Running head: MANAGEMENT 1

Resources and Contingencies

Student’s Name

Institution Affiliation
MANAGEMENT 2

Resources and Contingencies

Introduction

Organizational behaviors, size, structure, actions, and decision making are usually

influenced by external and internal factors that control critical resources and authority. The

purpose of this paper is to examine, compare, and contrast the resource dependence theory and

contingency theory in the organizational context. The extent to which these theories are able to

influence organizational behaviors and structure, as well as size, are major parts of the studies

discussed by the paper. The paper also examines how leaders determine which approach is

appropriate for their organization.

Compare and contrast Resource Dependence and Contingency theory

Resource dependency theory states that an organization must transact with other actors

and firms in its business environment to acquire resources. The resources to be acquired by the

organization may be scarce and thus unequal exchanges of such resources result in variance in

power, authority as well as access to further resources. The organization thus has to develop

strategies to enhance the bargaining position to avoid such dependencies. On the other hand,

contingency theory involves the idea that organizational structure is contingent on the kind of

environment in which the business operates and thus the effectiveness of an organization is based

on its fitting characteristics, such as structures, to contingencies the firm is facing.

One difference between the two theories is that, in the resource dependency theory, the

choices of a firm are limited by different external pressures and are only possible within the

constraints of the environment. Due to that, the theory asserts that due to the interconnectedness

of organizations, a member of the external environment has to be responsive to the external

demands and anticipations to survive. On the other hand, contingency theory provides that

organizational characteristics are influenced by contingencies such as the environment itself, size

of the organization, as well as its strategy (Van de Ven et al., 2013). Due to that, the high

performance of the organization is only realized when its characteristics are aligned with the

contingencies. The organizational interconnectedness is realized when there is fitness between

the organizational characteristics and related contingencies.

Also, as the resource dependency theory states the acquire resources as the main factor

determining the structure of an organization, the contingency theory states that organizational

size is the most influential factor that determines organizational structure. Contingency theory is

of the principle that as much as specialization, formalization, and decentralization might be

increasing when the size of the firm increases, organizational size remains a fundamental

influence of the organizational structure. The resource dependency theory, however, is of the

view that once an organization grows in size, it becomes too heavy leading to high overheads

and minimal speed and loss of effectiveness, and thus growth in size does not likely lead to

increased organizational performance.

How can organizational leaders know which of these approaches is correct for their

organization?

To understand the correct approach for the organization, the leaders should consider a

number of critical factors. For the resource dependency theory, the leaders should look for the

social context of the organization and how the theory explains the organizational behavior. The

propositions of the theory must be informative, empirically testable, and realistically applicable

to a large number of phenomena. The theory should always strive to create more precise

propositions concerning the conditions required by the organization to fit well in its environment,
MANAGEMENT 4

resist or rapidly change its environment. Since the theory is concerned with assumptions related

to exchange processes, it should be able to explain various phenomena of organizational

behavior. The range of phenomena that must be explained by the theory to make it correct for the

organization includes the surveys that assess the emergence as well as a change of structures

within the organization, the ability of the organization to build relationships with other

organizations such as through mergers or supply relationships, and board structuring. The theory

should be realistic regarding the role of management since it states that the effectiveness of the

management is limited by the availability of resources.

As per the theory, bounded rationality should apply for managers. Based on that, it is

only the cognitively and socially constructed environment that should determine how the teams

make decisions or act and not just the environment or resources (Drees & Heugens, 2013).

Moreover, another factor that makes the theory to be precise for the organization is the

assumption that the organization is not viewed as simply able to adapt to a more or less dynamic

environment but that the firms can develop their environment too and resist or disprove

resistance. The theory also has empirical results that support its propositions thus it supports

empirical collaboration. In summary, the theory is capable of explaining behavior, stability,

structure as well as organizational changes thus can be used in explaining the behavior of the

organization.

On the other hand, the contingency theory strives to determine how certain situations

influence the effectiveness and abilities of leaders to adapt to different work situations. The

theory can be used to determine if a particular leadership style is suitable in a particular situation.

The theory also states that a leader can be effective in a particular situation but ineffective in

another thus maximizing a leader's productivity requires one to examine each situation and make
MANAGEMENT 5

decisions whether the leadership style will be effective or not. Due to that, one has to be self-

aware, objective, and adaptable. Contingency theory highlights various factors that influence the

effectiveness of a leader. Such factors include the team size, scope of the program or project, and

the anticipated delivery time for a result (Danese, 2011). Different leaders with varying

leadership styles will have to respond to such factors and determine if they well suit their

effectiveness. For organizational leaders to consider this theory to be effective or correct, factors

that may impact the theory in the workplace must be known. The factors include the maturity

level of workers, relationships between coworkers, the work pace, management style, typical

work schedule, goals and objectives, the existing standards for behavior, company policies,

employees' work styles, and employees' morale (Hart & Dowell, 2011). If all or majority of these

factors represent a positive response to the theory expectations then the theory is correct for the

organization and the leaders should consider selecting and using it in managing their

effectiveness.

