Corporate philosophy as a sensemaking anchor: how Japanese management practices and team boundary work shape employee outcomes in foreign subsidiaries

Purpose Using the case of Japanese multinational corporations (MNCs) operating in Thailand, this study examines the role of corporate philosophy when MNCs adopt an ethnocentric approach to managing their foreign subsidiaries. The study also explores how local employees cooperatively make sense of ambiguous situations arising from conflicts between home-country practices and local institutions. Design/methodology/approach Data from 371 supervisor–employee dyads across 66 teams in seven Japanese manufacturing companies operating in Thailand were analyzed. Multilevel path analysis was used to explore the effects of home-country management practices and headquarters’ (HQ) control on employee behavior via corporate philosophy internalization. Furthermore, the moderating role of team boundary work was examined. Findings Corporate philosophy internalization in local employees’ work teams mediates the positive relationships between Japanese management practices and local employees’ in-role performance and knowledge-sharing behavior. When team boundary work is high, corporate philosophy internalization mediates the negative relationship between HQ control and knowledge-sharing behavior. Practical implications Corporate philosophy serves as a sensemaking anchor for MNCs and helps address subsidiary complexities. It guides local employees through ambiguity and fosters operational consistency and effective decision-making. Originality/value This study advances the literature by developing a theoretical model that incorporates corporate philosophy as a sensemaking anchor. This model explains how local employees interpret and engage with transferred practices under ambiguous conditions. It also addresses the limitations of the country-of-origin perspective.