The Resource Dependency Theory

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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…show more content…
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…show more content…
Social exchange theory was introduced by sociologist George Homans (1958) and developed by Peter Blau (1964) and Richard Emerson (1978). According to social exchange theory, “human relationships are formed by the use of subjective cost-benefit analysis and the comparison of alternatives. “ Studies have applied this theory to study the interdependent relationships among organizations and their need to absorb the constraints. A firm may initially try to bypass the constraints imposed by the environment or another organization by diversifying or by building redundancies in resource acquisition (e.g. liaising with multiple suppliers). When choices are limited and the organization is constrained by lack of alternatives it will seek to absorb this constraint by influencing the constraining organization to enter into a linkage. However, if we analyze this from the perspective of social exchange theory, there is always little or no incentive for the constraining organization to enter into such a tie. Since the constraining organization has more power and control over the constrained organization, entering into an alliance will mean losing this control. “For the dominant organization, this is equivalent to foregoing its bargaining power, and the advantageous exchange conditions that accompany it” (Gargiulo, 1993). The dependent organization has more to gain from such an alliance hence the
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