THE EFFECT OF EMPLOYEE ENGAGEMENT ON ORGANIZATIONAL PERFORMANCE IN MULTINATIONAL COMPANY (MNCS) IN THAILAND

Abstract

This study investigated the phenomenon of employee engagement in multinational companies in Thailand. The aim was to identify the factors that affected employee engagement. There were five objectives set, which investigated the interrelationships of employee engagement, and organizational performance, and turnover intention. The research was conducted using a survey of employees of Thai subsidiaries of multinational companies (n = 423). The sample was selected using convenience sampling, with demographic and professional statistics collected to investigate the characteristics of the sample. Data analysis included descriptive statistics and structural equation modeling (SEM).

The descriptive statistics showed that the overall level of employee engagement was only moderate, but that there was a slightly higher level of engagement for the parent company than for the Thai subsidiary. It was also shown that employee engagement with the subsidiary had a positive effect on employee engagement with the parent company. The structural equation modelling process identified factors in employee engagement including employee trust, organizational identification and employee exchange ideology. Employee engagement was shown to influence employee satisfaction, employee commitment and organizational citizenship behavior. Employee engagement was also shown to have a significant effect on employee performance and turnover intentions (negative). Employee trust had a negative effect on turnover intentions, but did not influence employee performance. Employee satisfaction and employee commitment both significantly affected turnover intentions (negative) and employee performance. Organizational citizenship behavior did not influence turnover intention, but did influence employee performance. Thus, the internal relationships of the structural model revealed that there is a complex set of relationships between the various employee attitudes identified.

These findings have both academic and managerial implications. The academic implication is that employee engagement is associated with a wide range of employee attitudes and beliefs about the company. Another implication is that there may be a difference between employee engagement with the subsidiary of a multinational company and with the multinational company itself. Managerial implications of the study include that managers should address employee engagement and create conditions for engagement in order to boost performance and reduce turnover intentions.

There are several limitations to this study. The research did not investigate cultural differences between the Thai subsidiary and multinational parent company, and did not examine the differences between companies in detail. It also only investigated multinational subsidiaries, meaning the phenomena studied could be different in domestic companies. These limitations offer opportunities for further research, especially investigating employee engagement in subsidiaries and parent companies and cross-cultural comparisons.

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