Inter-Organisational Cost Management: Towards an Evolutionary Perspective

This paper investigates how evolutionary theories might further our understanding of inter-organisational cost management. Core concepts of institutionalisation, capabilities, and learning and change are explored in the context of a longitudinal case study. Through the case, we describe the introduction of heuristics as a basis for cost management. Our evolutionary perspective interprets the heuristics as search routines leading to unpredictable modifications to activities, costs and organisational boundaries. Initial analysis indicates that the learning and change evident in these modifications is facilitated by previously instituted capabilities and relatively high levels of trust in inter-organisational relationships. The paper makes three main contributions. First it highlights the blurring of the boundaries between intra- and inter-organisational phenomena. The processes of institutionalisation, capabilities in resource utilisation, and learning and change appear to spill over from the organisational domain to the inter-organisational domain and vice versa. Second, the temporal dimension of evolutionary theories distances us from the apparently instantaneous cost minimising boundary decisions of other theoretical perspectives. Nevertheless, we caution against an overly deterministic view of path dependence. Third, further reflection on the empirical evidence leads to the suggestion that existing routines may blind us to conflicts of interest and power asymmetries in inter- and intra-organisational relationships, opening up the possibility that what previous studies have interpreted as trust, may have in fact been stability of behaviour afforded by inter- and intra-organisational routines.