Explanation:

The System Approach

1. The system approach was developed by J. P. Dunlop of Harvard University in 1958. According to this approach, individuals are part of an ongoing but independent social system.
2. The behaviour, actions and role of the individuals are shaped by the cultures of the society. The three elements of the system approach are input, process and output.
3. Society provides the cue (signal) to the individuals about how one should act in a situation. The institutions, the value system and other characteristics of the society influence the process and determine the outcome or response of the individuals.
4. The basis of this theory is that group cohesiveness is provided by the common ideology shaped by the societal factors.
5. According to Dunlop, the industrial relations system comprises certain actors, certain contexts, and an ideology, which binds them together and a body of rules created to govern the actors at the workplace and work community. 
6. The actors in the system are the managers, the workers and their representatives, and the government agencies. The rules in the system are classified into two categories:

Substantive rules & Procedural rules: -

• The substantive rules determine the conditions under which people are employed. Such rules are normally derived from the implied terms and conditions of employment, legislations, agreements, practices and managerial policies and directives.
• The procedural rules govern how substantive rules are to be made and understood. Ultimately, the introduction of new rules and regulations and revisions of the existing rules for improving the industrial relations are the major outputs of the industrial relations system.
• These may be substantive rules as well as procedural rules." The context in the system approach refers to the environment of the system which is normally determined by the technological nature of the organization, the financial and other constraints that restrict the actors of industrial relations, and the nature of power sharing in the macro environment, namely, the society.