The Failure of Theory to Predict the Way Public Sector Organisation Responds to its Organisational Environment and the Need for a Mosaic-View of Organisational Theory Bryane Michael & Maja Popov Published online: 25 November 2014 # Springer Science+Business Media New York 2014 Abstract What does theory predict about the way government size and structure adapts to changes in government’s organisational environment (particularly to uncertainty and complexity)? In this paper, we review the theory and evidence from the literature about the way government size adjusts to such changes – particularly to changes in macroeconomic fundamentals like gross national prod- uct (GDP). We find that the traditional theories from the organisational theory literature—like the contingency-based view, resource-based view and the rational choice view – fail to provide global explanations for much of the variation we see in the world around us. Instead, theorists need to adopt a “mosaic view” of organisational theory – accepting that different theories may explain the way public sector size and structure responds to the uncertainty and variability in its (macroeconomic) organisational environment. We also provide several empirical hypotheses to test such a mosaic-view. Keywords Contingency theory. Public sector organisational theory. Resource-based view. Size of government . Government structure . “Mosaic view” JELCodes . F4 . D7 . E6 . H1 . H4 Public Organiz Rev (2016) 16:55–75 DOI 10.1007/s11115-014-0296-5 The views expressed in this paper remain the views of the authors alone and do not reflect the views of the organisations for which the authors work or are affiliated with. The affiliations shown as of time of writing. B. Michael (*) Columbia University (SIPA), 420 W 118th St #1, New York, NY 10027, USA e-mail: [email protected] M. Popov General Secretariat of the Government of Serbia, 11 Nemanjina St., Belgrade, Serbia Introduction Despite over 40 years of theorizing about public sector organisation, we still know very little about how government responds to changes in its organisational environment. A variety of theories predict how government size and structure should respond to the national macroeconomic environment it regulates (as well as buys and sells labour, capital and goods in). Contingency theorists argue – though are now in relative disrepute – that government departments and agencies grow, shrink, divide and/or merge in response to changes in the macroeconomic environment (Gupta et al. 1994). Resource-based theorists – and their newer off-spring who write about “competencies” – argue that these govern- ment departments morph, depending on the resources (budgetary, staffing, know-how and so forth) they already have available – or can obtain through bureaucratic and/or political means (Bryson et al. 2007). Rational-choice theorists, and select scholars in public administration, argue that government organisational structure does (or sho.