Caught in a Dilemma: The Impacts of Dual Organizational Identification on Host Country Nationals in the Face of Ethical Controversies

Dual organizational identification (DOI) is generally considered beneficial to multinational corporations (MNCs) and their employees. However, this study challenges this consensus by exploring the potential negative impacts of DOI in the ethical controversy context when MNCs and host countries have conflicting views on a business decision and both feel that they are ethically correct. Integrating role identity theory, we propose that the DOI of host country nationals (HCNs) may create conflict in their work-related perceptions and behaviors amid an ethical controversy. In Study 1, we interviewed 51 HCNs from MNCs’ Chinese subsidiaries and found that HCNs’ DOI caused their role conflict during ethical controversies, which in turn affected their perceptions (i.e., perceived isolation, ethical pressure) and behaviors (i.e., procrastination, exit, voice, headquarters (HQ)–subsidiary cooperation). We also found that the job level of HCNs played a key role in moderating the above relationship. In Study 2, we tested the theoretical framework developed in Study 1 using a multi-wave survey from a sample of 300 HCNs working in MNCs’ Chinese subsidiaries. The results generally validated the Study 1 model. Theoretical and practical implications are discussed.