Inter-organizational

Relationships
Resource Dependence Theory
 Organizations depend on their environment for
the resources to survive and grow
 The goal of an organization is:
 To minimize its dependence on other organizations for
the supply of scarce resources in its environment; and
 To find ways of influencing them to make resources
available
 Strength of an organization’s dependence on
other organizations for a resource is a function
of:
 How vital is the resource to the other organizations?
 Extent to which the organizations control the resource

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Types of Interdependencies
 Symbiotic:
 That exist between an organization and its
suppliers and distributors
 Competitive
 That exist among organizations that compete
for scarce inputs and outputs
 An organization aims to choose the inter-
organizational strategy that offers the
most reduction in uncertainty for the least
loss of control
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Strategies for Symbiotic Interdependency

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Types of Strategic Alliance

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Strategies for Competitive Interdependency

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Transaction Cost Theory
 Costs of negotiating, monitoring and
governing exchange between people are
called transactions costs

 The goal of an organization is to minimize

the costs of exchanging resources in the
environment and the costs of managing
exchanges inside the organization

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Sources of Transaction Costs

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Transaction Costs and Linkage Mechanisms
 Transaction costs are low, when:
 Organizations are exchanging non-specific
goods and services
 Uncertainty is low
 There are many possible exchange partners

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Inter-organizational Strategies Using
Transactional Cost Theory
 Keiretsu
 Japanese system for achieving the benefits of
formal linkages without incurring its costs
 Example: Toyota having minority ownership in
its suppliers
 Franchising
 A business that is authorized to sell a
company’s products in a certain area
 Outsourcing
 Moving a value creation that was performed
inside the organization to outside agencies
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