When Fairness, Trust, and Commitment Boost Entrepreneurial Success

What is it about?

This study examines how social dynamics within organizations shape the success of their entrepreneurial orientation (EO)—a firm’s tendency to innovate, take risks, and act proactively. Using a social exchange perspective, it explores how procedural justice (the fairness of internal decision-making), trust among functional managers, and their organizational commitment together enhance the positive effects of entrepreneurship on firm performance. Analyzing data from Canadian firms, the research finds that the link between EO and firm performance becomes stronger when managers feel fairly treated, trust each other, and show strong commitment to the organization. Moreover, consistent with a systems view of organizational contingencies, the EO–performance relationship reaches its peak when all three social factors—fairness, trust, and commitment—align in an “ideal configuration” that fosters mutual respect and open knowledge exchange across departments. For managers and leaders, these findings stress the need to build social cohesion and fairness into organizational systems. By ensuring transparent decision-making, nurturing trust among managers, and fostering emotional commitment to the organization, leaders can help entrepreneurial initiatives deliver stronger performance outcomes. These lessons are particularly relevant for organizations where teamwork and trust-based collaboration are critical to sustaining innovation and competitive advantage.

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Photo by Redmind Studio on Unsplash

Photo by Redmind Studio on Unsplash

Why is it important?

This study is unique in showing how three social exchange factors—procedural justice, trust, and organizational commitment—work together to strengthen the connection between entrepreneurial orientation and performance. It highlights how fairness in processes motivates collaboration, how trust facilitates knowledge sharing, and how commitment ensures sustained effort toward entrepreneurial goals. Its timeliness lies in the growing need for firms, in Canada and beyond, to integrate fair procedures, mutual trust, and strong organizational commitment into their management systems. As Canadian firms continue to compete in dynamic markets, this research underscores how these social foundations can transform entrepreneurial ambition into enduring organizational success.