Organizational Identification in Local Subsidiaries of Foreign Multinational Enterprises

Abstract

We investigate organizational identification in small and medium-sized local subsidiaries of foreign multinational enterprises (MNEs). Organizational identification – a sense of oneness with their organization - is a strong predictor of positive employee attitudes and behaviors. However, due to the ‘foreignness’ and ‘smallness’ associated with small and medium-sized local subsidiaries of foreign MNEs, low-level host country nationals (HCNs) working for the small and medium-sized local subsidiaries exhibit low levels of organizational identification. In this study, we consider the role of HCN CEOs in overcoming the low organizational identification of low-level HCNs. Unlike low-level HCNs, HCN CEOs closely work with the headquarters, developing a good understanding of MNEs’ business strategies, activities, and policies, and the strategic importance of local subsidiaries for MNEs. To approach the issue, we develop and test a model on organizational identification in local subsidiaries based on multi-sourced data from small and medium-sized subsidiaries of MNEs in South Korea, using a sequential mixed methods design. First, we reviewed archival data on organizational identification from exit interviews of low-level HCNs, and also conducted interviews with HCN CEOs. As a result, we identify key antecedents and outcomes of organizational identification. Second, from a survey of both HCN CEOs and low-level HCNs, we test our hypotheses and validate our model. Implications are discussed in the paper.