Open Systems Theory

Open Systems Theory is a a theoretical perspective that views the organization as open to influence from the environment. The organization is viewed as transforming human and physical resources from the environment into goods and services, which are then returned to the environment.[1]

Many of the organizational diagnostic models rely upon the abstract notion of open systems theory as a basic assumption, thus, warranting a brief discussion of open systems theory. The premise of the theory is that organizations are social systems which are dependent upon the environment in which they exist for inputs (Katz & Kahn, 1978). Open systems theory allows for repeated cycles of input, transformation (i.e., throughputs), output, and renewed input within organizations. A feedback loop connects organizational outputs with renewed inputs.

Open Systems Theory
source: OI Institute

Open systems theory is a way of thinking about dynamic systems, or systems that interact with their environments. All businesses are dynamic systems, evolving and changing in response to feedback. Open systems theory is useful for businesses because it provides a framework for thinking about processes such as change – a regular part of running a business. Change in open systems is the process of adapting to shifting circumstances. Open systems theory provides tools for thinking about change, such as descriptions and explanations of general patterns and obstacles. Successful dynamic change involves paying attention to feedback and integrating this information rather than proceeding with a rigid idea of how change should occur. A business that changes its product line by focusing on its most successful products is effecting dynamic change by shifting in response to information about customer demand.[2]

Open systems theory is based on the work of Kurt Lewin, which was further developed in the Tavistock Institute during the fifties, especially by A. K. Rice and Eric Miller. This theory assumes that, similarly to biological organisms, it is possible to analyze any organization in terms of an open system - a system that can survive only by exchanging materials with its environment. The organization imports raw materials, converts them into end-products by carrying out various processes on them, utilizes some of these products for its own needs and exports the rest by exchanging it, directly or indirectly, for raw materials and other resources it needs. These processes of import-conversion-export are the work the organization has to perform in order to survive. Organizations differ from one another by the various kinds of materials they import, by the processes they use for achieving conversion and by the end-products they export.

Similar to the analysis of biological organisms, the analysis of organizations requires the creation of various theories: theories dealing with the type of raw materials the organization needs, with the processes it uses for their conversion, and with the relationships between the organization and its environment, relationships that determine its ability to import raw materials and export end-products. In addition to these kinds of theories, organizations, unlike biological organisms, are based on human beings, and thus any theory offered regarding them should include some component relating to human behavior. Open systems theory includes a set of concepts required for the development of these theories. One of the central concepts - the concept of the primary task - is brought here as an example. The following short discussion of this concept can demonstrate how the use of the basic concepts of this theory - open system, boundaries, import-conversion-export, primary task, together with some other concepts - provides tools for furthering the understanding of the complex and sometimes confusing operation of organizations.

Open systems theory claims that every organization has at any moment a primary task, which is defined as the task it has to perform if it is to survive. The definition of the primary task of the organization illuminates the hierarchy among the various activities existing simultaneously in it - determining the dominant import-conversion-export process and consequently the important set of activities. In addition, the concept opens the possibility of considering different organizational structures based on different definitions of the primary task, and of comparing them. One of the conclusions derived from the analysis of the organization from this point of view is that various subsystems in the organization may define its primary task in different or even conflicting ways. A conflict may also be found between the primary task as it is defined by the organization itself and the primary task its environment imposes on it.[3]

An open system is a system that has external interactions. Such interactions can take the form of information, energy, or material transfers into or out of the system boundary, depending on the discipline which defines the concept. An open system is contrasted with the concept of an isolated system which exchanges neither energy, matter, nor information with its environment. An open system is also known as a flow system. The concept of an open system was formalized within a framework that enabled one to interrelate the theory of the organism, thermodynamics, and evolutionary theory. This concept was expanded upon with the advent of information theory and subsequently systems theory. Today the concept has its applications in the natural and social sciences. In the natural sciences an open system is one whose border is permeable to both energy and mass. By contrast, a closed system is permeable to energy but not to matter. The definition of an open system assumes that there are supplies of energy that cannot be depleted; in practice, this energy is supplied from some source in the surrounding environment, which can be treated as infinite for the purposes of study. One type of open system is the radiant energy system, which receives its energy from solar radiation – an energy source that can be regarded as inexhaustible for all practical purposes.[4]

The open-systems approach was first applied by Katz and Kahn, who adapted General Systems Theory to organizational behavior. Katz and Kahn (1966); Bertalanffy (1951), pp. 303–361. This approach identifies organizational behavior by mapping the repeated cycles of input, throughput, output, and feedback between an organization and its external environment. Systems receive input from the environment either as information or in the form of resources. The systems then process the input internally, which is called throughput, and release outputs into the environment in an attempt to restore equilibrium to the environment. The system then seeks feedback to determine if the output was effective in restoring equilibrium. As can be seen, the systems approach focuses on the means used to maintain organizational survival and emphasize long-term goals rather than the short-term goals of the goal-attainment approach. Theoretically, systems can be considered either open or closed. Open organizations exchange information, energy, or resources with their environments, whereas closed systems do not. In reality, because no social systems can be completely closed or open, they are usually identified as relatively closed or relatively open. The distinction between closed and open systems is determined by the level of sensitivity to the external environment. Closed systems are insensitive to environmental deviations, whereas open systems are responsive to changes in the environment.[5]

Virtually all modern theories of organization utilize the open systems perspective. As a result, open systems theories come in many flavors. For example, contingency theorists argue that organizations are organized in ways that best fit the environment in which they are embedded. Institutional theorists see organizations as a means by which the societal values and beliefs are embedded in organizational structure and expressed in organizational change. Resource dependency theorists see the organization as adapting to the environment as dictated by its resource providers. Although there is a great variety in the perspectives provided by open systems theories, they share the perspective that an organization’s survival is dependent upon its relationship with the environment.[6]

See Also


  1. Definition - What Does Open Systems Theory Mean? APA
  2. Open Systems Theory and Change Bizfluent
  3. Explaining Open Systems Theory OFEK
  4. What is an Open System? Wikipedia
  5. The Open Systems Approach Saylor.Org
  6. The flavors of Open Systems Theory Michael N. Bastedo