To Litigate Or Not: A Resource Dependence Perspective On Interorganizational Conflict Resolution

Interorganizational conflict is ubiquitous, but scholarly knowledge about how companies resolve such conflicts remains limited. The present study draws on the resource dependence theory to develop and test a model examining how perceptions of the judicial system’s justice affect companies’ strategic choices to resolve interorganizational conflict. We predict that high levels of judicial justice perception allow organizations to rely more on this favorable external environment and use more litigation rather than alternative dispute resolution approaches, which, however, will witness an increase in time cost. Also, we predict that managerial discretion will mitigate the effect of judicial justice perception on companies’ use of litigation. The sample of 12,150 firms based on the Investment Climate Survey in China offers empirical support for our hypothesized model. The research findings contribute to a better understanding of how the external environment and internal arrangement jointly influence companies’ choices when involved in conflicts with other organizations.