This chapter of the book "The Functions of the Executive," by Chester I. Barnard (1938), explores the theory of formal organizations. According to Barnard, the elements of an organization are (1) communication; (2) willingness to serve; and (3) common purpose. For the continued existence of an organization, either effectiveness or efficiency is necessary. The vitality of organizations lies in the willingness of individuals to contribute forces to the coöperative system. When effectiveness ceases, willingness to contribute disappears. The continuance of willingness also depends upon the satisfactions that are secured by individual contributors in the process of carrying out the purpose. Overall, the initial existence of an organization depends upon a combination of these elements appropriate to the external conditions at the moment.