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INTERNATIONAL JOURNAL OF SOCIAL SERVICE AND
RESEARCH
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ANTECEDENTS OF PERCEIVED BUSINESS PERFORMANCE AMONG
PRIVATE BUSINESS ORGANIZATIONS: A PARTIAL LEAST SQUARE APPROACH
Zahir Osman, Noral Hidayah Alwi,
Bibi Nabi Ahmad Khan, Rose Ruziana Samad
Faculty of Business Management, Open
University Malaysia, Malaysia
Email: [email protected], [email protected], [email protected],
[email protected]
Abstract
This study aims to assess the direct relationships between corporate
image, employee engagement, organizational culture, employee loyalty, and
business performance among private business organizations. This study is vital
to be carried out because many private organizations face difficulty to
maintain their business performance in the coming years. The research model of
this study consists of three independent variables: corporate image, employee
engagement, organizational culture, employee loyalty as a mediator, and
business performance as a dependent variable. Primary data were utilized in
this study and a survey questionnaire which was adopted and adapted from
previous studies was used for data collection. 329 clean data were used in the
data analysis by utilizing the structural equation modeling technique.
Initially, the convergent validity was evaluated on the measurement model by
assessing the construct reliability and validity. Then, the discriminant validity
was assessed and confirmed through cross-loading and Hetrotrait-Monotrait
(HTMT) ratios. Subsequently, the structural model was assessed and the
hypotheses testing reveals that corporate image, employee engagement, and
organizational culture, have a positive and significant influence on employee
loyalty and business performance was strongly affected by employee loyalty.
Keywords: business performance; corporate image;
employee engagement; employee loyalty organizational culture
Received 01
July 2022, Revised 11 July 2022, Accepted 22 July 2022
INTRODUCTION
Today, most business organizations think about how to
ensure their business can sustain itself in the future by focusing on their
business performance. Companies realize there is stiff competition in goods and
service markets where business organizations have to look for new approaches to
keep on hold to their customers. Customers� need has become very sophisticated
and demanding. In a vibrant business environment, customer engagement allows
for sales promotion, improvement of product quality, rise in customer
satisfaction, cost and risk minimization, and competitive advantage enhancement
(Brodie, Ilic, Juric, & Hollebeek, 2013; Di Gangi & Wasko, 2009). In addition to
land, labor, and capital, international competitiveness and changing
surrounding circumstances have made institutions more aware of and prone to
adopting change continuously, as it requires effective participation from every
level of the organization and within all levels of institutions, as human
resources is also an asset (Almuhaisen, Habes, & Alghizzawi, 2020; Chin, 2011).
The mission is to organize institutional work and improve institutional
performance since it is critical to the organization's smooth management and
attainment of its objectives (Sarrab, Elbasir, & Elgamel, 2013).
As a result, in this changing and competitive global
ecosystem, if human resources are managed effectively, they can become a
competitive advantage for a business organization, and it is clear that leaders
have a significant influence on subordinates, so the importance of the
leadership standard in the institutions and organizations sector grows.
Malaysian business organizations are still behind in terms of competitive
advantage in the global business environment due to their low productivity and
poor business performance (Tehseen, Sajilan, Ramayah, & Gadar, 2015). In addition,
Malaysian business organizations are found to provide a lower contribution to
the nation�s GDP and exports as compared to business organizations of many
neighboring countries such as Japan, South Korea, and Singapore (Halim, Ahmad, & Ramayah, 2014). Realizing the
importance of Malaysian business organizations as an important element of
economic growth, it is vital to discover factors that can enhance
competitiveness and reduce the disparity between Malaysian business
organizations and business organizations in these countries in terms of
contribution to the economy. Business organizations must give attention to the
needs and requirements of their employees are all motives that enhance
productivity and positively influence performance effectiveness.
The undivided loyalty of the employees in the business
organization is also an important factor in the business organizations.
Loyalties employees produce the performance of the organization and build
competitive advantage (Foster, Whysall, & Harris, 2008; Khuong & Tien, 2013). However, employee
loyalty is a complex issue as it is not possible to recognize whether they have
been committed and loyal by simply asking questions or performing an
observation (Altanchimeg & Sarantuya, 2018). This study will
benefit private organizations in strategizing their businesses to ensure the
targeted business performance will be achievable. Employees in the private
business organization can better understand how they can implement the
organization�s plan to ensure the positive results of their operations. Also,
findings from this study will benefit policymakers in introducing future business
policies affecting private business organizations and ensuring positive
business performance by the private organizations towards the country�s
economy.
Therefore, this study aims to evaluate the relationship
between corporate image, employee engagement, and organizational culture
towards employee loyalty and employee loyalty to business organizational
performance in Malaysia.
