The Negotiated Environment: Normative Coordination of Interdependence

One simple and direct way to regulate behavior is to generate common expectations for all individuals operating within a certain set of cir-cumstances. A norm is developed, and social actors are socialized to behave as prescribed by the norm. If most actors conform to normative expectations, then it becomes feasible for stable and regular relationships to be maintained.

There are three important theoretical issues regarding the norms that develop to regulate interorganizational relations. When do norms arise? What aspect of relationships is covered by the content of the norms? Under what conditions do social actors violate norms so that the preservation of the norm is threatened? The limited information available suggests that norms develop under conditions of social uncertainty to increase the predictability of relationships for the mutual advantage of those involved, and that norms break down when they cease to serve those interests. It is difficult to know whether a norm is operating to influence behavior. The presence of a norm may be in-ferred by two means. When all social actors behave in a similar way in a particular situation there is a possibility that they are being influ-enced by a norm. This is an imperfect way of knowing that a norm exists, for in fact the actors could be behaving independently, having arrived at the same decision because it represents the best way to behave. When theatergoers arrive for a play at eight, they are not following a norm, but rather responding to the schedule established by the producer. More telling evidence of a norm is discovered when the I norm is violated. If sanctions are applied when the actors behave in certain ways, it is likely that a commonly shared norm is operating. Even this method, however, fails to distinguish between norms and the power of another to impose constraints. Norms’are commonly or widely shared sets of behavioral expectations. Although it is possible to be sanctioned by a single social actor, it is only when most social actors sanction the behavior that we can say a norm exists.

The earliest experiments dealing with the formation of norms were those conducted in the 1930s by MuzaBr Sherif (1935). Sheriff placed individuals in a darkened room and asked them to look at a single point of light projected on a screen. They were told to report how much movement they observed in the point of light. The light, in fact, never moved, but the normal visual process gave the appearance of movement. The situation is ambiguous because each individual’s eye movements are random and uncoordinated with any other’s. When estimates of the amount of movement were reported in the presence of others, the reports initially differed but over time became more similar. In this situation, every person provides a framework for the judgments of every other person. Since every person believes he or she is seeing the same phenomenon, each tends to adjust the judgments to accommodate the information received from the other people. Mutual adjustment results in a stable pattern of reporting. Sherif (1935) describes this phenomenon as the development of a social norm and indicates that it develops directly out of the situation of ambiguity and uncertainty facing the subjects.

Other research has been addressed to the issue of the transmission of norms from one generation of actor to smother. Jacobs and Camp-bell (1961), working with the Sherif experiment, found that norms decay slowly as new persons enter a group and the original group members leave. In their experimental situation, confederates of the experimenter originally were involved in establishing the norm regarding the amount of distance the light was observed to move. On each trial, one of the confederates was replaced by a naive subject, and after four trials, only subjects were in the group. This process of sub-stituting a new subject for a previous member of the group continued for thirty trials. By that time, the group norm had moved very close to the answer normally given by subjects viewing the light and responding alone. Jacobs and Campbell showed the transmission of norms across experimental generations. Such transmission occurs because, each individual is influenced by the judgments of the others as well as by what he or she observes. The verbal reports represent a compromise between what the others believe and what the individual sees. Over time, the artificially established norm is violated because it does not represent the world as the subjects experience it.

In a novel extension of the Jacobs and Campbell experiment (Zucker, 1975), it was found that artificially created norms will persist across generations with virtually no decay when the subjects believe themselves to be involved in a permanent social system. In this exten-sion, individuals were told that they belonged to an organization and that the judgments of distance were made as part of this organization. Under these conditions, the norms persisted over the thirty trials. The a subjects accepted the framework of observation because that frame-work was part of the accepted social structure of the organization. Adherence to norms is, then, in part an unintentional result of the acceptance of a larger social system as a frame of referenced.

The norms which have evolved to coordinate interorganizational behavior are general in content and apply to issues of trust and predictability. Macaulay (1963), for instance, has examined noncontractual relations among business firms, relationships where there was little formalized planning or prescriptions concerning how the parties should behave. He noted that the customs which operate fill the gaps in the express agreements between transacting parties. Two of the most widely accepted norms were: “(1) Commitments are to be honored in almost all situations; one does not welsh on a deal. (2) One ought to produce a good product and stand behind it” (1963:63). It is interesting that these norms both stress the meeting of expectations in an exchange relationship. Both norms are related to the concept of trust. It can be argued that predictability in social relationships rests on the ability of the social actors to trust one another, so that each can rely on the assurances provided by the other.

Normative arrangements, assured by implicit understandings, are useful when formal arrangements are not permitted. Perrow (1970) noted that many large, diversified organizations have what are known as trade relations people. These individuals are responsible for managing the organizations exchanges with other firms so that firms which do business with the organization receive, in turn, the focal organization’s business. Such arrangements are particularly important between diversified organizations when there is a good possibility of each firm being able to use some of the other’s products. A firm, for example, may be both a builder of ships and a manufacturer of heavy equipment. If the firm buys its steel from a particular company for the ships, it may expect the steel manufacturer to purchase its heavy machinery in return. Although less common, there may even be cases of complex patterns of reciprocity among a number of firms simultaneously. Thus, the transport firm that purchases the ships from the ship manufacturer might be given the hauling business of the steel firm. Such reciprocal trade arrangements are illegal. Rather than make explicit contracts, a norm of reciprocity develops, over time, which is understood and ac- ceptecTby all but is left implicit.

