Justice or Just between Us? Empirical Evidence of the Trade-Off between Procedural and Interactional Justice in Workplace Dispute Resolution

Abstract

This paper draws on unique data from a single, geographically-expansive, US firm with well over 100,000 employees in over 1,000 locations to examine the relationship between an employer’s implementation of a typical dispute resolution system (DRS) and organizational justice, perceived compliance with the law, and organizational commitment. Holding all time-constant, location-level variables in place, we find that introduction of the DRS is associated with elevated perceptions of interactional justice but diminished perceptions of procedural justice. We also find no discernible effect on organizational commitment, but a significant boost to perceived legal compliance by the company. The authors draw upon these findings to offer a “differential-effects” model for conceptualizing the relationship among organizational justice, perceived legal compliance, and implementation of dispute resolution mechanisms.

Keywords: arbitration, mandatory arbitration, voice, exit, loyalty, procedural justice, interactive justice, interactional justice, substantive justice, justice, dispute resolution, ADR, negotiation, employment, conflict, workplace, natural experiment, panel, longitudinal, empirical, organizational justice

JEL Classification: K10, K19, K30, K39