L10: Relational Flashcards
Lounsbury, M., & Gehman, J. (2024). Concise Introduction to Organization Theory: Resource Dependence Theory
Pfeffer and Salancik (1978): The environment has mulitiple organisations with their own interests (called environmental complexity).
Focus on power: if you control ressources that is vital for someone.
Purpose (stability): Reduce dependence to others and make other dependent. (M&A, alliances…)
Firms not only seek ressources BUT also legimacy in the industry (institutional theory).
Wry, et al. (2013). More than a Metaphor
How managemnt actually use RD?
The original book on resource dependence by Pfeffer and Salancik focused on top-down to deal with RD (1) mergers and vertical integration, 2) joint ventures and interorganizational relationships, 3) and political action and lobbying).
Focus of the paper
How management actually use RD?
Systematic analysis of RDT.
Resultats show that RDT lost its popularity and was then mostly used ceremonially. The focus was in specifik strategies (M&A, etc.)
Strategies: 1) hide demands, 2) change dependency (M&A), 3) negotiate (joint venture / SA), 4) government regulations
Bottum-up approach
RD focuses on bottum-up from organizations (opposite to NIT)
1) identify interested parties in the environment
2) determing their interest
3) analyze sources of power
4) how are groups interconnected
Casciaro & Piskorski (2005). Power Imbalance, Mutual Dependence, and Constraint Absorption
Power Imbalance: One organization holds more control over critical resources than another.
Mutual dependence (good for cooperation): two organizations rely on each other for critical resources.
Constraint absorption: gaining control over resources that used to create dependencies to the dependent actor (M&A, SA, etc.). Figure 1:
- Power imblance is bad: The one with power don’t want to change status quo and benefit other)
- Mutual dependence is good: Mutual interest in enhancing the other –> both benefits
Responses to dependencies
Power use operations: Dominant actor influence another to get extra power/value. (dominant organizations get in smaller boards –> influence decisions)
Power restructuring operations:
- Unilateral restructuring operations – performed by only one part of the dyad -> seeking autonomy (alternative suppliers)
- Bilateral restructuring operations – performed within the dyad -> smaller firm give ressources and bigger firm don’t use power.
Nvidia Case
Nvidia are thriving (increasing demand for generative AI).
Nividia is so big that their largest customers (Google, Apple…) seek to reduce dependency. This could be In-House Development, strategic alliances…
Novo Nordisk case
The growing influence of the Novo Nordisk Foundation (financial power) –> incluence on politics and research (funds certain health projects - which removes focus from others).
Danish Universities/institutions and thh governement rely on NN, but if they want to explore other projects: seek other funding, internal capabilities, regulatives
