Systems Theory of Management The systems theory of organization is a theory that organizations are composed of many subsystems that aren’t necessarily related to one another and yet work together to form the whole. This theory is helpful for understanding things like organizational behavior, organizational change and organizational development. Systems theory allows for an understanding of the connections between various parts of the organization and how they interact with one another. Origin The systems theory of organization has its roots in biology and systems science. However, it’s more commonly applied to businesses and other types of organizations. Bertalanffy(1950) first formalized the theory in the early 1950s. His ideas became the foundation for what we now refer to as systems theory. This concept broke away from classical management theory that viewed organizations as machines and moved toward a more holistic view that sees them as networks of people, procedures and activities. Although Bertalanffy is most commonly associated with the development of systems theory, this theory is a product of the collective effort by many individuals who were interested in understanding how an organization can function effectively and efficiently while also satisfying individual needs. The Framework Systems theory is a theoretical framework for understanding how organizations work. A system can be defined in different ways, but it’s best characterized as an entity that has all the elements necessary to carry out its functions. It started as a way to understand organizations from an outside perspective but has since become a means of gaining insight into daily operations within an organization.