The glue that binds: how organizational identification drives innovation performance in foreign-owned subsidiaries

Although organizational identification has been recognized as crucial for multinational enterprises, its configurations regarding innovation performance at the subsidiary level have hitherto received scant attention. Accordingly, the purpose of this research is to identify the types of configurations in which organizational identification in foreign-owned subsidiaries leads to high innovation performance. We base our research on social identity theory and the neo-configurational perspective to test our framework using survey data collected from subsidiaries located in Thailand and Vietnam. Our results provide evidence that organizational identification serves as a glue that binds strong inter- and intra-organizational network relationships to drive innovation performance. While we find some variation in that pattern between the two host countries, it appears overall that the conditions of expatriates in top management and the geographic distance between home and host country only play a peripheral role. We identify the “integrated innovation driver” and “distant local hub” as two subsidiary archetypes that show how organizational identity can drive high innovation performance in subsidiaries. This study is one of the first to empirically investigate the main complementing factors in the context of organizational identification and innovation in foreign-owned subsidiaries, which have previously predominantly been investigated in isolation of each other.