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Journal of Applied Psychology 2000, Vol. 85, No. 2, 294-304

The Effect of Organizational Structure on Perceptions of Procedural Fairness

Marshall Schminke Creighton University

Maureen L. Ambrose University of Colorado at Boulder

Russell S. Cropanzano Colorado State University

This study explored the relationship between 3 dimensions of organizational structure—centralization, formalization, and size—and perceptions of procedural and interactional fairness. Data from 11 organi- zations (N = 209) indicated that, as predicted, centralization was negatively related to perceptions of procedural fairness, and organizational size was negatively related to interactional fairness. However, contrary to predictions, formalization was not related to perceptions of procedural fairness. Results suggest that organizational structure and design should play a more prominent role in our thinking about organizational fairness.

The past 10 years have seen an explosion of our knowledge about organizational justice. Considerable research documents the many ill effects of perceived unfairness. When individuals feel that they are unfairly treated, they show declines in job satisfaction (Folger & Konovsky, 1989), organizational commitment (Daly & Geyer, 1995; Malatesta & Byrne, 1997), cooperativeness (Cropan- zano & Schminke, in press), helpful citizenship behaviors (Moor- man, 1991; Organ & Moorman, 1993), and job performance (Gilli- land, 1994; Konovsky & Cropanzano, 1991). Unfairly treated individuals also show a heightened propensity to turnover (Dailey & Kirk, 1992), steal (Greenberg, 1990a, 1993b), file a grievance (Taylor, Moghaddam, Gamble, & Zellerer, 1987), engage in con- flict (Folger & Cropanzano, 1998, Chapter 6), and experience stress (Zohar, 1995). However, all of this research neglects the larger social context within which fair—or unfair—interactions occur. In particular, none of this work considers macrolevel vari- ables such as organizational structure. The present study offers a first step at investigating how organizational structure affects individuals' perceptions of fairness.

Marshall Schminke, College of Business Administration, Creighton University; Maureen L. Ambrose, College of Business and Administration, University of Colorado at Boulder; Russell S. Cropanzano, Department of Psychology, Colorado State University.

Maureen L. Ambrose is now at the College of Business Administration, University of Central Florida.

This research was partially supported by the Robert B. Daugherty Chair in Managerial Ethics at the Creighton University College of Business Administration.

Correspondence concerning this article should be addressed to Marshall Schminke, who is now at the College of Business Administration, Univer- sity of Central Florida, P.O. Box 161400, Orlando, Florida 32816-1400. Electronic mail may be sent to marshall.schminke@bus.ucf.edu.

Organizational Justice

Distributive Justice

Historically, the first type of justice to receive wide attention from scholars was distributive justice, or the fairness of what one receives as the result of an allocation decision (Deustch, 1985; Tornblom, 1992). For instance, pay level is an outcome, and pay equity would be an example of this type of fairness. In general, research shows that individuals' perceptions of distributive fair- ness impact reactions to specific allocation outcomes (Brockner, Greenberg, & Brockner, 1986; Greenberg, 1988; McFarlin & Sweeney, 1992; Mowday, 1983; Oldham et al., 1982; Sweeney & McFarlin, 1993).

However, although it is often useful to understand how and why people react to the outcomes they receive, a focus on distributive justice leaves many questions unanswered. In particular, when compared with procedural (Lind & Tyler, 1988) and interactional (Tyler & Bies, 1990) justice, distributive justice is a less effica- cious predictor of how individuals respond to their employing organizations, as well as to particular decision makers. For exam- ple, procedural and interactional justice are associated with orga- nizational commitment, supervisory commitment, organizational citizenship behaviors, job performance ratings, and trust in man- agement (e.g., Malatesta & Byrne, 1997; Masterson, Lewis- McClear, Goldman, & Taylor, in press). Given the importance of these variables in promoting organizational effectiveness, this study emphasized the role of procedural and interactional justice.

Procedural Justice

Procedural justice, or the perceived fairness of the allocation process, stems from the seminal work of Leventhal (1976) and Thibaut and Walker (1975). This research is concerned with the perceived fairness of formal decision-making policies (Brockner & Wiesenfeld, 1996; Tyler & Bies, 1990).

ORGANIZATIONAL STRUCTURE AND FAIRNESS 295

Leventhal (1980; Leventhal, Karuza, & Fry, 1980) identified six rules by which individuals assess the fairness of procedures: con- sistency, bias suppression, representativeness, correctability, accu- racy, and ethicality. Empirical research demonstrates support for Leventhal's rules (Dipboye & dePontbriand, 1981; Folger & Konovsky, 1989; Greenberg, 1986; Singer, 1990; Tyler, 1989).

Most of the early work on procedural justice in organizations stemmed from Thibaut and Walker's (1975) work, which demon- strated that even when individuals receive unfavorable outcomes, they perceive themselves as fairly treated so long as they had voice or input into the process (process control). When such input is lacking, individuals perceive less fairness (Folger, 1977; Lind, Kanfer, & Early, 1990). Similarly, people prefer to have decision control or choice (Thibaut & Walker, 1975). For example, when individuals are allowed to choose their own work tasks they report being fairly treated even when their choice leads to disadvanta- geous outcomes (Cropanzano & Folger, 1989; Lind et al., 1990).

