The Role of Justice in Inter-organizational Contracting Negotiation and Implementation: Antecedents and Consequences
Date Issued
2015
Date
2015
Author(s)
Chiu, Chih-Fang
Abstract
Based mainly on economic and social perspectives, the studies of contractual and relational governances on how transaction parties negotiate formal contract and based on these agreements the inter-organizational transactions are executed have been well documented. Recently, the psychological cognition perspective has been induced to further enrich the contracting literature. Based upon this perspective, how parties design formal and informal governances as well as implement the collaborative arrangements is hinged on their internal psychological cognition. Since the cognitions are diversified and dynamic, we can therefore study how these various cognitions affect, independently and collectively, the negotiation and implementation of contracting in inter-organizational exchanges. This study adopts the concept of justice to explore the above issues. We argue that three types of justice, e.g., distributive, procedural, and interactive justice, will impact outcomes of the two contracting stages, e.g., negotiation and implementation. On the contracting negotiation stage, based on an empirical study of 97 buyer-supplier contracts in the industry of hand tools, we find that both the distributive and interactional justice are positively associated with (1) the economic outcomes, including contractual complexity, negotiating frequency, and transactional problems, and (2) the social outcomes, including trust, norm, and long-term orientation. The moderating effect between procedural and interactive justice ensures that parties are willing to design more complex contracts and develop stronger trust. On the contracting implementation stage, a high procedural justice between transaction parties could complement the incomplete formal contracts as well as the implicit relations that will facilitate future repeated contracts and contracting learning. Our contribution is that managers not only consider economic and social factors, but also cognize various justice perceptions to achieve negotiating and implementing effects in inter-organizational collaborations.
Subjects
justice
contract
relation
contracting negotiation
contracting implementation
Type
thesis