A Procedural Justice Model of Strategic Decision Making: Strategy Content Implications in the Multinational

Abstract

How can a multinational formulate an effective global strategy? This paper attempts to address this question by assessing the effect of a procedural justice model of strategic decision making (Kim and Mauborgne [Kim, W. C., R. A. Mauborgne. 1991. Implementing global strategies: The role of procedural justice. Strategic Management J. 12125–143.], [Kim, W. C., R. A. Mauborgne. 1993a. Procedural justice theory and the multinational corporation. S. Ghoshal, D. E. Westney, eds. Organization Theory and the Multinational Corporation. Macmillan, London, UK.]) on the multinational’s ability to formulate effective global strategies. There are five designing principles that define a procedural justice model of strategic decision making. These are: bilateral communication between the head office and subsidiary units; the subsidiary units’ ability to challenge and refute the strategic views of the head office; head office familiarity with the local situation of subsidiary units; a full account for the head office’s final strategic decisions; and application of consistent decision making procedures across subsidiary units. To examine the above effect, here we introduce information processing as an intervening concept to assess the match between the information processing requirements of multinationals’ global strategic objectives and the information processing capabilities provided by the proposed procedural justice model of strategic decision making. Here multinationals’ global strategic objectives are defined as global learning, the balancing of global efficiency and local responsiveness, global strategic renewal, and rapid global strategic decision making. The underlying assumption in this analysis is that if the dimensions of procedural justice facilitate the kinds of strategic information necessary to achieve the multinational’s global strategic objectives, the exercise of procedural justice can be judged to have a salutary effect on the content of global strategies. The results of this study, which are based on the experiences of 63 global strategic decision units, provide support for the effectiveness of this model of strategic decision making.