Procedural justice has been shown to be a consistent predictor of employees' reactions to their employing organization as well as to workplace decision makers (for reviews, see Cropanzano & Schminke, in press; Greenberg, 1990b). For example, when indi- viduals believe that decisions are made in a manner that is proce- durally fair, they report higher levels of organizational commit- ment (Daly & Geyer, 1995; McFarlin & Sweeney, 1992), greater trust in managers (Konovsky & Pugh, 1994), fewer turnover intentions (Dailey & Kirk, 1992), and higher job performance (Gilliland, 1994; Konovsky & Cropanzano, 1991). As a result of this and related evidence, scholars have advised organizations to draft formal policies that will be seen as fair. These include procedures for such human resource practices as staffing (Gilli- land, 1993), performance evaluation (Folger & Lewis, 1993), downsizing (Konovsky & Brockner, 1993), and work-family pol- icies (Grandey, in press) among others.

Notice that all of these interventions have in common the fact that they change operating procedures. The social context in which these policies are enacted is left unaltered. In the present study we suggest a new approach—looking to the organization's structure as a means of enhancing procedural justice.

Interactional Justice

A third type of justice refers to the fairness of the interpersonal treatment that one receives from a decision maker. Bies (1987) and Bies and Moag (1986) have termed this interactional justice. An authority figure is interactionally fair to the extent that he or she (a) treats employees with dignity and (b) provides individuals with important information (Bobocel, McCline, & Folger, 1997; Brock- ner & Weisenfield, 1996). When individuals are treated in an interpersonally fair manner, they tend to have high-quality rela- tionships with their supervisors (Cropanzano & Prehar, 1999; Masterson et al., in press), perform more helpful organizational citizenship behaviors (Malatesta & Byrne, 1997; Moorman, 1991), and have higher job performance (Cropanzano & Prehar, 1999; Masterson et al., in press).

As one might expect given these findings, organizational scien- tists have also designed interventions that enhance interactional justice. These usually involve training supervisors to change their interpersonal behavior. For example, Taylor, Tracy, Renard, Har- rison, and Carroll (1995) taught managers to provide interaction-

ally just performance evaluations. Similarly, in two studies, Skar- licki and Latham (1996, 1997) trained union officials to facilitate interpersonal justice. These behavioral interventions seem to have been effective. However, as with procedural justice, these inter- ventions ignore the social context in which the behavior occurs. Thus, in the current study, we present a complementary perspec- tive to interactional justice as we investigate the relationship between organizational structure and interactional justice.

The Relationship Between Procedural and Interactional Justice

When the concept of interactional justice was first proposed, it was viewed as a third form of justice that was distinct from procedural fairness (Bies, 1987; Bies & Moag, 1986). However, scholars soon realized that both types of justice dealt with aspects of the decision process. This conceptual similarity caused the two to be seen as social and formal aspects of procedural justice. In other words, researchers begin to treat formal procedural and interactional justice as different manifestations of a single con- struct (e.g., Brockner & Weisenfeld, 1996; Cropanzano & Green- berg, 1997; Folger & Bies, 1989; Tyler & Bies, 1990). In recent years, the pendulum seems to have swung back in the direction of separating procedures and interactions into different types of jus- tice (Bies, in press). In fact, various studies have found that procedural and interactional justice have different antecedents (Moye, Masterson, & Bartol, 1997) and consequences (Cropan- zano & Prehar, 1999; Malatesta & Byrne, 1997; Masterson et al., in press). The present study attempts to build on this research. In particular, we argue that interactional justice and procedural justice have distinct structural antecedents. As a result, these constructs can be distinguished on the basis of the pattern of relationships between the two types of justice and organizational structural variables.

Organizational Structure and Organizational Justice

Traditionally, research on organizational justice has taken a microlevel approach to investigating the phenomenon. Yet, orga- nizational decisions occur in a larger context, and this context may affect perceptions of fairness. (See Lind & Tyler, 1988, pp. 136- 141, for a discussion of the importance of context in perceptions of justice.) In this section we discuss the role of organizational structure in perceptions of procedural and interactional fairness.

Although little empirical work examines the relationship be- tween organizational structure and justice, this issue has received some conceptual attention. For example, Sheppard, Lewicki, and Minton (1993, see especially their chapters 3 and 6) noted that allocation decisions do not take place in a social vacuum. Rather, they are embedded within organizational systems that have some- what distinct architectures. The structure of some firms allows participation, provides due process, and so on. Sheppard and his colleagues referred to such organizations as systemically fair. The structure of other firms emphasizes shareholder profits to the exclusion of worker and community interests. Such firms are systemically unfair.

Greenberg (1993a) presented a second perspective on organiza- tional structure and justice. Greenberg observed that justice (or injustice) is often the result of one-on-one social transactions, but

296 SCHMINKE, AMBROSE, AND CROPANZANO

these social interactions are only one determinant of fairness. Greenberg also observed that justice often results from the formal structure of the organization. From this, it follows that the struc- tural dimensions of firms can increase or decrease fairness. Indeed, some of the relevant structural dimensions reflect the very issues involved in fairness perceptions: the concentration of power, the degree of individual voice, the ability to influence others, the existence of formal rules and regulations, and so on.

