Rules and Routines in Organizations: A Review and ... - CiteSeerX

Paper to be presented at the Fourth International Conference on Organizational Routines June 11-12, 2010 Nice, France

Rules and Routines in Organizations: A Review and Extension

Johann Weichbrodt & Gudela Grote Organization, Work & Technology Group Swiss Federal Institute of Technology (ETH) Zurich, Switzerland [email protected] | [email protected]

ABSTRACT Rules and organizational routines constitute essential parts of organizational life. In this paper, we aim to precisely distinguish the two concepts and advance the understanding of their relationship with one another. We review selected literature on both phenomena, identify relevant stakeholders, and propose several clarifications in terminology. Building on the understanding of rules as artifacts and routines as patterns of behavior, we develop propositions in regard to their relationships: Alignment between rules and routines is influenced by the type of rule, by how rules are perceived and enforced, and whether or not rule-followers can influence the creation of rules. Furthermore, under certain conditions, rule violations can lead to improvements in the rule system.

Weichbrodt & Grote: Rules and Routines in Organizations

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INTRODUCTION Rules and routines are a ubiquitous and essential aspect of organizational life. Recently, turmoil on the global financial markets put the spotlight on the rules of financial systems. "More regulation" is one of the most requested reactions to the current financial crisis. Apparently, the under-regulation of banks and financial institutions – thereby giving too much leeway to their managers and employees – was one of the main causes for the worldwide crisis.

But apart from preventing crises, rules and routines play a much more mundane, yet important role in any organization: They enable coordination among individuals and organizational units by aligning activities and goals. They can also be viewed as providing guidance and orientation for individuals. Having rules in place to work by reduces uncertainty and ambiguity in carrying out a job. Ideally, rules can thus simultaneously promote the interest of the organization as a whole as well as those of its individual members.

But rules and routines have of course also drawbacks: Excessive bureaucratic requirements sometimes serve as an end in themselves and hinder innovation and change. Changes within the organization or in its environment can lead to certain rules becoming obsolete and thus at best useless, if not dysfunctional. If tasks become so routinized that awareness drops, work can become boring and dissatisfying, and mistakes are more likely be made. And because rules by definition restrict freedom of action, they are often not very popular.

Besides procedures laid out in written rules, behavior patterns without written procedures attached to them exist as well. Not everything in organizational life is explicitly regulated


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(nor is that even thinkable), but rather, unwritten rules and emerging routine behavior play a crucial role as well.

With this article we want to achieve two objectives: First, we want to foster a clear distinction between the organizational phenomena of written and unwritten rules, and behavioral routines. Second, we want to advance the understanding of when and how regulation and routinization are functional and what follows from that for rule-making in organizations.

To achieve this, the core of this article is to explore the relationships between formal (written) rules and behavioral routines. Despite the key role of rules in organizations, relatively little is known about how they "work": Formal rules are usually put in place with the intent of creating or otherwise shaping organizational routines as forms of collective behavior. But so far, the social processes which steer this transformation of text in a rule book into collective patterns of behavior are not very well understood. Several authors have addressed either aspects of regulation, formalization and bureaucracy and how individuals cope with them, or the role and shaping of organizational routines, but a general understanding of how rules can (and cannot) influence collective action in the form of organizational routines is still lacking. We address this research gap by reviewing selected literatures on both rules and routines in organizations. We first discuss theory on rules and on organizational routines independently. Building, among others, on Pentland and Feldman's (2005) conceptualization of organizational routines as patterns of collective behavior and rules as artifacts, we then integrate both concepts and develop theoretical propositions about how they are related.


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Unless indicated otherwise, we will use the term "rule" to refer only to formal, explicit and written rules, which can thus also be viewed as artifacts. To be more precise, we propose to view the text of the rule as an artifact. An actual rule book is of course an artifact as well, but it could be destroyed and the rules would still be in place. Therefore, rules are artifacts in the same sense that a work of William Shakespeare constitutes an artifact of his time and culture. Unwritten rules, in contrast, are considered a variant of cultural or group norms and thus cannot be regarded as artifacts in the strong sense. They instead constitute one part of organizational routines (namely the abstract principle, or ostensive aspect, of routines). Behavioral patterns, i.e. routines as they are carried out in practice, constitute the other part (or performative aspect) of organizational routines (Feldman & Pentland, 2003).

RULES IN ORGANIZATIONS: DIFFERENT PERSPECTIVES

Rules play an important role in any organization, as they serve a number of functions: Probably one of the first things that comes to mind about rules, is that they are used by management to impose a certain order within the organization – for example when a dress code for employees is required. As much as this is true, it is of course a rather simplistic topdown perspective. Rules also have important "horizontal" functions: They can serve as a coordination mechanism among individuals and between organizational units (Van de Ven, Delbecq, & Koenig, 1976). For Okhuysen and Bechky (2009), rules provide a coordinating function because they define responsibilities for tasks, can be used to allocate resources, and help developing agreement among organizational actors.


