An organization's institutions and management practices can achieve their original purposes only when not just the introduction and implementation of the institutions but also their underlying principles and guidelines are well communicated to and accepted by employees. In this regard, there is a need to empirically analyze how employee internalization of institutions following their implementation affects organizational effectiveness. Additionally, organizational cynicism has been identified as a negative factor arising alongside changes in management practices such as increased organizational flexibility and the spread of short-term employment relationships, and researchers' interest in clarifying its relationship with organizational effectiveness has been growing. This study discussed employee internalization of institutions and organizational cynicism, and empirically analyzed their relationships with organizational commitment and innovation-oriented activities. Data were collected through a survey of 2,600 employees at public employment service agencies nationwide, and 1,690 responses were used in the final analysis. Hypothesis testing was conducted using covariance-based structural equation modeling. The research model assumed a latent method factor affecting all variables to control for the problem of covariance among variables due to common method bias in the data collection process. According to the estimation results of the research model, employee internalization of institutions had a positive effect on organizational commitment. Organizational cynicism was found to have a negative effect on organizational commitment, and it was also confirmed that organizational commitment had a positive effect on innovation-oriented activities. Through comparative analysis of competing models, the final model estimation confirmed a direct effect between institutional internalization and innovation-oriented activities, and the indirect effect of institutional internalization transmitted through organizational commitment was also found to be significant. In contrast, while organizational cynicism showed a negative relationship with organizational commitment, no direct relationship with innovation-oriented activities was found.