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ORGANIZATIONAL PRACTICE ADOPTION IN THE MNC:

A TRAIT ACTIVATION THEORY APPROACH

INTRODUCTION

A key concern in the MNC literature is the question regarding the effectiveness of

organizational practice adoption by the different international subsidiaries (e.g., Canato, Ravasi,

& Phillips, 2013; Kostova, 1999; Kostova & Roth, 2002; Yu & Zaheer, 2010). In MNCs,

organizational practices are used to share knowledge, best practices, and operating policies across

subsidiaries (Canato, Ravasi, & Phillips, 2013; Yu & Zaheer, 2010). However, organizational

practice adoption is often hampered by different internal and external contingencies (e.g., Jensen

& Szulanski, 2004; Kostova, 1999). Prior research identified a number of factors that can affect

the adoption of practices across firms including the firm’s institutional and relational contexts (e.g.,

Kostova, 1999; Kostova & Roth, 2002) and within firms including characteristics of the knowledge

(Szulanski, 1996a) and the practices that are being shared (e.g., Canato, Ravasi, & Phillips, 2013;

Yu & Zaheer, 2010).

Our study is motivated by two observations: First, despite longstanding calls for research

“to study individual-level variables, such as education, expertise, orientation to change, and even

some personality variables” (Kostova & Roth, 2002: 230), there is little explicit knowledge about

whether, when, and why some individuals are more willing than others are to adopt organizational

practices. This is surprising since the extant research (implicitly) acknowledges the important role

that individuals play in international subsidiaries by adopting or rejecting the organizational

practices promoted by the MNC headquarters. For example, Szulanski (1996b) and Jensen and

Szulanski (2004), who focused on the origins of the practices, found support for the existence of

the “not invented here” syndrome (Katz & Allen, 1988). This research revealed that when practices

originated in one department, people in another department had a higher likelihood of rejecting

them. Other studies have examined the effects of cultural and structural differences, and found that

the involvement of different nationalities or functions can impede practice adoption (Mäkelä,

Andersson, & Seppälä, 2012). However, these studies do not explain whether and when some

individuals are more willing than others are to adopt organizational practices.

Second, although a common theme in the extant literature on organizational practice

adoption is that the situational contexts matters (e.g., Canato, Ravasi, & Phillips, 2013; Yu &

Zaheer, 2010), there is a lack of research into how organizational controls influence practice

adoption behavior. This is an important shortcoming since MNC research has long emphasized

that MNCs use the organizational controls to achieve certain behaviors and outcomes (Baliga &

Jaeger, 1984; Doz & Prahalad, 1981; Prahalad & Doz, 1981).

In order to address these shortcomings in the existing literature, we set out to examine how

managers’ personality traits influence their practice adoption behavior in their different situational

contexts. While earlier studies have often used demographic characteristics as proxies for

underlying psychological constructs, scholars have more recently been able to increasingly also

capture the actual personality traits of managers (Nadkarni & Herrmann, 2010). We follow these

studies and examine subsidiary managers’ stable personality traits in organizational contexts that

MNC can alter. Specifically, we focus on individuals who are being targeted as adopters of

organizational practices and their specific situational contexts in the MNC, which are intended to

influence their behavior and achieve certain organizational outcomes.

To develop our theoretical argumentation underlying your hypotheses, we build on trait

activation theory (e.g., Tett & Burnett, 2003), and incorporate arguments from situational strength

theory (e.g., Meyer, Dalal, & Bonaccio, 2009; Meyer, Dalal, & Hermida, 2010) and organizational

control research (e.g., Sitkin, Cardinal, & Bijlsma-Frankema, 2010) as the triggers of trait

activation. According to trait activation theory, the effects of a personality trait on the behavior of

an individual is dependent on how a trait is being activated. Triggers, such as the situational context

or an external intervention, influence how personality traits influence behavior. For example, a

situational context that becomes uncertain could activate neurotic behavior causing a person

scoring high on neuroticism to behave differently than under normal circumstances.

We focus in this paper on a unifying construct that captures core dimensions of personality:

core self-evaluations (CSEs) of the subsidiary managers. As our baseline hypothesis, we propose

that subsidiary managers’ CSE traits are positively related to practice adoption. This is consistent

with prior research that has found CSE associated with a wide range of positive organizational

effects (Chang, Ferris, Johnson, Rosen, & Tan, 2012b). We argue, however, further that this

relationship is contingent upon the organizational context in which the managers are situated.

Specifically, we argue that formal controls weaken the relationship, because they create a rigid

behavioral context that limits behavioral variation and that can even flip high-CSE individuals

from supporters to resistors. At the same time, we propose that informal controls strengthen the

positive relationship between high CSE and practice adoption because they empower high-CSE

managers, and appeal to their self-esteem and perceptions of self-worth.

We test our hypotheses using a unique dataset covering 130 practice adoption situations in

a large European MNC. Surmounting the challenges commonly associated with obtaining intimate

self-assessments from managers (e.g., Simsek, Heavey, & Veiga, 2010), we were able to collect a

large-scale primary personality dataset covering an entire firm’s management. This survey-based

dataset enables us to provide novel insights into how managers’ personality characteristics

influence their practice adoption behavior in different MNC subsidiary contexts.

Our study makes three main contributions. First, we introduce trait activation theory as a

novel theoretical lens for examining organizational practice adoption. While our findings on the

positive effects of CSE on practice adoption are in line with prior research on the generally positive

effects of CSE, the effect depends on how the CSE traits are activated. We use trait activation

theory to theorize and show how activation can happen through organizational controls. By

introducing trait activation theory to the study of organizational practice adoption, we also add to

the prior research on the negative moderating effects of politics and perceived leader effectiveness

on the generally positive outcomes of CSE by showing that organizational controls also interact

with individual-level personality characteristics (Kacmar, Collins, Harris, & Judge, 2009).

Second, we contribute to an improved understanding of the effects of personality traits on

the behavior of senior and middle managers. Prior research has tended to center either on front-

line employees and the effects of different personality traits on their motivation, organizational

citizenship behavior, and job satisfaction, or on CEOs and the effects of their personality

characteristics on firm-level outcomes, such as risk taking and bold moves (Hiller & Hambrick,

2005). In this paper, we cover the middle ground by showing that middle managers’ personalities

can have positive and negative effects on their behaviors depending on the context.

