Conflict is inevitable in business relationships, just as it is in social relationships. Without conflict, growth is limited. Conflict is feared and avoided by many managers because they don't know how to deal with it. Unresolved conflict can be as poisonous to the productivity of a company as the virus is to the computer. Having an understanding about how people deal with conflict gives us, as managers an additional tool for managing effectively.
Oliver E. Williamson has postulated two attributes of Man: bounded rationality and opportunism. Though this was proposed more in the context of Organizational Theory, the second postulate is relevant to the discussion at hand. It is Man's opportunistic nature, workplace or at home, which is one of the primary causes of conflict. Other people are also opportunistic to the same degree. When these tendencies are not aligned with each other, conflict arises. A trivial example is illustrated during Group Discussions for entrance to reputed institutes. Talented hopefuls pit themselves against each other and consider the discussion as a forum to put down the rest of the competitors in any manner possible. The conflict arises when a candidate of comparable promise attempts the same tactic. The discussion is essentially in stalemate because both the candidates are too busy refuting each other. They do not want to lose out on the opportunity to appear superior in the eyes of the evaluator.
It is my opinion that the bounded rationality postulate can be applied to analyzing conflicts. Since each human has a limited scope of rational thinking, he or she may not understand the reasoning of the other individual, who may be thinking in a different domain, and this causes disagreements or conflicts.
At the workplace, other factors also contribute to conflict. Division of responsibility is one such cause. This process involves division of work through a structure.