Procedural justice theory and entrepreneurship
The theory of procedural justice was
introduced by John Thibaut and Laurens Walker
(1975) and has then been applied to the organizational strategy context (e.g.,
Kim and Mauborgne, 1991), and most recently to help explain entrepreneurial
success from a financing-availability perspective.
Thibaut and Walker propose that procedural justice focuses on the
processes of justice rather than the outcomes of such processes (i.e., distributive justice), because the processes are more important in the evaluations of participants. Processes take place over time, whereas outcomes are more like events. For example, a client may be more
willing to accept concessions suggested by a lawyer that assures him or her
that the negotiation process is normal and offers are within the bounds of
acceptable behavior for an opponent's council.
According to Sapienza and
Korsgaard, we do not yet know much about how
entrepreneurs manage their relationships with investors. Entrepreneurs want to
build trust to attain continuous support for their ventures and a boost to
their reputations, but how do they do it? They look to information sharing
between the entrepreneurs and their investors. While entrepreneurs benefit
from sharing information with investors, they also may benefit from withholding
information. Providing information builds trust while withholding information
increases relative power. They find that procedural justice optimizes information flows in order to
gain inventor trust, support, growth financing, and imparted reputation.
Procedural justice may help explain how entrepreneurs successfully manage their investor relationships. More generally, entrepreneurs may aim for procedural justice in the application of their decision-making power in all stakeholder relationships.
Sources:
Procedural justice: A psychological perspective
JW Thibaut, L Walker - 1975 - Hillsdale, NJ: Erlbaum
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