Resource Dependence Theory

You can't always get what you want
But if you try sometimes you just might find
You get what you need
--Rolling Stones

Resource dependence theory (Pfeffer & Salancik, 1978) posits that organizations engage in exchanges with other entities in their environment to obtain important resources. And because few organizations are self-sufficient with respect to such resources, this situation leads to conditions of interdependence. Interdependence occurs when one actor does not control all conditions necessary for achieving an action or desired outcome (Handfield, 1993).

Faced with external uncertainties, organizations will seek to create negotiated environments (Cyert & March, 1963). When acquisition of important resources is questionable, organizations will reduce uncertainty and manage dependence by structuring exchange relationships in a manner that establishes formal and informal links with other entities (Pfeffer & Nowak, 1976).

These links can often be seen as means for increasing the extent of coordination between exchange partners. In a sense, organizations seek closer ties to obtain 'collaborative advangage' (Kanter, 1994). Organizations operating in more uncertain environments have greater need for closer relationships with suppliers (Pfeffer, 1972).

Organizations might use various strategies for managing their resource environments to reduce uncertainty (Pfeffer, 1972). These strategies include cooptation (absorbing representatives of powerful groups into the organization), long term contracts, illegal collaboration (e.g., price fixing, conspiracies), joint ventures, and using the power of the state (e.g., obtaining subsidies, entry barriers, price floors/ceilings), and mergers.

It should be noted that dependencies that must be managed extend beyond material resources. For example, status, reputation, and legitimacy are vital resources that must be acquired from external sources as well (Eisenhardt & Schoonhoven, 1996).

References

Cyert, R.M. & March, J.G. 1963. A behavioral theory of the firm. Englewood Cliffs, NJ: Prentice-Hall Inc.

Eisenhardt, K.M. & Schoonhoven, C.B. 1996. Resource-based view of strategic alliance formation. Organization Science, 7: 136-150.

Handfield, R.B. 1993. A resource dependence perspective of just-in-time purchasing. Journal of Operations Management, 11: 289-311.

Kanter, R.M. 1994. Collaborative advantage. Harvard Business Review, 74(4): 96-108.

Pfeffer, J. 1972. Merger as a response to organizational interdependence. Administrative Science Quarterly, 17: 382-394.

Pfeffer, J. & Nowak, P. 1976. Joint ventures and interorganizational dependence. Administrative Science Quarterly, 21: 394-418.

Pfeffer, J. & Salancik, G.R. 1978. The external control of organizations: A resource dependence perspective. New York: Harper & Row.