Procedural justice, strategic decision making, and the knowledge economy

• Published in: Strategic management journal Vol. 19; no. 4; pp. 323 - 338
• Main Authors: Chan Kim, W., Mauborgne, Renée
• Format: Journal Article
• Language: English
• Published: Chichester John Wiley & Sons, Ltd 01.04.1998; John Wiley and Sons; John Wiley; Wiley Periodicals Inc
• Subjects: Alliances; Behavior; Business innovation; Business structures; Co-operation; Cooperation; Corporate strategies; Decision making; Decision making models; Economics; Emotion theories; Enterprises; Fairness; Information society; Justice; Knowledge; Knowledge economy; knowledge sharing; Management; Management decisions; Organization; Procedural justice; Psychological aspects; Self interest; Social psychology; strategic decision-making; Strategic management; Strategic planning; Success; Teams; voluntary cooperation; United States > US
• ISSN: 0143-2095; 1097-0266
• DOI: 10.1002/(SICI)1097-0266(199804)19:4<323::AID-SMJ976>3.0.CO;2-F

Collective knowledge building is a key strategic task for firms' success today. But creating and sharing knowledge are intangible activities that can neither be supervised nor forced out of people. They happen only when individuals cooperate voluntarily. A key challenge facing strategic management is obtaining the voluntary cooperation of individuals as firms formulate and implement their strategic decisions. This essay draws on the rich body of procedural justice research to address this critical issue. We argue that when people feel their strategic decision-making processes are fair, they display a high level of voluntary cooperation based on their attitudes of trust and commitment. Conversely, when people feel that the processes are unfair, they refuse to cooperate by hoarding ideas and dragging their feet in conceiving and executing strategic decisions. We further develop this argument into team performance wherein the attitudinal and behavioral effects of procedural justice are corroborated with theory and initial evidence of their bottom-line performance consequences. We then build a theory, which we call intellectual and emotional recognition theory, that can explain why procedural justice invokes the side of human behavior that goes beyond outcome-driven self-interests and that is so critical in the knowledge economy.