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But rules not only work as instruments of power and as coordination mechanisms. From an interpersonal relationships perspective, rules can also be seen as the formalized outcome of a negotiation process between different interest groups within the organization (e.g. negotiations between management and labor unions regarding working hours). Yet another perspective on rules is that, for the organization as a whole, rules are often needed to ensure the overall quality of work and adherence to standards the organization imposed upon itself. For example, abstract quality standards like ISO 9001 need to be "translated" into organizational rules and procedures in order to take effect.

Organizational Stakeholders in Regard to Rules

In the most basic sense, for every organizational rule there are at least three relevant stakeholders connected to it: First there must be someone (or some institution) who creates the rule, a rule-maker. Secondly, there must be someone (usually a group) for whom the rule is meant. We will use the term rule-follower, although it might be a little misleading: Not all rules are being followed all the time – deviance is a common phenomenon (which we will address later in this article). Therefore, the term rule-follower indicates the person or group of persons who are supposed to follow the rule. A third stakeholder that is worth distinguishing is that of the person or institution in charge of supervising adherence to the rule. We will call this stakeholder rule-supervisor (although to be precise, the rule-supervisor does not monitor the rule but rather the routine, i.e. the rule-follower's behavior).

Rule-making is a form of power, which leads to an inherent power asymmetry regarding rules. Even when rules are created in a process of direct democracy, the rule-maker (in this


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case, the collective of eligible voters) has power over individual rule-followers. In corporate organizations democracy is rare, but rules are nevertheless not always made in a simple topdown fashion. If we consider a basic example of a small enterprise with one owner and just a few employees, this would probably be true. But if we look at a large firm, the issue becomes more complex: Some rules may still be made by line managers for their direct subordinates, but others may be made by specific departments (for example, the HR department issuing rules regarding overtime), the top executives (a CEO declaring a rule in regard to a new strategy), or even by outsiders (e.g. a food safety agency defining sanitary standards). However, in each of these examples, the rule-maker holds an inherent form of power.

In a very small firm, the rule-maker and the rule-supervisor will usually be the same person. In larger organizations, however, these roles can be fulfilled by different actors. For example, a railway company may have a specific department concerned with the writing of safety rules, and separately employ auditors who control rule adherence. If we take the example of food safety standards again, here the rule-maker could be a state agency, and since the food producing company's obligation is to make sure its employees follow these standards, it effectively acts as rule-supervisor. In some cases, not only rule-making but also rulesupervising is done by actors external to the organization, for example when a regulatory body also employs auditors. Regardless of being a member of the organization or not, the rule-supervisor's power is that of controlling adherence to the rule. Often though, rules do not specify the complete details of their fulfillment. In these cases, the rule-supervisor’s position entails the power of deciding whether a particular behavior is in accordance with the rules or not, and thus whether or not sanctions are applied. Rule-supervisors also have (at least to some degree) the power to "look the other way", thereby choosing not to enforce a certain rule in certain situations, possibly undermining the rule-maker's power. It is therefore very


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important for rule-makers to work closely together with rule-supervisors, if their rules are to achieve the intended effect.

As it is with rule-makers, the position of rule-follower can be held by different organizational actors, too. Although the most rule-following will be done by the employees of an organization, in certain cases (e.g. government standards for food production) the company itself assumes the role of a rule-follower. A special case is that of standardization organizations (Brunsson & Jacobsson, 2000), where companies negotiate inter-organizational standards by which the organization has to abide. With these standards, firms act both as rulemakers (at least in part through negotiation) and as rule-followers.

Distinguishing the different stakeholders related to rules becomes particularly important when trying to assess the usefulness of a rule, because it allows us to search for the main beneficiary of any given rule. Ideally, rules will be beneficial to all individuals involved as well as the organization as a whole, but this is probably not often the case in real organizational life. Next, we will therefore look at the specific benefits of rules for rulemakers and rule-followers.

Rule-Making as Organizational Control

Ouchi (1979, 1980) proposed a framework of different types of organizational control, where rules constitute the informational prerequisite to a functioning bureaucracy. Other schemes of control, namely markets and clans, instead rely on prices and traditions, respectively. In Ouchi's view, rules are best suited when there is little goal congruency and high ambiguity


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about performance evaluation among individual members of an organization. Under these conditions – that is, when prices are too difficult to arrive at because of ambiguity and uncertainty – rules offer the lowest transaction costs among individuals. When goal congruency is high, however, clans are more efficient than bureaucracies, because they rely on traditions instead of rules. Traditions, in Ouchi's view, are implicit, non-specified rules. On the one hand, they are not easily accessible and therefore more difficult to learn. But on the other hand, while rules are always specific to a certain problem, traditions can provide much more general guidance for individuals. It is important to note that these forms of control are ideal types, which in reality will never be observed in pure form: "[r]eal organizations will each contain some features of each of the modes of control" (Ouchi, 1979:839). However, Ouchi saw the bureaucracy as the most dominant form, because both markets and clans have much more specific requirements, whereas bureaucracies are more "adaptable" and can exist within a large variety of environmental and organizational conditions.