Third, we contribute to an improved understanding of the situational context of practice

adoption. Specifically, we enhance the understanding of the effects of organizational controls. We

show that formal and informal controls can either strengthen or weaken the influence of

individuals’ personality traits on practice adoption. Overall, our study supports the emerging claim

that individuals’ personality traits and the interaction of those traits with the organizational context

warrant further exploration not only at the top management level (Hiller & Hambrick, 2005) and

among front-line employees (Raffiee & Feng, 2014) but also on other levels of the firm.

BACKGROUND

A key premise in the MNC literature is that organizational practice adoption plays an

important role for a firms’ overall success (e.g., Kostova, 1999; Kostova & Roth, 2002). We build

on Kostova and Roth’s definition of organizational practices as the “routine use of knowledge for

conducting a particular function that has evolved over time under the influence of the

organization’s history, people, interests and actions” (2002: 216). Such practices include

processes and routines individuals within the firm conduct when performing specific activities.

We focus on practices that headquarters promote among subsidiaries in a multinational

company setting and examine whether and when subsidiary managers adopt those practices. A

long line of research suggests that fostering the adoption of practices is a key task of corporate

headquarters (Campbell, Whitehead, Alexander, & Goold, 2014; Collis, Young, & Goold, 2012;

Menz, Kunisch, & Collis, 2015). When the MNC headquarters perceives an organizational practice

as useful, it works to ensure that the practice is adopted in the firm´s subsidiaries, for example to

replace less-efficient practices (Szulanski, 1996b). Institutional or practice theorists have also

sometimes labelled this as “coerced organizational practice adoption” (e.g., Canato, Ravasi, &

Phillips, 2013; DiMaggio & Powell, 1983). Such coerced practice adoption may be successful in

certain cases (Canato, Ravasi, & Phillips, 2013) and less so in other cases.

As noted in the introduction, we focus on two important but largely neglected aspects

related to organizational practice adoption by subsidiaries in MNCs. First, we focus on subsidiary

managers who differ with respect to their personality traits, which in turn can be expected to

influence their behavior. Second, we focus on organizational controls, which are used to influence

the behaviors of subsidiary managers by the corporate headquarters of the MNC in order to achieve

desired organizational outcomes.

Managers’ personality

One challenge in studying the effect of personality traits on behavior is that different

research streams rely on different, albeit overlapping, personality constructs. In an attempt to

resolve this problem, personality scholars have examined the similarities and the boundaries of

various personality constructs in order to move research beyond tangled approaches and isolated

studies toward an integrative construct (Judge & Bono, 2001; Judge, Erez, Bono, & Thoresen,

2002; Judge, Erez, Bono, & Thoresen, 2003; Judge, Locke, & Durham, 1997).

An important outcome of these efforts has been the development of the construct of core

self-evaluation (CSE)1. When considered in isolation, self-esteem refers to people’s fundamental

appraisals of themselves, their self-acceptance, self-liking, and self-respect (Judge, Erez, & Bono,

1998; Judge, Locke, & Durham, 1997; Judge, Locke, Durham, & Kluger, 1998). Generalized self-

efficacy expresses individuals’ estimations of their own capabilities to mobilize motivation, their

cognitive resources, and their ability to control life events (Bandura, 1982). Locus of control refers

to how people perceive themselves within their environments. A perception of an external locus

of control indicates that people believe they have little influence on their environment, while a

perception of an internal locus of control indicates that they believe they have a major influence

on their environment (Rotter, 1966). Neuroticism refers to an individual’s insecurity, guilt,

timidity, general anxiety, self-doubt, and fear of novel situations (Hiller & Hambrick, 2005; Judge,

Locke, & Durham, 1997; Judge, Locke, Durham, & Kluger, 1998).

1 Whether CSE is a theory in itself is an ongoing debate. Proponents argue that it has moved beyond the empirical meta-construct level (Bono and Judge, 2003) and is a personality theory in itself. As we do not intend to enter into this debate, we follow recent research that assumes no need to investigate all underlying theories to develop hypotheses stemming from the CSE construct (Hiller & Hambrick, 2005; Simsek et al., 2010). We therefore focus on the latent meta-construct.

In summary, core self-evaluations are evaluations that people make about themselves—

their worthiness and abilities—which vary from positive to negative. These self-appraisals reflect

baseline assessments that are implicit in all of their other beliefs and evaluations (Chang, Ferris,

Johnson, Rosen, & Tan, 2012a; Judge & Bono, 2001; Judge, Bono, Erez, & Locke, 2005; Judge,

Locke, & Durham, 1997).

While significant research efforts have focused on developing and testing the CSE

construct in the field of psychology, organization and management scholars have only recently

become interested in understanding the effect of individuals’ CSEs on organization-level outcomes

(cf., Chang, Ferris, Johnson, Rosen, & Tan, 2012a). In this regard, CSE has been found to be

positively related to job satisfaction, perceptions of work, goal setting, commitment, motivation,

performance, and front-line employees’ abilities to cope with change (Chang, Ferris, Johnson,

Rosen, & Tan, 2012a; Gagné & Deci, 2005; Judge, Erez, & Bono, 1998; Judge & Kammeyer-

Mueller, 2011; Judge, Locke, & Durham, 1997; Judge, Locke, Durham, & Kluger, 1998;

Kammeyer-Mueller, Judge, & Scott, 2009). In addition to non-senior employees, researchers have

examined the role of CSE as part of CEOs’ and other top executives’ personalities (e.g. Chang,

Rodgers, Shih, & Song, 2012; Hiller & Hambrick, 2005; Nadkarni & Herrmann, 2010; Resick,

Whitman, Weingarden, & Hiller, 2009; Simsek, Heavey, & Veiga, 2010). For example, studies

have found that high CSE is related to the propensity for risk taking (Hiller & Hambrick, 2005),

the likelihood of adopting an entrepreneurial orientation (Simsek, Heavey, & Veiga, 2010) and the

response to compensation schemes (Chang, Rodgers, Shih, & Song, 2012). Prior research has also

shown that individuals with high CSE scores tend to be more confident, proactive, and motivated

to act on behalf of the firm. However, extremely high scores can eventually lead to overconfidence,

high risk taking, and performance volatility (Hiller & Hambrick, 2005).

In this paper, we expand the scope of these studies from CEOs and front-line employees to

middle managers. Specifically, we examine how subsidiary managers’ CSEs relate to the adoption

of organizational practices. In addition, while some studies have explicitly referred to the link

between personality traits and job behaviors (Erez & Judge, 2001; Judge, Locke, & Durham,

1997), we contribute to the existing literature by showing how the personality traits of middle

managers can be activated differently in different organizational contexts.

