Endorsement or Detachment? Examining Individual Responses to Institutional Decoupling.

Scholars within institutional theory have consistently directed their focus toward the institutional and organizational determinants that explain why certain organizations engage in institutional decoupling. While these studies offer valuable insights, there remains a significant gap in understanding how individual employees respond to institutional decoupling. This study addresses this theoretical gap by examining South Korean organizations ostensibly adopting the 40-hour work policy while discreetly maintaining overtime work to sustain productivity. Through a multi-level analysis involving 6,576 individual employees across 209 organizations, our findings reveal a negative relationship between institutional decoupling, organizational identification, and proactive performance, attributed to the cognitive dissonance arising from the incongruence between external expressions and internal values. We argue that cognitive dissonance can be mitigated through normative attitudes and behaviors associated with social identities, along with individual motivations for self-enhancement. As organizations gain greater appeal in the labor market, employees rationalize institutional decoupling as a means to enhance their identity and status. Additionally, when organizations make efforts to achieve a desirable future image, they interpret institutional decoupling as a transitional phase aimed at reinforcing their social identity. These findings highlight the role of social identity in shaping how individual employees address cognitive dissonance arising from institutional decoupling. [ABSTRACT FROM AUTHOR]