But rules as forms of control of course also have drawbacks: Sole reliance on rules can lead to failure, as not all possible circumstances can be anticipated and put into a regulatory system. Thus even in highly regulated environments, individual decision-making and creativity is essential (Dekker, 2003; Woods & Shattuck, 2000). Large bureaucratic systems can be a hindrance to innovation and change (Rousseau, 1978), and studies have shown that formalization can have a negative effect on job satisfaction (Arches, 1991) and can lead to feelings of powerlessness and self-estrangement (Kakabadse, 1986). In order to address these disadvantages of rules as systems of control, organizations can react either by abolishing rules and reducing the overall rules density or by implementing more rules to counteract the shortcomings of the existing rules. Classic bureaucratization theory (e.g., Weber, 1978)


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argues that formalization has a self-promoting tendency to create more rules, but Schulz (1998) found that rules do not infinitely "breed" more rules – instead, the production of new rules slows down as more rules are already in place. Walsh and Dewar (1987) suggested that formalization has a greater positive effect in the beginning of organizational life as it increases efficiency, but later on negative effects take over, because, "as formalization fosters the development of administrative power and influence, it may ultimately contribute to organizational ineffectiveness and decline" (Walsh & Dewar, 1987:221).

This shows that finding the right degree of formalization is not at all a trivial task for an organization. Tackling this challenge over time typically leads to phases of lower and higher levels of formalization in organizations – just as on a larger level, western societies seem to go through ups and downs of bureaucratic organization (Olsen, 2008). In a decade-long case study of a small moving company, Cardinal, Sitkin and Long (2004) portrayed the phases of balance, imbalance and rebalancing of informal (strong culture, motivation through personal contact) and formal (formalized job descriptions, rules, and fines for violations) forms of control. They conclude that maintaining a balance is seldom achieved by small, incremental changes. Instead they observed a strong "pendulum-like" movement from one extreme to another: "Because managers remain vulnerable to the pressures that initially caused the imbalance, rebalancing activities may go too far and lead an organization to remain imbalanced, just in a different state" (Cardinal et al., 2004:428). The authors also state that very little is known so far about what causes these differences in the level of formalization over time. Grote (2004, 2009) frames this dilemma in terms of the management of uncertainty, for which she distinguishes two general approaches: Uncertainty can either be minimized through central planning and standardization (thereby reducing operative degrees of freedom), or be dealt with locally, which requires flexibility by maximizing operative


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degrees of freedom. She suggests that loose coupling (Weick, 1976) can serve as a principle of balancing standardization and flexibility. Adler and Borys (1996) tried to aim for a "middle course" by proposing the concept of enabling bureaucracies. They viewed formalization as an organizational technology and drew upon research on the design of equipment technology. According to them, rules and regulation - like equipment - can be either enabling or coercive, the former having a positive effect on employee's attitudes (reinforce commitment, increase efficiency) and the latter a negative (deskilling, less jobsatisfaction). Enabling bureaucracies show the following features: First, "repairs" in the rule system (i.e. changes in the rules) are made by the operators rather than specialists; second, internal transparency (providing a rationale for rules) as well as global transparency (extensive information to all employees) is promoted; and third, rule systems are flexible, meaning that users have an influence on deciding when the rules apply and when deviations are necessary. They further argue that in enabling bureaucracies, deviations from the rule can be seen as opportunities for learning (see also Desai, in press).

Rules from the Rule-Follower's Point of View

So far, we have reviewed literature about advantages and disadvantages of rules from a rulemaker's point of view. It is just as important, however, to look at rules from a rule-follower's perspective. For an individual member of an organization who is supposed to follow rules, they do provide a number of benefits: Following rules is a way of reducing complexity and simplifying decision-making. By not having to make a new decision in every situation and instead using the provided rules, efficiency can be improved to a large extent. In this way, individuals can benefit from organizational knowledge that is codified in rules (Burr, 1998).


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Further beneficial aspects from the individual's point of view are that rules provide guidance and support for the task one is faced with (e.g., especially for new or very complex tasks) and in general offer orientation for new employees. However, rules are also restrictive and one is not always in the position to choose whether or not to follow the rules. Because of their nature as instruments of organizational control, rules are usually combined with sanctions for violations. From this follows that, from the rule-follower's point of view, rules have both a supporting aspect (by reducing complexity and offering guidance) and a restricting aspect (by reducing freedom of action).

