Friday, September 13, 2013

The theory of resource dependence says that companies freedom of action is based on satisfying the needs of those entities outside the firm that give it its resources it needs to survive. This basically says that customers and investors control businesses. Businesses will only survive and prosper if their staff and systems satisfy the needs of customers and investors. They do this by providing them with goods and services that they want and need. Organizations that don't will die off. Since customers and investors have so much power in a company, there are two options When faced with a disruptive technology. One option being to go with it even if it is not profitable in the short term. Another is to form a separate company and sell stuff to people who do need the technology. Forming a separate company has a higher probability of success than just going with it.

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