What Is an Open Systems Model in Business?
An open system is a system which constantly interacts with its environment. In business, the open systems model focuses on the impact of external factors in an organization.
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History
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This concept developed in the natural sciences to describe the give-and-take between an organism and its environment. Later, with the development of systems theory, the term became widely used in the social sciences, including business.
In Business
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An open business system interacts with its environment, constantly adapting in order to survive. It imports and exports energy, information, capital, personnel or influence.
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Closed System
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The archetypal closed system is a space station that can meet all the inhabitant's needs without losing energy or resources.
Closed System Perspective
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Until the 1960s, closed system perspectives dominated business thinking. An organization was considered a system of managers, employees and resources, and the role of external factors was underplayed.
Open System Perspective
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Two early pioneers of open systems business theory were Daniel Katz and Robert Kahn, who in their book, "The Social Psychology of Organizations," argued that a closed-system approach fails to recognize organizations' dependence on the external environment.
Applying the Open Systems Model
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In the open systems model, a business is a system which transforms inputs to outputs. Inputs--personnel, information or equipment--are taken from the external environment and outputs--goods or services--are placed back into the environment. Businesses may design their subsystems to attain these goals.
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