Depending on the organizational context and nature of the rule, one of these two aspects of rules will usually be more prominent than the other. For instance, guidebooks or checklists can help accomplish a task and provide support without much restriction. Although it can be argued whether or not they constitute rules in the strong sense, it is nevertheless conceivable that some formal rules can be phrased more as advice or suggestions than as a command, thus emphasizing the supporting aspect. But because rules are seldom exclusively in the individual's interests, and instead also serve organizational interests, the supporting function will often not be the dominant one. In the case of "red tape", that is, ineffective and excessive bureaucratic regulation, the supporting function is lost and rules only restrict actions and slow down work processes (Pandey & Scott, 2002). Research devoted to the phenomenon of "red tape" has mostly been aimed at identifying and describing it, but so far little is known about how to avoid it. Sitkin and Bies (1993) describe a somewhat similar phenomenon, namely the trend towards "legalistic organizations": managerial decisions are more and more influenced by legalistic concerns (fear of public and legal scrutiny), resulting in increased usage of formal policies and procedures, neglecting other criteria relevant to organizational decision making (e.g. efficiency, profitability, or positive employee relations), and increased use of


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legal rhetoric. Legalistic organizations can be seen as an example where the benefit of the rules for management (i.e., the rule-makers) outweighs by far their benefit for the rulefollowers. The restricting function is over-emphasized in the interest of the rule-makers, at the cost of the supporting function (or even any usefulness at all) for the rule-follower. In contrast, Adler and Borys' (1996) idea of an enabling bureaucracy can be seen as an example where rule-followers benefit most from the rules, because their supporting function is emphasized. In a similar vain, DeHart-Davis (2009) recently proposed a theory of "green tape", or effective rules. She argues that rules are most effective when they are written down, have valid means-end relationships, employ optimal control, are applied consistently, and their purposes are understood by stakeholders.

Whether or not rules fulfill all their intended functions for individuals and organizations, or fail at doing so, depends to a large extent on the quality and on the appropriateness of the rule itself: Is it written clearly (for the intended audience)? Is it suited well to the processes it is meant to regulate, is there no over-regulation? Are restricting and supporting aspects both taken into account enough? Ouchi posed the following problem in his conclusion: "The design problem thus becomes one of assessing the social and informational characteristics of each division, department, or task and determining which of the forms of control ought to be emphasized in each case" (1979:839). It is worth adding that even with just rules as a form of control, the question of "how much" regulation and "what type" of regulation is not trivial (Grote, Weichbrodt, Günter, Zala-Mezö, & Künzle, 2009). In regard to safety rules, Hale and Swuste (1998) proposed a system of categories for rules. They distinguish rules at the level of action regulation they offer: Rules can define actions on a very concrete and detailed level (action rules); they can serve as solution search rules by specifying the means of how to come to a decision about the right course of action (process rules); or they can just define a


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goal to be achieved, leaving it up to the individual how to accomplish it (goal rules). While goal rules offer the most decision latitude, i.e. the least restriction, they also offer only little guidance and support. In contrast, action rules are high in both aspects – they support individuals by guiding their action very narrowly, but do this at the cost of also highly restricting it. Hale and Swuste therefore emphasize the balancing function of process rules as a possible compromise between the two extremes.

In any case, a good rule system is always a trade-off. Weick (1979) stated that scientific theories can never be accurate, general and simple at the same time. A similar statement can be made regarding rules: When rules are optimally accurate and general, they will inevitably become more complex. When they are simple, they may also be general, but then they will not be very accurate. And likewise accurate and simple rules will always lack generality. Hence, regulation is always a trade-off between these three characteristics.

Putting Rules into Practice

Looking at the effectiveness of rules or at the characteristics of an organization's rules system is, however, just one side of the story. Studying aspects of rules and regulatory systems as forms of control from the rule-maker's point of view or looking at different aspects of rules for rule-followers are both fruitful perspectives. But in doing this, we focus on rules as social structure and thus neglect human agency as the other side of the story. From this point of view, we have to look at what rule-followers make of the rules, how they adopt or don't adopt them, and how their behavior patterns in turn may influence formal rules. After all, whether or not rules as text can serve any of the above mentioned functions depends on how


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individual people put them into practice. Rules are a recipe, but it is human action that creates the cake.

Rules in organizations are most effective when they influence rule-followers' behavior in two regards: first, when they create collective behavior (that is, to induce coordinated action of a number of individuals), and second, when they lead to patterns of behavior (in the sense of repetitive and predictable occurrences of human action). Both are also typical characteristics of organizational routines, which are commonly viewed as collective patterns of action. This concept seems therefore fruitful for focusing on the agency aspect of rules, or the "cakemaking". Therefore, we will next discuss the concept of organizational routines and try to clarify some terminology issues. After that, we will then look at the specific relationships between rules and routines.

ORGANIZATIONAL ROUTINES: DIFFICULTIES IN TERMINOLOGY AND SOME SOLUTIONS

The origins of the organizational routines concept are traced back to the works of behavioralist organizational theorists Herbert Simon, James March and Richard Cyert. While March and Simon do not explicitly discuss routines but rather "performance programs in organizations" (March & Simon, 1958:142), and Cyert and March use the term "standard operating procedures" (Cyert & March, 1963:101), these ideas are still regarded as foundations for the organizational routines concept. However, these early works lack a clear definition of and distinction between rules and routines.


