Resource Dependence Theory

Resource beence supposition(RDT) is the study of how the international imagings of validations affect the behavior of the organization. The procurement of external resources is an important tenet of both the strategic and tactical way of whatever company. Nevertheless, a theory of the consequences of this importance was not formalized until the 1970s, with the publication ofThe external Control of Organizations A Resource Dependence Perspective (Pfeffer and Salancik 1978).Resource addiction theory has implications regarding the optimal divisional structure of organizations, recruitment of board members and employees, production strategies, reduce structure, external organizational links, and many other aspects of organizational strategy. The basic air of resource habituation theory squeeze out be summarized as follows * Organizations depend on resources. * These resources ultimately originate from an organizations environment. * The environment, to a considerable extent, contains other organizations. * The resources unrivaled organization needs are thus often in the go on of other organizations. Resources are a basis of power. * Leg on the wholey independent organizations can therefore depend on each other. * major power and resource dependence are directly linked Organization As power over organization B is equal to organization Bs dependence on organization As resources. * Power is thusrelational, situational and potentially mutual. Organizations depend on multidimensional resources labor, capital, raw material, etc. Organizations may not be able to come out with countervailing initiatives for all these multiple resources. Henceorganization should move through the principle of criticalness and principle of scarcity.Critical resources are those the organization must have to function. For example, a burger handout cant function without bread. An organization may adopt various countervailing strategiesit may connect with much suppliers, or i ntegrate vertically or horizontally. Resource dependence concerns more than the external organizations that provide, distri entirelye,finance, and compete with a firm. Although executive decisions have more individual weight than non-executive decisions, in aggregate the latter have great organizational impact. Managers throughout the organization understand their success is tied to ustomer demand. Managers careers spread out when customer demand expands. Thus customers are the ultimate resource on which companies depend. Although this seems obvious in terms of revenue, it is actually organizational incentives that make management see customers as a resource. Resource dependence theory is 1 of many theories oforganizational studiesthat characterize organizational behavior. In many ways, resource dependence theory predictions are similar to those oftransaction cost economics, but it also shares some aspects withinstitutional theory.