Conceptual links between organizational structure and justice were also outlined by Keeley (1988). Keeley maintained that there is a fundamental tension within organizations (as in society more generally) between the goal of efficiency and the goal of morality. Social institutions struggle to maintain a delicate balance between these competing objectives. Firms may attempt to resolve this tension at a systems level. Therefore, some organizations attempt to structure themselves in a way that will promote social justice as well as economic profit. Keeley argued that organizations that do not take human dignity into account are inherently unjust.

The conceptual groundwork laid by Sheppard et al. (1993), Greenberg (1993b), and Keeley (1988), suggests that individuals' sense of justice is partially a product of the organization and its structure. In this article, we examine this link between organiza- tional structure and organizational justice. Following the lead of others (Fredrickson, 1984; Wally & Baum, 1994), we explore structure from what Brass (1984) called a "traditional view," examining centralization, formalization, and size as focal struc- tural dimensions.

Centralization

Centralization refers to the concentration of power or authority in an organization. Hage and Aiken (1967) identified two subcom- ponents of centralization: participation in decision making and hierarchy of authority. Participation in decision making refers to the relative concentration of decision-making power with regard to policy making. It addresses how involved individuals are in issues such as hiring, promotion, and setting departmental policies. The second subcomponent of centralization, hierarchy of authority, refers to the relative concentration of decision-making power with regard to performing tasks. It focuses on the autonomy an indi- vidual has in performing his or her job. Low levels of participation in decision making and high levels of hierarchy of authority each reflect a centralized structure.

Centralization may be linked to perceptions of procedural fair- ness through the structure of procedures. Thibaut and Walker (1975) identified two structural attributes of procedural justice: process control (voice) and decision control (choice). These at- tributes parallel the two dimensions of centralization: participation and authority hierarchy. Participation—input into policy deci- sions—reflects voice, which is a central component of process control. To the extent that greater participation allows individuals greater input (voice) into policies and procedures, perceptions of the fairness of those procedures should increase (Lind et al., 1990; Lind & Tyler, 1988). Similarly, authority hierarchy reflects indi- viduals' ability to make decisions about their tasks. This individual discretion mirrors decision control, and increased decision control should lead to increased perceptions of procedural fairness (Lind et al., 1990; Tyler, Rasinski, & Spodick, 1985). Thus, we expect centralization to affect perceptions of procedural fairness. How-

ever, because centralization focuses on attributes of the structural aspects of procedures, we do not expect it to affect perceptions of interactional justice. The parallel between the dimensions of cen- tralization and the attributes of procedures led to the following hypotheses:

Hypothesis 1: Higher levels of participation in decision making (lower centralization) will be associated with higher levels of perceived procedural fairness.

Hypothesis 2: Lower levels of authority hierarchy (lower centraliza- tion) will be associated with higher levels of perceived procedural fairness.

Formalization

Formalization describes the extent to which rules, procedures, instructions, and communications are written down (Pugh, Hick- son, Hinings, & Turner, 1968). In highly formalized systems, little flexibility exists in determining how a decision is made or what outcomes are due in a given situation; procedures and rewards are dictated by the rules. This should contribute to an individual's confidence that he or she is being treated the same as others in similar situations, as the rules are well documented and well known. Leventhal (1980) suggested that consistency represents an important structural component of procedural justice, and empir- ical research demonstrates the importance of consistency for judg- ments of procedural justice (Barrett-Howard & Tyler, 1986; Ploy- hart & Ryan, 1998; Rettig & Dahl, 1993; van de Bos, Vermunt, & Wilke, 1996). To the extent that individuals know that everyone is subject to the same rules, they are more likely to judge a system procedurally fair. Highly formalized systems are consistent sys- tems. Therefore, increased formalization should lead to greater perceptions of fairness.

However, formalization and procedural fairness may be related in a more complex way as well. One possibility is that although some formalization could be perceived as desirable in terms of fostering organizational consistency, very strictly formalized or- ganizations may display "too much of a good thing," resulting in what has been termed a legalistic organization (Bies & Tyler, 1993; Sitkin & Bies, 1993). Legalistic organizations are those in which managerial discretion in decision making (historically driven by efficiency, profitability, or employee relations) is largely supplanted by procedures that are legally acceptable, but preclude process and decision control.

A paradox arises in that although legalistic procedures are often initiated in order to enhance fair treatment of employees, growing legalism can "undermine the very goals it has been designed to pursue" (Sitkin & Bies, 1993, p. 345). Organizations may become so rules-bound that little flexibility or discretion remains, and this lack of flexibility discourages managers from making the sort of day-to-day judgment calls that may enhance net fairness percep- tions. Indeed, one of the explicit reasons for enacting formal rules and regulations is to deny decision-making authority to a poten- tially biased human being and to vest power in a (supposedly) unbiased set of written policies (Howard, 1994). The rules do the allocating, not the decision maker. These opposing forces of con- sistency and legalism suggest that formalization may not be lin- early related to fairness. Rather, a relationship that resembles an "inverted U" may best describe the association; some moderate

ORGANIZATIONAL STRUCTURE AND FAIRNESS 297

optimal level of formalization may lead to the highest levels of perceived procedural fairness.