Organizational controls

The extant MNC literature suggests that the corporate headquarters use organizational

controls to influence the behaviors of subsidiary managers in order to achieve certain

organizational outcomes (e.g., Ambos & Reitsperger, 2004; Ambos & Schlegelmilch, 2007;

Björkman, Barner-Rasmussen, & Li, 2004; Doz & Prahalad, 1981). While prior research suggests

that these control mechanisms have to be tailored to the specific subsidiaries to ensure the desired

effect (Baliga & Jaeger, 1984; Doz & Prahalad, 1981; Prahalad & Doz, 1981), we shift focus to

the individuals and the behaviors of the people who are being controlled.

In this context, we define organizational controls as a set of mechanisms “through which

[headquarters] managers seek to align [subsidiary] employee capabilities, activities, and

performance with organizational goals and aspirations” (Sitkin, Cardinal, & Bijlsma-Frankema,

2010: 3). Building on an extensive body of prior research (e.g., Brenner & Ambos, 2013; Cardinal,

2001; Cardinal, Kreutzer, & Miller, 2017; Floyd & Lane, 2000; Gupta & Govindarajan, 1991;

Kirsch, 1996; Kreutzer, Walter, & Cardinal, 2015; Lange, 2008; Sitkin, Cardinal, & Bijlsma-

Frankema, 2010; Tannenbaum, 1956), we focus on two fundamentally different types of

organizational controls: formal and informal controls.

Formal controls include means of direct behavioral control, such as guidelines and rules,

as well as, defined goals and targets that focus on the results of employee behavior (Eisenhardt,

1989; Kreutzer, Walter, & Cardinal, 2015; Ouchi, 1977). To successfully apply formal controls,

headquarters must either be able to measure outputs (i.e., to set and assess appropriate goals for

managers) or be sufficiently knowledgeable of the process in order to direct managers to take the

right steps, or both (Eisenhardt, 1985; Kirsch, 1996; Ouchi, 1978). Formal controls have been the

focus of much of the literature on organization theory (Ambos & Schlegelmilch, 2007; Ouchi,

1979; Thompson, 1967 ) and agency theory (Arrow, 1985; Jensen & Meckling, 1976; O'Donnell,

2000). Two often implicit but important assumptions in these studies is that managers or agents

are self-interested, and that a certain amount of formal control is necessary to align their actions

with the goals and objectives of headquarters.

Informal controls, in contrast, are aimed at creating alignment through socialization

processes that reduce or eliminate goal conflicts between the headquarters and subsidiary

managers (Cardinal, Sitkin, & Long, 2010; Kreutzer, Walter, & Cardinal, 2015). The research

interest in informal controls originates from the works of Ouchi (1979; 1980; 1978), who used the

term “clan” to describe groups of individuals who cultivate and share common norms and values,

develop a feeling of joint dependence, and consequently show a high degree of goal alignment.

While clans generally achieve alignment through social controls, research suggests that the

selection of individuals with a sense of self-control can have a similar effect (Jaworski, 1988;

Manz, Mossholder, & Luthans, 1987). Thus, headquarters that rely on informal controls try to

foster normative integration by developing and maintaining processes that help create a shared set

of values.

HYPOTHESES

We now proceed to the theoretical argumentation underlying our baseline hypothesis on

the effects of subsidiary managers’ CSEs on practice adoption in those subsidiaries. Thereafter,

building on trait activation theory and the organizational control literature, we theorize about how

formal and informal controls influence the activation of the CSE trait.

Baseline hypothesis: The effect of managers’ core self-evaluations on practice adoption

When theorizing on the effects of CSE, it is important to recognize that CSE is not an

additive sum of the four traits nor decomposable to them, but rather “a broad latent trait” that is

the “source of the four specific traits” (Simsek, Heavey, & Veiga, 2010: 111). It cannot be broken

down into sub-components because a high (low) level of CSE tends to be associated with high

(low) levels of all of the specific traits. The specific traits are also closely correlated—for example,

self-esteem correlates with self-efficacy, self-efficacy correlates with the locus of control, and all

three correlate with emotional stability. In other words, CSE is “a broad personality trait [that]

captures the common elements embedded in self-esteem, generalized self-efficacy, emotional

adjustment, and locus of control (Judge, Locke, and Durham, 1997; Judge et al., 2003)” (Simsek,

Heavey, & Veiga, 2010: 111).

Our baseline hypothesis is that managers with high levels of CSE are more favorable

towards organizational practice adoption. We expect the relationship between managers’ CSE and

practice adoption to be positive, especially because high levels of CSE are associated with

individuals’ cognitive abilities, entrepreneurial attitudes, sense of duty, and commitment. First,

higher cognitive ability of subsidiary managers fosters organizational practice adoption. The extant

research associates high CSE with high cognitive ability (Chang, Ferris, Johnson, Rosen, & Tan,

2012a). Higher cognitive ability can help managers better understand the motivations underlying

a new practice and, thereby, enable them to implement that practice more easily than those with

low CSE. Cognitive ability may also enable managers to more easily understand how to optimally

adopt and tailor a new practice to the subsidiary so that the corporate headquarters will be satisfied

and disruptions of routines at the subsidiary level will be minimized.

Second, higher entrepreneurial attitude of subsidiary managers nurtures practice adoption.

Prior research has found that high levels of CSE are associated with entrepreneurial and pioneering

behaviors (Simsek, Heavey, & Veiga, 2010). Individuals with high levels of CSE tend to have

higher self-efficacy and perceptions of an external locus of control, which are typically associated

with entrepreneurial behaviors. When headquarters introduce new practices to subsidiaries, the

outcomes may not be directly visible. However, entrepreneurial managers can be expected to be

faster in recognizing the potential opportunities associated with such practices as well as the

consequences for their departments. An entrepreneurial attitude should support managers’ efforts

to find the most efficient solution.

Third, the sense of duty of subsidiary managers fosters organizational practice adoption.

High-CSE individuals have a stronger sense of duty and tend to feel more obliged to fulfill their

job requirements than individuals with low CSEs. Prior research has established a link between

high CSE and the fulfillment of job duties, persistence, and conscientiousness (Chang, Ferris,

Johnson, Rosen, & Tan, 2012a; Gagné & Deci, 2005) as well as acceptance of change (Wanberg

& Banas, 2000). A higher sense of duty and the desire to excel in one’s own work can be expected

to lead high-CSE managers to take new practices proposed by corporate headquarters more

seriously, accept them with less emotion, and implement them more effectively due to their higher

cognitive and entrepreneurial capabilities.

