orgtheory.net

reviving resource dependence theory

A while ago I asked, “what happened to resource dependence theory?” Although resource dependence theory seemed to be the dominant macro-organizational theory of the late 1970s, by the early 1990s the theory was eclipsed by institutional theory and population ecology. In the previous post, I offered some reasons for why this might have happened, but I stopped short of doing any serious analysis or a literature review.  So I was happy to see that Tyler Wry, Adam Cobb, and Howard Aldrich have a paper in the latest Academy of Management Annals that tackles this question and offers some thoughts about the future of RD theory.  Based on their analysis, the problem is worse than I imagined. Not only is RD theory cited less than those other theories, but it also seems to be the case that most citations to RD theory are fairly superficial. On a positive note, RD theory has become associated with a few fragmented communities of scholars who were interested in studying the particular strategies that Pfeffer and Salancik suggested actors/organizations ought to take when seeking to gain control over dependencies. From the Wry et al. paper:

[W]e conducted a systematic analysis of every study that cited External Control in 29 highly regarded management, psychology, and sociology journals between 1978 and 2011. Given the breadth of empirical domains covered by RD, our analysis focused on identifying how, and to what extent, each article used the perspective. Our results indicate that there is merit in Pfeffer’s assertion that RD serves primarily as a  metaphorical statement about organizations. Though External Control continues to be cited at an enviable rate, the vast majority of citations are ceremonial—variously used as a nod toward the environment,  resources, or power. Results also show that beneath an ever growing citation count is a fragmented landscape of scholars whose primary interest is in the specific strategies discussed in External Control —mergers and acquisitions (M&A), joint ventures and strategic alliances, interlocking directorates and executive succession—rather than the underlying perspective….To say that RD has been reduced to a metaphorical statement about organizations, however, belies its considerable impact. Indeed, while RD lacks a coterie of followers and has failed to catalyze a dedicated  research programin the vein of NIT or OE, it has had a uniquely broad influence within management scholarship. Scholars have drawn on RD to derive key hypotheses in the study of M&A’s, joint ventures and  strategic alliances, interlocking directorates, and executive succession, with the hypotheses largely supported (Hillman, Withers, & Collins, 2009).

They also suggest that its time to revive RD theory in organizational analysis. Why should we do that?  Well, because RD theory offers an actual theory about power relations inside and between organizations, a dynamic that is sorely missing from institutional theory.  RD theory might also enrich our understanding of environmental complexity. Whereas institutional theory boils everything down to scripts and logics, RD theory suggests we also ought to consider the power differentials between the carriers of these scripts and logics, which ought shape how practices and cultural stuff gets diffused or implemented at the organization-level.  Thus, RD theory has promise for helping explain sources of institutional complexity.

[W]e believe that RDs influence has far from run its course. Although External Control is remembered primarily for its insights about power and dependence, its most distinctive contribution was arguably to  theorize environmental complexity in an empirically tractable way. That organizations face complex environments is a hallmark of open-systems perspectives (Lawrence & Lorsch, 1967; Thompson, 1967) and once again, theorizing, defining, and measuring environmental complexity has become a burgeoning area of inquiry for organizational scholars using an institutional logics framework (Greenwood et al., 2010;  Pache & Santos, 2010). Problems arise, however, when trying to account for the mechanisms that link logics to imposed external constraint. Thus, studies in this milieu risk misspecifying the complexity that logics create for an organization. In comparison, RD suggests that interests are not simply the result of coalition members’ location in institutional space and that complexity emerges when groups have different interests in a particular issue and also hold power over a focal organization. In short, rather than viewing “competing logics” as the source of complexity, RD helps to account for complexity in terms of  organizationally proximate and empirically measurable power dynamics.

It would be a worthwhile change if the only thing that resulted from a revival of RD theory was that organizational scholars became more sensitive to power dynamics. I’m starting to feel like the bad guy reviewer lately who has to point out to authors that organizational politics and power dynamics may be a reasonable alternative interpretation of their findings. I’m surprised at how often authors immediately get sucked into a cultural argument without even considering the possibility that interests and resource dynamics might matter a bit.  It seems odd given that so many of these studies are done in empirical settings where interests, politics, and struggles for resource control are readily apparent.