Hypothesis 3: The relationship between formalization and procedural fairness will be described by an "inverted U"; moderate levels of structural formalization will be associated with the highest levels of perceived procedural fairness.

Organizational Size

Organizational size is the third structural variable that may affect perceptions of fairness. Size has been examined as a struc- tural component in its own right (Meyer, 1972), a dimension of an organization's context (Pugh et al., 1963), or as a surrogate for a third structural component: organizational complexity (Fredrick- son, 1984; Wally & Baum, 1994). For our purposes it is not as critical to define size in one of these three roles as it is to be clear about what role it plays in our analysis. Kimberly (1976) described four aspects of organizational size: physical capacity, available personnel, inputs or outputs, and discretionary resources. Because our concern here is with the extent to which it affects the behavior of organization members, the second aspect, available personnel, is especially appropriate.

Organizational size may affect perceptions of fairness in two ways. First, as organizations grow, it may be increasingly difficult to treat individuals with the dignity and respect that they desire and to demonstrate that the individual is valuable to the group as a whole. Instead, as organizations grow larger they become more bureaucratic (Robbins, 1990) and rely more heavily on hierarchical authority (Daft, 1998). Consequently, employees of larger organi- zations are more likely to find themselves relating to the power structure through impersonal rules and regulations and less likely to have relationships based on close interpersonal contact. The personal touches—such as courtesy, politeness, and respect—con- stitute the core of interpersonal sensitivity and thus are key com- ponents of interactional justice. If they become more rare as size increases, perceptions of interactional fairness will decline.

Indirect evidence for this possibility can be found in sociolog- ical research on worker alienation (for a review, see Kanungo, 1982, chapter 3). For example, work by Blauner (1964) suggested that large bureaucratic organizations sometimes disrupt interper- sonal relationships among workers and between workers and their employers. This lack of social integration, in turn, promotes a sense of alienation. Similar arguments have been made by Gould- ner (1959) and Trist and Bamforth (1951).

The second way that size may affect perceptions of fairness is through organizational politics. Cropanzano, Kacmar, and Boze- man (1995) have suggested that as firms become larger, more interests are likely to be brought into play, and more subgroups have to be organized. These trends are apt to encourage politics (cf. Witt, 1998). Ambrose and Harland (1995) have suggested that politicking may be associated with decreased perceptions of pro- cedural and interactional fairness. Therefore, as size increases, using these "hidden" or political sources of power could decrease both procedural fairness and interactional fairness. We predicted that greater organizational size would lead to lower perceptions of both procedural and interactional fairness.

Hypothesis 4a: Larger organizations will be associated with lower levels of perceived interactional fairness.

Hypothesis 4b: Larger organizations will be associated with lower levels of perceived procedural fairness.

Method

Participants

Participants were from 11 primarily Midwestern organizations. These included accounting, architectural engineering, banking, food processing, health services, insurance, light manufacturing, municipal government, private education (postsecondary), public education (primary and second- ary), and telecommunications organizations. Each organization was con- tacted through the Creighton University College of Business Board of Advisors—an advisory panel of 25 upper-level managers from local orga- nizations—and asked to participate in the study. The resulting sample represents both goods and services producing firms, as well as for-profit and not-for-profit entities. The firms ranged in size from fewer than 30 employees to more than 3,800, with a mean size of 602.

We requested that each participating board member identify an area or department in his or her organization in which employees varied consid- erably by age, experience, supervisory status, and sex. We requested departments in which we could gain access to at least 20 potential partic- ipants (but informed board members we would not require more than 40 from any one organization). Finally, we asked to be linked with a contact person in each of these departments, through which we would distribute the surveys and follow-up messages encouraging nonrespondents to reply.

In each case, the departments or areas identified represented lower-to- middle level supervisors and subordinates (e.g., loan processing in bank- ing, claims processing in insurance, the shop floor in light manufacturing and food processing). Depending on the department, 20 to 40 survey packets (described below) were hand-delivered by the researchers to the contact person at each organization. This person distributed the survey packets to employees, informing each that participation was voluntary but encouraged, and that because responses would be returned directly to the researchers, no one in the organization would know how they responded. (Each packet contained a postage-paid envelope so the respondent could mail the survey directly back to the researchers, thereby preserving anonymity.)

Instructions in the packet informed participants that the survey was part of a study to learn more about organizations, how they work, and how employees feel about their workplaces. These instructions confirmed that participation was voluntary, that no one in their organization would ever know how (or even whether) they had responded, and provided information by which participants could contact the researchers with any questions. (None did.) After 30 days, the contact person was asked to provide a follow-up message to the department, encouraging any individuals who had not yet completed the survey to do so.

A total of 209 responses out of 285 surveys were received and tabulated. This represented an overall response rate of 73%. (Response rates varied by organization from 40% to 97%.) Of the respondents, 35% were male, and 65% were female. The average age of respondents was 38.6 years. Super- visors constituted 55% of respondents, whereas 45% held nonsupervisory positions. The average length of tenure at the present employer was 9.1 years, the present department was 5.7 years, and the present job was 4.4 years.