The norm of reciprocity is ubiquitous in social arrangements (Gouldner, 1960). Reciprocal agreements stabilize interorganizational relationships by providing an element of commitment that binds the transacting parties together. Doctors, for instance, engage in a form of reciprocity in their system of patient referrals. Sometimes the exchanges are asymmetric, so that some form of kickback mechanism is required. While we know of no studies of referral networks, we suspect that the frequency and cohesiveness of such networks would increase when competition is high and communications facilities are available, such as local organizations where the parties can get together.

The existence of reciprocal exchanges and referral networks need not develop from the explicit assignment of individuals (Perrow, 1970) to such tasks. It is likely that the development of the trade relations function occurred when organizations missed complying with the norms of reciprocity because of the increasing size, diversity, and complexity of their operations. Reciprocity could arise because a firm, in disposing of its product to another business, learns about that other business and how it can benefit the focal organization. Reciprocity can also develop from the sense of obligation that arises when one party does a favor for another. Several studies of individuals suggest that the acceptance of a favor implies an obligation to return it ( Wicklund. 1974). We suspect that this tendency for acting on such implicit; obligations, however, is dependent upon the extent of interdependence and the amount of communication among a set of social actors. Referral networks would be unnecessary if there was no interdependence and would be unstable if the actors did not communicate enough to know what each was referring to the other. There is con- siderable evidence that norms are more likely to be adhered to when individuals expect to interact in the future ( Kiesler and Kiesler, 1969 ), and that sanctions are more likely to be applied against violators of norms when future interaction is anticipated (Kiesler, Kiesler, and Pallak, 1967).

A good deal of competition among organizations is eliminated through nothing more than the existence of norms against cutthroat competition. Professional groups and organizations frequently have explicit norms against competition, maintained through proscriptions against advertising. Doctors, lawyers, and architects all have restrictions on advertising, though recently federal agencies have attacked these restrictions for their anticompetitive impact. Kessel (1958) has. described how norms developed in the medical profession so that one; doctor would not testify against another in a malpractice case. Lawyers overcome such reluctance by bringing into their firms nonpracticing physicians who could provide the necessary medical ex- pertise.

It has been demonstrated experimentally that stable patterns of behavionnazilLevoIve among individuals competing with one another (Rabinowitz et ah, 1966). Each individual learns over time that by trying to maximize an individual outcome in an interdependent situa-1 tion neither participant fares very well. As a consequence, patterns of action develop which stabilize the individual outcomes and permit stable outcomes to the competitors. These studies, using the minimal social situation in which outcomes are interdependent but no communication is permitted, illustrate the basis for the development of norms against competition. The norm formalizes a recognized need for stability and predictability in organizational operations.

In addition to norms against overly competitive behavior, there are also normative restraints on the use of interorganizational influence. Conflicts between organizations are occasionally governed by normative restrictions. Public agencies, and particularly those concerned with public safety and welfare, such as hospitals, police and fire departments, and public schools, do not face the same degree of strike threat from unions as economic organizations, partly because it is less acceptable to strike against public organizations. Thus, when workers for these organizations do strike, they generally attempt to develop elaborate social justifications for their deviant behavior, aligning their actions with the socially justifiable goal of improving service or helping the clients. When doctors withheld services in California in 1975 to protest rapidly increasing malpractice insurance rates, it was done, so it was claimed, to hold down the cost of medical care since the doctors could have passed the higher rates along to their patients.

One can hypothesize that the more normative constraints there are against a given interorganizational influence attempt, the more justification will be mustered to legitimate it. In a recent teachers’ strike in Urbana, Illinois, the teachers passed out literature to citizens in shopping centers oudining their demands. There were six demands listed on the sheet. The first five dealt with dimensions which people tend to associate with the quality of education—class size, preparation time, facilities, etc. The last item on the list was salaries. When the school board agreed to meet the first five demands completely, the teachers, of course, still refused to settle. The board had cleverly caught the teachers at the game of attempting to cloak private demands in socially legitimate trappings.

Norms that arise in interorganizational relationships serve to alleviate the incidence of drastic change or surprise. Although we have no systematic data about their formation and alteration, an analogy to individual normative situations suggests that norms arise when uncertainty must be stabilized. When norms change, it is because they no longer serve the interests of the parties to the relationships and there is not sufficient social support to apply sanctions to violators.

From a managerial point of view, norms are not a particularly useful mechanism for coping with interdependence. Since norms represent a social consensus, it is not possible simply to mandate a normative environment to suit an organization’s needs. Management’s task is to become aware of the normative constraints affecting relationships among organizations, recognizing when and whether the norms are beneficial, and if not, taking an active role in attempting to change them by establishing a new social consensus through persuasion.

More direct methods of achieving interorganizational coordination, are available. These methods involve developing interfirm organizations (Phillips, 1960) in a process involving the exchange of information, resources, and other commitments. Though the specific linkage mechanisms used may vary, in each instance there is some mechanism for exchanging information and some motivation to develop coordinated structures of interorganizational behavior.

Source: Pfeffer Jeffrey, Salancik Gerald (2003), The External Control of Organizations: A Resource Dependence Perspective, Stanford Business Books; 1st edition

Leave a Reply

Your email address will not be published. Required fields are marked *