EMPLOYEES’ PERCEPTIONS OF MULTINATIONAL ORGANIZATIONAL PRACTICES IN INDONESIA: CULTURAL DIFFERENCES AND SOCIAL IDENTITY

Dahesihsari, Rayini (2007). EMPLOYEES’ PERCEPTIONS OF MULTINATIONAL ORGANIZATIONAL PRACTICES IN INDONESIA: CULTURAL DIFFERENCES AND SOCIAL IDENTITY PhD Thesis, School of Psychology, University of Queensland.

       
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Author Dahesihsari, Rayini
Thesis Title EMPLOYEES’ PERCEPTIONS OF MULTINATIONAL ORGANIZATIONAL PRACTICES IN INDONESIA: CULTURAL DIFFERENCES AND SOCIAL IDENTITY
School, Centre or Institute School of Psychology
Institution University of Queensland
Publication date 2007
Thesis type PhD Thesis
Supervisor Professor Cynthia Gallois
Abstract/Summary While there are a number of multinational corporations (MNCs) operating in Indonesia, only a few studies have addressed the issue of Indonesian employees’ work experiences in MNCs. How Indonesian employees perceive the foreign management practices within MNCs, and how these perceptions affect their work attitudes and behaviour remains unexplored. This research project is designed to investigate Indonesian employees’ perceptions of MNCs. More specifically, it examines the role of cultural differences and social identity in employees’ perceptions of MNCs and psychological climate, the mediating role of their perceptions of managers’ communication behaviour, and the impact of these on organizational identification and employee outcomes. The over-arching conceptual framework adopted for the study is that of Social Identity Theory. To achieve these objectives, this research used a combination of quantitative and qualitative methods, including a survey and interviews. Three organizations with headquarters in Jakarta were selected for study; each of them had experienced recent organizational change connected with the multinational nature of the company and had different industry backgrounds and different origins of the parent company. Two hundred and six participants (all volunteers) from the subsidiaries of these three MNCs participated in this research. Initially, pilot interviews were conducted with a small number of people, selected using maximum variation sampling, to explore the organizational context and to establish the salient issues related to the cultural context of an MNC in Indonesia. After that, a survey was carried out with employees at all levels of the three organizations, to test hypotheses and to assess the generality of the findings uncovered by the interviews. Post-survey interviews were also conducted, to develop a deeper understanding of the variables examined in the survey and the complexity and contradictions in the data. Finally, follow-up interviews were conducted to clarify the results of the survey and to explore them further. All the interviews were examined through thematic analyses. Statistical procedures used included multiple regression analyses for each organization and for the entire data set. In general, the national employees had positive views of MNCs. They sought identification with the foreign management, which offered them a high status. The research also provides evidence that cultural differences and social identity influenced Indonesian employees’ perceptions of MNCs and psychological climate, leading to differences in organizational identification and employee outcomes. Issues of differences between Indonesian and MNC values were salient in all three organizations. There were a number of values, such as ethics, safety and direct style of communication, which raised cultural barriers to national employees in reaching MNC practice standards, demonstrating that it is important for MNCs to be culturally in tune with local customs and consistent with local expectations. Cultural differences have been found to be one of the main sources of perceptual bias in MNC practices and have been cited as a major reason for any problems that exist in MNCs. However, this research shows that cultural differences are able to be bridged by the adaptive fit to the multinational work environment that has been exhibited by national employees. A strong motivation to adapt helped employees to improve their understanding and acceptance of the specific cultural differences of MNC management practices. This led to positive views of foreign management practices, psychological climate, a strong organizational identification and positive employee outcomes. This research highlights the importance of managing the balance of power and of reaching relatively equal status between Indonesian employees and expatriates in organizational practice. Rather than MNC status, or foreign management practices per se, it was power imbalance that resulted in an intergroup climate based on national culture. The salience of cultural identity was thus an effect of inequality and power imbalance between expatriates and national employees in the organization. This study indicates that accommodative communication displayed by expatriate and national managers contributed to positive perceptions of MNCs and psychological climate, by bridging the differences in cultural values between the MNC and local employees. On the other hand, where managers’ communicative behaviour accentuated the gap and segregation between expatriates and national employees, this was likely to play an important role in stimulating cultural identification. The study also demonstrates that perceptions of foreign management practices affect employees’ work attitudes and behaviour. Perceptions of MNCs, psychological climate and organizational identification were significantly associated with employee outcomes (with the exception of intention to leave). In summary, this research suggests that the intergroup approach offers a sound framework for understanding Indonesian employees’ perceptions of differences in values and practice in the subsidiaries of multinational corporations.

 
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Created: Fri, 21 Nov 2008, 15:55:34 EST