Organization Science
Issue Date: January-February 1995
(Vol. 6, N°1)
Pages: 44-61
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A Procedural Justice Model
of Strategic Decision-Making: Strategy Content Implications in the Multinational
W. Chan Kim and Renée
Mauborgne
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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 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 the authors
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
| W. Chan Kim is The Boston Consulting Group Bruce D. Henderson Chair
Professor of International Management at INSEAD, France.
Renée Mauborgne is The INSEAD Distinguished
Fellow and a professor of strategy and management at INSEAD, and a Fellow of the World Economic Forum.
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