1. SYSTEMS THEORY
Provides a general analytical framework (perspective) for viewing an organization.

2. Ludwig von Bertalanffy (1901-1972): General Systems Theory
Open system theory was intially developed by Ludwig von Bertanlanffy, a biologist, but it was immediately applicable across all disciplines.
Daniel Katz ve Robert Kahn: The Social Psychology of Organizations (1966)

3. Traditional organizational theories have tended to view the human organization as a closed system. The tendency has led to a disregard of differing organizational environments and the nature of organizational dependency on environment.
It has led also to an overconcentration on principles of internal organizational functioning, with consequent failure to develop and understand the processes of feedback which are essential to survival.

4. The open-system approach, on the other hand, begins by identifying and mapping the repeated cyclesof input, transformation, output, and renewed input which compromise the organizational represents the adaptation of work in biology and in the physical sciences by Von Bertalanffy and others.

5. System
A system is a set of interrelated and interdependent parts arranged in a manner that produces a unified whole.
It’s a concept taken from the physical sciences and applied to organizations. Human body is composed of sub-systems such as nervous system, respiratory system, digestive system, etc.
Example of organizational sub-systems that composes the system are similar to units(departments) of that organization. There might be production system, marketting system, human resources etc.

6. The systems theory approach is based on the notion that organizations can be visualized as systems of interrelated parts or subsystems that operate as a whole in pursuit of common goals.
Communication and decision making process bring them together.

7. Main concepts
Environment and boundary: Organizations exist in an environment and they have a hypothetical line that assumed to exist between the organization and the environment. Organizations are influenced (affected) from outside and they also affect (in some sense change) the outside.
Balance or Homeostatis: 1.Static 2.Dynamic. An example of the first balance is the human body temperature that is fixed at 36.4 °C. It is static, if you cannot reach the balance, you will probably die. Second balance mechanism is dynamic. A new balance is reached in different levels and conditions. Social systems are more like this.

8. Main concepts
Entropy: Going towards death. Entropic forces/ impacts pushes a system death because it causes a lose in the balance mechanism. Therefore, static balance has an inevitable consequence: Death. If an organization cannot adopt with its environment, entropy is a result.
Negative entropy is the ability of open systems to bring in new energy in the form of inputs and feedback from the environment in order for the organization to delay or to arrest entropy, the decaying process. The law of negative entropy states that systems survive and maintain their characteristics internal order only so long as they import from the environment more energy than they expend in the process of transformation and exportation.

9. Main concepts
Synergy (Holism) is the ability of the whole to equal more than the sum of its parts. The systems viewpoint suggests that managers are likely to be more successful if they attempt to operate their units as open systems rather than as closed system.
The feedback principle has to do with information input, which is a special kind of energic importation, a kind of signal to the system about environmental conditions and about the functioning of the system in relation to its environment. The feedback of such information enables the system to correct for its own malfunctioning or for changes in the environment, and thus to maintain a steady state or homeostasis. Both Negative and Positive feedback is possible. Sub-systems also come up with feedback.

10. The major components of a system are:
Inputs: the various human, materials, financial, equipment, and informational resources required to produce goods and services.
Transformation processes: the organization’s managerial and technological abilities that are applied to convert inputs into outputs.
Outputs: the products, services, and other outcomes produced by the organization.
Feedback: information about results and organizational status relative to its environment.

11. Hierarchical Order:
System has smaller subsystems within larger systems
Interdependence:
Systems rely on each other
Permeability:
System is open to its environment
Input-Throughput-Output:
Process like a machine
Exchange:
System exchanges good for services
Feedback
Both Negative and Positive
Negative- stays the same
Positive-changes

12. The two basic types of systems
Closed systems are not influenced by and do not interact with their environment.
Open systems dynamically interact with their environment.
Today, when we call organization systems, we mean open systems, that is, an organization that constantly interacts with its environment.

13. These are terms indicating the relative degree with which a system interacts with its environment. While there are very few, if any, completely open or completely closed systems, we usually view open systems as those having continual interaction with its environment. Closed systems are those with little interaction and feedback from their environments.

16. Organizations as a special class of open systems have properties of their own, but they share other properties in common with all open systems. These include the transformation of energy from the environment, the through-put or transformation of the imported energy into some product form which is characteristic of the system, the exporting of that product into the environment, and the reenergizing of the system from sources in the environment.

17. Contributions of the approach
The concepts such as environment, boundary, open systems overcome the problems of classical and neo-classical theories. In other words, they ignored such terms.
An holistic view: We should look the organization holistically with its environment. As the system is composed of interactive sub-systems, an intervention will affect all system.

18. Criticisms
Too generalistic: not only applicable to all kinds of systems but also unifies all disciplines under one umbrella.
It is not a theory but an approach, a metafor.
Some concepts are hard to define: boundary; where is the line of the boundary between the environment and organization. The boundary of the organization is ambiguous, not clear.
Macro theory: Individuals and small groups are ignored.

19. Key concepts related to the major characteristics of open systems are:
Katz and Kahn note 10 characteristics of open systems: 1. Importation of energy from the environment (resources, people, etc.) (No social system is self-sufficient) 2. Throughput (transform resources avialable to them). 3. Output (export some resources to the environment). 4. Systems as cycles of events (Cyclical pattern of output and input) 5. Negative entropy (through input of energy/resources) (Open systems can acquire negative entropy by importing more energy than it expends. This creates a store house of energy, preventing starvation, death.)

20. 6. Information input, negative feedback, and a coding process
6. Information input, negative feedback, and a coding process. (to maintain steady state). (Inputs gather information about the environment. A type of information input is Negative Feedback. This allows for a system to correct itself (i.e., a Thermostat). Because not all input can be accepted into a system, it uses a Coding Process to select certain input.) 7. The steady state and dynamic homeostasis (and a tendency toward growth to ensure survival). (A steady state does not mean motionless, it means that the input output ratio remains equal) (Body temperature regulation) 8. Differentiation and specialization (Multiplication, elaboration and specialization) 9. Integration and coordination
10. Equifinality (many paths to same goal). (There are many ways to get to the same end.)