The Effect of Organizational Justice on Organizational Performance: Evidence From Public Hospitals in Ethiopia

Abstract

Organizational justice is a fundamental aspect of human resource management and a critical driver of institutional performance. In Ethiopian hospitals, however, persistent employee grievances suggest a systematic breakdown in fairness perceptions, potentially undermining hospital performance. Grounded in equity theory and employing an explanatory research design, this study investigates the effect of organizational justice on the performance of Ethiopian public hospitals. Data were collected from 371 employees using a stratified simple random sample and a five-point Likert scale questionnaire. Data were analyzed using descriptive statistics and partial least squares structural equation modeling (PLS-SEM) with bootstrapping analysis, performed using SMART PLS software. Descriptive statistics demonstrate public hospitals’ low practice of organizational justice and weak hospital performance. Such perceptions of inequity show a critical organizational challenge that warrants attention. The findings further reveal that four justice dimensions significantly influence hospital performance, with informational justice exhibiting a strong effect (β = 0.363, p < 0.001), followed by distributive justice (β = 0.323, p < 0.001), procedural justice (β = 0.200, p < 0.001), and interpersonal justice (β = 0.191, p < 0.001). These results underscore the differential effect of each justice dimension on hospital performance. By advancing the theoretical application of equity theory within the health sector, this study offers actionable insights for leaders, managers, policymakers, and stakeholders to design and implement targeted strategies that foster fairness, strengthen sustainable human resource management, and ultimately improve the performance of public hospitals.