Procedural fairness in strategic alliancesInternational Business and Development

Università degli Studi di ParmaProf. Alessandro Arrighetti

2013/2014

Balan IrinaTerzoni Luigia

Idea of fairness in the processes that resolve disputes and allocate resources.

Organizational justice: from micro level aspects to macro level phenomena

Selection of the partners focused on social characteristics

Procedural justice: some general definitions

Distributive justice

• distribution of benefits and harms, rewards and costs or other things that affect the well-being of a group’ members or a community

Procedural justice

• extent to which the dynamics of the decision process are considered fair and the way in which decision-making process influences the quality of exchange relationships

Interactional justice

• individual’s perceptions of the quality of interpersonal treatment received during the enactment of organizational decisions and procedures

Some General Definitions

Distributive

justice

Interactional justice

Procedural justice

The three types of justice in alliances

Procedural justice as an instrument to determine each party’s trustworthiness and commitment in an uncertain environment.

Fostering of interfirm cooperation on the long-term basis

extent to which interparty sharing of the reward from cooperation is fair

extent to which interpersonal treatment and information exchange between top management representing each party are fair

extent to which the strategic decision-making process and procedures that impact each party’s gains are fair

Differences from the general definition:

justice perception arises from both parties rather than from a single party.

need to establish 2 way communication, mutual respect and courtesy in making and implementing decisions

transformation of perceptual justice into recommended actions by the top management representatives.

the processes that must be viewed as fair involve important areas such as alliance structuring, management, and interpartner sharing.

Procedural justice defined in strategical alliance

Procedural justice

Distributive justice

Interactional justice

A theoritical model

Strategic Alliance

Performance

Interact through IJ’srelational attachment

instr

um

en

tality

eq

ui

ty

S

ocia

l exch

an

ge

It Explains the process of interfirm cooperation

Justice theory:

Procedural fairness creates

Cooperative value

Relational Value

Relational model in justice theory

Procerural Justice Theory

party’s opportunity

to voice its views

It includes

party’s commitment

to joint effortsReduction of

risks inInterpartner

exchange

It increases:

1.interpartner conformity Identification

Internalization

Favorable procedural justice

involves group efforts fororganizationalaffiliation and group unityalleviates interpartyorganizational differences

It increases:

2) complementary effect

Favorable procedural justice

Collectivecontrol

Cooperation

The role of boundary spanners

They transform theirperceptions of fairness

into actions

It helps to better understand:

quality of decision making:

related to the fairness of decision-making procedures

quality of treatment:

help people to evaluate the social atmosphere of the group

Procedural justice information

perceptions of fairness are amplified through:

Engagement: means involving individuals in decision-making processes;

Explanation: everyone involved should understand why final decisions are made;

Clarity of expectations: before, during, and after decisions are made, managers have a firm understanding of what is expected of them.

Justice theorists also suggest ….

is associated with

Procedural Justice

Operational

outcome

Financialoutcome

On which it has a

Direct effect On which it has an

Indirect effect

Contributes less to outcomes

when

interpartner cultural distance

is shorter

Procedural Justice

Importance of independent effects of DJ, PJ, IJ

…… also interactively they function together to improve strategic alliances performance because the may complement one another in stimulating interparty exchange.

Procedural fairness is seen as a critical stimulus for improving cooperation outcomes.

Conclusion

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