Based on the Fielder model, the contingency theory posits that there must always be a

leadership style that must be fixed and thus once a leader's style is found unfit for a particular

situation, replacement with a different leader is necessary. Still, on the model, situational

favorableness is determined by evaluating various factors. The first factor is the leader-member

relations which involve the level of trust and confidence that other team members have in

another member. When one is well-liked and highly trusted by the entire team, their influence

and effectiveness as a leader will improve and thus making workplace favorable (Felin et al.,

2015). The second factor is task structure which is concerned with whether the tasks a team

accomplishes are clear, structured, or vague. When the tasks are unstructured, they lack a well-

specified plan of action and thus would be taken as unfavorable. The other factor is the leader's
MANAGEMENT 6

position power which involves the level of power one has over their team and the ability to offer

rewards or punishment to the members. The more power one has, the more favorable and

effective their situation. Based on the model, a situation involving a good team relationship and

well-structured tasks, task-oriented leaders are more appropriate to handle such situations. On the

other hand, a situation involving a distant team relationship as well as unstructured tasks, the

more effective leader is a relationship-oriented one.

The other model of the contingency theory is situational leadership which suggests that

the appropriate option for leaders is the ability to adapt their own leadership styles to benefit

team members and empower their abilities. The model is primarily focused on the level of

maturity of team members and assumes that members with high maturity level are experienced

and can make decisions independently while moderately mature individuals have the capability

but lack confidence thus are unable to accurately complete the assigned tasks and the low

maturity workers are considered to be enthusiastic and willing to work but lack necessary skills

or experience to accomplish the assigned tasks. Each of the different leadership styles such as

delegating, participating, and telling styles differently suits various maturity levels of employees.

The path-goal model is concerned with determining processes that will permit team

members to meet their objectives. Organizational leaders who are capable of implementing this

model are able to adjust their behaviors and anticipations to positively influence their team

productivity. The model requires a leader to be flexible in their style to meet every member's

specific needs to help them meet their goals. The model is focused on improving employee

motivation, autonomy, and satisfaction to enhance their level of productivity in the organization

(Taylor & Taylor, 2014). The model is however effective with leadership styles such as

achievement-oriented, supportive, and participative leaders. The decision-making model, on the

other hand, determines the relationship existing between a leader and team members. The ability

to build and maintain this relationship influences the leader's success. The leadership styles to

make this model effective include autocratic, consultative, and collaborative leaders. Therefore,

the organization leaders that want to determine their effectiveness, ability to adapt to changes,

and the effective leadership to use in managing and influencing employees in the organization

should consider the contingency theory as appropriate (Otley, 2016). The theory gives different

leadership styles and models that reflect the needs and necessary strategies to be undertaken.

From both the internal and external perspectives, are all contingencies created equal?

Why/Why not?

Bearing the fact that there are potential negative events that may likely take place in the

future like economic recession, cybercrime, natural disaster, or terrorist attacks, contingencies

ought to be prepared based on the nature and scope of such unknown negative events. All

contingencies are not created equally. Contingency primary responses to risk. Since risks can

occur differently, severely or mildly, the contingencies have to be created differently to be able

to encounter the associated risks. Different risks warrant the different levels of mitigation plans

and thus creating contingencies equal will not be significant in risk identification and

management. Some risks need to be avoided or exploited, transferred or shared, mitigated, or

enhanced or accepted thus contingencies need to be created differently to control the prevailing

risks in the organization (Hanisch & Wald, 2012).

Conclusion

The paper examines resource dependency and contingency theory, their comparison, and

contrast as well as their appropriateness in the organization. Resource dependency theory is of

the view that firms are interconnected and are influenced by the external environment and thus

have to be responsive to external demands and anticipations to survive. Conversely, contingency

theory assumes that the effectiveness of an organization relies on its characteristics such as

structure, size, and strategy. The dependency theory is appropriate in the organization if it can

explain behavior, stability, structure, as well as organizational changes thus, it can be used in

explaining the behavior of the organization. On the other hand, contingency theory is effective if

it can clearly be used by leaders in determining their effectiveness, ability to adapt to changes,

and effective leadership to use in managing and influencing employees.

References

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