An analytical report on the article “Power Imbalance, Mutual Dependence, and Constraint Absorption: A Closer Look at Resource Dependence Theory” by Tiziana Casciaro and Mikolaj Jan Piskorski

a. What is the paper about? What are the goals of the paper? What is highlighted and which question is addressed?

In this paper, the authors offer a reformulation of resource dependence theory to address the ambiguities of original one with novel predictions and findings. In addition to this, they specify the theoretical scope of the distinct effect of mutual dependence and power imbalance. Furthermore, their studies show that both power imbalance and mutual dependence are essential at the dyadic level.

b. What is the main concept with which the paper concerns?

This article tries to show unrealized strength of resource dependency theory to clarify inter-firm relationship. While in their analysis, the authors identify and use two distinct theoretical dimensions of resource dependence which are power imbalance and mutual dependence. In the original resource dependence theory, these dimensions were combined in the construct of interdependence. In addition to this, they have opposite effects on an organization’s ability to decrease dependencies by absorbing sources of external constraint. According to this article, power imbalance is seen as an impediment. However, mutual dependence is a main point for mergers and acquisitions. In the paper, the authors offer the two main hypothesis. According to the hypothesis 1, while the power imbalance between two organizations increases, the possibility of constraint absorption decreases. However, in the hypothesis 2, the greater the mutual dependence between two organization enables the higher the probability of constraint absorption operation between them.

c. What is the dependent and independent variables (if empirical)?

The dependent variables are merger frequency and acquisitions formed by business units.

The independent variable is the general concept of dependence.

d. What is the level of analysis (macro, micro, group, individual etc.). What method was used?

The authors make macro level analysis. The authors use configurations of power imbalance and mutual dependence diagram to show relations of these dimensions. In addition, they utilize comparison of original and revised constraint-absorption hypothesis diagram to compere the old and their new theory. While their study, they illustrate the M&A data from Securities Data Corporation’s (SDC) Mergers and Acquisitions database. Also, they trust Burt’s (1980, 1983) seminal formulation of constraint. Furthermore, they matched SIC codes to I-O codes. They get historical data on the financial characteristics of the industries from COMPUSTAT.

e. What is the gap/problem in OT that author intends to fill or answer?

The authors said that there is a limited amount of empirical work to extend and test resource dependence theory as a disadvantage. In addition to this, they realize some ambiguities in the original resource dependency theory and after that they study these uncertainties such as ambiguities in the flow of needed resources of organizations. The paper offers and examines some tactics how organizations get their dependencies. In the original theory, power imbalance and mutual dependency integrated into single construct, but in this paper, the authors find opposite effects of these dimensions. Also, the authors mentioned further developments.

f. What insight have you developed after reading it?

Before this paper, I read about original resource dependency theory and after that I read this paper. I realize the how the organizations manage their need of critical resource and which tactics they use to get these resources according to power imbalance and mutual dependence. Furthermore, I get information about how these dependent resources adjust the relation of the companies which need same resources.

Software Development Team Lead, Technical Product Manager, MBA Candidate

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