Procedures

Each survey packet began with instructions and demographic questions (tenure, job category, sex, age) followed by several instruments to assess characteristics of the participant's organization and his or her perceptions of organizational fairness. Where possible, we relied on well-established measures of the constructs. These instruments, which were presented in random order across participants, included measures of (a) two dimensions of centralization (participation and authority hierarchy), (b) formalization,

298 SCHMINKE, AMBROSE, AND CROPANZANO

Table 1 Summary Statistics, Alphas, Zero-Order Correlations, and Scale Reliabilities

Variable M SD 1

1. 2. 3. 4. 5. 6.

Perceived procedural justice (structural) Perceived interactional justice (social) Participation (Centralization 1) Authority hierarchy (Centralization 2) Formalization Size (log)

3.59 2.56 2.40 2.89 3.60 6.54

1.30 1.34 0.40 0.43 0.88 1.60

(.71) .53** .17**

-.20** .08

-.06

(.94) -.04 -.15* -.06 -.23**

(.84) -.37** -.02 -.04

(.89) .02 .14*

(.70) .01 —

Note. For scale items, reliabilities (coefficient alphas) appear in parentheses on the diagonal. *p<.Q5. **p<.0\.

Measures

Centralization. Two aspects of centralization were measured: partici- pation in decision making and hierarchy of authority (Hage & Aiken, 1969). Participation in decision making was calculated as the mean re- sponse to four items along a 5-point Likert-type scale (5 = always, 1 = never): (a) How frequently do you usually participate in the decision on the adoption of new programs? (b) How frequently do you usually participate in decisions on the adoption of new policies? (c) How frequently do you usually participate in the decision to hire new staff? (d) How frequently do you usually participate in the decisions on the promotions of any of the professional staff? (Reliabilities for all scales appear along the diagonal in Table 1.)

Hierarchy of authority was calculated as the mean response to five items along a 4-point Likert-type scale (4 = definitely true, 1 = definitely false)'. (a) There can be little action here until a supervisor approves a decision; (b) A person who wants to make his own decisions would be quickly discour- aged; (c) Even small matters have to be referred to someone higher up for a final answer; (d) I have to ask my boss before I do almost anything; (e) Any decision I make has to have my boss's approval.

Following Rousseau and others (e.g., Rousseau, 1985), we aggregated these individual-level perceptions (and those of formalization below) into a single organization-level measure of the shared perceptions held about each organization's structural characteristics. We did so by averaging all members' responses to each scale, by organization.1

Formalization. Following Pugh et al. (1968), we assessed formaliza- tion by averaging the responses to five items on a 5-point Likert-type scale (5 = very accurate, 1 = very inaccurate): (a) The organization has a large number of written rules and policies; (b) A "rules and procedures" manual exists and is readily available within this organization; (c) There is a complete written job description for most jobs in this organization; (d) The organization keeps a written record of nearly everyone's job performance; (e) There is a formal orientation program for most new members of the organization.

Size. Size was measured as the number of full-time employees. This is the most commonly used measure of organizational size (Kimberly, 1976) and has been found to be largely interchangeable with other measures (e.g., total assets; Agarwal, 1979).2

Procedural fairness. Three items, adapted from Tyler and Schuller (1990), assessed participants' perceptions of procedural fairness. Each was presented on a 7-point Likert-type scale (1 = very, 1 = not at all): (a) How much opportunity are you given to have input into decisions that affect you before they are made? (b) How much influence do you have over the decisions that affect you that are made by your supervisor? (c) How much do the methods used to make decisions favor one person over another?

Interactional fairness. Four items, adapted from Tyler and Schuller (1990), assessed participants' perceptions of interactional fairness. Each

was presented on a 7-point Likert-type scale (1 = very, 1 = not at all): (a) How politely does your supervisor treat you when he or she makes a decision that affects you? (b) How fairly treated are you by your supervi- sor? (c) How hard does your supervisor try to be fair to you? (d) How much concern does your supervisor show for your rights when he or she makes a decision that affects you? Confirmatory factor analyses for each fairness construct demonstrated the expected structures, revealing the expected number of factors and item loadings on each factor.

Results

Responses from the 11 organizations are pooled in our analy- ses.3 Table 1 shows means, standard deviations, correlations, and scale reliabilities for all variables. Table 2 presents results of regression analyses that tested Hypotheses 1-4.4 Hypotheses 1, 2, 3, and 4b concerned structural effects on perceptions of proce- dural justice (left column), whereas Hypothesis 4a concerned structural effects on perceptions of interactional justice (right column).

Hypothesis 1 predicted that structural decentralization—in the form of participation in decision making—would be positively related to perceptions of procedural fairness. As predicted, Table 2

1 Of course, this aggregation is valid only if organization members actually share similar perceptions of their organization's structure. To assess the degree of agreement regarding each of the three structural measures, we calculated the rwg statistic (James, Demaree, & Wolf, 1984, 1993; Kozlowski & Hattrup, 1992) for each of the three structural vari- ables, for each organization. This statistic reflects the degree of interrater agreement between members of a group, with 1.00 reflecting perfect agreement across all members. Across the 11 organizations in our sample, rxg ranged from .62 to .89 (M = .75) for participation, from .80 to .95 {M = .88) for authority hierarchy, and from .60 to .93 (M = .78) for formaliza- tion. Thus, aggregation is appropriate.

