A theoretical and empirical exploration of the adoption of employee empowerment practices: evidence from multinational subsidiaries in China

For many years, employee empowerment practices have been of major interest to both management scholars and practitioners. A large body of literature suggests that employee empowerment practices positively relate to organizational performance. However, insufficient is known about the factors that determine the adoption of empowerment practices by firms. Furthermore, most of the research on employee empowerment practices has been conducted in Western countries. To better understand this phenomenon, this thesis investigates the antecedents and outcomes of employee empowerment practices in MNE subsidiaries operating in China. Data were collected from MNE subsidiaries operating in China and analyses were based on three conceptual models. Drawing on transaction cost economics (TCE), the first model proposed that two employee - employer exchange characteristics, performance ambiguity and human asset specificity, independently and inter actively determine the degree of empowerment practices adopted by firms. It further examined the interactive effect of the employee - employer exchange characteristics and empowerment practices on organizational performance. Based on knowledge - based view (KB V) of the firm, the second model examined how employee empowerment practices influence knowledge transfer through individual level mechanisms with regard to employee perceived empowerment practices, psychological empowerment, knowledge sharing. Underpinned by institutional theory, the last model investigated how the informal institution and the subsidiaries' characteristics affect the degree of empowerment practices adopted in the MNE subsidiaries in China. Results revealed that all the three models were at least partially supported, suggesting each of the three models provided valuable insights to explain the adoption of employee empowerment practices. Overall, this thesis contributes to employee empowerment practices literature by shedding light on the underlying factors that influence the adoption of different degree of empowerment practices. This thesis goes beyond the current literature by initiating a new TCE perspective of employee empowerment practices and illuminating the economic nature of employee empowerment practices. It also extends our knowledge on the individual - level mechanism of how empowerment practices contribute to knowledge - based competitive advantage. Finally, it refines the understanding of contextual factors that specifically influenc e employ ee empowerment practices in MNE subsidiaries in China.