This study carries forward the new institutional exploration of the legal environment of organizations by examining the dynamics of legalization in the Commonwealth of Virginia Grievance Program. It extends legalization research to the public administration and policy field by exploring and describing how the legal environment of complex, public organizations serve to transform--to legalize--social processes for resolving problems and disputes. This knowledge and insight will educate and empower public administrators to better manage the political, administrative, and institutional change normatively sanctioned by the downsizing, reinvention, and re-engineering government reform movement.

A phenomenological or naturalistic inquiry perspective frames the research as a methodological philosophy or research mode that focuses on what people experience and how they interpret the world. Thirty-four key informants were interviewed Statewide from three primary groups: (1) Managers and supervisors, (2) Non-supervisory personnel and grievants, and (3) Administrative hearing officers appointed by the Virginia Supreme Court. As a means of triangulation multiple data-gathering techniques were used to investigate interview data. Other sources include direct observations, official documents, and archival records.

The study employs Sitkin and Bies' (1994) new institutional conceptualization of legalization as an investigatory lens to examine and report the findings. Data analysis revealed that the legalization of internal dispute resolution (IDR) in the Commonwealth tends to result in the circumvention of immediate supervisors in the formal grievance process, thereby obviating their positional authority to resolve employee grievances in a nonadversarial way. In sum, data supports the legalization literature that indicates mimicking judicially legitimate procedure in the grievance process alters the way flexibility, trust, and shared meanings govern the essence of organizational relationships and results in economic and systemic costs (loss of organizational trust and legitimacy) while resulting in little substantive justice.

This study suggests that public organizations that are better adapted to their legal environments are not necessarily more effective. Thus, public administration theorists and practitioners should strive to understand how organizational forms, structural components, and legal rules (the institutional environment) transform organizational relationships (social and technical environments) in complex, public organizations.