Resource Dependence Theory: Strategies to Control the Organizational Environment

The Organizational Environment and Resource Dependence

The environment refers to the set of forces surrounding an organization that can affect both its operations and its access to scarce resources. An organization attempts to manage these environmental forces to obtain the resources necessary for producing goods and services for its customers. Organizations depend on the environment to acquire essential resources, and the availability of these resources is influenced by factors such as the dynamism and abundance of the environment.

Resource Dependence Theory and Vulnerability

According to Resource Dependence Theory (RDT), the goal of an organization is to minimize its reliance on other entities for acquiring resources. Organizations that heavily depend on resources controlled by others become vulnerable. To manage this dependence, various strategies are implemented, categorized by the type of interdependency they address.

Managing Symbiotic Interdependencies

Symbiotic interdependencies occur when one organization's inputs are the outputs of another, such as between suppliers and distributors. Organizations use several methods to manage these crucial relationships:

1. Reputation: Building a trustworthy and respected image helps foster cooperation and reduce uncertainty in relationships with external parties.
2. Cooptation: This strategy involves neutralizing threats by turning external stakeholders into internal ones—for example, inviting representatives from other organizations to sit on the organization’s own board of directors (known as an interlocking directorate).
3. Strategic Alliances: These are formed between companies in the same industry and involve agreements to share resources to develop new opportunities. The more formal the agreement, the stronger the ties and the stricter the control over joint activities.

Formal Strategic Alliance Types

• Long-term contracts: Mainly aimed at reducing costs.
• Networks: Groups of organizations that coordinate their actions through agreements or contracts.
• Minority ownership: One company purchases a minority stake in another; this is more formal than previous types.
• Joint venture: Two or more organizations create a new jointly-owned company.

The most formal strategy is a merger or acquisition of a supplier or distributor, used when it is necessary to control a critical resource.

Managing Competitive Interdependencies

Competitive interdependencies arise between organizations that compete for scarce resources, increasing environmental uncertainty and threatening access to those resources. Organizations use various techniques to manipulate the environment and reduce uncertainty:

• Collusion: A secret agreement among competitors to share information for deceptive or illegal purposes.
• Cartel: An informal association of companies agreeing to coordinate activities.
• Third-party linkage mechanisms: When a regulatory body enables companies to share information and manage competition.

Strategic alliances can also be used to manage competitive interdependencies. Furthermore, mergers and acquisitions allow companies to expand and consolidate their organizational scope. However, antitrust authorities monitor these practices to prevent the formation of monopolies.