Resource Dependency Theory

Resource Dependency Theory was formalized by Jeffrey Pfeffer and Gerald R. Salancik in 1978 with the publication of “The External Control of Organizations: A Resource Dependence Perspective”. This theory states that external resources the organization utilizes and the environment they operate in affect organizational behavior.
Organizations operate in uncertain environment as resources are scarce and are often controlled by other organizations that they have no control over. To ensure that the organization continues to exist and survive, its managers adopt a number of proven strategies to influence other organizations to provide them with those scarce resources.
Ultimately, the goal of any organization is to reduce its dependency on another

Interdependencies exist in any kind of relationship. Hence organizations are interdependent one on another for their day-to-day functioning. The dependency may be for input resources like raw materials, financial capital, human resources etc. or for output resources like finished goods. Some of these relationships may be symbiotic and some may be competitive and/or dominant. From resource dependence perspective, the type of relationship that an organization shares with other organizations is determined by how critical is the resource to the organization and how scarce is the resource. Power equations also play an important role in determining the type of relationship. An organization may derive power from its environment by virtue of the extent that it controls and have influence over the scarce resources in the environment. The more power that an organization can exert on the environment and on other organizations, the more chances it has to influence the environment in their favor, thus ensuring continuous growth and survival for itself. Organizations continually guard their positions in the environment and tend to thwart any actions or attempts by other organizations that try to endanger their position.
Applications of Resource Dependency Theory:
No organization likes to operate in an uncertain and an unpredictable environment. To reduce uncertainty and to ensure the continual supply of critical resources, firms tend to adopt a number of strategic tactics. The firm may choose to buffer input and output resource to ensure continued access to these resources and guard against any fluctuations. Here are some of the buffering strategies adopted by organizations from the perspective of resource dependence:
Coding: Simplifying the input process by pre-classifying the input