Managing interorganisational relationships: an in-depth study in a hospital context

Can interorganisational relationships be managed for effective functioning? This is the problem investigated in this research. Organisations world-wide are adopting co-operative relationships with other organisations. These interorganisational relationships are viewed as a way to enhance their own business performance (Williamson 1985, 1991; Dyer 1997; Gulati 1998; Barringer & Harrison 2000; Das & Teng 2000; Quinn 2000; Stuart 2000; Johnson, Korsgaard & Sapienza 2002). Despite this, the success rate for interorganisational relationships is not high (Hutt, Stafford, Walker & Reingen 2000; Quinn 2000; Hitt, Ireland & Vaidyanath 2002) with many of them failing to achieve their objectives. Understanding how to manage these boundary-spanning arrangements is important to realising the objectives of the business strategy. The research setting is a large private hospital in Australia. It works with a network of external service organisations that provide the Hospital with a range of clinical and non-clinical support services including: Diagnostic Imaging, Pathology Pharmacy, Food Services, Environmental Services, and Human Resources support. This research explores how these different relationships were managed in their operating period: 1998 to 2002. It reveals the dynamic and often ad hoc way, in which managers made sense of the collaborative service context, and how managers influenced the process of interorganisational relationship formation. Extant research about interorganisational relationships comes from a variety of fields. For this research it is most relevant to draw from the research fields of organisational theory, organisation behaviour, sociology, psychology and management. These fields contribute findings that provide useful knowledge upon which to build further understanding about how managers contribute to construct interorganisational relationships functioning (Ring & Van de Ven 1992, 1994; Walsh 1995; Chikudate 1999a, 1999b; Boddy, Macbeth & Wagner 2000; Hutt, Stafford, Walker & Reingen 2000; Lasker, Weiss & Miller 2001). This research uses an interpretivist methodology that enables the researcher to explore the dynamic nature of the Manager's sense-making in the construction of six interorganisational relationships. For the purposes of this research, interorganisational relationships are defined as new structures that emerge through the social interaction of actors involved in shared service delivery. The collaborative context of interorganisational relationships stimulates managers' sense-making by challenging institutionalised ways of behaving. This sensemaking process builds new knowledge stores and contributes to emerging, new management routines. The process is transformative and enables the emergence of interorganisational relationships. It emerges from this research that managers take cues from their context. These cues are used to interpret and make assessments that enable decisions about those actions that they take to construct the interorganisational relationships. A manager's processing of contextual cues, through interpretive frames and dispositional sense-making filters, is an inter-subjective, socially constructive process. The 'self' is a dimensional influence in the managers' sense-making and management behaviours and is implicated through the notion of contextual interpretive frames and dispositional sense-making filters. A model of interorganisational relationship management as a transformational process is developed. The association between contextual influences and managers' behaviours will raise awareness for professional practitioners of the challenges involved in managing across organisational boundaries and in turn, may contribute to more successful implementation of interorganisational business relationships.