2 Resource Dependence: A tool for Managers.
2.1 Better look at Resource Dependence and its theory.
3 Resource Dependence Theory: Framework, Benefits and a tool for Management
3.1 Framework of the theory.
3.2 Benefits of the Theory.
3.3 Management Tool: Aids in Strategic Development
4 Commentary on Resource Dependence Theory: Control in Competitive landscape.
5 Resource Dependence Theory: Should it be used?.
Businesses and organizations work with a plan and a workflow in mind. Employing managers and various other officers in order to ensure that the organization does not step away from its goals and objectives. Furthermore, to smoothly run with its processes, the organizations create relationships with other organizations, and maintain the same. Exchanging services and opportunities organizations create strategic relationships over the course of time as well. In this aspect, resource dependency is formed among various organizations. (Findikli, 2019)
The paper will look into the dynamics of resource dependence theory, use of theory by managers, the framework of the same, and how it affects businesses and organizations. Furthermore, the paper looks at various aspects of the same theory along with its effect on the landscape of organizations to be interacted with.
First, the paper will describe what resource dependency theory is in the context of an introduction and then it will describe it as a tool for the managers of an organization, which will lay out the framework of the theory and its effects for an origination. Lastly, it will speak of the relationship so created among the organizations.
The concept of resource dependence theory was first coined in 1978. It gained public awareness through a book called The External Control of Organizations by Jeffery Pfeffer and Gerald Salancik. A point to be noted here is that resource dependence theory, also known as RTD, has been noted as one of the total of seven theoretical approaches for HR strategies in an organization. A fundamental element in the concept of this theory is that the resource so spoken about in the theory’s understanding is a resource of high influence and sets various other actions in the organization in motion.
These resources are exceptionally important in making decisions and taking actions, and can be explained in simple terms in context of the particular dependence. (Nienhüser, 2017) In simple terms, the concept can be described as the understanding of various organizations that require various resources. In order to attain such resources, the organizations create strategic relationships with other organizations that offer the resources. Furthermore, there is a relationship based on exchange of services or resources. In this context, resources that an organization might use, may be scarce, it might take a bit longer to find it and may give rise to a special relationship with the organization? (Janse, 2020)
Another aspect to keep in mind is that all organizations need external resources. To understand resource dependence theory is to understand that no organization can be completely self-dependent. Since an organization cannot completely find all the resources on its own, the relationship of dependence is established. (Pfeffer, 2020)
As per Pfeffer’s works, it can be understood that an organization that can control its external resources, does better in terms of success in the future. The external resources can be controlled by individuals, investors, public companies, government or private companies.
As dependence has been understood, the theory around it can be described as the understanding of the dependence of resources among the organizations and considers the power that underpins the success of the organization.
To sum it up, the theory understands the relationship between two or more organizations, along with its behavior. The theory allows for better understanding of the strategic means of the organizations and the management aspects of the organizations. (Pfeffer, 2020)
The theory is dependent on various aspects, which is discussed in the following section on framework. In a nutshell this theory speaks of the dependence of various organizations and companies in order to sustain them. (Heatley, 2018)
Pfeffer’s theory was simple and a bit restrictive. It had made use of three broad categories, which were prevalence, importance and control. These three categories were to be considered when the organization was making a strategic plan. Furthermore, these aspects were considered in the context of company or organization well-being, and the effects of the same were considered as well. (Heatley, 2018)
The work published by Nienhueser, however, speaks of a better model which has been modified a bit by Nienhueser, himself. The modified theory considers the environment, selection and removal of executives and organizational structures as well, apart from the original three aspects. (Nienhüser, 2017) As understood by the division of the framework, the modified version of the model seems to be a better fit for the present-day world and business models.
The use of resource dependence theory has proved to be beneficial for organizations. Primarily, the use of resource dependence theory has been attributed to the effectiveness and the improvement in the same sector for organizations. Furthermore, the understanding of management and the executives in the model allows the organizations to create strategies which will offer long-term benefits. As the use of resource dependence theory considers both internal and external factors, the theory allows a business model to become effective without a massive amount of effort. (Altholz, 2010)
The use of resource dependence theory has offer management and the managers of any organization an easier way of transforming the work structure of the company or the organization. (Findikli, 2019)
The two models discussed above in thee paper offer an in-depth understanding of the aspects that it allows a better look into. The use of various elements in the models have provided somewhat a cushion to various managers and organizations to know, in advance, what might happen and what is essential for the company itself. (Nienhüser, 2017)
In other words, resource dependence theory provides “a strong theoretical lens for examining firms because it recognizes that firms exist within a larger social environment comprised of other firms that may have differing goals, and that those firms may exercise power and control over a focal firm by constraining its resources.” (Sproul, 2017)
As per Sproul’s work published in 2017, too much emphasis has been provided on the dependence fact of the organizations, but not enough has been said on how its adds to the effectiveness of the organization. (Sproul, 2017)
The use of RTD has been characterized by the fact that it offers established views on various aspects of resources in the environment, along with offering an established plan for the same. The concept makes use of the fact that there are various forces at play in the environment which has an effect on the resources and the procurement of the same.
The theory lays a specific emphasis on the formulation of actions along with stressing on making decisions for the business or the business model. With that being said, the theory has advocated a better understanding of the resources, which has allowed organizations to strategically maintain their relationships and to decide which organizations can be brought into the relationship for the specific purpose of resource acquisition.
The use of RTD has been directly attributed to “bringing stability and certainty to their environments” in a business. The theory offers a very good look on the external services and external factors that may affect the business, which will allow the managers and officials to consider which aspect or route to take for better decisions.
