Notes on Davis, G (1992) Resource Dependency Theory

Chapter overview Critical review of development of theory and research on organizations and environments (1970-1980)s - Focusing on 6 influences
Approaches that study the environment and organizations interactions Thompson's Contingency theory Resource dependence Transaction costs economics Network approaches Focus on organization position in a larger network How exchange patterns affect activities Approaches that look at internal aspects of the organizations Organizational ecology New institutionalism

Less attention to static relationships among variables - Focus of analysis of researches: Larger than the organization
Network population Sector Patterns of change over time

Notes on the segment: Pfeffer and Salancik's Resource Dependence Theory Basic Premise
Extends the notion of environmental determinism even further than previous approaches Organization behavior can be explained by looking at the organization's context Organizations are adaptative Organizations are externally constrained and controlled Organizations are coalitions o Participants trade off their contributions for inducements provided by the organization o Manager is a "finagler" o Organizational goals are not given but negotiated The most fundamental goal is survival Organization is an open system, so survival requires importing resources from the environment The organization also seeks to maintain autonomy

Conception of environment
Impose constraints and create uncertainty Dependence of social actors is determined by three factors The importance of the resources The degree of discretion that the external actor has over the resource The concentration of the resource When the dependence is asymmetric, then the external actor has control over the organization

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Notes on Davis, G (1992) Resource Dependency Theory

Managing dependence
The organization copes with the dependence by compliance or adaptation Conditions facilitation compliance o Power is asymmetric o External organization has the legitimate right to use that power o The behavior of the focal organization is under its own control and is observable When an external actor is very powerful, it tries to eat the other organization Types of mergers o Vertical Responses to symbiotic interdependence Buyer-seller is very common o Horizontal This is the merger with competitors Response to commensalistic interdependence (competition for the same resources) o Conglomerate or diversification Response to high levels of dependency that cannot be managed in any other way Grow through merger will tend in the direction of the organization's most problematic dependencies. The organization also tries to avoid or managing influence attempts Negotiated environment Interfirm linkages

Critique
Empirical critique This theory has been performed at an inappropriate level of analysis However, it has been one of the most fruitful frameworks for organizational analysis Theoretical critique Unresolved difficulties from some fundamental ambiguities in its formulation Greater management always seeks environmental certainty? The maintenance of discretion and power drives managerial action?

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