Finally, higher commitment of subsidiary managers fosters organizational practice

adoption. High-CSE managers are generally more committed to their firms than low-CSE

individuals. High-CSE managers are also more emotionally stable and confident in their own

abilities, which enables them to avoid behaviors that could harm their firms. They may even

actively promote the firm in their own social contexts (Chang, Ferris, Johnson, Rosen, & Tan,

2012a). Against this background, commitment to the firm can be expected to translate to

commitment to organizational practices introduced by the headquarters.

Based on these arguments, our baseline hypothesis is that managers with high levels of

CSE show more compliance with, belief in, and commitment to the adoption of organizational

practices than those with low CSE. In addition, they are more confident, effective, and convincing

when introducing new practices to their staff. While we would expect the relationship between

CSE and practice adoption to turn to negative at very high levels of CSE, we do not expect

subsidiary managers to exhibit the high levels of CSE documented in some studies of CEOs.

Therefore, we only expect to see a positive relationship between subsidiary managers’ CSEs and

organizational practice adoption.

H1: Subsidiary managers’ core-self evaluations (CSEs) are positively associated with

organizational practice adoption.

Trait activation: The moderating effects of formal and informal controls

While our baseline hypothesis portrays subsidiary managers as competent, confident, and

motivated actors, they also have their own agency. Therefore, an understanding of the interplay

between managers’ personality traits and the organizational context is central to understanding

their behavior. To examine this interplay, we use trait activation theory to theorize on the

contingent effects of two distinct organizational controls on the association between managers’

CSEs and organizational practice adoption.

Trait activation theory is useful for theorizing about whether and when the CSE traits of

subsidiary managers are activated. It argues that the personality-job performance relationship is

moderated by situational factors that affect whether certain personality traits come into play (Tett

& Burnett, 2003). For example, Simsek et al. (2010) find that the association between the CEO’s

CSE and the firm’s entrepreneurial orientation is contingent upon the level of environmental

dynamism. This would seem to suggest that the CSE trait is more likely to be activated in a specific

environmental context. Similarly, Chang, Rodgers, Shih, and Song (2012) find that managers with

high CSEs “respond to incentive compensation with greater perseverance, competitive strategy

focus, ethical behavior, and strategic risk taking during organizational decline” but not during

periods of organizational growth (p. 1343). Although neither of these studies used trait activation

theory to theorize on the effects of the context on managers’ psychological traits, their findings

would be consistent with the expectations of trait activation theory.

Tett and Burnett (2003) suggested that five main situational factors are generally relevant

for trait activation: (a) job demands, (b) distracters, (c) constraints, (d) releasers, and (e)

facilitators. These factors operate on three levels: organizational, social, and task. In this paper, we

focus on the interplay between the organizational and social factors by examining the different

levers that headquarters can use to influence practice adoption. As noted before, headquarters can

use different levers to influence the behavior of subsidiary managers (Ambos & Reitsperger, 2004;

Ambos & Schlegelmilch, 2007; Björkman, Barner-Rasmussen, & Li, 2004; Doz & Prahalad,

1981). In this context, we see the role of organizational controls as the means “through which

managers seek to align employee capabilities, activities, and performance with organizational

goals and aspirations” (Sitkin, Cardinal, & Bijlsma-Frankema, 2010: 3). Thus, the aim is not only

to “control” the behaviors of employees, but to also stretch, support, guide, and empower them to

move towards common organizational goals (e.g., Ghoshal & Bartlett, 1994; Gibson &

Birkinshaw, 2004). These control mechanisms must be tailored to ensure the desired effect (Baliga

& Jaeger, 1984; Doz & Prahalad, 1981; Prahalad & Doz, 1981), and they have to fit the

personalities and behaviors of the people who are affected.

In this paper we focus on formal controls and informal controls as two distinct types of

organizational control (e.g., Brenner & Ambos, 2013; Cardinal, 2001; Cardinal, Kreutzer, &

Miller, 2017; Floyd & Lane, 2000; Gupta & Govindarajan, 1991; Kirsch, 1996; Kreutzer, Walter,

& Cardinal, 2015; Lange, 2008; Sitkin, Cardinal, & Bijlsma-Frankema, 2010; Tannenbaum, 1956).

While formal controls can include job-related demands or organizational constraints placed on

managers, informal controls operate on the social-structural level, where they act as releasers or

facilitators rather than constraints. Prior research indicates that charismatic leadership strengthens

the impact of the big five personality traits on employee effectiveness in dynamic environments

(De Hoogh, Den Hartog, & Koopman, 2005), and that high-quality social exchange relationships

(both leader-member exchange and team-member exchange) tend to eliminate the distinguishable

positive effects of agreeableness and conscientiousness on performance (Kamdar & Van Dyne,

2007). Moreover, prior work shows that politics and perceived leader ineffectiveness can cause

high-CSE individuals to underperform low-CSE employees, thereby leading to the deactivation of

the personality trait and a negative effect (Kacmar, Collins, Harris, & Judge, 2009).

Accordingly, we argue that formal and informal controls create different organizational

contexts that have different effects on how psychological traits, such as those manifested in the

managers’ CSEs (i.e., self-esteem, generalized self-efficacy, locus of control, and emotional

stability), are activated. Along these lines, we propose that the relationship between managers’

CSEs and practice adoption is moderated by formal and informal controls. More specifically, we

argue that formals controls negatively moderate the relationship and that informal controls

positively moderate it. While formal controls tend to lead to compliance and standardization of

behavior regardless of differences in individuals’ personality traits, informal controls enable

entrepreneurial freedom, which allows high-CSE subsidiary managers to excel. High-CSE

managers might even perceive formal controls as inflexible straitjackets that are only necessary

for those who do not believe in the practices that they govern.

Therefore, despite high-CSE subsidiary managers’ overall commitment to the organization

and their high motivation, we expect formal controls to have a neutral or even negative effect on

their practice adoption behaviors. Formal rules could be viewed as an additional burden and reduce

the entrepreneurial spirit of high-CSE subsidiary managers. They could also be seen as a negative

signal indicating corporate headquarters’ lack of trust in the subsidiary. Moreover, consistent with

situational strength theory (Meyer, Dalal, & Bonaccio, 2009; Meyer, Dalal, & Hermida, 2010),

formal controls tend to lead to a reduction in personal freedom to make decisions and reduce the

ability of individuals to deviate from a prescribed practice. While this might not matter for less

entrepreneurial, low-CSE managers, high-CSE managers would benefit from having more room

to initiate and perform tasks with an entrepreneurial spirit (Chang, Ferris, Johnson, Rosen, & Tan,

2012a; Simsek, Heavey, & Veiga, 2010), which could be expected to enhance their commitment

to practice adoption. Yet, formal controls provide individuals with less freedom to act self-

confident, empowered, high-CSE individuals to oppose new organizational practices, especially if

an attempt at coercive implementation through strict formal controls signals that their own

judgments are not appreciated. As higher levels of formality limit opportunities for deviation (i.e.,

opportunities to stand out by doing things better than others do), we expect the commitment of

high-CSE managers to decline. Therefore, we argue that formal controls negatively moderate the

association between managers’ CSE and organizational practice adoption.