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Nelson and Winter (1982) later emphasized the role of routines in organizations in their theory of evolutionary economics. They, too, employed a very wide and flexible interpretation of routines. They proposed that routines can serve three functions: They can serve as organizational memory, they can constitute a truce in intra-organizational conflict, and they can serve as a target for control, replication and imitation. Since the publication of Nelson and Winter's work, the concept of organizational routines has been picked up by numerous authors and has become a central construct in organizational science (Becker, 2004; Cohen, 2007). It is often used in such a way as to encompass a large share of all of the activities that go on inside an organization. How much of organizational behavior can reasonably be called routine, is of course debatable (Felin & Foss, 2009). But the popularity of the concept nevertheless supports at least the notion that routine behavior plays a major role in organizations. However, as the concept of organizational routines has been used in various research settings and contexts, it has also been ascribed different meanings and different definitions have been offered.

Especially the idea of routines as "storage" for organizational knowledge has resonated with organizational theorists (Argote & Darr, 2000; Eisenhardt & Martin, 2000; Levitt & March, 1988). Cohen and Bacdayan defined routines as "patterned sequences of learned behavior involving multiple actors who are linked by relations of communication and/or authority" (1994:555). Drawing on psychological theories of the memory of skills, they proclaimed that organizational routines are stored as distributed procedural memories. Gersick and Hackman (1990), on the other hand, focused on the behavioral side of routines. They studied routines within groups, and according to them, "[a] habitual routine exists when a group repeatedly exhibits a functionally similar pattern of behavior in a given stimulus situation without explicitly selecting it over alternative ways of behaving" (Gersick & Hackman, 1990:69).


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The conceptual work of Martha Feldman and Brian Pentland (2003) introduced an advanced view on organizational routines. They define routines as "generative systems that produce repetitive, recognizable patterns of interdependent action carried out by multiple participants" (Pentland & Feldman, 2008:236). Feldman and Pentland argue that in analogy to Latour's conceptualization of power (Latour, 1986), routines also share a duality of principle and practice: routines incorporate ostensive aspects (the principle, the common understanding, or articulated pattern of a routine) as well as a performative aspect (the practice, or execution of a routine at a specific time and place). Ostensive aspects of a routine can be a taken-forgranted norm or the abstract idea of the routine. However, as this understanding may not be exactly the same from person to person or in different situations, ostensive aspects "should not be conceptualized as a single entity" (Pentland & Feldman, 2005:797). This idea of the routine has to be put into practice in order for the routine to exist. In this performative process, the abstract principle of the routine is adapted to the specific circumstances of a concrete situation.

In Feldman and Pentland's concept, both aspects of a routine serve a number of functions: The principle of a routine (ostensive aspect) helps through guiding, accounting, and referring: It can guide in the sense that it can serve as a normative goal for action. It can also provide an explanation for one's action, thus support accounting for what one is doing. Finally, since the principle of a routine is a simple label for a complex action pattern, it can be used in communication as a commonly understood reference. The practice of a routine (performative aspect), on the other hand, is essential for both the establishment and maintenance of the ostensive aspect, as routines only develop and continue to exist through repeated action. However, due to the situational characteristic of the performative aspect (each performance


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of a routine has to be adapted to the situation at hand, where circumstances may change), it can also modify the principle, and thus the routine as a whole.

The different definitions and understandings of routines in the organizational science literature are the reason that despite the growing body of research (or maybe precisely because of it), some ambiguities persist concerning what exactly an organizational routine is. Next, we will address some of these issues in terminology with the aim of further clarification.

The question whether routines should be regarded as an individual level or collective level construct has been answered by Dosi, Nelson and Winter (2000) in such a way that habits describe individual level patterns and routines describe patterns between multiple actors (thus at the collective level). However, several other open issues remain.

Routines as Latent Disposition or as Observable Behavior

Nelson and Winter (1982) conceptualized routines by way of analogy as the organizational equivalent to individual skills. They also further explored the metaphor of viewing routines as the genes of an organization. Both analogies emphasize the aspect of capacity for a certain behavior, rather than execution of actual behavior: A skill gives an individual the potential for executing a certain (routinized) behavior, but it is not equivalent with that behavior. Likewise, genes constitute the potential for an organism's phenotype, but by no means do they fully determine it. Nelson and Winter, however, also emphasized that, in order for an organization to keep this potential, routines have to be executed in everyday organizational


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practice: "The idea that organizations 'remember' a routine largely by exercising it is much like the idea than an individual remembers skills by exercising them" (Nelson & Winter, 1982:99). Regardless of Nelson and Winter's dualistic notion of routines as both capacity and behavior, a large stream in the organizational and economic literature has picked up the notion of routines as capabilities (e.g., Eisenhardt & Martin, 2000; Zollo & Winter, 2002) . Hodgson (2008), for example, very rigidly defines routines not as behavior but as dispositions. In his view, "a routine is […] defined as a generative structure or capacity within an organization. Routines are organizational dispositions to energize conditional patterns of behaviour within an organizational group of individuals, involving sequential responses to cues" (Hodgson, 2008:25, italics in the original). At the same time, other authors have focused on the interpretation of routines as actual patterns of behavior (e.g., Edmondson, Bohmer, & Pisano, 2001; Essén, 2008; Gersick & Hackman, 1990; HowardGrenville, 2005; Reynaud, 2005).

