Procedural justice theory and entrepreneurship

The theory of procedural justice was introduced by Thibaut and Walker (1975). 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. 

 

Procedural justice theory was later been applied to the organizational strategy context by Kim and Mauborgne (1991), who argue that when implementing global strategies, as long as the decision-making process is deemed fair to stakeholders, then even if an outcome is not distributively advantageous, it may accepted as just.

 

Procedural justice has been used to help explain entrepreneurial success from a financing-availability perspective. Procedural justice may help explain how entrepreneurs successfully manage their investor relationships. According to Sapienza and Korsgaard (1996), 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.

 

More generally, the implication is that entrepreneurs may want to aim for procedural justice in the application of their decision-making power in all stakeholder relationships--instead of distributive justice, which may be less achievable.

Sources:

Kim, W. C., and Mauborgne, R. A. (1991). Implementing global strategies: The role of procedural justice. Strategic Management Journal, 12(S1), 125-143.

Sapienza, H. J., and Korsgaard, M. A. (1996). Procedural justice in entrepreneur-investor relations. Academy of management Journal, 39(3), 544-574.

Thibaut, J. W., & Walker, L. (1975). Procedural justice: A psychological perspective.