In contrast to formal controls, informal controls aim at achieving alignment in a more subtle

matter by creating a shared understanding of purpose and direction within the organization.

Therefore, informal controls have often been equated with clan or social controls (Ouchi, 1979),

which could be expected to resonate with self-conscious, high-CSE individuals. Informal controls

give high-CSE managers more degrees of freedom, as they are less likely to constrain employee

behavior. Informal or social controls help align the values of headquarters and subsidiary

managers, thereby enhancing the positive effect of CSE. They enable practice adoption when

headquarters and local managers have similar values and objectives, even with fewer formal

controls. Informal controls can also be used to legitimize the new practices in the eyes of the

subsidiary managers, such that “legitimacy” describes perceptions or assumptions that an

organization’s actions are desirable and appropriate within a cultural system of norms and beliefs

(Suchman, 1995). Without formal controls, the legitimacy of the new practices is crucial for

building trust and fostering their acceptance (Sitkin & George, 2005). This, in turn, promotes

commitment from people with high CSE to practice adoption because the firm’s practices fit their

own values. Hence, building on trait activation theory, we argue that different types of

organizational controls can act as trait activation triggers that either provide individual discretion

and enable or enhance the effect of CSE on organizational practice adoption, or act as triggers that

limit individual discretion or even turn the effect of CSE negative. Therefore, in line with trait

activation theory, we hypothesize that the relationship between CSE and practice adoption is more

pronounced in the presence of informal controls than in the presence of formal controls:

H2a: Formal controls negatively moderate the association between subsidiary managers’

CSEs and the adoption of organizational practices such that the association is weaker for

higher levels of formal control and stronger for lower levels of formal control.

H2b: Informal controls positively moderate the association between subsidiary managers’

CSEs and the adoption of organizational practices such that the association is stronger for

higher levels of informal control and weaker for lower level of informal control.

METHODS

Research design and data collection

In order to put the hypothesized relationships to an empirical test, we utilized a single-firm

research design to minimize “noise” from differences among firms. Due to our long-standing

collaboration with the company, we were able to obtain unique detailed internal data on

organizational practice adoption in a large European insurance firm. The firm had annual sales of

USD 7.7 billion in 2012. At the time, it was operating in six European countries with one subsidiary

in each country. The corporate headquarters and one of the subsidiaries were located in the same

country (the home market).

When we launched our investigation in 2013, the headquarters was implementing

organizational practices in 24 units across the six subsidiaries. These units included “Risk and

Capital Management,” “Accounting,” “Communications and Brand Management,” and “IT

Operations.” All 24 units were present in all six subsidiaries (with 10 exceptions), which leads to

a total of 134 subsidiary units. For each subsidiary unit, at least one manager responsible for

adopting new practices was identified as a potential respondent. In 24 units, two managers were

responsible for adopting new practices, and there were three in one case. As we were interested in

the effects of managers’ CSEs on the adoption of new practices, we included all of these managers

in our survey. This provided a total of 159 potential respondents. Each manager was asked about

the degree of implementation and internalization of organizational practices mandated by

headquarters.

Access to the company was negotiated through the chief executive officer (CEO) and the

chief strategy officer (CSO), who also acted as the internal sponsors of our research. Initial

interviews with four managers in various groups and positions helped us to understand the research

setting and to develop the survey instrument. Data collection took place in April and May 2013 by

means of an online survey. The survey was announced in an e-mail from the CEO. Thereafter, the

survey was sent to all of the subsidiary unit managers by the research team. This ensured a high

response rate, although not everyone responded. The research team reminded those who had not

responded in two waves (first by e-mail and then by phone). In 29 cases, we received either no

response or an incomplete response. Therefore, our final data set covered 130 observations (82%).

Variables and measurement

Practice adoption: In order to account for different adoption behaviors, we considered two

levels of depth in organizational practice adoption (Collings & Dick, 2011; Ford, 2011; Kostova,

1999; Kostova & Roth, 2002). Implementation refers to compliance with an adoption mandate,

which leads to observable behavior that is in alignment with the mandated action. Internalization

refers to belief in and commitment to a practice, which reflects whether the managers consider

such practices valuable. Investigations of the effects of personality on organizational practice

adoption require an understanding of each dimension. However, since the results of these two

measures were quite similar, we report in our analysis only results regarding implementation.

We used the scales developed by Kostova and Roth (2002), which we adapted to fit the

specific context of the focal MNC. Accordingly, we measured implementation using eight items,

and respondents were asked to use a seven-point Likert scale to assess the extent to which practices

had been implemented in their departments (ranging from “no extent” to “a very great extent”) (α

= 0.92). Respondents were asked to assess the extent to which they agreed with each item using a

seven-point Likert scale (ranging from “strongly disagree” to “strongly agree”) (α = 0.87).

Core self-evaluation (CSE): Following prior research (Simsek, Heavey, & Veiga, 2010)

we used the established measure of CSE developed by Judge, Erez, Bono, and Thoresen (2003).

We asked respondents about their level of agreement with 12 statements about themselves.

Respondents used a five-point Likert scale, ranging from “strongly disagree” to “strongly agree”

(α = 0.86), to indicate their responses.

Formal control: We followed the established literature on strategic controls (Ambos &

Schlegelmilch, 2007; Brenner & Ambos, 2013; Cardinal, 2001; Collis, Young, & Goold, 2007)

and measured formalization using four items on a seven-point Likert scale. The items asked

respondents to indicate the degree and enforcement of formalized procedures (α = 0.86).

Informal control: We followed an approach similar to that adopted by Ghoshal and Bartlett

(1988) and Björkman, Barner-Rasmussen, and Li (2004) in which we created an aggregate

measure that consisted of four components. Our goal was to remove subjectivity. First, we asked

respondents whether they had mentors at the corporate headquarters (coded 1 for “yes” and 0 for

“no”). Second, managers who had spent more than one year working at corporate headquarters

were assigned a value of 1, while all others were coded 0. Third, we recorded how often managers

visited corporate headquarters each year. Given that all subsidiaries were less than two hours from

headquarters by car, train, or plane, we assigned a score of 1 for managers who visited headquarters

at least once per month, while others received a score of 0. The final component was participation

in corporate training, which was coded 1 for managers who had participated in corporate training

and 0 for all others. We calculated an aggregate measure from these scores (0-4).

