resource-dependence-theory

What is Resource Dependence Theory? Resource Dependence Theory In A Nutshell

Resource dependence theory was first introduced in the 1970s in a publication entitled The External Control of Organizations: A Resource Dependence Perspective. Resource dependence theory (RDT) is the study of the impact of resource acquisition on the behavior of an organization. In the publication, authors Jeffrey Pfeffer and Gerald R. Salancik argue that resources are key to organizational success. However, an organization does not always have control over the resources it needs and must devise strategies that sustain access.

Understanding resource dependence theory

Resource dependence theory notes that those who control critical resources have power, and power influences behavior. Similarly, the behavior of an organization with a dependence on these critical resources is also influenced. 

Resource dependencies can relate to raw materials, labor, and capital to name a few.

Foundational assumptions of resource dependence theory

RDT is based on three core assumptions:

  1. Organizations contain internal and external actors that influence and control resources and by extension, behavior. For example, how abundant are the resources? How much competition is there? How easy are the resources to acquire? Is there a more cost-effective acquisition method?
  2. The environment contains valued resources essential to the continued operation of the organization. Uncertainty develops around resource acquisition for those who do not control access.
  3. Organizations work toward two core objectives. They must seek to minimize dependence on critical resources from other organizations. They must also increase the dependence that other organizations have on them for resources. Achieving either of these two objectives has benefits for the power level of the organization

Factors that determine organizational dependence

Pfeffer and Salancik also identified three factors that determine the degree of dependence of one organization on another:

  • The importance of the resource – defined as the extent to which the organization relies on a resource for its continued viability. Such resources are valuable in that their removal from business operations would cause rapid and serious harm.
  • The extent of discretion over the use or allocation of the resource by the controlling company.
  • The availability of alternative resources or the concentration of resource control. How many companies control the majority of the resources?

Based on these factors, the business can minimize resource uncertainty by tweaking processes, relationships, and structures. Identifying substitute resources or establishing a supply from multiple sources are effective ways to reduce dependency.

If a business has the necessary capital, resource dependency can also be addressed by mergers or acquisitions. In this instance, each entity develops resource interdependence – which is a more favorable scenario when compared to complete dependence on either side.

Key takeaways:

  • Resource dependence theory describes the impact of resource acquisition on the behavior of a company.
  • Resource dependence theory argues that organizations with the most access to critical resources exert power and influence over those with less access.
  • Resource dependence occurs when an organization has little control over a resource it deems crucial to daily operations. Dependence can be reduced by identifying multiple resource suppliers and adjusting internal processes and structures.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"