In attempt to resolve the question whether routines should be viewed as behavior or as disposition, we propose that the term "routine" should be used to focus on collective behavioral patterns, while the term "capability" should be used for emphasizing the dispositional aspect at the firm-level.

Mindfulness or Mindlessness in Carrying out Routines

Several authors have argued that routines are not mindless behavior, but in contrast they constitute an "effortful" and "ongoing accomplishment" (Feldman, 2000:613).While there is certainly some truth to this idea, it is also important to remember that routines (or habits) in


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general are carried out with less consideration and mindfulness than non-routine activity. After all, one purpose of task routinization is to free up resources for other issues.

On the individual level, it can be said that habits are necessary for mastery. A highly successful person needs to be able to do many things routinely, freeing resources for other tasks. No skills will be developed without the forming of habits - e.g. one does not learn to play a musical instrument by once studying the theory of it, but rather by practicing repeatedly and habitually. Indeed, psychologist William James urged his readers to "make our nervous system our ally instead of our enemy. […] For this we must make automatic and habitual, as early as possible, as many useful actions as we can […]. The more of the details of our daily life we can hand over to the effortless custody of automatism, the more our higher powers of mind will be set free for their own proper work" (James, 1983:48). At the same time, habitualization bears the peril of doing things in the learned way despite circumstances having changed, thus potentially resulting in inefficiency or even failure (Luchins, 1942).

This dilemma of the "two faces of habits" (or routines) can cautiously be applied to the organizational level: Organizations, too, routinize established processes to be able to focus on other issues, while at the same time facing the danger of sticking to the routine despite circumstances having changed. In their article about habitual routines in groups, Gersick and Hackman (1990) describe a possible example of particularly disastrous wrongful collective routine-following: In 1982, Air Florida Flight 90, scheduled to fly from Washington, D. C. to Fort Lauderdale, FL, crashed shortly after take-off because of snow and/or ice adhering to the aircraft's wings, killing 78 people. There had been moderate to heavy snowfall, but the crew, which was not very acquainted with flying under such circumstances, neglected to use the


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anti-ice capability of the aircraft to remove the snow and/or ice from its wings (National Transportation Safety Board, 1982). Gersick and Hackman raise the question whether the crew routinely skipped the de-icing of the airplane, because they were not used to conditions of snowfall and cold temperatures and regularly did not need the anti-ice procedure. Dekker (2003) further explored this dilemma in regard to safety rules by describing two models of how procedures can be followed (either as route rule-following or as substantive cognitive activity) and their implications for high-risk organizations.

In summary, it can be argued that routinization is two-faced: On the one hand it is a necessary measure for any organization to improve efficiency and productivity by freeing resources which are otherwise needed for solution finding and decision making. In that sense, routines are always carried out less mindful than non-routine behavior. On the other hand, routines may discourage the learning of new, possibly better ways of doing things, and sole reliance on routines may lead to failure, when conditions have changed and the routine no longer applies.

Routines as Behavior and Rules as Artifacts

Feldman and Pentland further developed their conceptualization of routines by integrating artifacts, i.e. physical manifestations of a routine (Pentland & Feldman, 2005, 2008). Examples for artifacts can be the written procedures, like rules or checklists, that prescribe a certain way of doing things, or the log files or other forms of transaction history that are produced by computer systems as the outcome of a routine. Artifacts such as rules can also be embedded in further artifacts like computer programs and decision-making tools. In this case


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they can be especially powerful in shaping behavior (D'Adderio, 2008). Because rules are necessarily abstract and incomplete, they never fully align with routines. Divergence between rules and routines is therefore a focus of the remaining part of the paper. But this conceptualization of formal rules as organizational artifacts in contrast to routines as collective patterns of action not only opens up opportunities to theorize about the potential relationships between rules and routines. It further lets us begin to get a theoretical understanding of informal (or unwritten) rules: An unwritten rule can be seen as the principle (an ostensive aspect) of a routine for which there is no artifact like a written rule. Research on unwritten rules in organizations is scarce. In one of the few works on this topic, Henderson and Argyle (1986) analyzed informal rules of work relationships. They found two types of unwritten rules for relationships at the workplace (between peers as well as between superior and subordinate): Firstly there are maintenance rules which reduce or regulate conflict, thereby maintaining the relationship (e.g. not to disclose what is said in confidence, not to criticize the other publicly). Secondly, there are reward rules which provide a reinforcing output for the participants (e.g. sharing knowledge for cooperation on a common task). The authors view these informal rules as "shared cognitions, rather than shared behaviour" (Henderson & Argyle, 1986:260), which relates to the notion of ostensive aspects of routines as a shared understanding. However, as research on informal rules is so limited, a clear understanding of the relationship between routines and informal rules is difficult to arrive at. In the next part of the paper, we therefore focus on the relationships between formal rules and routines, outlining the ways in which they influence one another in more detail. The above developed different aspects of rules and routines along with the relevant stakeholders are summarized in figure 1.


