Resource dependence theory in international business: Progress and Prospects
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This paper explores the application of Resource Dependence Theory (RDT) in the context of International Business (IB). RDT, a prominent theoretical framework in organizational studies, examines how organizations manage their dependencies on external resources to maintain autonomy and achieve goals....
Resource dependence theory in international business: Progress and prospects
Abstract
Research Summary
Over the past four decades, Resource Dependence Theory (RDT) has been extensively utilized in
the realm of international business (IB). This study undertakes a comprehensive review and
synthesis of RDT insights within IB literature spanning the same period, while also proposing an
integrative framework for future research endeavors. This analysis identifies three crucial
dimensions of dependence (locational, inter-organizational, and intra-organizational) and
delineates three core RDT themes (dependence solutions, dependence-managing outcomes, and
macro environmental conditions) within the IB context. The review underscores the conceptual
and empirical consensus achieved in understanding how multinational corporations (MNCs)
execute diverse resource dependence strategies and navigate resource dependencies across
various scenarios. Furthermore, we highlight the imperative for extending RDT in IB research,
advocating for theoretical integration, elucidation of underlying processes, and exploration of
new dynamics reshaping cross-border interdependencies in the evolving global landscape.
Introduction
In 2018, the renowned work of Pfeffer and Salancik (1978), "The External Control of
Organizations: A Resource Dependence Perspective," celebrated its 40th anniversary, marking a
significant milestone in the development of Resource Dependence Theory (RDT). Drawing from
the open-system view of organizations (Katz & Kahn, 1966), the power dependence perspective
(Emerson, 1962), and early insights on strategic choices and decisions (Child, 1972), Pfeffer and
Salancik conceptualized the concept of resource dependence. Their seminal work laid out several
fundamental propositions of RDT:
Organizations are intricately interwoven in a network of relationships, inevitably relying on other
entities controlling critical resources essential for their operations.
This reliance on external entities constrains organizational autonomy and introduces
uncertainties into strategic decision-making and operational activities.
In response, organizations are driven to manage both inter- and intra-organizational resource
exchanges and power dynamics to mitigate or circumvent dependency constraints.
However, the effectiveness of dependence-managing strategies can be hindered by internal and
external barriers.
These foundational principles of RDT seamlessly align with the dynamics inherent in
international business (IB). Multinational corporations (MNCs), owing to the disparate
distribution of resources and comparative advantages across countries and regions, frequently
depend on resources located beyond their domestic borders to sustain their operations. This
reliance on cross-border resources propels MNCs to extend their operational reach globally,
engaging in exchanges and competition with foreign entities (Buckley, 2002). Over time, such
activities contribute to the development of a complex international web of interdependencies,
,characterized by intricate cross-border exchanges and power dynamics among various
stakeholders surrounding and within MNCs (Pfeffer & Salancik, 2003).
Consequently, the concept of resource dependencies and the theoretical framework of RDT offer
valuable insights into understanding the mechanisms governing IB processes and performance
(Hillman, Withers, & Collins, 2009). As evidenced by its widespread application in IB research
over the past four decades, RDT continues to serve as a pertinent lens through which scholars
analyze and interpret the intricate dynamics of international business operations.
In the realm of international business (IB), scholars have noticed a significant gap within the
classic framework of Resource Dependence Theory (RDT) — the variation in resource
dependencies across different locations. Pfeffer, in the introduction of the second edition of the
seminal work from 1978, emphasized this gap by pointing out the neglect of geographical factors
in inter-organizational relations. This gap is particularly evident in RDT studies focused on
domestic settings, where assumptions are made about firms operating within similar
socioeconomic and institutional environments. These studies typically generalize interdependent
relationships and primarily focus on variations in how much firms rely on specific resources.
