Resource Dependence Theory 2022

Running head: RESOURCE DEPENDENCE THEORY
Management Theory and Practice: Resource Dependence Theory
Author Name(s)
Institution
Author Note

RESOURCE DEPENDENCE THEORY 1
Introduction
The resource dependency theory provides an explanation of how organisations rely on
each other for the supply of the necessary resources. In this case, resources can be anything that
is key to an organisation’s operations. Among the resources include the raw materials that the
organisation requires for its processing, technology, workers, or funds. Dependency arises where
the output of one company becomes the input of another company. To a larger extent, over-
reliance on one company for the supply of resources creates uncertainty of the company
progress. That is, the uncertainties of the production of the output will affect any other company
that relies on that output for its input. The purpose of this paper is to discuss the resource
dependency theory by showing interactions between organisations. The paper will also discuss
ways in which a firm can minimize dependency.
The Basic of Resource Dependence Theory
The Resource Dependence Theory (RDT) is a theoretical framework that originated with
Pfeffer and Salancik’s in their 1978 analysis which they later republished in 2003 (Pfeffer &
Salancik, 2003). Since its publication, RDT has been used by different scholars to explain the
structure and performance of different organisations. Also, in the realm of organisational
theories and studies in strategic management, RDT has been taken as an important theory in
explaining the interaction between the organisations and their external environment (Hatch,
2018). The basic rationale in RDT is that a study of an organisation’s inter-organisational
network is an important approach for the managers who aspire to understand the organisation
power and how far does it depend on the existence of other organisations (Scott & Davis, 2015).
According to (Pfeffer & Salancik, 2003, p. 1), “to understand the behaviour of an organisation
you must understand the context of that behaviour which is the ecology of the organisation.”

RESOURCE DEPENDENCE THEORY 2
The knowledge of the interdependency allows the organisation executive to anticipate the
environmental factors that influence the success of the organisation. The theory further suggests
the various ways an organisation can mitigate some of the vital influences created by the
interdependence. On analysis, an organisation stays in the interdependency network due to the
supply of vital resources which could be raw materials, capital, labour, knowledge, equipment,
and channels for selling its final products. This is the organisational environment from where it
derives its power. Figure 1 demonstrates an example of such interdependency network.
Explaining RDT through Organisational Interaction
For a better understanding of the theory, this paper takes the example of a fictional Candy
Company Ltd that makes Candy products.
Figure 1
On analysis, RDT characterises an organisation as existing within an open system. For its
survival, the organisation depends on eventualities that exist within the external environment.
According to Pfeffer and Salancik (2003), it requires one to understand the organisation’s
ecology to understand its behaviour. For instance, in making Milk Candy (Figure 1), the
Sugarcane
Farmers
Sugar
Company
Milk Candy
Company
Milk Powder
Company
Daily
Farmers
Stores &
Distributors