Figure 1: Rule, routine, and the relevant stakeholders in organizations

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THE RELATIONSHIP BETWEEN ORGANIZATIONAL ROUTINES AND RULES

So far, we have laid out the theoretical foundations for routines and rules independently, which leads us to the core question of how both are connected. It is obvious that rules are often put into place with the intent to create routines, but as rules are static artifacts, and routines are patterns of action, incorporating a certain extent of variation, it is clear that this is not a trivial process. We will make four propositions on how this process unfolds in organizational life.

Types of Rules and the Effect on Routines

It is well established that rules can never completely prescribe the desired behavior in every last detail, that even in highly regulated environments rules have to be – to some degree – translated and interpreted (Bourdieu, 2005; Desai, in press; Reynaud, 2005). Rules are abstract and general in nature and therefore need to be translated to concrete actions, and parts that haven't been specified need to be added in. When this translation process occurs in the same way on multiple occasions and with different actors, it leads to the establishment of an organizational routine. There is, however, considerable variation in the degree to which rules prescribe and thus influence behavior. Some rules may shape behavior by prohibiting certain acts, thereby functioning as boundaries, within which the rule user is (more or less) free to do what he or she sees fit. Other rules are designed to influence behavior to the smallest detail, dictating the exact process of how to accomplish a task from beginning to end. One example of a more elaborate classification of rules in regard to their level of action regulation is the categorization scheme for safety rules by Hale and Swuste (1998) discussed


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above. From this follows that, depending on the level of detail a rule contains, it is more or less tightly connected to the corresponding routine. Or, in other words, the degree of overlapping between the behavior described in the rule and the routine depends (among other factors) on the nature of the rule. If, for example, a rule just states a goal that is to be achieved, or prohibits a single certain action, the corresponding organizational routine will be influenced less by that rule than by a rule which prescribes the process in detail. A boundary defining rule (goal rule or proscription) can thus lead to more variation in the connected routine than an action rule. Depending on the circumstances, variability of routines can either be a desirable or an adverse effect: When creativity or innovation is desired, a few boundary defining rules can prevent the "red tape" phenomenon and leave rule-followers enough leeway, while at the same time ensuring at least some aspects of the production outcomes. Similarly, when rule-followers are faced with high uncertainty and frequent unforeseeable situations, goal rules or proscriptions can provide the high amount of flexibility needed to adapt routines quickly. On the flip side, strict regulation will lead to less variable routines, which are usually desired for high-risk tasks with low uncertainty.

Proposition 1: The likelihood of variability in a routine increases when it is regulated by boundary defining rules, and decreases when it is regulated by action rules.

Perceptions of Rules and the Effect on Routines

The impact of rules on routines not only depends on the nature of the ruler themselves, but also on characteristics of the rule-followers, namely their perception of rules. In the field of health care, McDonald, Waring, Harrison, Walshe, and Boaden (2005) showed how rules as


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artifacts can be interpreted very differently by people with different professional backgrounds. Comparing doctors' and nurses' views on rules and guidelines in the operating theater, they found that members of these two professions differ largely on the importance they ascribe to rules: Doctors tended to play down the importance of written rules, emphasizing the non-routine nature of events in medical care and that following rules and procedures prevents people from thinking for themselves. They deemed rules useful for trainees with little experience, but believed that experienced doctors can provide the best care using their tacit knowledge. In their view, rules are therefore primarily restricting. Nurses, on the other hand, regarded following the rules as an important part of their professional ethic. For them, working by the rule was regarded as important because it reduces the risk for errors and thus was regarded as a key element in providing safe and high-quality patient care. They thus emphasized the supporting aspect of routines. It is not far-fetched to assume that the different belief systems of doctors and nurses lead to a different form of "translating" rules into routines: When rule-followers view rules primarily as supporting, they will most likely adhere more to the rules than when they view them as restricting. Hence, routines will be more in alignment with the rules. However, the reverse is not automatically true: Under a system of strict supervision and sanctions, (i.e., with high involvement of the rulesupervisor), rule-followers will abide by the rules even if they view them as mostly restricting.

Proposition 2a: When rule-followers perceive the rules as supporting, the likelihood of alignment of rules and routines increases. Proposition 2b: When rule-followers perceive the rules as restricting, involvement of the rule-supervisor is necessary for alignment of rules and routines.


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Participation in Rule Creation

One way in which routines can influence written rules is the process of formalization. While formalization has been studied by some social scientists as a static characteristic of organizations (e.g., Walsh & Dewar, 1987), it is worthy to focus on formalizing as a process that goes on within organizations. If, for example, an organization wants to get certified in accordance with the ISO 9001 standard for quality management, documented procedures have to be developed for quality-critical processes. When the routines that are already established are deemed fit and are thus put into writing to become the required documented procedures, this can be regarded as a case of routines influencing rules. This influence depends, however, on the level of participation by rule users. Such rules, SOPs or standards can of course be imposed completely top-down. But when those who already practice the routine in question take an active role in the process, their established patterns of action (performative aspect) as well as their ideas about and concepts of the routine (ostensive aspects) can have an impact on the written rules. As rule-followers can bring in their "expert" knowledge about the routines to be regulated, the ensuing rules will be better suited to the circumstances. These rules will then more likely be in alignment with the corresponding routines.

