2.1 Theoretical review
This study was hinged on perspectives from Resource Dependency Theory to piece together the research of how NGOs in Uganda are responding to the changing aid landscape. Postulated by (Pfeiffer, 2003) , resource dependency theory has become a useful framework for examining the relationship between an organization and its external environment. Factors such as resource criticality (a measure of an organization’s ability to function in the absence of a resource) and concentration (availability of alternative sources for the same resource), as well as ability of external powers to determine resource allocation are central to understanding the external environment of organizations (Cho et al, 2006). Research on resource dependency theory has advanced the view that, actors who have control of resources exert power especially when there is a high dependency. In this regard, the relationship between NGOs and donors is mostly applied which reflects a type of relationship where donors set the goals of programs because of NGOs’ high dependence for funding (AbouAssi, 2013). This relationship also reflects the situation that makes NGOs closer to their donors rather than the communities they claim to support (Banks et al., 2015). This follows that, because many NGOs in Uganda have for a long time, depended significantly on foreign donors, the reported reduction in the aid funds and the associated withdrawal, decline and re-prioritization of foreign aid could have a threatening effect on their continued existence and programs.
Studies on resource dependency further show how organizations do not passively comply with conditions in their external environment; instead, they try to manage their dependence by adopting several strategies in order to influence their demand for resources with the aim of becoming independent. Resource dependency theory, therefore, aligns with a range of perspectives on how NGOs obtain resources from their external environment and the exercise of control by donors over NGOs because of their resource dependence. Dependency as an actor creates power especially when there are asymmetrical exchange relationships. Resource dependency theory, therefore, sheds light on the effect of power on NGOs behavior and how they adopt strategies to safeguard organizational autonomy. Interestingly, (Pfeiffer, 2003) highlight that although resource dependence results in the exertion of power and control, the role of organizational management is to devise strategies for managing such dependence in order to ensure resource stability, organizational autonomy and interest.
According to (Pfeiffer, 2003), organizations employ strategies of avoidance and adaptation in order to absorb, diffuse and co-opt external pressures and influences in their operating environment. The specific strategies include resource diversification, formation of alliances through mergers and acquisition, co-option and compliance to the demands of resource actors. Several authors have used insights from resource dependency theory to explain strategic organizational responses and behavior (Kumi, 2017) . This study will employ this theory in trying to explain the various strategies and internal controls NGOs have put in place in relation to funding, and how this is affected by the various strategies employed to control the resources received from the funders by NGOs in Uganda given the changing aid conditions by donors (Mawdsley et al., 2014).
Resource Dependency Theory (RDT) is a theoretical framework that explores the relationships between organizations and their external environment, emphasizing the role of resources in shaping these relationships. While RDT has provided valuable insights into organizational behavior, it is not without its challenges. Some of the key challenges associated with Resource Dependency Theory include:
Simplistic View of Resources:
RDT tends to oversimplify the concept of resources, often reducing them to tangible assets like money, technology, or raw materials. This narrow view may neglect the importance of intangible resources such as knowledge, reputation, and relationships.
Limited Focus on Power Dynamics:
The theory sometimes underplays the complexity of power dynamics in organizational relationships. It may not fully capture the nuances of power struggles and negotiations that occur between organizations as they seek to manage their dependencies.
Assumption of Rational Decision-Making:
RDT assumes that organizations make rational decisions to minimize dependency and maximize resource control. In reality, organizational decision-making is often influenced by various factors, including emotions, cognitive biases, and organizational politics.
Static Nature of Relationships:
RDT tends to portray organizational relationships as relatively stable and unchanging. In dynamic business environments, relationships are often fluid, evolving over time due to changes in the external environment, organizational strategies, and other factors.
Neglect of Internal Dynamics:
The theory primarily focuses on external relationships and dependencies, neglecting internal factors that can also impact organizational behavior. Internal factors such as organizational culture, structure, and leadership are crucial in understanding how organizations manage their resources.
Inadequate Attention to Environmental Uncertainty:
RDT does not adequately address the challenges posed by environmental uncertainty. In rapidly changing and unpredictable environments, organizations may face difficulties in managing dependencies and adapting to new resource conditions.
Overemphasis on Economic Factors:
RDT tends to place a strong emphasis on economic factors as the primary drivers of organizational behavior. While economic considerations are important, other non-economic factors, such as social and political influences, can also significantly impact resource dependencies.
Limited Prescriptive Value:
RDT is more descriptive than prescriptive, meaning it provides a framework for understanding relationships but offers limited guidance on how organizations should manage their dependencies effectively in practice.
Despite these challenges, Resource Dependency Theory has contributed valuable insights to the field of organizational studies. Researchers and practitioners should be aware of its limitations and consider complementing it with other theories and frameworks to gain a more comprehensive understanding of organizational behavior.