2 As is common practice in studies examining organizational size, we have performed a natural log transformation on the number of employees (Kimberly, 1976; Yasai-Ardekani, 1989).

3 One-way analyses of variance revealed no significant relationship between either perceptions of procedural justice and organization, F(10, 198) = 1.01, ns, or perceptions of interactional justice and organization, F(10, 198) = 0.56, ns, allowing these data to be combined in the analyses that follow.

4 As noted above, centralization and formalization both represent aggre- gated measures of organizational structure. However, the pattern of results described below is the same (in both direction and significance) using individual-level measures of each.

ORGANIZATIONAL STRUCTURE AND FAIRNESS 299

Table 2 Results of Multiple Regression Analysis for Effects of Structure on Perceptions of Fairness

Dependent variable

Perceived procedural justice (structural)

Perceived interactional justice (social)

Independent variable

Participation (Centralization 1) Authority hierarchy (Centralization 2) Formalization normalization squared Size (log) Constant Multiple R R2

1.11 8* (0.552) -1.446** (0.642)

0.280 (0.265) -0.040 (0.034) -0.066 (0.066) -4.921 (12.157)

.24

.06

0.164* -0.229**

0.196 -0.168 -0.082

-0.078 (0.084) -0.425 (0.665)

0.039 (0.268) -0.001 (0.036) -0.199** (0.069)

3.839 (12.604) .25 .06

-0.009 -0.065

0.051 -0.088 -0.237**

Note. B = unstandardized regression coefficients (standard errors are in parentheses); /3 = standardized coefficients, p values are one-tailed. *p < .05. **p < .01.

reveals that participation in decision making significantly predicts procedural justice (p < .05).

Hypothesis 2 predicted that structural centralization—in the form of authority hierarchy—would be inversely related to per- ceptions of procedural fairness. Results in Table 2 also support this hypothesis. Increased authority hierarchy was related to lower perceptions of procedural justice (p < .01). The standardized betas suggest that authority hierarchy's effect was the largest of any of the structural influences, nearly 40% greater than that for partici- pation. As expected, neither participation nor authority hierarchy were significant predictors of perceived interactional fairness.

Hypothesis 3 predicted that structural formalization would be nonlinearly related to perceptions of procedural fairness. Specifi- cally, we predicted that the relationship between formalization and perceived fairness would be described by an "inverted U," that the quadratic term (formalization squared) would be significant. That was not supported by the data. Table 2 shows that neither the quadratic nor the linear formalization term was significant.

Hypothesis 4a predicted that organizational size would be neg- atively related to perceptions of interactional fairness. This hy- pothesis was also supported. Table 2 shows that for perceptions of interactional fairness, organizational size played a significant role; members of larger organizations reported lower perceptions of interactional justice (p < .01). Hypothesis 4b predicted a negative effect of size on perceptions of procedural justice. However, this hypothesis was not supported.

Discussion

This study was motivated by a gap in the existing literature on organizational fairness: the link between perceptions of fairness and the structural characteristics of the organization in which those judgments are made. We predicted that centralization, formaliza- tion, and size would affect perceptions of procedural justice, and interactional justice would be affected by size. The results support our hypotheses for two dimensions of structure: centralization and size.

Our results provided strong support for the effect of centraliza- tion. As we expected, both participation and authority hierarchy

were significantly related to perceptions of procedural justice. However, although both participation and authority hierarchy af- fected perceptions of procedural fairness, authority hierarchy had a stronger effect on these perceptions. Thus, decentralizing power related to tasks was more important than decentralizing decision making related to general departmental policies or procedures. It is not clear from our data why this is true. It may be that decentral- ization that occurs at a level that markedly affects individuals in concrete, recurring ways is more salient to individuals and there- fore carries more weight in their assessment of procedural fairness. Thus, although participation in general departmental policies is also important to fairness perceptions, it is not as important as input or control over the carrying-out of one's day-to-day tasks.

We found mixed support for our hypotheses about organiza- tional size. As we predicted, organizational size played a signifi- cant role in determining perceptions of interactional fairness. How- ever, organizational size did not affect perceptions of procedural fairness. Although larger organizations were perceived to be less interactionally fair than smaller ones, there were no differences in the perception of the fairness of the structure of procedures. We based our latter prediction on theoretical work examining the relationship between politics and justice (e.g., Cropanzano et al., 1995; Ferris et al., 1996). However, there has been little empirical work on this relationship, and there may be conditions under which this intuitive relationship does not hold. Our results point to the need for more work in this area.

The relationship between interactional justice and size is inter- esting for two reasons. First, our analyses focused on the size of the entire organization, although our questions focused on the treatment our participants received from their supervisors. In dis- cussing our hypothesis with our colleagues, they often argue that even in large organizations, work groups may be small, and the supervisors of these groups could maintain a high level of inter- actional justice. Interestingly, it appears that the overall size of the organization does drive perceptions of interactional fairness. These results demonstrate that supervisors in large organizations are perceived as less interactionally fair than those in smaller organi- zations. One explanation may be that span of control is wider in

300 SCHMINKE, AMBROSE, AND CROPANZANO

large organizations. However, the organizational structure litera- ture does not support this assertion; in the empirical work on the relationship between size and structure, span of control has not emerged as a structural dimension that tends to be associated with greater size (Bluedorn, 1993; Daft & Becker, 1980; Kimberly, 1976). Thus, the relationship between size and interactional justice does not seem to be a function of span of control. Why, then, might individuals feel less interpersonally valued in large organizations? Supervisors in larger organizations must either engage in less interactionally fair behavior than their counterparts in smaller organizations, or they are perceived to do so. Let us briefly consider each of these possibilities.