Proposition 3: Participation by the rule-followers in rule creation increases the likelihood of alignment between rules and routines.


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Rule Violations and Rule Change

Rule violations can have a number of different causes: Certainly some rule violations occur because of workers' negligence or for personal gain (Robinson & Bennett, 1995). However, other violations can be considered "necessary" to ensure productivity and efficiency (Morrison, 2006), or because circumstances have changed and the rules no longer suit the situation at hand. In what is now a classic example of "productive" rule deviation, Bensman and Gerver (1963) analyzed the use of the tap in airplane construction. Workers routinely used the tap, a tool to "re-drill" holes, when the components to be screwed together would not align properly. This was "the most serious crime of workmanship conceivable in the plant" (p. 590), as this practice bears significant risks for the stability of the airplane's structure, yet it happened frequently, and even was (unofficially) requested by foremen. Bensman and Gerver described how workers would specifically not use the tap whenever inspectors were near and how professional norms prevented the overuse of it. They point out that this practice had an important function in order to ensure productivity, since not using the tap meant serious delays in production. Similarly, in a study conducted at a UK railway company, Lawton (1998) analyzed shunters' behavior and attitudes towards breaking rules. She developed a classification of rule violations with which she distinguishes (among three other types of rule infringements) "routine violations": They constitute a shortcut which has become regular behavior. They are quite common and usually concern less risky actions (or the violator at least thinks he or she can take the risk because of his or her high competence) and often go unpunished. Bourrier (1998) analyzed maintenance work in four nuclear power plants. She found in her comparative case study that the workers' compliance with rules was higher when they had influence over changes in the rules system. Changing conditions in the plant can lead to workers being "forced" to work against the rules in order to do the right


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thing, when these rules are not adapted quickly. Two of her cases she therefore identified as "self-correcting organizations", for which it is typical that procedures can be very easily modified by the people who have to work by them, thus reducing the necessity of rule violations.

These examples show how well-intended rule violations can be incorporated in organizational routines, which then deviate significantly from the rules in place. As Bourrier's example illustrates, these "violating routines" can be seen as an opportunity for improvement: When violations become the norm, and the actual routines "drift off" from the prescribed procedure, this can be a clear sign that rules should be re-written. However, this form of organizational learning does not happen automatically. Rather, rules have an inherent drive to keep their validity because of sanctions attached to them: Treating rule deviations as "bad behavior" is the default way of dealing with them. Violations are usually hidden practices, thus actually helping to keep the formal rules in place. Therefore, rule-supervisors need to consider if a given rule violation is in fact it not "bad behavior" but a case of "bad rules". This can generally be facilitated by increasing participation by rule-followers. Employees who have to work by rules can be considered as "experts" on these rules. Since they are the ones doing the "translation" and interpretation, they are the first to know when rules no longer provide support or produce more problems than they solve. Without them, it is difficult to assess the appropriateness of a rule. Therefore, regularly involving rule-followers in the evaluation of rule violations facilitates rule change.

Proposition 4: When rule-supervisors include rule-followers in evaluating rule violations, the likelihood of identifying and correcting inadequate rules increases, thus leading to higher rule-routine-alignment.


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CONCLUSION

Our goal in this article has been to clarify the terminology in regard to rules and organizational routines, as well as to advance the understanding of their relationship and functioning in organizations. We discussed literature on both rules and routines, and made propositions about how they are related.

In our view, the crucial point in regulating is matching the right type of rule with the right process within the organization. The overall organizational goal can be viewed as achieving a balance between standardization and flexibility (Grote, 2009), while from the point of view of the individual, rules need to provide the right level of both support and restriction. In order to achieve a continuous balance in these conflicting goals, participation of all stakeholders in rule creation and adaption is crucial. Issuing rules in order to shape individual's behavior in a top-down fashion may seem tempting for rule-makers – and in some cases, e.g. commandand-control environments like the military, it may function well. But all rules have to be "translated" into concrete action in the form of organizational routines, and because this translation process allows for variation, the outcome is not entirely predictable. Therefore, it is important for rule-makers to keep in mind that a number of other factors influence organizational routines as "outcomes" of rules: For example, the nature of the rule itself, how it is perceived by the rule-followers, how they are involved in the process of rule creation, and how it is monitored by rule-supervisors. Furthermore, violations of rules are not always a bad thing: They can be seen as opportunities for improving the rule system, but for this, rulefollowers must participate in the process.


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Future research on the subject matter should focus on further conditions that potentially shape the relationship between rules as artifacts and routines as patterns of behavior: For example, the role that organizational culture plays in this is so far understood only very little. It can also be estimated that training and education about rules have an impact on how they are carried out – thus shaping routines. Furthermore, a more detailed look at the rules itself can prove fruitful: More fine-grained categorization systems of rules can be used to better answer the question of what type of rule is best suited for a certain routine. Lastly, the role of informal, unwritten (or even unspoken) rules is heavily understudied. It may very well be that in some cases, unwritten rules have even a much stronger influence on behavior patterns than formal rules.


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