Resource Dependency Theory: Renaissance and Extensions — A Conceptual Basis
18 Pages Posted: 5 Mar 2012 Last revised: 26 Oct 2013
Date Written: March 3, 2012
Resource dependency theory is one of the two resource based perspectives in Strategic management which have contributed significantly to its literature. It explains the impact of environment on a firm in terms of resources and how firms can use tactics to manage this impact. This perspective has always looked at organisation or firms as the unit of analysis, maintained an external perspective and therefore tried to fathom the inter-organisational actions of a firm in terms of mergers, acquisitions, vertical integration, board interlocks and succession planning. However, this perspective faces the problem of poor empirical support and inappropriate operationalisation of its key concept.
This paper takes the view that this perspective has been plagued by the field’s reluctance to go for processual research and emphasize research on implementation. This has led to use of cross sectional studies, non use of intervening outcome variables and poor linkage of the key concept of resource to its utility. The key question the field needs to answer is how do the qualities of resource make it valuable and therefore confer power or necessitate the control of such a resource.
This paper takes a Penrosian view that all resources are bundles of services. It proposes that VRIN like qualities of a resource stem from the utility it serves and the criticality of such a utility. This defines the degree of dependence, a firm will experience and therefore the firm actions are towards the management of such a dependency. It treats Power and dependencies as distinct concepts and links them by defining Power as the exercise of influence to leverage control over Critical resources for the advantage of parent firm in an exchange. It also states that management of dependencies need not always involve use of power.
Thus it rejuvenates the resource dependency perspective by linking it to implementation and takes an internal perspective of a firm. It thus extends the concept of resource dependency to implementation, actions which need not involve exercise of power.
Keywords: Renaissance of RDT, Penrose, VRIN like resources, Implementation, Non power based actions
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