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Modeling the Micro-Foundations of Routine Formation: When Expectations Match Interpretations

35 Pages Posted: 13 Jan 2015  

Amit Gal

Open University of Israel, Students

Ziv Hellman

Bar-Ilan University

Date Written: August 12, 2010

Abstract

While organizational routines have received considerable attention in strategic management literature, relatively little is known about how new routines are formed. In this paper we develop a formal model of routine formation that builds upon the game-theoretic concepts underlying “common knowledge”. We focus on individual-level cognitions of situations and actions as key factors in routine formation, and explicate how these cognitions change over time as situations recur. We treat actions as signals that both call for subsequent action and trigger a retrospective evaluation of the situation. The retrospective sense-making gives rise to expectations regarding future actions in similar situations. Over time, the amount of information conveyed by these signals decreases and eventually disappears – a situation which we identify as routine operation. In such situations, actors’ perceptions, and their corresponding expectations for actions, become aligned, so that no “surprises” can happen and no further sense-making is required. We discuss the implication of our model on the empirical study of routines, as well as its contribution to the theoretical understanding of routines and learning in organizations.

Keywords: organizational routines

Suggested Citation

Gal, Amit and Hellman, Ziv, Modeling the Micro-Foundations of Routine Formation: When Expectations Match Interpretations (August 12, 2010). Available at SSRN: https://ssrn.com/abstract=2548567 or http://dx.doi.org/10.2139/ssrn.2548567

Amit Gal (Contact Author)

Open University of Israel, Students ( email )

Israel

Ziv Hellman

Bar-Ilan University

Ramat Gan
Ramat Gan, 52900
Israel

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