Organizational theories study how people act within organizations, the principles that guide successful business management and how organizations interact with each other. They encompass many viewpoints focusing on various areas such as communication, economics, social and business interactions, individual and industrial psychology, management and leadership. The contemporary models of organizational theory focus on one or more of these disciplines.


The five contemporary organization theory models are population ecology, resource dependence, contingency, transaction cost and the institutional model.

Population Ecology Theory

The population ecology organizational theory model focuses on the impacts of dynamic changes of phenomenon related to the birth and deaths of organizations and organizational forms. The study of population ecology is done over a long period of time. Most organizations have static structures that hinder adaptation to changes.

The organizations with inflexible models of organizations are then more likely to crumble and cease to exist while more new flexible businesses, better adapted to change, will startup and strive. In population ecology, success then depends on an intrinsic ability to adapt in a changing environment.

Resource Dependence Model

The resource dependence model examines influence of power in the relation of exchange resources. In the resource dependence theory, organizational success happens when a business maximizes its power and influences in gaining the resources needed for the businesses' survival. In this theory model, organizations that lack in resources will seek to become allies of other organizations who have more resources.

The dependence relationship means that organizations become reliable on each other's capacity to have access to necessary resources, and the power is given to the organization who possesses the highest amount of resources. The resource dependence organizational model theory originally discussed the relationship between organizations, but it also applies to the relationships between groups of a same organization.

The Contingency Model

The contingency organizational theory is actually a amalgamation of behavioral theories which contend that there isn't one best way of organizing or leading an organization, but that other internal and external constraints help determine which organization and leadership types are best for the business. The four core elements of contingency theory are that there is not a universal way to manage, an organization's design must fit with its environment, effective organization also depends on its fit with its subsystems and organizational needs are best satisfied when all previous three elements are met to achieve the main objectives of its work groups.

Transaction Cost Theory

Transaction costs organizational systems takes into account social-psychological dimensions that are not considered in the costing of the production of goods or services. Transaction costs are difficult to measure and rely on human activities, but understanding the impact of human psychology in relation to its the organization's operations is crucial to gain a full picture of an organization's economics.

The Institutional Model

Finally, the institutional organizational theory model studies institutions' structures and processes in relation to the functions of global governance. According to the model, institutional-based organizations should innovate in their structures, posses a participatory structure encouraging public and private participation, have strong trans-national coordination capacities, and establish dispute resolution mechanisms.

Examples of organization that follow the institutional model include the World Trade Organization, International Labor Organization, The World Health Organization and the United Nations Environment Program.