Resource Dependency and Bridging Strategies

Emerson (1962) defined that "the power of A over B is equal to, and based upon the dependence of B upon A" (p. 33 quoted in Scott p. 198). B'd dependence is proportional to the importance B places upon the goals mediated by A and inversely proportional to the availability of these goals to B outside the A-B relationship (Scott p. 198).

Thus power is a function of the exchange relationship, and the power of an individual or organization varies by situation. In a zero-sum power situation when one gains power another loses it, but it's also possible to increase the power of both parties through increased interdependence. Bridging strategies increase interdependence. In symbiotic interdependence groups exchange unlike resources. Power is created with the perceived importance of these resource is different between parties. In competitive interdependence two groups compete for the same resources of another party (Scott p. 198)

Pfeffer and Salancik claim that the most common solution to the problems inherant in interdependence is to increase the mutual control over each others resources (Pfeffer and Salancik, 1978). Some common bridging strategies are:

This is actually a pre-bridging strategy, most often reflected in defining and defending the organization's domain (Scott p. 198). This can include acts like developing alternative suppliers of a critical resource.

But bargaining often involves negotiation between two organizations (Katz and Kahn, 1978). Bargaining behavior is moderated by the boudary role person and their trust relationships with their counterpart in the other organization and with their internal members.

Thompson states that contracting is "the negotiation of an agreement for the exchange of performances in the future" (Thompson 1967 in Scott p. 199). They are attempts by organizations to reduce uncertainty by coordinating future behavior with other organizations. There is still some inherant uncertainty in any contract (see Williamson, 1975) but they help define obligations between parties. Also their quasi-legal status often opens them up to future renogiation and bargaining.

Selznick (1949) first described co-optation as the incorporation of representative of external groups into the internal decision-making or advisory structure of an organization (Scott p. 199). Studies of interlocking directorates is often a focus on co-optation. They show that often board appointments are used to build relationships with important parts of the environment of which they are dependent (see studies in Scott p. 200).

Co-optation is also used in public agencies and non-profit organizations. Many federal programs get local representation for this purpose, though many critized this strategy as merely legitimizing federal intervention (Scott p. 201). Like Selznick found this strategy can backfire when local interests subvert the federal goals.

Hierarchical Contracts
Stinchcombe (1985) identified a new form of bridging that combines the "arms length" feature of contracts with the control features of authority relations (Scott p. 201). They are used in highly complex and uncertain interdependencies (like between defense contractors and governments). The contracts give intermediate control rights to exchange partners that normally would be the domain of internal decision-making. "Such hierarchical rights undermine the autonomy of the independent contractors... (and become more like a joint venture) -- Scott p. 202. They are used in large, high risk projects like defense projects and large construction.

Joint Ventures
In joint ventures two or more firms create a new organization to pursue a common interest, though there is less pooling of resources than in a merger. They can occur between competitors or exchange partners. They most often occur when competition is high and event horizons are short. Sometimes joint-ventures of R&D nature are done in research consortia. Other times they allow two firms to capitalize on each other's strengths and to compensate for one's own weaknesses.

In mergers two more more organizations combine to form one organization. Three major types of mergers are (Scott p. 203):

1. Vertical Integration
Organizations at different stages of the production process (that are symbiotically related) merge with one another. They most often occur in organizations that are already interacting with each other (Pfeffer, 1972).

2. Horizontal Merger
Organizations performing similar functions merge together to form a larger organization. They tend to occur when competition is high (Pfeffer 1972).

3. Diversification
Organizations acquire other firms with little relationship to their core business. The extreme form of diversification is a conglomerate.

Different types of mergers have occured more frequently at different stages of history (Chandler, 1990).

Besides the resource dependency approach above, Williamson (1975) argues that transaction costs can also help explain vertical integration -- "as the assets required by the firm become more specific, firms will elect to produce them internally to avoid dependence on a small number of external suppliers" (Scott p. 204). This has been supported by various studies (see Scott p. 204). However, it was also shown that comparative production costs is a major decision factor (i.e, can firms produce the required assets more cheaply internally?).

"Associations are arrangements that allow similar..organizations to work in concert to pursue mutually desired objectives" (Scott p. 205). The members can be similar or dissimilar, depending on the objectives of the association. Individual organizations join associations to "garner resources, secure information, exercise influence, or obtain legitimacy and acceptance" (Scott p. 205).

Trade associations are a particular form with varying degrees of power (lower in US, high in Japan and Western Europe).

Government Connections
Governments affect organizational exchanges by specifying what types of exchanges are permitted and by also exchanging resources themselves with organizations. Goverments have varying degrees of authority over organizations, though these organizations can lobby goverments to influence both the demography and decision-making of government bodies.

Goverments exert varying degrees of monitoring and regulation of organizational sets, which can have unintended consequences (protection of current environment, favoritism, restricting competition, fixing prices and profits, etc.). While goverments extract taxes from organizations, they can also provide resources such as tax breaks, incentives, subsidies, or simply as a purchaser of products or services.