A review of Pfeffer, J., and G.R. Salancik. 1978. The External Control of Organizations: A Resource Dependence Perspective. New York: Harper & Row, Introduction, Chapter 1, 3.

1. The External Control of
Organization: A Resource
Dependence Perspective
Kan Yuenyong
DA8020: Advanced Organization Theory; GSPA/NIDA
November 4, 2020.

2. • Pfeffer, J., and G.R. Salancik. 1978. The
External Control of Organizations: A
Resource Dependence Perspective. New
York: Harper & Row, Introduction, Chapter
1, 3.

3. External Control of Organization: 3 Central Themes
• Exogenous vs Endogenous variables: i.e. social psychology, network of
interdependencies, social relationships, the need for resources (financial, physical,
information, etc. -> resource dependence)
• #1. Importance of environment/social context on decision making, i.e. who to hire,
combination of board of director, M&A
• #2. Environmental/Context constraint, but there is room to maneuver (i.e. coopting
source of constraint to obtain more autonomy), ability to change environment (reflexivity
between organization vs environment)
• #3. Construct of power on an understanding between intra- vs inter-organizational
behavior. Power (resource dependence) ≠ Economic efficiency (transactions cost theory),
i.e. relationship between government and contractors. (Gov > contractors) Innovation is a
source of “power”?

4. Other Theories on Organizations and Environments
• Population Ecology (Hannan and Freeman, 1989): environment ->
organization (i.e. population density)
• Institutional Theory (Meyer and Rowan, 1977), quite close to resource
dependence
• Difference on 3 foci: (1) environmental determinism, (2) strategic choice,
and (3) interplay between external constraints and internal dynamics

5. Difference between Population Ecology vs
Resource Dependence
• RD -> more ability on organization to alter environment
• RD -> more ability to adapt to environment
• RD -> focus more on decision making
• PE -> longitudinal than most empirical studies in RD
• PE -> less concern on internal dynamics in organization

6. RD as theory and metaphor
• Environmental Effects on Organizations
• Organizational Efforts to Manage Environmental Constraint
• How Environmental Constraint Affects Internal Organizational Dynamics

7. Challenges and Critics
• Ignoring on spatial character of social action and structure (i.e.
Geopolitics?)
• Ignoring of social class
• More influence from financial market and “globalization / global value
chain”

8. New Direction
• Consequences of organizational efforts to manage environmental
dependence (i.e population control -> population decline? -> less
consumption? -> economic problem? -> robotic replacement on
workforces -> etc.)
• Cooptive Strategy in details (how and dynamics on applying strategy)
• Non-market based action, i.e. political activities, political elites
cooperation (i.e. revolving door in think tank)

9. Chapter 1
External Perspective on
Organizations

10. Issues
• How organizations manage to survive
• In order to survive -> maintain effectiveness -> management of demands
(ability to acquire and maintain resources)
• Not a complete standalone (self-contained) organization -> no context-free,
i.e. to live within environment includes other organizations
• Operate transaction to acquire necessary resources (i.e. recruitment,
procurement, providing, etc.)
• Dynamics on environment and adaptation of organization (in order to
survive)

11. Internal vs External Perspective
• The internal perspective tends to consider that problems can be solved by
changing elements within the organization, without regard to their
contextual basis
• Individuals roles’s question “how much of the variance in organizational
activities or outcomes is associated with context and how much with
individuals has been infrequently addressed.”

12. Contextual Perspective: Effectiveness
• Key concepts to systematically understand the effect of environments on
organizations and the effect of organizations on environments
• Organizational Effectiveness: ability to create acceptable outcomes and
actions. Effectiveness ≠ Efficiency.
• Effectiveness = external standard of how well an organization is
meeting the demands of the various groups and organizations that
are concerned with its activities. (sociopolitical question)
• Efficiency = internal standard of performance, ratio of resources
utilized to output produced (managerial problem)

13. Contextual Perspective: Environment
• Environment = elusive concept; every event confronting an organization
does not necessarily affect it
• Organization select issue on environment to response based on its
construct perceptions of reality -> unto its information systems

14. Contextual Perspective: Constraints
• Constraint is present whenever responses to a situation are not random
• Constraint facilitates the choice and decision process
• Constraint explains why individuals account for relatively little variance in
the performance and activities of organizational systems

15. Contextual Perspective: Management
• Symbolic role of management: to personify the organization, its activities
and its outcomes
• Possibilities of management action: every constraints have been managed
by some certain interest group, and the outcome of action of social actors

16. Chapter 3
Social Control of Organization

17. Concepts
• Interdependence
• Social control of organizational choice
• Resource importance
• Discretion over resource allocation and use
• Concentration of resource control
• Dependence
• Countervailing power and asymmetric dependence

18. Empirical Examinations of Interorganizational
Influence : Israeli Managers

19. Empirical Examinations of Interorganizational Influence :
Sales Interdependence and Affirmative Action

20. Research Question
• What are the flaws of the past theories that cause this theory occur?
• What is the key research question of this theory?
• What is the meaning of “loosely coupled”?
• What is the role of management from resource dependence perspective?

21. Underpinning
• Environmental determinism (Astley & Van de Sen, 1983; Perrow, 1986)
• Active role of agent vs passive role of agent
• Proactive strategy
• Acquire and maintain resources vs use resources

29. Conclusion
• Drive to reduce uncertainty
• Drive to control over resources
• Drive to maximize autonomy
• Organization have ability to adapt but
within constraints
Organizational behavior Environmental Constraints
Active Choice of Behavior
Motives Context
Source: Interpreted by Tippawan Lorsuwannarat

30. Organization Structure from Different Paradigms
• Postmodern Organization
• Formless
• Iron cage
• Organization vs Disorganization
• De-differentiation
• Self-organization
• Anti-administration theory

31. END