Control variables: To account for alternative explanations, we used three sets of controls.

First, we controlled for both the institutional and relational contexts (Kostova & Roth, 2002). For

the institutional context, we used subsidiary dummies to control for effects that originated at the

six locations, five of which were in countries other than the home country. In order to control for

the relational context, we asked each corporate manager responsible for the rollout in the

subsidiary to indicate the frequency of communication with his or her manager using a four-item

measure. This item was based on a seven-point Likert scale ranging from “once every few months”

to “very often” (α = 0.86), which was developed by Nobel and Birkinshaw (1998).

Second, we controlled for several practice characteristics. We controlled for task

environment in order to account for the fact that some practices allow more freedom in

implementation than others. We relied on the traditional distinction between administrative and

entrepreneurial tasks (Chandler, 1962). Three experienced researchers rated the task environments

independently. Deviations were discussed until all raters were in full agreement. Administrative

practices were coded 0 and entrepreneurial practices were coded 1. We also controlled for

organizational practice size (i.e., the number of employees involved in each case), as the relative

importance of a practice independence from corporate headquarters might change as this variable

changes (Bouquet & Birkinshaw, 2008; Nell & Ambos, 2013). Moreover, we controlled for

organizational practice age because older practices might have an administrative heritage that

affects the relations with corporate headquarters (Bouquet & Birkinshaw, 2008).

Third, we controlled for managers’ demographic and professional backgrounds. More

specifically, we controlled for the effect of the hierarchical level in order to address any problems

that might stem from hubris (Chatterjee & Hambrick, 2007; Hiller & Hambrick, 2005; Resick,

Whitman, Weingarden, & Hiller, 2009). Respondents were not all on the same hierarchical level.

We chose them on the basis of their responsibility for adopting organizational practices in the local

department, which meant that they could be higher or lower in the hierarchy. We measured the

hierarchical level in terms of hierarchical distance from the CEO (i.e., 1 for direct reports of the

CEO, 2 for one level below direct reports, etc.). In addition, some researchers have proposed that

CSE is influenced by life experience and the development of thinking processes (Judge, Locke, &

Durham, 1997). Therefore, we also controlled for respondents’ age to account for any impact from

life experiences and for respondents’ tenure in the firm to control for potential influences on

thinking that might stem from the corporate context.

Fourth, although common method problems are often overstated (Lindell & Whitney, 2001;

Spector, 2006), we took a number of precautions to alleviate potential concerns (Podsakoff,

MacKenzie, Jeong-Yeon, & Podsakoff, 2003). First, in order to avoid consistency motives, we

separated the independent and dependent constructs in the survey by inserting other questions

between those related to the independent and dependent variables. Second, we used different scale

anchors for CSE (1-5) and implementation (1-7), and included several reverse-coded items. Third,

to avoid social-desirability bias, we assured respondents that their answers would be kept

confidential. In addition, we told them that answering questions about CSE was voluntary and that

those questions had nothing to do with the other questions. Fourth, to avoid potential ambiguity

stemming from item complexity, we tested the survey on four managers in various positions.

Finally, we conducted the Harman’s single-factor test that indicated no common method problems.

ANALYSIS AND RESULTS

We applied multiple linear regression analyses with clustered, robust, and standard errors

(as implemented in STATA 12.1) to control for the nesting effect of idiosyncratic properties of

respondents who provided answers for more than one local department (Moulton, 1986; Rogers,

1993). Prior to running the regressions, we carefully examined the data for normality, linearity,

and equality of variance. We used the cubed value of implementation, and the logarithms of

practice size, practice age, respondent age, and respondent tenure to adjust for non-normality. To

reduce the effects of multicollinearity with respect to the moderating variables, we performed z-

score transformations for formal control, informal control, and CSE. We examined the variance

inflation factors (VIF), all of which were less than 3 and, therefore, well below the recommended

threshold of 10 (Myers, 1990). A variance-decomposition analysis with condition indices further

ensured us that multicollinearity was not a problem in our data. Table 1 provides the descriptive

statistics and the correlation matrix.

------------------------------------------------------------------ Insert Table 1 and Table 2 about here

------------------------------------------------------------------

Hypotheses testing

We used stepwise OLS regressions to test for the effects of organizational practice adoption

on our dependent variable (see Table 2). All models are significant (adjusted R-squared ranged

from 0.31 to 0.50) and include all control variables and subsidiary dummies (not shown). In our

baseline model (Model 1), we find statistically significant positive effects for subsidiary dummies

(p < 0.001) and the hierarchy level of individuals (p < 0.01). In Model 2, which includes the direct

effects of the moderators, we find a negative but non-significant direct effect of informal control

and a positive, statistically significant effect of formal control (p < 0.001).

Hypothesis 1 states that there is a positive relationship between CSE and practice adoption.

To test for this main effect, we add CSE into the regression in Model 3. Consistent with the

hypothesis, we find a positive, statistically significant effect (p < 0.001), which remains unchanged

in all of the following models. This provides support for Hypothesis 1.

Hypotheses 2a and 2b outline the moderating effects of formal and informal controls on

the relationship between CSE and practice adoption. To test Hypothesis 2a, we add the moderation

term of formal controls into the regression (Model 4). The coefficient is negative and statistically

significant at the p < 0.05 level. Moreover, the increase in R-squared from Model 3 to Model 4 is

statistically significant (p < 0.05), which provides support for Hypothesis 2a and suggests a

negative moderating effect of formal control on the CSE-practice adoption relationship. To test

Hypothesis 2b, we introduce the informal controls moderator into the model (after excluding the

formal control moderator; see Model 5). We find a statistically significant, positive effect (p <

0.01) with an adjusted R-squared of 0.49. The increase in R-squared from Model 3 to Model 5 is

also significant (p < 0.01), which supports Hypothesis 2b. In Model 6, we include both moderation

effects, and find that the both the formal control (p < 0.1) and informal control moderations (p <

0.05) are still significant, which provides further support for Hypotheses 2a and 2b.

