A study of two small-to-middle-sized midwestern school districts, each observed for over a year, shows that the negotiated order concept can provide a useful framework for viewing schools' organizational functions. According to the negotiated order concept, organizational relationships require constant negotiations concerning values, goals, rules, role expectations, authority hierarchies, resource distributions, responses to new situations, decisions, courses of action, and the interests of individuals, groups, and the organization as a whole. The problems in both districts studied were similar, varying in source, emergence, magnitude, duration, and intensity, as well as in the degree and type of negotiations involved in their resolution. Still, one district was found to be more clearly a negotiated order than the other. Analysis of the differences between the two districts in the context of the literature, other observational data, and the limits of negotiation, leads to identification of 12 factors influencing the frequency and nature of negotiation. Among these factors are organizational growth or decline, organizational success or failure, routine or varied activities, organizational size, recruitment of outside administrators, organizational change, decentralization of authority, and operation within an aroused environment. (PGD)