The external control of organizations: A resource dependence perspective
Citation: Jeffrey Pfeffer, Gerald Salancik (1978) The external control of organizations: A resource dependence perspective.
Pfeffer and Salancik's major work is the seminal contribution to the organization theory on resource dependence theory (RDT). The key argument in the work is implied in the title: organizations are highly contingent on, and indeed essentially at the whim of an controlled, by environmental factors. While previous organizational work has focused on internal factors influencing the design of organizations, that by focusing strongly on the environment of organizations, one can gain a solid understanding of why organizations take on particular structures and act in particular ways.
Pfeffer and Salancik introduce three key concepts:
- Organizational effectiveness: A measure of whether an organization can create acceptable outcomes which an external measure as differentiated from efficiency which is internal.
- Organizational Environment: A broad term that can contain all organizations and events around a focal organization.
- Constraints: When actions are non-random and at all predictable, behaviors will be constrained in that it will need to correspond to these patterns.
Pfeffer and Salncik's third chapter on the social control of organizations lays out much of their theory and opens with an example of two buyers and a supplier who, due to competition around unpredictable buying patterns, he suggests will be likely find a way to coordinate their actions in order to reduce uncertainty. The key premise is that, "organizational activities and outcomes are accounted for by the context in which the organizations embedded" (p. 39).
The key term in Pfeffer and Salancik is dependence and interdepedence (although the authors do not explore the differences in the reciprocity of the relationship, an item that was taken up in subsequent work in RDT). The authors discuss a number of the determinants of interdependence that include resource importance, concentration of resource control, and discretions over a allocation (e.g., possession, access, etc).
Much of Pfeffer and Salancik's book discusses means of addressing issues related to uncertainty brought on by by interdependence. They discuss strategies for adaptation to resource dependence and strategies for avoiding them.
In some of the most influential work, the authors discuss means of alternating organizational interpdendence (e.g., relationships that give one organization power over another). In particular, these include:
- Cooptation (e.g. Philip Selznick's TVA and the grassroots)
- Coordination (i.e., join ventures, cartels, etc.)
The authors provide detailed descriptions and examples and provide both qualitative and quantitative accounts of different industries to support their basic arguments.