Collaboration between departments is often needed to deliver high quality services to customers. Results of interviewing 27 managers from an engineering consulting firm and 43 employees of a utility company using the critical incident method- indicate that experimental findings on cooperation and competition generalize to organizational settings. Employees who believed their goals were cooperative interacted effectively, made progress on the task, and strengthened their work relationships. Employees also used the organization's tasks, rewards, and values to conclude that their goals were cooperative or competitive. Results identify major dimensions of interaction between departments and specify consequences of effective and ineffective collaboration between departments.