Procedural fairness in strategic alliances International Business and Development Università degli Studi di Parma Prof. Alessandro Arrighetti 2013/2014 Balan Irina Terzoni 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’s relational attachment instrumentality equity Social exchange

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 efforts Reduction of risks in Interpartner exchange

It increases: 1. interpartner conformity  Identification  Internalization  Favorable procedural justice involves group efforts for organizational affiliation and group unity alleviates interparty organizational differences

It increases: 2) complementary effect Favorable procedural justice Collective control Cooperation

The role of boundary spanners They transform their perceptions 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 Financial outcome 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