Constructs of Perceived Fairness and Impact on Performance: An International and Local Context

Abstract

Fairness is a complex concept and has been studied extensively in sociology and philosophy. The perceptual difference among people with regards to fairness, justice, and trust makes it an interesting concept to explore. The present study analyses the impact of perceived trust in three different scenarios. In the first part, the impact of trust within the members of a society on the performance of that country is observed. Labor force trends, per capita income, human capital value and political institutions were analyzed as part of the theoretical framework. In the second part, the mediating role of organizational trust between organizational justice and organizational performance was analyzed. The third part brings the attention to the dimensions of justice and how they influence trust among employees. For the first part of the study, a sample of 64 countries was taken and cross country analysis was applied. These countries were further separated into developing and developed countries to observe the impact of trust on performance. To examine the change in the level of trust on the performance of a country a non-linear term of trust was included in the regression model. In the second part of the study, Structural equation modeling (SEM) was used to analyze the direct and indirect effect of organizational justice on organizational performance. Structured questionnaire was used as the instrument to collect data. In the third part of the study PLS-SEM was applied to test the relationship between the dimensions of justice and its impact on the organizational trust. The results from the first part suggest a strong positive correlation between social trust and economic growth of countries. This association was much stronger for developing countries than developed countries. The findings specify that an increased level of trust beyond a certain level within developed economies does not lead to economic and financial benefits. Whereas, developing countries can prosper and increase performance in lieu of increased level of social trust. Findings from the second part indicate that trust plays a significant role in justice and organizational performance relationship. The results drawn from the third part signify that employees in an organization give value to procedures and regulations than the rewards during decision making or reward distributing process. Trust level of the employees increases if they feel that rules are implemented and practiced in the organization. This puts pressure on the organizations to increase transparency in the procedures. This study will have implications for the managers of multinationals as well as local companies in a country, to strategize the decisions related to trust.