Commitment to a parent company and a local operation. A comparison between local employees and Western expatriates working for multinational companies

DOIhttps://doi.org/10.1108/EBHRM-05-2013-0013
Date03 August 2015
Publication Date03 August 2015
Pages181-204
AuthorPhuong Nguyen,Jörg Felfe,Insa Fooken,Ho Thuy Ngoc
SubjectHR & organizational behaviour,Global HRM
Commitment to a
parent company and
a local operation
A comparison between local employees and
Western expatriates working for
multinational companies
Phuong Nguyen
INEDD at the Department of Educational Science and Psychology,
University of Siegen, Siegen, Germany
Jörg Felfe
Helmut Schmidt University of Hamburg, Hamburg, Germany
Insa Fooken
Department of Educational Science and Psychology,
University of Siegen, Siegen, Germany, and
Ho Thuy Ngoc
Faculty of International Education,
Foreign Trade University, Hanoi, Vietnam
Abstract
Purpose The purpose of this paper is to investigate the nature of commitments of local employees to
a parent company and a local operation in comparison to the nature of commitment of Western
expatriates to the two foci.
Design/methodology/approach Data w ere collected by questionnaire from 532 local
employees and 471 Western expatriates currently working for the subsidiaries of multinational
companies (MNCs) in Vietnam. Hypotheses were tested using exploratory factor analyses,
confirmatory factor analyses, correlation analyses, t-test, generalized linear models and
hierarchical regression.
Findings The results confirmed two distinct commitment foci and revealed that the commitment
to the local operation was stronger than the commitment to the parent company for local
employees. Remarkably, retention and absenteeism are more driven by local operation
commitment than by parent company commitment for the local employees. In contrast,
these outcomes are more driven by parent company commitment for the Western expatriates.
Working conditions (job autonomy, job variety, transformational leadership and remuneration)
positively predicted affective commitment to the local operation for both groups;
particularly job variety and leadership were better predictors for local employees than for
Western expatriates.
Practical implications The comparison shows effective and specific ways to sustain and
reinforce the comm itments of each employ ee group with regard to two foci. This infor mation may
help to reduce the rate of turnover intention and absenteeism in MNCs.
Evidence-based HRM: a Global
Forum for Empirical Scholarship
Vol. 3 No. 2, 2015
pp. 181-204
©Emerald Group Publis hing Limited
2049-3983
DOI 10.1108/EBHRM-05-2013-0013
Received 31 May 2013
Revised 17 September 2013
4February2014
16 May 2014
Accepted 20 June 2014
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2049-3983.htm
This research was funded in part by DAAD Germany, and the International Office of Siegen
University. The authors would like to express the gratitude for the helpful financial support.
181
Commitment
to a parent
company
Originality/value By using a multifaceted approach, this study provided a comparison of
dual organizational commitment for different categories of employees working in MNCs. Second, this
study shows that the stronger commitment focus has a stronger influence on related outcomes
(i.e. retention and absenteeism). If so, MNCs can focus on reinforcing the selected commitment focus in
order to reduce the costs of management. Third, the study has initially pointed out that some
work factors exert a specific influence on different commitment foci in the two groups. Controlling
these work conditions is recommended to sustain and develop commitment levels of the two groups.
Keywords Employee turnover, Organizational behaviour, Expatriation and repatriation,
International human resource management, Work engagement and commitment
Paper type Research paper
1. Introduction
Globalization leads to a growing number of multinational companies (MNCs) in
different countries and regions all over the world. For example, Robert Bosch GmbH, a
German multinational engineering and electronics company, established more than
350 subsidiaries across over 60 countries. Similarly, Unilever, a multinational consumer
goods company headquartered in London, England, created subsidiaries in at least
90 countries. MNCs have to send employees from the Western headquarters to key
positions in the foreign operations. Usually, local workers are employed in manual and
staff positions.In general, the Asian subsidiariesof MNCs employ two main categoriesof
employees: Western expatriates and local employees. As members of more than one
formal organization, both Western expatriates and local employees working at the local
operations may experience dual commitments to a local operation where they are
currently working, and to a Western parent company whichestablishes and supports the
performance of the local operation.
Indeed, in the caseof Western expatriates, previous studies (e.g. Black and Gregersen,
1999; Nguyen et al., 2013) have found that commitment to the parent company
and commitment to the local operation are distinguishable foci and that commitment to
a parent company is generally stronger than commitment to a local operation.
Interestingly, relevant outcomes (i.e. retention) are mostly predicted by commitment to
the parent company (Gregersen and Black, 1990; Nguyen et al., 2013). However, it is an
open question if thefindings with expatriates are alsovalid for local employees. Do local
employees also perceive the parent company and the local operation as different entities,
and therefore also develop different commitment foci? Is parent company commitment
for local employees as relevant for outcomes as for Western expatriates? The nature
of dual commitmentof local employees to a parent company and a local operationhas not
been examined yet. The purpose of the study is to address the following unanswered
questions: first, do local employees differentiate between commitment to the parent
company and to the local operation? Second, how do commitment to a parent company
and commitment to a local operation differ between Western expatriates and local
employees; e.g. are local employees more committed to the local operation whereas
Western expatriates are more committed to the parent company? Third, are the effects of
the two commitmentfoci on related outcomes differentfor the two groups? Finally,which
antecedents are more closely related to local employeescommitment in comparison
to Western expatriates? Therefore, from a theoretical perspective, it seems critical
for researchers to understand if the phenomenon of dual commitment is rather similar or
different for local and foreign employees. As we will argue, the different organizational
background and perspective of local and expatriate employees may cause different
patterns of commitment. From a practical perspective,for human resource managers itis
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