Resource Dependence Theory

Pfeffer and Salancik (1978) devised the resource dependence theory to explain how organisations’ behaviour is affected by the external resources they possess.

They propose that firms change, as well as negotiate with, their external environment in order to secure access to the resources which they need to survive. This means that a firm’s competitiveness is determined by the way they deal with their external resources. Van Weele (2018) believes that this is, in fact, more important than their internal resources.

Implications of Resource Dependence Theory

As procuring external resources is important for the strategic and tactical management of any company, resource dependence theory has several important implications. These relate to: the optimal organisational structure, recruitment of board members and employees, production strategies, contract structure, external organisational links, and other aspects of organisational strategy.

The premise of resource dependence theory can be summarised as follows:

• Organisations respond to the demands of elements in the environment that control critical resources.
• These resources ultimately originate from an organisation’s environment.
• The environment, to a considerable extent, contains other organisations.
• The resources needed by a particular organisation are therefore often in the hands of other organisations.
• Resources are a basis of power.
• Legally independent organisations can therefore depend on each other.
• Power and resource dependence are directly linked. For example, organisation A’s power over organisation B is equal to organisation B’s dependence on organisation A’s resources.
• Power is relational. In other words, it concerns how different organisations are connected.
• Power is also situational. In order words, it is dependent on what is happening at a particular time.
• Power is potentially mutual, so organisations may be reliant on each other to possess it.
• Managers attempt to manage their external dependencies to ensure survival and acquire more autonomy.

The resource-based view of the firm is concerned with the management of a firm’s internal resources and capabilities, which may satisfy external stakeholders of the firm. In the resource dependence theory, however, the firm’s dependence on other external parties, such as suppliers, is central.

References

_{Pfeffer, J., & Salancik, G. R. (1978). The external control of organisations: A resource dependence perspective. Harper & Row.}

_{Van Weele, A. J. (2018). Purchasing and supply chain management (7th ed.). Cengage Learning.}