Managers face identity conflict within foreign-employing organizations, study shows

LAWRENCE — Company or country?

In this “age of nationalism,” workers often find themselves employed in local subsidiaries of multinational enterprises (MNEs). But according to Minyoung Kim, associate professor of strategic management and Frank T. Stockton Fellow in the School of Business at the University of Kansas, this can lead to contradictions in loyalties that impact both employee and employer.

Minyoung Kim“Managers working for multinational corporations feel an identity conflict. Because of that, they experience more stress. In terms of management strategy, the firms need to provide more opportunities so they can mitigate this identity conflict,” Kim said.

His article “Betwixt and Between: National and Organizational Identification of Host Country Managers Working in MNE Subsidiaries” investigates the patterns of dual identities of host country managers working in multinational enterprise subsidiaries. It finds that host country managers identify more strongly with their nation and less strongly with their organization than domestic firm managers, exposing them to greater acculturative stress within foreign organizations. It’s published in the Academy of Management Journal.

Co-written with Khan-Pyo Lee of Sogang University and Chi-Yeon You of Gyeongsang National University (both in South Korea), the article emphasizes why identification with an organization may prove important to overall job satisfaction.

“When managers are identifying more with their nation than the foreign-employing organization, the firms need to provide more care, opportunities and vision for these employees,” he said.

Kim explained that what is unique about his study is a clear demarcation between company and nation.

“For example, those people who work at Amazon or Google, they have both an organization identity and national identity. Most are U.S. citizens. So they are nested — this is a U.S. firm using U.S. employees. There’s not much source of conflict,” he said.

“The reason why we contrast the emphasis of managers working for the multinational corporation is that they are not nested; it is more of a cross-cutting. So if I’m in South Korea, and I’m working for Google Korea, I’m like the title: betwixt and between.”

While this research does have applications to social and community settings, Kim chose to focus on the business world. That arena offers at least one advantage when facing such a dilemma.

“In business, the firms can do something to address that situation. Managers who are recognizing the problem can have some kind of strategy for providing career opportunities, and they can acknowledge their employees’ importance so they’ll identify more with the organization. Maybe the government can institute similar kinds of public strategies, but that’s beyond our scope right now,” he said.

Kim’s study centers on an analysis of 843 Korean managers working in 19 Korean firms and 60 MNE subsidiaries.

Would this study yield different results if it was conducted in a country other than South Korea?

“People in certain countries don’t necessarily identify strongly with their countries. So depending on the economic development, status of the country or other factors, different countries may have different implications,” he said, noting a similar study was tried previously in Romania that led to mixed conclusions.

“Korea is relatively ethnically homogenous. They have a rather long history. So they have many factors to identify with more as a nation.”

The inverse of this situation introduces its own set of problems.

“For an immigrant in the States, the ideal situation is that you identify with the U.S. at the same time you identify with your ethnic group — what is called an ‘integrated profile.’ But the worst-case scenario is that you’re living in the U.S. but still have a stronger identification with your ethnic group. Then you can feel alienated.”

Now in his 10th year at KU, Kim studies the intersection between strategic management and international business. He often focuses on how firms create value and how they appropriate the value they have created. His latest article intersects with a concept he studies called “liability of foreignness.”

“As a foreigner traveling in another country, you are inferior to the native resident there in terms of language and culture. In the same way, every firm — regardless if you’re GM or Google — suffers from this liability of foreignness when they go abroad because they don’t know the rules and norms, and they don’t have network and distribution channels,” he said.

So far, other studies have recognized liability of foreignness in terms of external factors.

“But what we are finding here is there’s an internal source of liability of foreignness,” Kim said. “Multinational corporations’ own employees can be a source of liability because they are not identifying with the firm. Identification with the organization is really important because that’s what makes a firm more efficient. So if you can mitigate this cost, you can create more value.”

Read this article on the KU News website.