Coping with Problems of Understanding in Interorganizational Relationships: Using Formalization as a Means to Make Sense

Abstract

Research into the management of interorganizational relationships has hitherto primarily focused on problems of coordination, control, and to a lesser extent, legitimacy. In this article, we assert that partners cooperating in such relationships are also confronted with ‘problems of understanding’. Such problems arise from differences between partners in terms of culture, experience, structure and industry, and from the uncertainty and ambiguity that participants in interorganizational relationships experience in early stages of collaboration. Building on Karl Weick’s theory of sensemaking, we advance that participants in interorganizational relationships use formalization as a means to make sense of their partners, the interorganizational relationships in which they are engaged and the contexts in which these are embedded so as to diminish problems of understanding. We offer a systematic overview of the mechanisms through which formalization facilitates sensemaking, including: (1) focusing participants’ attention; (2) provoking articulation, deliberation and reflection; (3) instigating and maintaining interaction; and (4) reducing judgement errors and individual biases, and diminishing the incompleteness and inconsistency of cognitive representations. In this way, the article contributes to a better understanding of the relationships between formalization and sensemaking in collaborative relationships, and it carries Karl Weick’s thinking on the relationship between sense-making and organizing forward in the context of interorganizational management.