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Lessening the divide in foreign subsidiaries: The influence of localization on the organizational commitment and turnover intention of host country nationals

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  • Hitotsuyanagi-Hansel, Azusa
  • Froese, Fabian Jintae
  • Pak, Yong Suhk

Abstract

The retention of host country nationals (HCNs) has become a key challenge for many foreign subsidiaries of multinational enterprises. This study examines whether localization, the replacement of expatriates with HCNs, could serve as a counter-strategy to increase the organizational commitment and reduces the turnover intention among HCNs. Based on social identity theory, we have developed a model to explain the heterogeneous nature of this influence on HCNs depending on different individual-level characteristics, e.g., gender, educational level, organizational tenure, and managerial position. Survey results from 197 Chinese white-collar employees showed that localization increases organizational commitment, which in turn reduces their turnover intention. This tendency was the strongest among male and highly educated employees. Practical and theoretical implications are further discussed.

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  • Hitotsuyanagi-Hansel, Azusa & Froese, Fabian Jintae & Pak, Yong Suhk, 2016. "Lessening the divide in foreign subsidiaries: The influence of localization on the organizational commitment and turnover intention of host country nationals," International Business Review, Elsevier, vol. 25(2), pages 569-578.
    • Handle: RePEc:eee:iburev:v:25:y:2016:i:2:p:569-578
    DOI: 10.1016/j.ibusrev.2015.09.011
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    2. Bebenroth, Ralf & Froese, Fabian J., 2020. "Consequences of expatriate top manager replacement on foreign subsidiary performance," Journal of International Management, Elsevier, vol. 26(2).
    3. Peltokorpi, Vesa & Sekiguchi, Tomoki & Yamao, Sachiko, 2021. "Expatriate justice and host country nationals' work outcomes: Does host country nationals' language proficiency matter?," Journal of International Management, Elsevier, vol. 27(1).
    4. Émilie Lapointe & Christian Vandenberghe & Shea X. Fan, 2022. "Psychological contract breach and organizational cynicism and commitment among self-initiated expatriates vs. host country nationals in the Chinese and Malaysian transnational education sector," Asia Pacific Journal of Management, Springer, vol. 39(1), pages 319-342, March.
    5. Ashish Malik & Vijay Pereira & Pawan Budhwar & Fabian Jintae Froese & Dana Minbaeva & James Sun & Anh Tuan Nguyen & Shanzi Xue, 2022. "Multilevel relational influences on HRM practices: a cross-country comparative reflective review of HRM practices in Asia," Asian Business & Management, Palgrave Macmillan, vol. 21(5), pages 745-779, November.
    6. Michailova, Snejina & Fee, Anthony & DeNisi, Angelo, 2023. "Research on host-country nationals in multinational enterprises: The last five decades and ways forward," Journal of World Business, Elsevier, vol. 58(1).
    7. Hsiao-Ping Chang & Chi-Ming Hsieh & Meei-Ying Lan & Han-Shen Chen, 2019. "Examining the Moderating Effects of Work–Life Balance between Human Resource Practices and Intention to Stay," Sustainability, MDPI, vol. 11(17), pages 1-15, August.
    8. Fabian Jintae Froese & Dylan Sutherland & Jeoung Yul Lee & Yipeng Liu & Yuan Pan, 2019. "Challenges for foreign companies in China: implications for research and practice," Asian Business & Management, Palgrave Macmillan, vol. 18(4), pages 249-262, September.
    9. Marina Anna Schmitz & Fabian Jintae Froese & Anna Katharina Bader, 2018. "Organizational cynicism in multinational corporations in China," Asia Pacific Business Review, Taylor & Francis Journals, vol. 24(5), pages 620-637, October.
    10. Nan Zhou & Heli Wang, 0. "Foreign subsidiary CSR as a buffer against parent firm reputation risk," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 0, pages 1-27.
    11. Nan Zhou & Heli Wang, 2020. "Foreign subsidiary CSR as a buffer against parent firm reputation risk," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(8), pages 1256-1282, October.
    12. Yong Suhk Pak & Qinglu Sun & Yi Yang, 2019. "Influences of expatriate managerial styles on host-country nationals’ turnover intention," Asian Business & Management, Palgrave Macmillan, vol. 18(4), pages 263-280, September.
    13. Yezdi H. Godiwalla, 2016. "The Influences of Multinational Corporation¡¯s Headquarters and Host Country Cultures on Foreign Subsidiaries¡¯ Management Styles," Applied Economics and Finance, Redfame publishing, vol. 3(4), pages 148-156, November.
    14. Yamao, Sachiko & Yoshikawa, Toru & Choi, Daejeong & Toh, Soo Min, 2020. "When do host country nationals help expatriates? The roles of identification with the multinational enterprise and career development support by the subsidiary," Journal of International Management, Elsevier, vol. 26(3).

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