The Paradox of Stability and Dynamics in Organizational Couplings

According to Niklas Luhmann, organizations are temporal systems operating in a state of dynamic stability. In this article, we discuss how this constitutes a paradox in the sense that systems rely on a state of stability in order to allow for change. We focus on how two organizational systems turn this paradox productive. We begin by discussing the temporal structures of two forms of interorganizational relations they rely on: partnerships and contracts. We argue that the advantage of contracts lies in their ability to determine the future by creating static expectations, but this happens at the cost of flexibility. A contract is thus well suited for contributing to the stability of a system but cannot contribute towards dynamic relations which extend beyond the contract. Partnerships, we argue, are better suited to address the paradox as they are based on expecting the unexpected and operate with an open time horizon. But they do this at the cost of an increase of complexity compared to contracts.