Chapter 5: Functions of Negotiation and Contracting
* the focus in much of organizational theorizing is to homogenize what is essentially a pluralistic world. On balance, organizational theorists have tended to emphasize the unifying principles that lend cohesion, focus, legitimacy, and identity; the result has been to problematize (or often overlook) the variety embedded in pluralism. (Glynn et al., 2000: 726) The formal process of negotiating enables, perhaps even forces, the parties to engage in sensemaking. (Ring and Van de Ven, 1989: 185) INTRODUCTION Research on interorganizational governance focuses primarily on problems of coordination, control and, to a lesser extent, legitimacy. In this chapter, I develop a complementary perspective, proposing that contracting enables interorganizational participants to give, make, demand and break sense. I further contend that these sociocognitive processes contribute to value creation not only by helping participants in interorganizational relationships to cope with problems of understanding, but also because they facilitate the transfer of pre-existing understandings and the co-creation of novel understandings. This chapter thus emphasizes an alternative theoretical perspective on the functions, beneﬁts or positive consequences of contracting practices and formalization in general, departing from mainstream research (see the non-shaded areas in Figure 5.1). By doing this, I attempt to ‘provide more creative, innovative, and insightful ideas, facilitating new theory generation and enhancing the level of disciplinary maturity’ (Robson et al., 2002: 392) in the interorganizational governance ﬁeld. I also answer calls from, among others, Glynn et al. (2000) to use pluralism and paradigmatic eclecticism more explicitly in organizational theorizing. * An earlier version of this...
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