METHOD
Employees who were working
in private organizations were selected for this study. This study used primary
data and a survey instrument was utilized for data collection. The survey
questionnaire used in this study was developed with a careful evaluation of
previous studies to acquire appropriate measurements that were being frequently
used and have well-built reliability and validity. Survey questionnaires were
sent via email to the targeted respondents by utilizing the non-probability
sampling technique of purposive sampling to collect data. There were a total of 25 observed variables constituted of the
exogenous variables and the endogenous variable measurement. Corporate image
construct consists of 5 measurement items (Lee, 2004), employee engagement
consists of 5 measurement items (Saks, 2006), organizational
culture constructs consist of 5 measurement items (Van den Berg & Wilderom, 2004), employee loyalty
construct consists of 4 measurements (Matzler & Renzl, 2006) and business performance construct
consists of 5 measurement items (Ganeshasundaram & Henley, 2007). A five-point
Likert scale was employed ranging from strongly disagree to strongly agree to
measure the measurement items of each construct. Out of 485 questionnaires
distributed, 353 were collected. This made-up a 72.8% response rate and it was
adequate to conduct data analysis by employing the structural equation modeling
technique (SEM). After data screening and deleting the outliers process, 329
questionnaires were cleared and ready to be analyzed. Table 1 demonstrated the
respondents� profiles of the sampled ODL students. Smartpls3 was used in this study to run
the multivariate data analysis and test the proposed hypotheses. In addition,
the model measurement and structural model assessment procedures also were
performed by using Smartpls3, The PLS-SEM technique was employed for this study
due to its assessment ability (Hair, Black, Babin, &
Anderson, 2010).
RESULTS AND DISCUSSION
The
ability of private organizations to maintain their business performance will
determine whether private organizations can sustain their business over time.
The focus of this study is to evaluate the direct relationships between
corporate image, employee engagement, organizational culture, and employee
loyalty and the direct relationship between employee loyalty and business
performance. From the above statistical result, it has clearly shown that
employee engagement has the strongest influence on employee loyalty (�=0.439).
Hence, the private organization needs to emphasize their employee engagement in
their organizations. The employees must be encouraged to do engagement in their
work. With active engagement by the employees, it will strengthen their loyalty
to their organizations. On the organization�s part, top management must come
out with the right planning and strategy on how to make their employees more
engaged in their work, and eventually, their employees will become loyal to the
organization. Corporate image has the second strongest influence on employee
loyalty (�=0.222). Private organizations with a strong corporate image will be
much preferred by internal and external stakeholders. Employees in private
organizations with a strong corporate image will carry the pride of their
organizations and will have a strong attachment to their organizations.
Employees feel highly motivated in performing their duty in the organization
and feel that they are in the right organization. This will lead the employees
to become increasingly loyal to their organizations and will make the employees
less likely to move to other organizations. Private organizations must
continuously develop a plan and formulate a strategy on how to strengthen their
corporate image so that the organization would be able to retain their
employees for a long period, especially their skilled employees. The third
strongest construct influences employee loyalty is organizational culture
(�=0.222). Even though organizational culture�s influence on employee loyalty
is not as strong as employee engagement, the influence is still significant.
Employees stay within the organization if their organizations have a good
working culture in the organization. This will make them feel comfortable doing
their work. Positive organizational culture will create a conducive environment
for the employees to perform their work which eventually will make them want to
stay longer in their organizations. From the above statistical results, there
is clear evidence that employee engagement, corporate image, and organizational
culture will enhance employee loyalty in private business organizations. With
strong employee loyalty, the statistical result shows that employee loyalty
will strongly and positively affect the business performance of private organizations
(� = 0.571). Loyal employees tend to perform better in their work which will
lead to high productivity and eventually the business performance of the
private organization will be strengthened. Therefore, private organizations
must make sure to implement the strategies to enhance their employees� loyalty
by focusing on employee engagement, corporate image, and organizational
culture, so that the impact on the business performance of the organization
will be greater.
CONCLUSION
The sustainability of private
organizations very much depends on their business performance. Therefore, the
employees of the organization play a very important role and make a significant
contribution to the organization�s business performance. An organization is
made up of a group of people and they are the assets of the organization. Their
loyalty toward the organization definitely will give a positive impact on the
organization�s business performance. Hence, it is the duty of the top
management in the organization to ensure their employees remain loyal by
focusing on the factors of corporate image, employee engagement, and
organizational culture. These three factors can have a positive impact on
employee loyalty which is one of the strong antecedents to private organization
business performance. For future studies, it is recommended other variables
such as leadership style, organizational commitment, and brand image should be
considered in developing the research framework.
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