Lessons from Resource Dependence Theory for Contemporary Public and Nonprofit Management

• Author: Craig R. Smith,Deanna Malatesta
• Published date: 01 January 2014
• Date: 01 January 2014
• DOI: http://doi.org/10.1111/puar.12181

Theory to Practice

Deanna Malatesta is associate profes-

sor of public administration and policy in

the School of Public and Environmental

Affairs, Indiana University-Purdue University

Indianapolis. Her research addresses the

management of public organizations,

governance, and contract structure.

E-mail: dmalates@iupui.edu

Craig R. Smith is associate professor in

the School of Government and Public Policy

at the University of Arizona. His research

focuses on public management, privatiza-

tion, and interorganizational collaboration.

E-mail: crsmith@email.arizona.edu

14 Public Administration Review • January | February 2014

Public Administration Review,

Vol. 74, Iss. 1, pp. 14–25. © 2014 by

The American Society for Public Administration.

DOI: 10.1111/puar.12181.

Donald P. Moynihan, Editor

Deanna Malatesta

Indiana University-Purdue University Indianapolis

Craig R. Smith

University of Arizona

 e f‌i scal landscape continues to challenge public and

nonprof‌i t managers. Against this backdrop, public and

nonprof‌i t managers look for new strategies to address the

challenges associated with limited resources. Resource

dependence theory provides valuable guidance for

managers who want to understand the considerations

and consequences relevant to dif‌f erent types of interor-

ganizational partnering. In this article, the theory’s core

ideas are described, along with three common strategies or

tactics that organizations use to obtain critical resources

from the environment: merging, forming alliances, and

co-opting. For each strategy, the authors derive a set of

practical lessons for busy public and nonprof‌i t managers.

The f‌i scal landscape continues to challenge

public and nonprof‌i t managers.  e National

Governors Association (NGA and NASBO

2012) reports drastic reductions in state and local

government revenues and collections. To balance their

own budgets, states continue to reduce aid to local

governments. Local governments, which traditionally

have relied heavily on property taxes to fund services,

have been hit hard by the housing crisis.  e U.S.

Government Accountability Of‌f‌i ce (GAO 2011) pre-

dicts that the decline in f‌i scal resources for state and

local governments will persist for the next 50 years.

Meanwhile, a recent Urban Institute survey f‌i nds that

40 percent of nonprof‌i ts face a budget def‌i cit (Boris

et al. 2010). In short, public and nonprof‌i t managers

face a new f‌i scal reality.

Against this backdrop, public and nonprof‌i t manag-

ers look for new strategies to address the challenges

associated with limited resources. Many managerial

strategies involve some form of interorganizational

partnering. State and local governments increasingly

view nonprof‌i ts as essential ser vice delivery partners

(Van Slyke 2003), while local governments f‌i nd ways

to contract with each other (Marvel and Marvel

2008). For their part, many struggling nonprof‌i ts now

consider merging to reduce competition for funding,

a strategy that was not popular in the past (La Piana

2010). Yet the short-term and long-term consequences

of these strategies are not always clear. New patterns of

interlocal cooperation continue to emerge, each linked

to increasingly complex vertical and horizontal net-

works (Agranof‌f 2012; Agranof‌f and McGuire 2003;

Carr, LeRoux, and Shrestha 2009). Governmental

solutions involve a mix of public, private, and non-

prof‌i t providers, all embedded in an already compli-

cated federalist system that connects federal, state, and

local governments.

We believe that resource dependence theory (RD),

which has its roots in Emerson’s classic “Power-

Dependence Relations” (1962) and Pfef‌f er and

Salancik’s  e External Control of Organizations

(1978), provides valuable guidance for managers who

want to understand the considerations and conse-

quences relevant to dif‌f erent types of interorganiza-

tional partnering. RD rests on a few straightforward

principles. First, an organization needs resources to

survive and to pursue its goals. Second, an organiza-

tion can obtain resources from its environment or,

more simply, from other organizations.  ird, power

and its inverse, dependence, play key roles in under-

standing interorganizational relationships.  is last

principle implies that the balance of power usually

favors the organization that possesses what other

organizations need.  us, RD provides managers

with a perspective for comparing dif‌f erent strategies,

emphasizing the short-term coordination costs as well

as the long-term prospects of organizational survival

and growth.

Paradoxically, RD’s key principles are near axiomatic

but, at the same time, lacking. On the one hand,

we can hardly argue with the idea that organizations

can secure critical resources by looking outside their

boundaries.  e application of many RD strategies is

also quite evident. For example, managers routinely

purchase supplies by way of contracts with other

organizations. And most public and nonprof‌i t manag-

ers can cite examples of mergers, alliances, and even

co-optation—evidence that specif‌i c RD prescriptions

are routinely invoked. At the same time, researchers

Lessons from Resource Dependence  eory

for Contemporary Public and Nonprof‌i t Management