Resource dependence is when one organization has to rely on another organization for a resource

SLIDE 3 Resource dependence is when one organization has to rely
on another organization for a resource. These resources can be for
things as obvious as financing or as subtle as recognition. Through
this resource dependence the organization with the resources is
given influence and power over the organization without the
resource. With this influence over others, organizations can do things
such as influence prices and encourage particular organizational
structures. So if one company maintains the majority of a resource,
then another company will become dependent on in order to operate,
creating a symbiotic relationship. So in this case, the firm’s central
goal is effectiveness in a context of environment. So it’s survival and
effectiveness.
SLIDE 4 However, for this to happen there must be few places where
the resource dependent organization can acquire the resource and
the resource must be valuable to the dependent organization.
So in this case we can say that resource dependence theory mostly
focus on relations with the external environment rather than ones
within the firm.
For example: An organic grocery store can only purchase organic
tomatoes from one local farm. Because the farm knows it is the only
local source of organic tomatoes, it pressures the organic grocery
store to also sell their bell peppers. The organic grocery store decides
to sell the bell peppers even though they are more expensive than
organic bell peppers other farms because they need to sell tomatoes
in their store.
SLIDE 5 There are 3 key aspects in this theory, which are – Social
context, which means that organizations are embedded (included) in
network of interdependencies and social relationships. Dependencies
are often mutual and sometimes indirect. Strategy, when
organizations seek to manage their environment and maximize their
autonomy, pursuing interests strategically. Power, which is the
internal and external actions of organizations, can be understood by
investigating who holds the power.
SLIDE 6 As we know that resource dependence theory is focused on
external environment. And as such this theory views organizational
conditions in a particular way. It presumes that there is
environmental determinism. Which means that organization’s
behavior can be explained by looking at the organization’s context
such as external constraints and control. It also assumes that an
organization’s specific goals are contingent on dependence
relations that keep it alive, so these are relationships that secure its
necessary resources. Within this context of resource dependencies,
the firm’s main goal is to find greater certainty so relationships
that persist and are clear and advantageous as well as autonomy, so
they are looking for relations that render them independent or in
control. Last, organizations are viewed as responding to resource
dependencies in at least two ways. They can either comply and
adapt to these dependencies or they can avoid and manage them.
SLIDE 7 So what are the core features of resource dependence
theory?
One of the most important features of the theory concerns the
resources involves and how they establish dependencies. To identify
resource dependencies, it helps to ask ‘What are the key resources in
an environment?” “Who controls the resources in question?
Resources come in a variety forms and they’re valued differently
depending on their importance and availability. And they differ in
terms of who has discretion and control over them. There are
various types of resources that firms depend on, such as physical
materials. These might be actual materials the organization builds a
product from. But firms may also depend on technical resources, like
information or knowledge as well. And last, they may depend on
social resources, like prestige and reputation that enable them to
survive.
SLIDE 8 All these resources can vary in value. On the one hand, the
value could differ by the importance of the resources. Is it in
demand? Is it valued? Does the firm need the resources to survive? Is
there a critical resource? For example: What does NTUST need to
survive? Does it absolutely need students? Does it require a physical
location, books, teachers, money, and food? What can it live without?
What can’t it live without? Is there a demand for safety, healthy food,
expert teachers, and awards? So what resources are considered most
and least important?
On the other hand, does the availability or supply of the resource
influence its value? Is the resource scarce? Do only some of the other
organizations have it? Are there alternatives to this resource or can
another kind of resource can be substituted for it? Let’s consider
NTUST again. What does it offer? What does NTUST offer that is
unique, that no one else can provide?
Discretion over resource also defines relations of resource
dependence. Discretion is defined in at least two ways, first who
controls the resource? Can the exchange partner dictate how you use
the resource? Does the government regulate the resource? Is your
firm dependent on the supplier for materials and funds?
Second, what controls dependencies? What laws are in place? What
are the copyrights or contracts and licenses that exist that prevent us
from sharing certain curricula? So resource dependence varies from a
variety of factors – there are different types of resources, and they
can vary in value due to their importance and availability. And then
certain actors and institutions can control discretion over those
resources. So important rare resources are of greater value. Moreover,
actors and institutions that have the greatest discretion over these
resources and the least amount of dependence will be more
autonomous and capable for forging certain relations with other
firms in the environment.