Resource Dependence

Resource Dependency Theory (RDT) acknowledges that every organization needs resources to function. These resources can be found both within and outside an organization. When the resources are outside the focal organization, it leads to interdependence and therefore uncertainty.

Thus the central ideas of RDT deal with power over resources, the strategies organizations employ to gain access and maintain power over those resources, and the social context where these decision take place (Scott & Davis, 2007). In order to reduce interdependence and uncertainty, organizations seek power over their key resources. In order to gain that power, they may employ many strategies including forming alliances, associations, an co-optation (Scott & Davis, 2007).

Organizations must exchange with other organizations for resources to survive, but the interdependence leads to power differences. Managers act to reduce such dependence while increasing its own power in relation to others (Pfeffer and Salancik 1978).

RDT rests on the following assumptions:

  • Organizations are comprised of internal and external alliances/coalitions created to influence or control.
  • The environment has scarce and valuable resources essential for the organization.
  • Organizations work to minimize dependence on other organizations and maximize other organization’s dependence on them.

This theory can be applied at the organizational level by looking at power relationships among different organizations. It can also be applied at the unit level within an organization. Hillman, Withers and Collins (2009) have a useful review of how this theory has been used in management. They note that RDT has been tested in several corporate activities including mergers, vertical integration, joint ventures. They also note how this theory has applications in the study of inter-organizational relationships, board of directors, political action, and executive succession.

(Adapted from course notes)
(Flashcards and other resources here)
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