A study examined the influence of differences in school district organization on internal school organizational processes that are central to reform strategies, such as teacher cooperation and instructional leadership. Data were obtained from interviews conducted with the principals of 98 Tennessee elementary schools that participated in the State's School Incentive Improvement Program (SIIP) and from teacher questionnaires. Findings indicate that schools in both centralized and decentralized districts had a more positive school ethos when compared to schools in districts characterized by "fragmented centralization." The level of district support appeared to be a crucial mechanism for positive change in schools. A conclusion is that the implementation of internal organizational processes may depend upon designating a clear message of general district control policy and the level of district support for school operation. (37 references) (LMI)