Considering the theory’s idea and concept, it helps the organization to understand what exactly resource means, which allows the organization to make better decisions in the future regarding the same. Additionally, the business can extract competitive value and competitive advantage by making use of RTD. RTD allows the business or organization to find access to additional resources, by offering a better understanding of resources. The model employed by organizations can differ, but the idea behind resource acquisition remains the same.
As the theory understands and considers the use of external forces and sources in the business, it is important to realize that organizations can make use of to understand which relationships should be established in the market. Additionally, the business can understand the concept of resource allocation and which areas to stress on without hampering the internal aspects of the business. (Altholz, 2010)
Another aspect of RTD’s benefits for an organization is that the traditional forms of research overlook the deeper power of resources and autonomous power of resources. The use of RTD not only offers a perspective on the external factors, but allows overseeing the internal framework of the organization as well. Even if there are excessive dependencies, RTD offers a remedy for that as well by providing understand on creation of relationships with other organizations and dependence remedy. (Sproul, 2017)
Additionally, RTD allows a business to find a multi-business productivity. The establishment of better productivity allows an organization to assert its power in the market. RTD offers a look in certain parts of the organization’s economic parts and potential, which offers a better advantage in the market. (Altholz, 2010)
With that being said, there is another benefit that RTD offers to organizations. The theory can offer great insights when it comes to a merger or acquisition. The primary focus of RTD is market research and understanding, which provides a cushion of information for making informed decisions for managers in aspect of a merger or acquisition. Furthermore, there is a deeper understanding of markets and a deeper understanding of products along with resources, which goes beyond the concept of customer satisfaction alone.
There is an extended emphasis on the fact that RTD considers the performance of the firm and looks into the recognition of power, which helps an organization to not only consider its internal matters and resource acquisition, but also offers an insight that allows the organizations to make strategic decisions. RTD offers a rational outlook to an organization’s performance, which benefits the business and the organization’s relationships. Furthermore, this allows for autonomous decisions within the organization as well. (Sproul, 2017)
The paper lays out a complete structure and framework on the understanding of RTD. However, there have been literary works which negate the benefits of the same. Sproul’s work suggests that there is an excessive dependence on the resource dependence theory. (Sproul, 2017)
Furthermore, there have been views that the resource dependency relationships can turn into hefty things due to unequal transactions. (Janse, 2020) Unhealthy relationships in the aspect of resource management and resource dependence can lead to colossal damage to the organization’s health and objectives in the future.
Although there remain many open questions regarding the use of RTD and its implications, the evidence in context of its success cannot be avoided. (Biermann & Harsch, 2016)
Various studies have been conducted in order to understand the depth of RTD for businesses and organizations. RTD has been found to offer businesses a way to revive their declining profits and to offer a way to ensure their strategic alliances are strong.
It has been observed that only unhealthy and unequal transactions in the context of RTD are bad for an organization. In other aspects, organizations have been found to make various changes and adaptations to their framework, which allows for better understanding of elements and environmental pressures that affect its business. (Archibald, 2017)
With the cited literature in this paper, it is evident that the use of RTD offers evidence-backed results to an organization and its efficiency. The framework can be modified as per the business and its objectives. The use of RTD is primarily to ensure that the organization knows which resources to need and how to create a relationship.
However, there are other aspects that are affected by the same, which brings out harmony in its operations. Furthermore, the use of RTD has been attributed to competitive advantage. Businesses and organizations tend to gain a multitude of benefits as managers will be able to make use of better information, which is not possible through research alone.
Archibald, M. E. (2017). Resource dependency theory | Definition & Facts. In Encyclopædia Britannica. Retrieved from https://www.britannica.com/topic/resource-dependency-theory
Altholz, V. (2010). The advantages and limitations of developing an external perspective for analysing corporate strategic alignment. Economic and Environmental Studies, 10(01(13/2010)), 35–48.
Biermann, R., & Harsch, M. (2016). Resource Dependence Theory. Palgrave Handbook of Inter-Organizational Relations in World Politics, 135–155. https://doi.org/10.1057/978-1-137-36039-7_6
Findikli, M. A. (2019). Resource Dependence Theory, Firm Performance and Producers-Suppliers Relationships. https://doi.org/10.15405/epsbs.2019.01.02.14
Janse, B. (2020, February 14). What is the Resource Dependence Theory? Definition & more. Retrieved May 31, 2020, from toolshero website: http://toolshero.com/management/resource-dependence-theory-rdt/
Heatley, S. (2018, November 21). Resource Dependence Theory: The low-down. Retrieved May 31, 2020, from Perkbox website: http://perkbox.com/uk/resources/blog/the-low-down-on-resource-dependence-theory
Nienhüser, W. (2017). Resource Dependence Theory – How Well Does It Explain Behavior of Organizations? Human Resources, Labour Relations and Organizations, 192–219. https://doi.org/10.5771/0935-9915-2017-2-192
Sproul, Curtis R., "Clarifying Resource Dependence: A Multi-Dimensional Approach to Dependence and Autonomy in Entrepreneurial Firms" (2017). Graduate Theses, Dissertations, and Problem Reports. 6705. https://researchrepository.wvu.edu/etd/6705
Pfeffer, J. (2020). Open School of Management - Resource-Dependence Theory. Retrieved May 31, 2020, from Openschoolofmanagement.com website: https://www.openschoolofmanagement.com/resource-dependence-theory-management-theory
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