------------------------------------------------------------------ Insert Figure 1a and Figure 1b about here

------------------------------------------------------------------

To better interpret the moderation effects, we plot the moderating effects following the

approach suggested by Cohen, Cohen, West, and Aiken (2003), which has also been adopted in

similar studies (Simsek, Heavey, & Veiga, 2010; Zhang, 2006). To do so, we conduct simple

regressions based on Models 4 and 5 for both formal and informal controls. We set all values at

the mean with conditional values (mean +/- 1 standard deviation) for formal and informal controls.

As shown in Figure 1a, the relationship between CSE and practice adoption is steeper under

low levels of formal control and flatter when formal control is high. In other words, people with

high CSE appear to be less effective at adopting practices when they are surrounded by many

formalized procedures and more effective when they enjoy behavioral freedom. In contrast, as

shown in Figure 1a, the slope for the relationship between CSE and practice adoption is steeper

under conditions of high informal control. Accordingly, when people have higher CSE, efforts to

establish a shared set of values and common views appear to be beneficial for practice adoption.

Validity and reliability

We also conducted various additional tests to examine the robustness of our results. First,

our data represents multiple hierarchical levels. The 130 observations about practice adoptions are

nested in 24 organizational departments. In order to account for possible effects in this regard, we

used a multi-level model (Raudenbush & Bryk, 2002). We included all variables from the final

regression model (Model 6) with practice as a random-effect parameter. All previously reported

effects were maintained. A likelihood-ratio test comparing the linear model to the multilevel model

indicates that the null hypothesis (Prob > chi-bar-squared = 1.00) cannot be rejected, which

suggests no difference between the simple model and the hierarchical model. This provides

additional support for our findings. As an additional robustness check, we excluded all variables

that showed no significance in the final models and then re-ran the regressions. All of the effects

remained consistent with the reported results.

DISCUSSION

Based on an analysis of organizational practice adoption by subsidiary managers in the

subsidiaries of an MNC, our paper sheds light on the effects of managers’ personality traits on

their practice adoption behavior. Specifically, we examined how the personality traits of managers,

as captured by their CSE traits, affect practice adoption and how the CSE traits can be activated in

different situational contexts. Consistent with prior research pointing to the generally positive

effects of high CSE on individuals’ behavior (Chang, Ferris, Johnson, Rosen, & Tan, 2012a), we

found that, in general, high-CSE managers are more inclined to adopt organizational practices

promoted by the headquarters. This is an interesting finding, as a hypothesis regarding the opposite

effect could have also been put forward by arguing that more confident subsidiary managers should

be unwilling to accept any guidance from the headquarters. Moreover, trait activation theory

enabled us to theorize and show that the use of informal controls further strengthens this

relationship. At the same time, we found that formal controls have a negative, albeit statistically

non-significant, moderating effect.

Contributions to theory development

Our paper contributes to an improved understanding of organizational practice adoption by

proposing trait activation theory (Tett & Burnett, 2003; Tett & Guterman, 2000) as a novel

theoretical lens for analyzing practice adoption situations. Moreover, we contribute to recent

interactionist accounts of the relative importance of situational strength and the personality

characteristics of individuals in different situational contexts (Judge & Zapata, 2015). Meyer,

Dalal, and Hermida (2010) built on prior work to coin the term “situational strength,” which they

defined as the “implicit or explicit cues provided by external entities regarding the desirability of

potential behaviors.” The leading idea in research on situational strength is that, in some situations,

individuals can experience external pressure to behave in pre-determined or specific ways that is

so strong that the relationship between a specific personality trait and the behavior to which it

relates weakens or entirely disappears. This idea is consistent with the idea of trait activation

theory, according to which situational contexts and clues can be seen as triggers that activate

specific personality traits rather than disabling them.

The formal and informal characteristics of organizations have been proposed as factors that

determine whether a situation is strong or weak (Forehand & Gilmer, 1964; Meyer, Dalal, &

Bonaccio, 2009; Meyer, Dalal, & Hermida, 2010). Accordingly, formal controls can be viewed as

representing a strong situational context in which there is no space or degrees of freedom for

individual trait activation. Informal controls, on the other hand, can be seen to represent a weak

situational context in which individual characteristics matter even more and can be activated. This

is also evident in our empirical analyses. While formal controls have a direct, positive effect on

practice adoption in our study, the moderating effect on CSE is non-significant (and negative).

Informal controls, on the other hand, seem to enhance the positive baseline relationship between

subsidiary managers’ CSE scores and their practice adoption. Therefore, similar to Judge and

Zapata (2015), we find that trait activation theory interacts with the theoretical conceptualization

of the effects of strong and weak situations.

Our paper builds on and extends the work of Judge and Zapata (2015). They examine the

moderating effects of general interactionism (situation strength) and specific interactionism (trait

activation) on the effects of the big five personality traits on job performance by examining the

effects of managers’ CSEs on their practice adoption behaviors, and the roles of formal and

informal controls as determinants of situation strength and as trait activation triggers. Based on

our analysis of middle managers, we find that the nature of organizational controls can act as a

trigger for trait activation and as a determinant of situational strength. Formal controls seem to

create a strong situational context that standardizes behavior and reduces the effects of individual

differences on practice adoption, while informal controls appear to act as both trait activation

triggers and magnifiers in the context of organizational practice adoption.

Through our analysis, we respond to the call by Judge and Zapata (2015) for more empirical

work that examines the joint effects of individual traits and the strength of the situational context

on performance outcomes. Moreover, we add to the extant research on trait activation theory by

showing that, in addition to organizational politics and perceived leader effectiveness, formal and

informal controls moderate the relationship between CSE and performance (Kacmar, Collins,

Harris, & Judge, 2009).

Contributions to empirical research on organizational practice adoption

Our paper also contributes to the extant empirical research on organizational practice

adoption, by showing that subsidiary managers’ personality traits affect their practice adoption

behaviors. Our findings indicate that when the MNC headquarters promote the implementation of

new practices in the different subsidiaries, they would benefit from considering the personalities

of the individuals involved. This finding supports recent calls for more research on the micro-

foundations of knowledge transfer, and on organizational routines and practices (Felin & Foss,

2009; Felin, Foss, & Ployhart, 2015; Foss & Pedersen, 2014; Foss & Pedersen, 2004). Personality

traits in general and CSE in particular may help us better understand and substantiate the relations

among practice transfer, motivation, ability, and interpersonal similarities (Minbaeva, Pedersen,

Björkman, Hyeon Jeong, & Fey, 2002; Mäkelä, Andersson, & Seppälä, 2012).