First, supervisors in large organizations may engage in less interactionally fair behavior. We suggested in the Introduction that as organizations grow it becomes increasingly difficult to treat individuals with the dignity and respect that they desire. Large organizations are generally more bureaucratic. Bureaucracies are designed to remove the human element from organizational inter- actions (Weber, 1947). Thus, the norms in large organizations may be to treat employees as numbers, rather than as individuals. This norm may permeate the supervisor-subordinate relationship.

Alternatively, there may be no observable difference in the behavior of supervisors in large organizations and those in small organizations. The difference in ratings of interactional justice may result from subordinates' evaluation of their supervisors' behavior. Perhaps it is more difficult for employees in large organizations to discern their contribution to the organization and understand their value to the group. A group value model approach (Lind & Tyler, 1988; Tyler & Lind, 1992) may suggest these employees would be particularly sensitive to behaviors that provide them with informa- tion about their standing within the group. Consequently, they notice and recall more information about interpersonal interactions than employees in small organizations. It is also possible that employees who choose to work in large organizations expect to be treated as a piece of the organizational machinery. Therefore, they interpret the supervisors' behavior as consistent with these expec- tations. Clearly, additional research is needed to assess the basis for employee perceptions of interactional justice.

The second interesting aspect of the relationship between inter- actional fairness and size lies in its ability to help us understand earlier findings regarding the effects of organizational size. For example, we know that employees of larger organizations display higher absenteeism rates and lower job satisfaction than those in smaller organizations (e.g., Indik, 1963; Rousseau, 1978; Stevens, Philipsen, & Diederiks, 1992). Indik (1965) suggested that orga- nizational structure affects behaviors such as absenteeism indi- rectly through its effect on organizational processes such as com- munication, control, and coordination. Our results suggest that another factor, interactional justice, may also be important. We know that interactional fairness is related to satisfaction (Bies & Moag, 1986; Tyler & Bies, 1990). Thus, the relationship between size and satisfaction (and subsequent behavioral responses such as absenteeism) may be mediated by perceptions of interactional fairness.5 Such a relationship would provide us a greater under- standing of the processes that link structure to job attitudes and behaviors.

Another implication of our study is a practical one. As we have discussed, there is much data that suggests that there are negative consequences associated with unfair treatment. These conse-

quences have motivated researchers to seek interventions that can enhance organizational justice. Most of these recommendations fall into two groups: (a) prepare fairer policies (e.g., Folger & Lewis, 1993; Gilliland, 1993), and (b) train people to be more interpersonally effective (e.g., Skarlicki & Latham, 1996, 1997; Taylor et al., 1995). For the first recommendation, the onus for change falls on policies; in the second, it falls on individuals. We argue that this is only part of the picture. Procedures and interac- tions take place in a social context. One cannot ignore this context when drafting policy statements or when training people, as it exerts an important influence on fairness perceptions. Although the present study can hardly be seen as the last word, we have begun to describe the structural conditions under which procedural and interactional justice are more or less likely. Future research of this kind could offer prescriptive recommendations to fair-minded employers.

This study also has a valuable theoretical ramification, as it provides further evidence that can bear on the conceptual status of interactional justice. As we noted earlier, various studies have found that procedural and interactional fairness have different consequences (Cropanzano & Prehar, 1999; Malatesta & Byrne, 1997; Masterson et al., in press). Our study complements this earlier work by finding that procedural and interactional justice have different structural antecedents. For example, centralization was related to procedural justice but not interactional justice. Size, on the other hand, was associated with interactional justice but not procedural. The fact that procedural and interactional justice have different correlates suggests that they are not the same construct (Bies, in press).

We found neither nonlinear (quadratic) nor linear effects of formalization on perceptions of procedural fairness. The linear relationship reflected the argument that the increased consistency provided by formal, written rules and regulations would lead to fewer cases of idiosyncratic processes, treatment, and outcomes, and therefore increased perceptions of fairness. The nonlinear relationship suggested that there might be an optimal level of formalization. Neither relationship was supported.

In retrospect, it is possible that Hypothesis 3 was a bit naive. First, we assumed that all formalization was of a similar quality, that the difference was one of degree: too little, too much, or just right. In light of our results, another possibility presents itself. It could be that the amount of formalization matters less than its usefulness. Rules and guidelines that improve organizational func- tioning may be seen as fair, regardless of their detail. For example, a firm that competes in a relatively static market may find that

5 A more complex description of this mediation effect can be derived from the group value model (Tyler & Lind, 1992). Tyler and Lind sug- gested that individuals use the treatment they receive from authorities as an indication of their standing within the group. Low perceptions of interac- tional fairness have two implications from the group value perspective. First, the perceived unfairness would lead individuals to view organiza- tional authorities as less trustworthy and consequently make them less likely to acquiesce to organizational requests. Second, the low interactional fairness would reflect lack of standing within the group. This lack of standing may cause individuals to feel less committed to the organization and therefore less likely to engage in positive organizational behaviors (e.g., organizational citizenship behaviors) and more likely to engage in negative behavior (e.g., absence, turnover, theft).

