Resource Dependence Theory: A Review

Abstract

Thirty years have passed since Pfeffer and Salancik's seminal work on resource dependence theory (RDT). During this time RDT has been applied broadly across the research domain to explain how organizations reduce environmental interdependence and uncertainty. In this review, the authors assess the conceptual development, empirical research, and application of RDT. They structure their review around the five options that Pfeffer and Salancik propose firms can enact to minimize environmental dependences: (a) mergers/vertical integration, (b) joint ventures and other interorganizational relationships, (c) boards of directors, (d) political action, and (e) executive succession. The authors summarize past work, synthesize contemporary thought, and propose future research directions.

How powerful political ties appropriate resources and how weaker organizations protect themselves: A case study from Indonesia

“…Further, the mutual dependencies changed as the partnership progressed, as predicted by RDT (Hillman et al, 2009). The business model adopted relied on farmers who were loyal to the local tie.…”

“…RDT, originally developed by Pfeffer and Salancik (1978), and a continued source of inspiration for management scholars (Christensen, 1997;Hillman et al, 2009;Lux, Crook, & Woehr, 2011;Wry, Cobb, & Aldrich, 2013), highlights that organizations experience dependence as they need resources located outside the organization, and that influencing and responding to such external dependencies is a key task of management. Forming linkages with outside parties is a coping mechanism as these ties provide advice, information, access to resources and legitimacy (Pfeffer & Salancik, 1978).…”

“…Therefore, organizations with external ties face a risk of their partners appropriating their resources (Gulati & Singh, 1998), necessitating controls, in particular in cases of power imbalance. Much of the earlier literature on this looked at antecedents of tie formation such as the opportunity to reduce competition; managing dependences on buyers or suppliers; or opportunities for diversification to reduce dependences, in particular focusing on situations such as mergers, joint ventures and co-optation of power-holders (see Davis & Cobb, 2009;Hillman et al, 2009 for a review). Later extensions of resource dependence have advanced our understanding of the dynamic nature of dependencies (Hillman et al, 2009;Xia, 2011) and the defense mechanisms that organizations can build to deal with appropriation concerns after the tie-formation stage (Inkpen & Currall, 2004;Kirsch, 1996).…”

“…Much of the earlier literature on this looked at antecedents of tie formation such as the opportunity to reduce competition; managing dependences on buyers or suppliers; or opportunities for diversification to reduce dependences, in particular focusing on situations such as mergers, joint ventures and co-optation of power-holders (see Davis & Cobb, 2009;Hillman et al, 2009 for a review). Later extensions of resource dependence have advanced our understanding of the dynamic nature of dependencies (Hillman et al, 2009;Xia, 2011) and the defense mechanisms that organizations can build to deal with appropriation concerns after the tie-formation stage (Inkpen & Currall, 2004;Kirsch, 1996). Research suggests that one way to deal with appropriation concerns is through careful management of organizational boundaries (Dieleman & Boddewyn, 2012;Katila et al, 2008).…”

“…Researchers employing resource dependence theory (RDT) in particular have shown that risks are prevalent when there is a power imbalance, as powerful partners may appropriate organizational resources (Casciaro & Piskorski, 2005;Emerson, 1962;Gulati & Singh, 1998;Pfeffer & Salancik, 1978). Although considerable research has advanced our knowledge of the conditions under which organizations seek partnerships (e.g., Hillman, Withers, & Collins, 2009;Katila, Rosenberger, & Eisenhardt, 2008), we know much less about the mechanisms by which powerful partners appropriate resources (Mellahi, Frynas, Sun, & Siegel, 2016;Xia, 2011) and, in turn, how weaker organizations can seek to protect themselves (Katila et al, 2008). This is important as smaller firms increasingly enter new markets and must partner with larger (and sometimes) state linked partners creating relationships that need to be carefully managed (Young, Ahlstrom, Bruton, & Rubanik, 2011).…”