Open system theory refers to how an organizational structure affects the flow of information and interaction internally and with the external environment.

OPEN-SYSTEMS THEORY Traditional theories regarded organizations as closed systems that were autonomous and isolated from the outside world.

There are two types of systems in organizations: closed systems and open systems. An open system interacts with its environment through giving and receiving information.

General systems theory has been proposed as a basis for the unification of science. The open systems model has stimulated many new conceptualizations in organization theory and management practice.