The study was based on the view that most previous studies of organizational action tended to deal separately with actors, structures, and goals and failed to examine how their interactions affect organizational functioning. The study goal was to determine how broadly defined rules emerge as narrowly defined procedures which are sanctioned as reasonable and proper conduct. Police organizations were characterized as highly rule-oriented organizations which are also segmented in that supervisory personnel and uniformed officers have sharply differing values, norms, and lifestyles. Despite this segmentation, shared understandings based on common experiences and common views of the police role underlie the communication between segments of the police departments studied. In narcotics enforcement, the continuing problem is how to guide, direct, and constrain enforcement toward the higher levels of the drug market. Each narcotics investigation involves uncertainty due to the many factors involved and the investigator's need to decide about the relative value of various informants. The term 'major violator' can be formally defined in at least six different overlapping but competing ways. The meaning of the term depends on the relationship of the people using it and their positions in the organization. Actual decisions regarding which cases to investigate are made by the lower level officers, while supervisors must evaluate the success of these investigations. Analysis of the decisions regarding payment for drug buys also shows the differing perspectives of the various organizational levels. It is concluded that rules and rule-guided behavior must be examined in context and with reference to the subjective definitions that actors attribute to conduct in different contexts. Results suggest that studies of organizations should focus on interactions in different situations, accounts of these actions, and shared understandings. Thirty-eight references are appended.