Closed systems and organisational theories

Before an extensive analysis of theories of open systems is conducted, it is useful to briefly consider some attributes of closed systems. In physics, a closed system is one where there is no exchange of matter between the system and its environment (Cengel and Boles, 2002). However, Kramer and De Smith (1977) define a closed system as a system that has no interaction at all with its environment. But they explain further that a system can be deliberately considered as a closed one by researchers if the relations that exist between the system and its environment are disregarded for the sake of simplicity in their analysis. For example, a production or assembly line, which is built on the theory of scientific management and operations research, can be treated as a closed system if it is insulated from fluctuations in demand and supply (environmental contingencies) through the stockpiling of raw materials and finished-goods to keep it in a relatively static environment.

Even though it is impossible to treat a work organisation as a completely closed system, in the past several organisational theories have assumed this view (Robbins, 1990; Scott, 1998). Between 1900 and 1930, the most dominant theories, which were based on closed-rational system models, were Taylor’s scientific management approach, Weber’s model of bureaucracy, and Fayol’s administrative theory. From the 1930s through the 1950s, the most influential theories were based on a new perspective of closed-natural system models, such as Barnard’s theory of cooperative systems and Mayo’s human relations model. It is reasonable to say that the ideas of scientific management and bureaucracy are rooted in engineering where the system designer believes that, through proper design and without referring to external factors, a purposive system will perform in an efficient and effective manner. This belief has become the foundation of the machine metaphor or the mechanistic organisation (Morgan, 1997).

A prevalent example of a management system built on a closed system model is a machine bureaucracy, which is still, to various degrees the prevailing paradigm in most organisations (Brown, 1992; Beetham, 1996; Du Gay, 2000). The main objective of a bureaucracy is to promote efficiency and control in systems through the following: a fixed division of labour; a hierarchy of offices; a set of general rules that govern performance; a separation of personal from official property and rights; selection of personnel on the basis of technical qualifications; and employment viewed as a career by participants (Scott, 1998). From an engineering viewpoint, it is a superbly designed system based on technical rationality, aimed at maximising operational efficiency and control. However, the emphasis on internal operational efficiency without referring to external factors can result in system-environment misalignment. In addition, the sole concentration on control without flexibility may well cause poor adaptation, which leads to unsatisfactory performance in the long run.

Closed systems and change

One possible explanation for the existence of organisations that continuously remain in a steady state condition is that they reside in a relatively static environment (e.g. some not-for-profit organisations). When the environment is relatively static, stable, and predictable, interactions and relationships between the organisation and its environment are trivial and, thus, can be ignored or otherwise managed (Robbins, 1990). The closed system model was universally adopted in management theory development during the early 20th century. However, the environment has changed dramatically over the past century and the direction of change is toward an increase in both complexity and dynamism (Neumann, 1997; Robbins, 1990). A model that was valid in the past might not be effective in describing, explaining, and predicting organisational phenomena in a changing context. For example, the Just-in-Time (JIT) inventory system increases the alignment between the production system and its environment, giving a substantial increase in operational efficiency and a reduction in inventory cost (Chase and Aquilano, 1989; Greene, 1997; Gaither and Frazier, 1999).

If the human or work organisation is assumed to be a closed system, the direction of change should go toward an equilibrium state in which entropy will maximised, according to the second law of thermodynamics. In this case, the organisation as a system should deteriorate rather than prosper over time. The increase in entropy suggests that the organisation and order of the system will be degraded and the system will run down.