Systems Thinking Paradigm Table and Summary

System Thinking Paradigm Table and Summary


University of Phoenix

System Thinking Paradigm Theory Table

The System Paradigm Theory table below summarizes information researched on the Rational, Natural, and Open Systems paradigm. The attached reference list includes a complete compilation of sources summarized in Table 1.


Systems Thinking and Organizational Theories

SystemsParadigm Organizational Theories KeyCharacteristics Advantages and Disadvantages Industries and Examples
Rational Systems as defined by Weber, Simon, and Alkadry Transaction Cost Theory, Rational Systems Theory Goal specific, formal, controlling, mechanical, achieves a single goal. Component parts have no meaning except for their function in the system. Only specific traits of individuals are important for the organization. The advantages include efficiency, cost effectiveness, resulting in a good ROI (return on investment). The disadvantages include it can be seen as devoid of human values, can be used to pursue irrational goals, does not value the individual or the environment, it only values the shareowner as a stockholder The manufacturing and services industries use this paradigm. Examples include the manufacturing division of Union Carbide and the transportation division of Exxon
Natural Systems Theory as defined by Gouldner Institutional Theory, Network Theory, Agency Theory, Natural Theory, Critical Theory Organization is viewed as a collective, social group with characteristics more important than goals. Goal complexity, informal, cooperative, commonality among organizations. Emphasis is on behavioral structure. Organizational structure overshadows individual goals. It is organic and evolving. The advantages include being adaptive, goal oriented, integrated, people friendly.The disadvantages include output goals often eclipsed because of focus on system goals, and abstract design and often a higher cost of doing business. Natural Systems Theory can be applied in non profit organizations, government organizations, and may also be found in progressive manufacturing and services industries. One example is the March of Dimes.
Open Systems Theory as defined by Cummings & Worley; Buckley Contingency Theory, Postmodern Theory, Humanistic Theory Imports energy from environment, negentropic, contingent on environmental conditions. Exchange with the environment is underlying assumption. The system is the key, everything is part of the system. Loosely coupled, changing coalition of groups and interests with individual goals. Input and output boundaries are distinct. The advantages include beingself-maintaining, community connectedness, operational effectiveness, a clean environment, safer products, and a fit between components, systems, and the enterprise. An open system takes into account the significance of the wider environment and recognizes the complex nature of (global) systems. The disadvantages include the determination of boundaries is difficult. Being “green” (environmentally friendly) may be a hard sell even with regulations. The fines may be cheaper than compliance. It may be more costly. Open Systems Theory can be applied in small enterprises, small town law enforcement organizations, and may also be found in progressive manufacturing and services industries like Caterpillar and StarPak now MES.


Union Carbide was selected as the Rational Theory paradigm because of the glaring examples of a lack of concern for the environment and the people. The Bhopal incident caused in a large part by the elimination of redundant decision making systems, shift supervisors, and superintendents – all to reduce money and be profitable (Husted, 1993). It is a glaring example of what can go wrong when a rational system is used to justify the bottom line in spite of possible consequences of the cost reduction. The result was an ecological disaster and thousands of deaths.

The National Foundation for Infantile Paralysis (March of Dimes) was selected for the Natural Systems paradigm because it is an excellent example of an organization changing its focus and remaining in business when the original reason for the formation of the organization has disappeared. The National Foundation for Infantile Paralysis became the March of Dimes with a new focus when the Salk vaccine was invented and is still in existence (50th anniversary of the first polio vaccine. (2005).

StarPak Energy Systems Corporation now MES (Mechanical Energy Systems) was selected as an example because it was community (environment) oriented company displaying a loosely coupled construct. The company originally sold products designed to reduce the use of fossil fuels but when the price of oil dropped making the products less competitive, it adapted. StarPak became MES to remain in business, still selling environmentally friendly products (Hendrickson & Tuttle, 1997).


Systems information in Table 1 was derived from the following references: (50th anniversary of the first polio vaccine, 2005; Alkadry & Nyhan, 2005; Brooks, 1995; Covi & Kling 1996; Falcone, Wells, & Weisheit, 2002; Hallett & Ventresca, 2006; Husted, 1993; Klassen, 1993; Scott & Davis, 2007; Spender & Kessler, 1995; Weber, 1968).


50th anniversary of the first polio vaccine. (2005). Journal of Environmental Health, 68(1), 54. Retrieved from

Alkadry, M. G., & Nyhan, R. C. (2005). The impact of rational organizations on public administrators: A structural equation model. International Journal of Organization Theory and Behavior, 8(2), 155-173. Retrieved from

Brooks, G. R. (1995). Defining market boundaries. Strategic Management Journal (1986-1998), 16(7), 535. Retrieved from

Covi, L., & Kling, R. (1996). Organizational dimensions of effective digital library use: Closed rational and open natural systems models. Journal of the American Society for Information Science (1986-1998), 47(9), 672. Retrieved from

Falcone, D. N., Wells, L. E., & Weisheit, R. A. (2002). The small-town police department. Policing, 25(2), 371. Retrieved from

Hallett, T., & Ventresca, M. J. (2006). How institutions form: Loose coupling as mechanism in Gouldner’s patterns of industrial bureaucracy. The American Behavioral Scientist, 49(7), 908-924. Retrieved from

Hendrickson, L. U., & Tuttle, D. B. (1997). Dynamic management of the environmental enterprise: A qualitative analysis. Journal of Organizational Change Management, 10(4), 363-382. Retrieved from

Husted, B. W. (1993). Reliability and the design of ethical organizations: A rational systems approach. Journal of Business Ethics, 12(10), 761. Retrieved from

Klassen, R. D. (1993). The integration of environmental issues into manufacturing: Production and Inventory Management Journal, 34(1), 82. Retrieved from

Scott, W. R., & Davis, G. F. (2007). Organizations and organizing: Rational, natural, and open system perspectives. Upper Saddle River, NJ: Pearson Prentice Hall.

Spender, J., & Kessler, E. H. (1995). Managing the uncertainties of innovation: Extending Thompson. Human Relations, 48(1), 35. Retrieved from

Weber, M. (1968). Economy and Society (Guenther Roth and Claus Wittich, Trans.) New York: Bedminster Press (Original work published in 1917)