We argue that a perceived misalignment between a multinational corporation’s espoused values and how those values are lived in the subsidiary has detrimental effects on group outcomes, specifically groups’ affective organizational commitment. Using data from 1760 work groups in the foreign subsidiaries of a large European MNC, we find support to our hypotheses and show that when there is a misalignment between a particular espoused value and the lived value, and the value at stake is central to the value system of the country in which the subsidiary is located, the detrimental effect on the group’s outcomes is more pronounced.
Given the geographic spread of multinational corporations (MNCs) and the diversity of their employees, shared values serve as a common thread in guiding and achieving integration across foreign subsidiaries (Grøgaard & Colman, 2016). MNC headquarters (HQ) rely heavily on corporate values to establish and maintain behavioral norms, achieve global integration across subsidiaries, and facilitate knowledge sharing and creation (Chen, Paik, & Park, 2010; Harzing, 2001; Zander, Jonsen, & Mockaitis, 2016). As companies become increasingly globalized, shared values act as the “glue that holds an organization together as it grows, decentralizes, diversifies and expands” (van Rekom, van Riel, & Wierenga, 2006, p. 175). To act like a common glue requires the company’s core values to be “lived” throughout the MNC (Michailova & Minbaeva, 2012; Zander et al., 2016). The difference between espoused and lived values is critical in this context. Espoused values are “the articulated, publicly announced principles and values that … [an organization] claims to be trying to achieve” (Schein, 1992, p. 9). These values emerge from the underlying principles to which (most) members of the organization are expected to subscribe (Grøgaard & Colman, 2016). Although these values may predict what people say, they may differ widely from what people actually do (Argyris & Schon, 1996). On the other hand, lived values involve a theory-in-use that explains actual behavior (Argyris & Schon, 1996; Argyris, 1999; Kabanoff & Daly, 2002). Organizational values become “lived” only if they are internalized by individuals. Alignment between espoused and lived values is advantageous (Zander et al., 2016) but can be difficult to achieve, especially in MNCs organized as transnational, differentiated networks or as heterarchies (Bartlett & Ghoshal, 1989; Hedlund & Rolander, 1990; Nohria & Ghoshal, 1997). In such global networks of geographically dispersed subsidiaries, there are often notable differences between the values embraced by the HQ (espoused values)—manifested in mission statements, codes of conduct, corporate communications, and so on—and how they are practiced within the subsidiaries (lived values) (O’Reilly, 1989). These differences may result in value incongruence (Schein, 1992), and complicate shared interpretation and understanding of the MNC’s underlying value system (Kwantes, Arbour, & Boglarsky, 2007). In turn, this can violate the established psychological contract and “create cynical and dispirited employees … and undermine managerial credibility” (Lencioni, 2002, p. 5) to the extent that the commitment of foreign subsidiary employees and work groups is affected negatively (Howell, Kirk-Brown, & Cooper, 2012; Ortega-Parra & Sastre-Castillo, 2013; Simons, 2002).