MNC Employees’ Adoption and Adaptation of Corporate Practice: A Legitimacy-Based View

Abstract

This paper theorizes and examines the micro-institutional process of corporate practice implementation in multinational corporations (MNCs). Drawing from the social-psychological approach to institutional theory, we focus on the role of legitimacy judgment in explaining MNC employees’ diverse behavioral responses to organizational and institutional pressures. Our theoretical model was examined in two studies regarding common corporate language (CCL) based on 228 MNC employees in the United Kingdom and United States (survey) and 105 MNC employees in China (experiment). The findings reveal that legitimacy judgment bolsters MNC employees’ passive adoption of the CCL practice but reduces their active adaptation in the form of code-switching. Further, employees form legitimacy judgment based on authorization, external endorsement, and the interaction of authorization and external endorsement. Intriguingly, employees’ adaptation, rather than their adoption, drives knowledge sharing in their MNCs, suggesting acquiescence to a taken-for-granted practice could undermine a useful outcome. Our study advances the theoretical understanding of corporate practice implementation in MNCs, legitimacy judgment, and the CCL practice.