In contrast, in IB contexts, the nature of interdependent relationships varies considerably across
countries and regions due to diverse political, economic, and sociocultural conditions. Resources
are exchanged across organizational boundaries and national borders, leveraging both firm-
specific and location-specific advantages. Consequently, multinational corporations (MNCs)
demonstrate different levels of inter- and intra-organizational dependencies across the locations
where they conduct cross-border operations and exchanges.
Firstly, specific locations possess unique resources and comparative advantages, controlled by
local stakeholders. MNCs navigate these dependencies through exchanges with various
stakeholders in different countries. For instance, the control of natural resources may be vested in
local governments in some regions, while dominated by major companies or cartels in others.
Moreover, local stakeholders from different countries have distinct needs and agendas,
influencing their interactions with MNCs. Consequently, when engaging with similar
stakeholders in different locations, MNCs face varying dependence constraints and power
dynamics. This is evident in the differing demands and preferences of local governments in
developed and developing countries regarding the entry of foreign MNCs. In conclusion, the
specificities of resources and stakeholders across different countries and regions within IB
contexts result in resource dependence unfolding in location-specific ways. This underscores the
importance of understanding inter- and intra-organizational dependencies in MNCs' relationships
across diverse geographical settings.
The specific characteristics of resource dependencies in international business (IB) contexts
carry significant implications for multinational corporations' (MNCs) strategies in managing
their dependencies on inter- and intra-organizational stakeholders. Balancing interdependent
relationships across different locations poses a formidable challenge for MNCs, necessitating the
crafting of nuanced dependence-managing strategies that often go beyond traditional Resource
Dependence Theory (RDT) prescriptions based on domestic settings.
, For instance, while prior studies often emphasize building political connections as the primary
means for firms to manage their dependencies on governments in domestic operations, MNCs in
IB contexts may opt to leverage coalitions and competitions across countries and regions to
counterbalance their dependencies on a particular government.
Given these unique features of resource dependencies in IB contexts, a comprehensive review
and synthesis of RDT-based insights specifically achieved in IB research are valuable. Such a
review not only sheds light on how locational factors complement, extend, or contradict general
RDT prescriptions, but also provides a systematic understanding of navigating and interpreting
the rich IB settings through the lens of RDT. Additionally, reviewing RDT-based IB literature
can deepen theoretical insights and indicate future prospects for both RDT and IB research.
This review is particularly important for advancing future studies that address the new
complexities in IB. With the rise of decentralized business models facilitated by digital
technologies and the looming concerns of de-globalization amid geopolitical tensions and
conflicts, understanding past experiences can help scholars and business leaders effectively
navigate the opportunities and threats facing global business.
The remainder of this work proceeds as follows: first, we develop a conceptual framework to
elucidate the core premises of RDT in IB contexts, integrating insights from both RDT and IB
research. This framework serves as a theoretical guide for our review. Subsequently, we
introduce the methodology of our review, which identifies 142 RDT-based IB studies published
in 16 leading journals over the past 40 years (1980–2019). Using our conceptual framework, we
synthesize the insights of these studies, identify knowledge gaps, and suggest future research
directions.
A RESOURCE DEPENDENCE FRAMEWORK FOR IB
2.1 | International dimensions of resource dependence
A RESOURCE DEPENDENCE FRAMEWORK FOR IB
2.1 | International dimensions of resource dependence
A Resource Dependence Framework for 1B
International Dimensions of Resource Dependence
Resource dependencies lie at the core of Resource Dependence Theory (RDT), particularly when
applied in the context of international business (IB) research. In IB, resource dependencies
mainly refer to the ways in which multinational corporations (MNCs) rely on and are constrained
by both internal and external actors who control the resources essential for their operations.
These dependencies are shaped by various factors, including both location-specific conditions
and firm-specific considerations assumed by MNCs and related organizations.
In IB practices, the essence of activities revolves around securing, exchanging, and deploying
firm-specific resources through intra- and inter-organizational arrangements with internal and
external players. These interdependencies manifest differently across countries due to the diverse
global mandates, strategic resources, economic conditions, comparative advantages, and
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