Effectively Conceiving and Executing Multinationals' Worldwide Strategies

Abstract

This study addresses one of the most compelling questions in the field of international management: How can a multinational simultaneously pursue the double-ended objective of effectively conceiving and executing its worldwide strategy? Here we examine the ways in which the dynamics of the strategy-making process between head office and subsidiary units influence the multinational's ability to achieve these two objectives. Specifically, we introduce the concept of procedural justice, the intellectual root of which is grounded in social psychology and law, into the international management and explore the impact of process fairness on multinationals' ability to conceive and execute effective worldwide strategies. The results of this research are based on a two-phase longitudinal study of the decision making dynamics of nineteen multinationals. They provide support that the exercise of procedural justice is indeed a powerful way to organize the multinationals' strategy-making process. Procedural justice was found to significantly augment multinationals' ability to achieve this double-ended objective.