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Resource Dependency Theory

Question:

Discuss about the Determinist Theories.

The determinist theories applied within the context of an organization helps in bringing about the suitable changes within the organizational framework.  The approach undertaken over here could be justified using different school of thoughts and accepted standards. It further consists of a number of theories such as resource dependency theory, institutional theory and population ecology. The strategic management focuses upon providing the company with a competitive advantage over others.

The determinist theories on the other hand focus upon long term growth or evolution of the organization as a whole. There are three different theories covered under the determinist approaches such as the institutional, resource dependent and population ecology theories.  As commented by Wollmann & Steiner  (2017), the institutional theory is particularly useful in conducting a research upon the changing market dynamics. The population ecology further helps in analysing the social, economic and political considerations, which further affects the work process of an organization.

According to Drees and Heugens (2013), the resource dependency theory is an important component how the determinism principles that is applied within an organization. The purpose of this theory is to focus upon the external resources that have direct and indirect impact on the organizational performance. .Pfeffer and SALANCIK (2015), have added in this context that it is essential for an organization management to procure all necessary resources that can help to manage all type of critical situation. It is crucial to analyze the external environment, which is an essential step to determine and analyze the available resources. One of the most popular aspects of this theory is due to the fact that it allows one organization to depend upon available resources of other organization in the same business environment. In other word, it is possible to legally develop business partnership by sharing the available resources (Nienhüser, 2017).

Few of the important resources that are an essential part of all multinational corporations include capital, labor and raw material supply that is dependent upon the performance of the Logistic department. The option of business outsourcing process from third party agent is also possible in accordance with the principle of resource dependence theory. Hence, it is possible for legally independent business organization to depend upon other institutions for getting supply of better resources. Large scale multinational organization hiring workers from business Processing Unit is one of the popular example of the application of this theory.

Institutional Theory

Nevertheless, as mentioned in the argument of Malatesta and Smith (2014), one of the major challenges in implication of resource based theory is due to the fact that in many cases large scale business organization can adopt unethical business policy to procure their own resources. This can be a highly challenging for small scale business organization. Moreover, as in most cases, organizations are dependent upon external agents for research supply; they are not able to implement independent organizational business strategy under all circumstances.

The main aim of the institutional theory within an organization is to provide a complex overview of structure and functioning and operational management. There are certain legitimate elements that control the elements of institutional theory within an organization. According to Vayanos and Woolley (2013), there are certain critical conditions within an organization, which help to determine the importance of institutional theory, which can rapidly help to implement the radical ideas related to organizational structure.

Keohane, and Martin (2014), have mentioned about the challenges associated with application of institutional theory due to the fact that organization have to assume and grant for certain objectives. It is believed that the social structure of a culture is reflected with in elements of the institutional theory. It thereby provides guideline to the management` about maintaining cultural diversity within an organization. According to MacCormick and Weinberger (2013), is one of the popularly widely except theoretical element that is dependent upon the isomorphism and legitimacy of a given situation within the society. It mainly emphasizes upon the legal aspect of the organizational structure.

On the other hand, Wang et al., (2014), have argued about the fact that one of the main challenge of institutional theory is due to the fact that organization have to change their protocol depending upon changes in the economy and social structure of a community. This is mainly challenging for multinational corporations, which have to deal with business and social environment of different nation all across the globe. It is therefore highly essential for the multinational organization to have effective human resource policy to implement a perfect institutional theory depending upon social and economic circumstances. From the research work of Grob and Benn (2014), it is clear that if a multinational corporation is successfully able to tackle the diversity in the social structure in different places and market, it is possible for them to implement the principles of institutional theory that can help them to maintain a proper and unique organizational structure.

Population Ecology

The population ecology of organizational Ecology theory is a sub section of organizational theory that helps to determine the situation under which an organization is able to emerge, sustain and perish under certain situations. According to Allen and Starr (2017), the population Ecology theory analyses the level of integration within a society and that help them to accomplish organizational goal. The main aim of this theory is to focus upon the needs of individual stakeholder within an organization.

Abbott et al., (2016), have mentioned that it is important to focus upon a particular type of population and collect various relevant data about their social and cultural aspect. This will be used exclusively for implementing organizational theory within the certain group of the population. It is also important to focus up on that changed within a society at various levels can help to affect the overall performance within an organization. The major implication of the social theory is to ensure sustainability within the business environment that can be employed in broader prospect under various critical conditions.

From the findings of the research work of Allen and Starr (2017), it is clear that the elements of population Ecology theory are valuable aspect of business sustainability for new entrants. Hence, it is possible to deal with all types of uncertain and unsustainable organizational business environment. It is also important to mention that application of sustainability practice can improve the chance of surviving rate in the fast changing external business environment.

However, as mentioned by Cross et al., (2015), one of the major challenges associated with the population Ecology theory is due to the complexity of the social structure that can harm the overall business environment. The complexities can also be a major challenge to the policy making body of an organization.