Written by brayden king

May 6, 2013 at 9:30 pm

7 Responses

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  1. Interestingly, Wry et al. do not cite one of the most influential books written out of an RD perspective: Christensen’s “Innovator’s Dilemma”. And his argument that success breeds failure because firms depend on external value networks that make it difficult to recognize and/or react to disruptive innovation adds another dimension to the power dynamics argument you are making.

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    leonidobusch

    May 6, 2013 at 10:45 pm

  2. Serious question: what theoretical leverage does P&S 1978 give me that Emerson (1962) does not? Aside from changing the unit of analysis. It’s probably something really obvious, but I’m feeling the psychological safety right now.

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    haastalavista

    May 7, 2013 at 1:42 am

  3. This may be wildly off, but is RD much different than path dependency? Path dependence is the core of one of my truly favorite articles “The Ascendance of New York Fashion” by Rantisi (2004). Maybe path dependency is at more of an urban level and RD is more intra-organization?

    Also, I’m thinking of doing a Foucault thing in my dissertation and in the early stages of a lit. review it’s like Foucault fell out of fashion mid-1990’s and took “power” with him. It’s like you can’t say power without conjuring Foucault and then suddenly relativist mud pies are flying through the theoretical air.

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    Emily Kennedy

    May 7, 2013 at 4:15 am

  4. After teaching a few cohorts of grad students, I have a hypothesis. RD was surpassed by neo-institutionalism because neo-inst offered a rejection of rational choice and an embrace of culture. These are very appealing features to modern sociologists.

    And it’s odd. Just today a very bright grad student offered an RD argument and simply could not make the connection to RD theory. Modern students read a lot of institutionalism and relatively little else.

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    fabiorojas

    May 7, 2013 at 4:34 am

  5. Like said, to me the some arguments in Wry et al. (2013) read like a sociopolitical legitimacy (Aldrich & Fiol, 1994) or pragmatic legitimacy (Suchman, 1995) especially when they argue for the integration of RDT approach to institutional theory. Personally their re-analysis of Greenwood et al. (2010) from the perspective of RDT seem not to add much, still leaving a room for ambiguity and arbitrarily about which groups/coalitions drive lay-off decision.

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    jaylee

    May 7, 2013 at 5:57 am

  6. Thanks everyone for your comments and questions.

    @leonidobusch: we only analyzed journal articles and not books. You are correct that the book makes a few references to resource dependence theory, although I’m not sure how I’d go so far as to claim that Christensen is writing out of an RD perspective. Interestingly, I have noticed in the course of writing this paper that I now notice authors making arguments that are consistent with the RD perspective that are not really RD papers.

    @haastalavista: as we tried to articulate in the article, RD blended insights from a variety of perspectives that were prominent at the time of its formation (see pages 442 to 446 in the article). Personally, I love the Emerson piece and recommend it to anyone studying RD as Pfeffer & Salancik’s theorization of power are extrapolated from Emerson. The argument we attempted to lay out in the paper is that External Control contains within it both a theory of power (that is Emersonian) and a theory of the environment. It is that theorization of the environment and that it is combined with the theorization of power that is unique.

    @fabio: Curious as to your thoughts on this … many sociologists also care about power, but RD has never been a big hit among sociologists (at least in terms of the citations within sociology journals. Furthermore, an earlier paper I did with Jerry Davis shows that citations of Emerson’s classic has waned in sociology journals as well). Why do you think that could be the case? I agree that modern sociologists love the warm embrace of “culture”, but couldn’t causality be running the other direction — as NIT became increasingly popular, new generations of scholars are drawn to the light?

    @jaylee: The purpose in using the Greenwood article was to illustrate what the theorization of that paper may have looked like had it begun with an RD versus a logics perspective, with the goal being, this is how an RD perspective informs our conceptualization of environmental complexity. We were not attempting to be exhaustive in all the factors that go into a downsizing decision. However, the fact that we discuss the phenomenon in terms of groups/coalitions, their interests, and their sources of power is distinct from the perspective taken by Greenwood and colleagues. Anyway, Royston edited the Annals piece and he seemed to like it! And honestly, our goal was to get people to read the thing, think about our arguments, and have a discussion about it. So I think I can speak for Tyler and Howard when I say we appreciate the fact you read it!

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    jadamcobb

    May 8, 2013 at 10:27 pm

  7. A bit nasty picking Greenwood et al. (2010) paper, which really comes off as an attempt to create a story to quantitive dataset. It is not representative of the quality of Royston’s work, in my opinion. :)

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    Henri

    May 9, 2013 at 9:33 pm


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