The Role of Procedural Justice for Global Strategy and Subsidiary Initiatives

Strategic Management Journal, Forthcoming

Bocconi University Management Research Paper

46 Pages Posted: 31 May 2019

See all articles by Christian Geisler Asmussen

Christian Geisler Asmussen

Copenhagen Business School

Nicolai J. Foss

Copenhagen Business School - Department of Strategy and Innovation

Phillip C. Nell

Vienna University of Economics and Business - Department of Global Business and Trade; Copenhagen Business School - Department of Strategy and Innovation

Date Written: May 10, 2019

Abstract

The global strategy literature highlights the role of headquarters (HQ) in realizing global integration benefits while enabling independent subsidiary strategic initiatives. We construct a game-theoretic model of the interaction between HQ and subsidiaries, and, building on procedural justice theory, we analyze the motivational costs that can result from the anticipation or realization of HQ intervention in subsidiary initiatives. We also analyze the implications for MNC-level value creation when HQ managers, fearing subsidiary managers’ emotion-based reactions, refrain from intervening. We derive a number of counter-intuitive results, for example, that good HQ behavior may involve forgoing opportunities for value creation, and that procedural justice systems may sometimes be counterproductive.

Keywords: headquarters, subsidiaries, procedural justice, motivation, initiatives

Suggested Citation

Asmussen, Christian Geisler and Foss, Nicolai J. and Nell, Phillip C., The Role of Procedural Justice for Global Strategy and Subsidiary Initiatives (May 10, 2019). Strategic Management Journal, Forthcoming, Bocconi University Management Research Paper , Available at SSRN: https://ssrn.com/abstract=3396472 or http://dx.doi.org/10.2139/ssrn.3396472

Christian Geisler Asmussen (Contact Author)

Copenhagen Business School

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Nicolai J. Foss

Copenhagen Business School - Department of Strategy and Innovation ( email )

Kilen
Frederiksberg, 2000
Denmark

Phillip C. Nell

Vienna University of Economics and Business - Department of Global Business and Trade ( email )

Welthandelsplatz 1
Building D1
Vienna, 1020
Austria

Copenhagen Business School - Department of Strategy and Innovation ( email )

Kilevej 14
Frederiksberg, 2000
Denmark

HOME PAGE: http://www.cbs.dk/

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