ORGANIZATIONAL STRUCTURE AND FAIRNESS 301

detailed guidelines provide the fairest method of operation because the environment lends itself to a comparatively high degree of certainty and predictability. On the other hand, firms that operate in fluid markets may find that detailed policies are seen as unfair because the rules are too rigid to respond to the dynamic environ- ment. In short, it may not be the amount of rules that is important but the amount of appropriate rules and how well those rules function. Indeed, Leventhal (1980, p. 46) explicitly stated that the relevance of his procedural rules may vary across settings.

There is another potential problem with our formalization hy- pothesis. We argued that formalization might increase procedural justice because it affords everyone more or less consistent treat- ment. Although this may be the case, it is noteworthy that consis- tency is only one of several process elements that produce fairness perceptions. As Leventhal (1976) and Bies and Moag (1986) have emphasized, other things matter as well. For example, a fair process should be ethical and reversible, among other things. It is not clear how formalization affects these other process elements.6

For this reason, our hypothesis may have been too simplistic. Like all studies, this one has some limitations. Our dependent

measures involved different kinds of fairness perceptions, but we did not examine other individual-level outcomes that are presumed to be caused by fairness, such as work attitudes, turnover inten- tions, or organizational citizenship behaviors. Fortunately, previ- ous research has established the relationship of justice perceptions to these outcomes (Cropanzano & Greenberg, 1997; Greenberg, 1990b). Nevertheless, it would be useful to examine them in the context of organizational structure.

Another potential concern is that our results could be explained by common method variance. Because many of the variables were taken from a single respondent, some association may be expected as a result of response style. Though this threat cannot be conclu- sively ruled out, some of our results argue against it. For one thing, organizational size—a predictor of interactional fairness ratings— was not measured by self-report. Additionally, we predicted that the structural variables would affect the two dimensions of justice differently. For example, centralization was expected to affect procedural justice, but not interactional justice. For all of our analyses, the structural variables only affected the dimension of justice they were predicted to affect. If the results were driven by common method variance, we would expect to see a similar impact on both procedural and interactional justice. In addition, method variance would be expected to produce common, modest relation- ships among all the variables. This was not observed, as the obtained associations varied widely.

Third, our measure of procedural justice is narrower than that used in other studies (e.g., Folger & Konovsky, 1989). Although our measure assessed both opportunities for input and bias sup- pression, it did not include items about procedural attributes like consistency, accuracy, and correctability. Future research should use a broader measure of procedural justice.

Finally, we cannot say with certainty whether our respondents differed in systematic ways from nonrespondents. However, each organization's respondents included a broad range of perspectives. For example, every organization's respondents included both men and women as well as supervisory and nonsupervisory employees. Further, every organization's respondents included individuals younger than 32 and older than 55, and most included individuals younger than 25 and older than 60. Finally, every organization's

participants included individuals with less than 1 year and more than 14 years tenure with that firm, and most included individuals with less than 6 months and more than 25 years tenure.

This study took a decidedly different approach to examining organizational justice. We focused on the relationship between organizational structure and perceptions of organizational justice. Our results are important in that they represent the first attempt to present a macrolevel view of organizational influences on fairness perceptions, and they challenge other researchers to consider a broader array of influences on perceptions of fairness than have previously been considered.

Work organizations are purposively constructed social systems (Coleman, 1993). As such, they provide the environmental context in which fair and unfair interactions transpire. To neglect structural attributes is to neglect the setting in which justice occurs. The results obtained here suggest that structural features are indeed associated with fairness perceptions. Our results suggest that it may be possible for firms to build justice into their designs by decentralizing authority and limiting the size of business units. Alternatively, neglecting these structural attributes may inadver- tently build a setting that works against justice by centralizing authority and discouraging empowerment. Ultimately, organiza- tional design may prove an effective means of making fairness an inherent part of work life. However, this possibility awaits inquiry.

6 We are thankful to an anonymous reviewer for pointing this out to us.

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Received October 7, 1998 Revision received June 10, 1999

Accepted June 10, 1999

Correction to Phillips et al. (1999)

The article "Double-Blind Photoarray Administration as a Safeguard Against Investigator Bias," by Mark R. Phillips, Bradley D. McAuliff, Margaret Bull Kovera, and Brian L. Cutler (Journal of Applied Psychology, 1999, Vol. 84, No. 6, pp. 940-951), contained an error.

On page 947, the graphs within Figure 1 were incorrectly labeled. The corrected figure follows.

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Photoarray Procedure

Observer Present

- Simultaneous

- Sequential

g 0.8

!§ 0.6 0.5-

•8 0.3 -

I °'2 "

0.56

0.22

- Simultaneous

- Sequential

Single-Blind Double-Blind

Photoarray Procedure

Figure /. Proportion of false identifications as a result of photoarray procedure, photoarray presentation, and observer practice.