Does fairness narrow the gap? Effect of procedural justice on MNE attention disparity

Abstract

Research Summary

Earlier studies have suggested that multinational enterprise (MNE) subsidiaries may receive unequal attention from headquarters, but have not yet thoroughly examined either this issue or potential mechanisms that may ameliorate the situation. Our study contends that procedural justice helps bridge an MNE's attention gap as perceived by subsidiaries. We further posit that this proposed effect would be moderated by several contextual factors including subsidiary capability, subsidiary initiative, MNE internationalization, and MNE scope. An assembled sample of MNEs headquartered in Taiwan supports our predictions. These findings have important implications for both the attention-based view of the firm and headquarters–subsidiary relationships.

Managerial Summary

MNEs often allocate unequal attention among their overseas subsidiaries. Yet the means of addressing this potential attention disparity remains underexplored. We contend that developing a set of fair, transparent, and unbiased procedures within an MNE can help address this issue. Results based on a sample of MNEs based in Taiwan support this argument. These analyses also suggest that the effect of procedural justice would be weakened when subsidiaries are more capable and demonstrate greater initiative. In contrast, the impact of procedural justice will be strengthened for highly internationalized MNEs. Our findings offer crucial practical implications for MNEs to allocate attention among and manage their subsidiaries.