Lessons from Resource Dependence Theory for Contemporary Public and Nonprofit Management

Published date01 January 2014
Date01 January 2014
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

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