Sense Making and the Emergence of a New Form of Market Governance

Abstract

The problem of sense making is particularly acute when established organizations face a sudden set of changes in their fields. This article offers some conceptual clarification of this issue in several ways in the context of profit-making firms. In these circumstances, managers need to worry about not just competitors but also governments, suppliers, and workers. Because of these complex interdependencies, the process of sense making is accompanied by a search process that may lead managers in directions that are a priori unpredictable. New sets of understandings about how to survive in a market often reflect political compromises between actors that create new cultural conceptions of action. Managers have to sometimes take what systems give in order instead of what they might prefer. The author illustrates these principles in the case of the reorganization of the European defense industry.