RESOURCE DEPENDENCE

Resource Dependence



Resource Dependence

Introduction

Resource Dependence is the study of how external resources organizations influence the behavior of the organization. Obtaining external resources is an important principle in both the strategic and tactical management of any company. Nevertheless, a theory of the consequences of this importance has not been formalized until 1970 with the publication of the external control of organizations: a resource dependence perspective. Dependence on resource theory has implications for the optimal structure of the division of organizations, recruitment of board members and employees, production strategies, contract structure, external links to the organization, and many other aspects of organizational strategy.

The resource dependence theory was developed by Aldrich and Pfeffer, Pfeffer and Salancik, and describes the interdependency between organizations and their environment. Their analysis is intended to explain the interrelation of organizations and private actors. According to the authors, organizations are not capable of generating all the resources needed for the maintenance of their duties. To overcome their shortcomings, they have to cooperate with private actors which control the demanded resources. The demand of resources and the provision with resources determine whether cooperation between the organization and an actor from the environment takes place and, consequently, affects the influence of an actor. In other words, the more resources an organization requires, the more receptive it is towards external actors. The better an external actor can respond to the demand of resources, the higher its chances are to influence the organization. On the contrary, a low level of resource dependency limits the external actors' chance to exert influence.

The basic argument of resource dependency theory can be summarized as follows:

Organizations depend on resources

These resources come in the end the environment of organizations

The environment contains a considerable extent other organizations

Resource requirements are often only organization in hand with other organizations

Resources are the staple diet

Legally independent organizations may be dependent on each other

Power and resource dependence are directly related:

Power is relational, and the situation may be mutual

Discussion and Analysis

Dependence on resource theory is one of many theories of organizational studies concerning the behavior of organizations. In many respects, the predictions of the theory of resource dependence are similar to those of the economy of transaction costs, but it also shares some aspects of institutional theory.

Pfeffer (2008) offered a broad “ecological” theory about how firms were situated in and depended on their environment, but the empirical application of the theory became too narrow too soon. Although P&S emphasized in their original formulations that organizational managers could respond to dependencies in a number of ways, including symbolic responses, research seemed to settle on absorption as the most common/effective response. Dependence absorption essentially means that the organization seeks to eliminate the source of its dependence through co-optation, merger, acquisition, etc. Thus, many of the most famous resource dependence studies are about acquisition or merger patterns across industries. While absorption is certainly a common response, resource dependence scholars' fascination with it may have unintentionally diverted scholars ...