Organization Theory-Week 4

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9 Νοε 2013 (πριν από 3 χρόνια και 1 μήνα)

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Organization Theory
-
Week 4

Reena Uppal

The Resource Dependence Theory (RDT)

contributes a political perspective to organizational analysis
and explains why firms undertake cooperative strategies and establish ties with other firms with
whom they share the supply of resources and human competencies. Pfeffer and Salancik criticized

previous studies of organizations as too focused on the internal working of the organizations and
for
having ignored the political dimension. They suggest that in order to understand the actions and
choices of organization
,

one needs to look beyond the be
liefs and values of organization leaders and
more on situations in which the organization exists and the pressures and constraints resulting in
the situation.
RDT depicts the links among organizations as power relations based on resource
exchanges and depe
ndencies. The
RDT model is presented as a model of political struggle

different
organizations seeking to influence each other to gain advantage. They describe similar struggle
within the organization between different members.

RDT
is based on
the following

assumptions: 1) Organizations need access to resources to
meet their
goal
s.
2)
Organizations co
mpet
e for

scarce resources as the environment
present
s

uncertainty in
resource acquisition
.

3) Organizations try to minimize
this
uncertainty in order to surviv
e
.

Resource dependency is an open
-
system the
ory that states


all organizations exchange resources with
the environment as a condition for
survival

.
The theory is concerned about the relationship of an
organization with the
set of actors in its environment
.
It describes how organizations face
competitive pressures and may depend on, or be impacted by, other actors in the environment for
its survival. RDT

focuses
on the

organization
’s need to access resources from other actors in the
environment and describ
es how resource scarcities force organizations to
build coalitions with other
organizations
.
The

major
underlying principle

of
RDT is resource scarcity

that results

in multiple
organizations c
ompeting for the same

pool

of scarce resources.
This creates a resource dependency
such that

firms

are dependent upon other organizations

in the immediate “task environment” to
obtain resources. The
theory predicts that the

organization will
attempt
to reduce or increase its
level of reliance on those a
ctors

so as to minimize uncertainties around accessing the needed
resources

th
rough actions such as alliances
.

Organizations facing substantial environmental
uncertainty will attempt to minimize it by pursuing inter
-
organizational ties. At the same time,
r
esource scarcities may force organizations to pursue new innovations that use alternative
resources.
In other words,
organizations work toward two related objectives: 1) to minimize their
dependence on other organizations and 2) to maximize the dependence
of other organizations on
them. Attaining either objective is predicted to affect the exchange between organizations, which in
turn affects an organization’s power.


According to RDT,

decisions made inside the organizations are a result of pressures from
the
environment.
Organizational a
ctions cope with uncertainty resulting from dependence.
The need
for external resources

financial, physical and informational makes the
organizations dependent on
the

sources of these resources.
First, o
rganization’s focus

i
s not just on products and customers but
also suppliers and other players
in the environment that affect

the flow of resources to the
organization. In light of th
e constraints, organizations have

the option of negotiating with other
entities to pursue th
eir own interests.

Secondly,

a
s the organizations negotiate and/or try to alter
their environment, new sets of constraints and interdependencies result. There is what Pf
ef
fer calls

a dynamic interaction and evolution of
environments resulting in
organizations and inter
-
organizational relations over time as organizations
make

choices as to how best
to
survive

.
Thirdly,
resource dependency theory addresses the importance of power over efficiency and rationality in
understanding the inter
-

and intra
-
organizational behaviors. In the environment of
interdependence
, not all organizations are equally powerful. Some have more power than others
due to the nature of interd
ependence (multiple suppliers and

one buyer) and their importance/
role
in

social space
.

These external re
source dependencies also create

internal power differentials
among sub units/people in the organiz
ations. The sub unit that plays

the most critical role in
survival, by managing the environment
al dependencies and hence reducing

un
certain
ty, i
s more
powerful.

These power differentials may change depending on the changes in the environment.

So
the resource dependence perspective applies both inside and outside the organization.

Role
s

of manager

In this perspective,
managers make

some
choic
es
within the given environmental constraints
.
Managers
try to acquire resources without creating difficult dependencies.
Three roles of a manager are
discussed

symbolic, responsive and discretionary. In the symbolic role, outcomes are determined
by the en
vironment and managers are merely a symbol of control.
In the responsive role, the
actions are taken in response to the constraints in the environment. In the discretionary role, the
focus is on altering the system of constraints and dependencies in the e
nvironment.

RDT discusses some implications on aspects of organization design: 1) scanning systems to keep up with
the information on changes in the environment, 2) loosening dependencies (diversification), 3)
managing conflicting demands and constraints

(sub units that are loose coupled, use of slack
resources), 4) chief executive positions.

RDT has im
plications regarding the divisional

structure of organizations, recruitment of board members
and employees, production strategies, contract structure, exte
rnal organizational links, and many
other aspects of organizational strategy.

The
RDT
theory does very little work to explain the internal structure and workings of the organization.
The theory's major limitation is its assumption that organizational beha
vior and structures are
shaped primarily by
external environmental

forces; it does not recognize the role of cultural and
ideological forces on the structure of the organization.

Comparison with other Organization Theories

Both RDT and P
opulation
E
cology
theory

emphasize the importance of environment for understanding
organizations. Key differences

from PE

While PE takes selection processes resulting from
competition as a given
,

RDT

adaptation

is bidirectional and
emphasizes
more on

1)
the
phenomenon of
o
rganizations altering their environments
, 2) organizations changing and adapting
in response
to the

environment 3) organizational decisions on structure and behavior
. In addition,
PE
does not explain internal organizational dynamics su
ch as power different
ials and implies

longitudinal lifecycle of organizations due to its stress on births and dea
ths processes and the notion
of resistance to change.

In comparison, RDT
predicts dynamic changes
as organizations engage in
strategic actions
in response to change
s in environmental constraints.

Bo
th
RDT and Structural Contingency Theory (SCT)
uphold the adaptive a
pproach to external
environment

differences among organizations result from deliberate changes in strategy and
structure in re
s
ponse to changes in environ
ments. Managers are able to make decisions to ensure
functioning and survival of their organizations.

Structural contingency view seems to consider entire
organization’s structure

adjustments

where as RDT is concerned primarily with the boundaries

relation
s with suppliers, clients etc. The main focus
in RDT
is on boundary arrangements like PR,
legal and suggests that the rest of the organization (the tech core) is shielded from the environment.

SCT sees envir
onment

somewhat objectively where as in RDT environment is how the managers
perceive and manipulate it.

These theories adopt different positions on level of discretion of the manager, they all agree on the
change using adaptation concept. Explicit focus on chang
e differs among the theories.
In
SCT
managers are rational decision makers responsible for modifying org
anization
’s
characteristics in

order to adapt to its environment.

The change may be gradual and reactive to environmental
changes.

According to the Stra
tegic Management theory (SMT), manager’s role is to make
proactive
discrete choices of change in strategy to achieve strategic fit in the environment. Managers have the
total power and choice to make the changes and are only partially constrained by enviro
nment.
Ideology, expectations and power play the most important role
-
extreme
voluntary vs deterministic

sp
ectrum
.
RDT is in the middle of this spectrum.

Manager is seen as a manipulator of constraints
and of the social setting

and

seem
s

to have a planned r
esponse to preserve autonomy in light of
environmental constraints.