After consideration of both forms of theory in the forms of strategic and determinism, it is believed that, the latter is more effective in the context of dealing with organizational challenges. This is due to the fact that with determinism there are different kind of theories namely the resource dependence theory, institutional and population Ecology theory under the deterministic theory that can help to effectively manage all types of organizational issues especially the one related to that of the human resource department. With the help of these theories that have been mentioned under the paradigm of determinism, it is possible to analyse all circumstances related to that of the issues that are encountered within an organization. For the manager of an organization it is more helpful to focus upon resource related issues while implementing organizational strategy. With the help of strategic development theory, it may not be possible to focus upon any particular issue encountered during the time of policy making that will ultimately compromise upon the level of organizational performance.

Challenges Associated with Determinist Theories

Organizational theories are highly dependent upon the external business environment and demand of the society. With the help of theories under the determinism, it is possible to identify the need of the society by collecting relevant marketing data. In spite of the several challenges that have been mentioned in the previous section about each of the determinism theories, it is possible to overcome to deal with the ultimate challenges related to that of the business issues and organizational conflict. This is mainly possible by improving the level of cultural diversity that is major part of the population ecology theory. By the elements of the resource dependency theory, it is possible to ensure that no resource are being wasted and increase the chance of revenue loss.   

Conclusion

The current study focuses upon the aspect of paradigm wars within the context of an organization and the role played by the same in bringing forth evolution within the business context.  In this context, a number of approaches have been discussed which plays crucial role in deciding upon the suitable organizational action. The two such contradictory views have been discussed over here which includes strategic choice and determinist theory. The strategic choices are mainly focussed upon evidence based decision making and planning. This helps in identification of the problem situation and provides the organization with a competitive advantage. On the other hand, the determinist theory helps in the long term growth of the organization by focussing upon the different marketing challenges and sustainable measures which could be implemented of the long term growth.

References

Abbott, K. W., Green, J. F., & Keohane, R. O. (2016). Organizational ecology and institutional change in global governance. International Organization, 70(2), 247-277.

Aguinis, H., Edwards, J. R., & Bradley, K. J. (2017). Improving our understanding of moderation and mediation in strategic management research. Organizational Research Methods, 20(4), 665-685.

Allen, T. F., & Starr, T. B. (2017). Hierarchy: perspectives for ecological complexity. University of Chicago Press.

Boxenbaum, E. (2014). Toward a situated stance in organizational institutionalism: Contributions from French pragmatist sociology theory. Journal of Management Inquiry, 23(3), 319-323.

Cross, W. F., Hood, J. M., Benstead, J. P., Huryn, A. D., & Nelson, D. (2015). Interactions between temperature and nutrients across levels of ecological organization. Global change biology, 21(3), 1025-1040.

Drees, J. M., & Heugens, P. P. (2013). Synthesizing and extending resource dependence theory: A meta-analysis. Journal of Management, 39(6), 1666-1698.

Grob, S., & Benn, S. (2014). Conceptualising the adoption of sustainable procurement: an institutional theory perspective. Australasian journal of environmental management, 21(1), 11-21.

Jarzabkowski, P., & Kaplan, S. (2015). Strategy tools?in?use: A framework for understanding “technologies of rationality” in practice. Strategic Management Journal, 36(4), 537-558.

Keohane, R. O., & Martin, L. L. (2014). Institutional theory as a research program. The Realism Reader, 320.

MacCormick, N., & Weinberger, O. (2013). An institutional theory of law: new approaches to legal positivism (Vol. 3). Springer Science & Business Media.

Malatesta, D., & Smith, C. R. (2014). Lessons from resource dependence theory for contemporary public and nonprofit management. Public Administration Review, 74(1), 14-25.

Nienhüser, W. (2017, July). Resource Dependence Theory–How Well Does It Explain Behavior of Organizations?. In Human Resources, Labour Relations and Organizations (pp. 192-219). Nomos Verlagsgesellschaft mbH & Co. KG.

Pfeffer, J., & SALANCIK, G. (2015). EXTERNAL CONTROL OF ORGANIZATIONS—RESOURCE DEPENDENCE PERSPECTIVE. Organizational Behavior 2: Essential Theories of Process and Structure, 2, 355.

Vayanos, D., & Woolley, P. (2013). An institutional theory of momentum and reversal. The Review of Financial Studies, 26(5), 1087-1145.

Wang, P., Che, F., Fan, S., & Gu, C. (2014). Ownership governance, institutional pressures and circular economy accounting information disclosure: An institutional theory and corporate governance theory perspective. Chinese Management Studies, 8(3), 487-501.

Wheelen, T. L., & Hunger, J. D. (2017). Strategic management and business policy. pearson.

Whittington, R. (2014). Corporate Strategies in Recession and Recovery (Routledge Revivals): Social Structure and Strategic Choice. Abingdon: Routledge.

Wollmann, D., & Steiner, M. T. A. (2017). The Strategic Decision-Making as a Complex Adaptive System: A Conceptual Scientific Model. Complexity, 2017, P.25

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