Subsidiary Distributive Justice, Internal Embeddedness, and Subsidiary Initiative

Abstract While prior research has suggested that justice matters for multinational enterprises (MNEs), whether distributive justice affects a subsidiary's tendency to show initiative remains unclear. In this study, we postulate that the extent to which a subsidiary manager regards the sharing of profit and rewards from the headquarters as fair has a curvilinear relationship with the subsidiary's inclination to take initiative. Specifically, although a low to moderate level of distributive justice can motivate subsidiaries to show initiative, this stimulating effect will diminish when distributive justice goes beyond a certain threshold. We furthermore contend that this non-monotonic effect will differ between low internally embedded subsidiaries and high embedded subsidiaries. Results based on a sample of subsidiaries owned by MNEs in Taiwan support our arguments. Implications for theory and practice are discussed.