Resource Dependence

Conceptual Overview

The theory has three main elements. The first element is a focus upon resources, including raw materials, capital, information, authority, or any other resources required for organizational operations. Authority is the social legitimation of organizational activities. Most expressions of resource dependence theory emphasize material resources, such as labor, capital, and information. Attention to the role of legitimacy became the domain of neoinstitutional theory.

The second element points to the resource environment as a network of other organizations. That is, resources required by an organization are typically controlled by other organizations. It is in this sense that an organization is dependent upon other organizations. By emphasizing the importance of securing stable supplies of critical resources, resource dependence theory shifted attention away from the (then) prevalent focus within organization theory upon consumers and competitor organizations to include suppliers and governments as regulators of terms of exchange. In doing so, the theory differentiated itself from economic approaches to understanding organizations (e.g., the transaction cost perspective). The theory also anticipated the concept of organizational field that became central to institutional theory. However, the focus within resource dependence theory, unlike institutional theory, remains at the level of the individual organization, and most empirical work has examined dyadic relations.

The third element of the theory is that organizations seek to avoid becoming overdependent on other organizations, yet at the same time seek to exploit situations where organizations are dependent upon them. Organizations respond to their resource contexts by adaptation (i.e., through internal changes to strategies or operations) and/or by domination (i.e., through efforts to control the environment). Early statements and empirical tests of resource dependence emphasized attempts at domination.

Adaptive strategies are attempts to mitigate resource dependencies through actions such as buffering (building inventories beyond levels needed for immediate operations), use of long-term contracts, avoidance of overreliance on single sources, and the development of substitutable resources. Domination strategies range from proprietary strategies (e.g., pursuing a strategy of growth, so as to gain market power; diversification, both vertical and horizontal; predatory pricing practices; bribery of government officials) through dyadic strategies (joint ventures, interlocking directorates, co-optation) to collective strategies (trade associations, cartels, mergers, and ultimately control of legislative institutions). A particularly fruitful research emphasis has examined interlocking directors (resource dependence theory would predict that choice of directors is a function of resource dependencies, as organizations seek to co-opt representatives of organizations where dependencies are high), mergers and acquisitions (the theory would predict that organizations will seek to acquire organizations upon whom they are dependent, or that would provide political leverage over those organizations), and joint ventures (the theory would predict that [Page 1384]organizations will enter joint ventures that minimize dependencies or provide leverage).

...