In addition, we contribute to an improved understanding of the control mechanisms related

to practice adoption. Specifically, we enhance the understanding of the interplay between

individual and organization-level controls. We show that formal and informal controls either

reinforce or diminish the positive effects of individuals’ personality characteristics. Our study also

supports the recent work that has argued that understanding the effects of CSE and its moderators

warrant further exploration in organizational contexts, not only on the level of top management

(Hiller & Hambrick, 2005) or front-line employees (Raffiee & Feng, 2014) but also when

examining middle managers. Prior research on the effects of CSE has tended to focus either on

front-line employees and the positive effects of CSE on their motivation, organizational citizenship

behavior, or job satisfaction, or on CEOs and the effects of high levels of CSE on the likelihood

of engaging in risk taking and bold moves (Hiller & Hambrick, 2005). We cover the middle ground

by using a sample of managers to show that the effects of CSE can be either positive or negative

depending on the trait activation triggers.

Limitations and future research

Although we exercised great care in designing our study, it has several limitations, which

offer opportunities for future research. First, due to our single-firm design, we were unable to

follow Judge and Zapata (2015) in capturing differences in situational strength across industries.

For example, managers who work in insurance might have personalities that systematically differ

from those in other industry contexts. Therefore, additional research is needed to extend our

analyses to other industry contexts. Second, we used organizational practice adoption as our main

dependent variable, acknowledging that a firm’s ultimate performance is not necessarily a

consequence of successful adoption.

We regard the adoption of organizational practices as a way of sharing complex forms of

knowledge, which could be expected to be beneficial for gaining and sustaining competitive

advantage relative to other firms (Kostova & Roth, 2002). However, they could also lead to

excessive standardization and homogenization of the practices in the MNC, which could lead to

the loss of local discretion and adaptability. We encourage scholars to extend our study by

examining the performance implications of the adoption of organizational practices.

CONCLUSION

We introduce trait activation theory as a novel theoretical lens to international business

research and test a conceptual model of how the personality characteristics of individual managers,

measured in terms of their core self-evaluations (CSEs), affect organizational practice adoption

and how practice adoption behavior is affected by different types of organizational controls. Our

paper provides one of the first applications of trait activation theory in the context of organizational

practice adoption and contributes to an improved understanding of the interplay between trait

activation and situational strength theories in practice adoption situations.

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TABLES AND FIGURES

Table 1: Descriptive statistics

Mean SD (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) 1 Practice adoption 22.78 8.80 -1.00 2 Relational context 3.42 1.41 -0.00 -1.00 3 Practice size (log) 2.37 1.84 -0.12 -0.35*** -1.00 4 Practice age (log) 1.77 0.89 -0.09 -0.20* -0.32*** -1.00 5 Hierarchy 2.12 0.57 -0.33*** -0.02 -0.07 -0.21* -1.00 6 Age (log) 3.89 0.14 -0.12 -0.12 -0.05 -0.24** -0.37*** -1.00 7 Tenure (log) 2.31 0.87 -0.02 -0.20* -0.02 -0.03 -0.05 -0.41*** -1.00 8 Formal control 4.12 1.46 -0.33*** -0.04 -0.01 -0.15† -0.00 -0.06 -0.03 -1.00 9 Informal control 2.27 0.89 -0.04 -0.34*** -0.18* -0.12 -0.16† -0.12 -0.23** -0.06 -1.00 10 CSE 4.12 0.45 -0.46*** -0.07 -0.01 -0.18* -0.29** -0.05 -0.11 -0.09 -0.25** -1.00

Table 2: Regression models for hypothesized effects (H1, H2a, and H2b)

Organizational practice adoption (1) (2) (3) (4) (5) (6) Constant 15.37 20.70 12.95 1.99 -1.36 -8.52 (0.61 ) (0.85 ) (0.40 ) (0.07 ) (-0.05 ) (-0.31 ) Controls Subsidiary dummies S S S S S S Relational context 0.78 0.83 0.79 † 0.79 † 0.64 0.66 (1.48 ) (1.62 ) (1.93 ) (2.00 ) (1.50 ) (1.56 ) Practice size (log) 0.01 -0.35 -0.30 -0.19 -0.47 -0.36 (0.01 ) (-0.82 ) (-0.73 ) (-0.48 ) (-1.43 ) (-1.19 ) Practice age (log) -0.13 -0.56 -0.12 -0.11 -0.20 -0.18 (-0.16 ) (-0.71 ) (-0.13 ) (-0.12 ) (-0.22 ) (-0.19 ) Hierarchy -3.78 ** -3.81 ** -2.84 -2.23 -3.12 † -2.62 (-2.68 ) (-2.70 ) (-1.68 ) (-1.33 ) (-1.93 ) (-1.63 ) Age (log) 2.59 1.29 2.70 5.03 6.75 8.19 (0.41 ) (0.21 ) (0.34 ) (0.67 ) (0.93 ) (1.21 ) Tenure (log) -1.14 -0.37 -0.40 -0.35 -0.69 -0.63 (-1.03 ) (-0.33 ) (-0.32 ) (-0.31 ) (-0.56 ) (-0.54 ) Main effects Formal control 2.74 *** 2.55 *** 2.50 *** 2.35 *** 2.33 *** (3.83 ) (3.23 ) (3.64 ) (3.48 ) (3.90 ) Informal control -0.04 -0.61 -0.41 -0.65 -0.50 (-0.06 ) (-0.81 ) (-0.53 ) (-0.95 ) (-0.69 ) CSE H1 + 2.84 *** 3.15 *** 2.74 *** 2.98 *** (5.78 ) (7.12 ) (5.73 ) (6.14 ) CSE x formal control H2a - -1.33 * -1.01 † (-2.40 ) (-1.98 ) CSE x informal control H2b + 1.69 ** 1.55 ** (3.55 ) (3.32 ) Observations 130 130 130 130 130 130 R-squared 0 .37 0 .44 0 .52 0 .53 0 .55 0 .56 Adjusted R-squared 0 .31 0 .40 0 .46 0 .47 0 .49 0 .50 Prob > F 0 .0000 0 .0000 0 .0000 0 .0000 0 .0000 0 .0000 Δ R-squared (to Model 3) 0 .01* 0 .03** Prob > F 0 .0251 0 .0018 *** p < 0.001, ** p < 0.01, * p < 0.05, † p < 0.1. t-statistics in parentheses. We included five subsidiary dummies.

Figure 1a: Illustration of moderation effects of formal controls

Figure 2b: Illustration of moderation effects of informal controls

-3 STD -2 STD -1 STD Mean +1 STD +2 STD +3 STD

Pr ac

tic e

ad op

tio n

Core self-evaluation

Formal control

High Low