Testing Resilience and Work Ethics as Mediators Between Charismatic Leadership and Affective Commitment to Change

Abstract

The study tests resilience and work ethics as mediators between charismatic leadership and affective commitment to change. Many organizations, such as banking, insurance companies, and financial institutions, face strong competition and consequently need to effect considerable change within the organization. Many variables have a significant impact on the success of organizational change, and people (resilience and work ethics) as well as change leaders are primary variables in this research. This study, using structural equation modeling, was conducted on a sample of 355 employees from banking and insurance companies. In this study, the inventory of affective commitment to change, the Conger-Kanungo charismatic leadership scale, resilience, and work ethic inventory was used. The results showed that resilience is a partial mediator between charismatic leadership and affective commitment to change. Meanwhile, work ethic was not a mediator between the two variables. The results showed that charismatic leadership can have a direct, positive, and significant impact on affective commitment to change without mediators, and that resilience can act as partial mediator. Furthermore, work ethic had a significant and positive effect on affective commitment to change through resilience. In other words, resilience is a full mediator for the impact of work ethic on affective commitment to change.

1. Introduction

The world is changing, with VUCA (Volatility, Uncertainty, Complexity, and Ambiguity) conditions and rapid technological development making competition very challenging for many organizations. To face this strong competition, organizations, including banks and insurance institutions, are introducing changes and new approaches, such as restructuring and enhancing service excellence. Previous studies have showed that one of the biggest challenges concerns people’s commitment to change: employees may feel threatened by change and, consequently, become resistant to it, and this affects the process and success of organizational change. Consequently, every organization needs an excellent program and change agent that can motivate and inspire people to commit to the planned change.

Previous studies indicate that personal characteristics such as efficacy and resilience can become drivers of organizational change (Luthans, 2015; Hodges, 2017) and work ethics (Abbas, 2013). Moreover, Michaelis et al. (2009) and House in Pierce and Newstrom (2011) also showed that leaders, including the charismatic leader, have a significant impact on organizational change and developing a commitment to change, with Michaelis, Segmaier, and Sonntag (2009) demonstrating that charismatic leadership is positively correlated with affective commitment to change. However, studies on leadership and its impact on the affective commitment to change were quite limited, although research has been conducted on the effect of change leadership on affective commitment to change (Herold et al., 2008; Liu, 2010; Mangundjaya, 2019) and transformational leadership on the commitment to change (Herold et al., 2008; Rowold & Abrel-Vogel, 2014; Mangundjaya, 2018a, 2018b). From the studies, it was observed that similarities exist between transformational leadership and charismatic leadership with a shared focus on the well-being and development of followers. Nevertheless, research into the role of charismatic leadership on affective commitment to change is still limited and needs further study.

This research aims to fill the gaps in understanding of the roles of leader and people during the process of organizational change, in particular in the development of the affective commitment to change. Charismatic leadership comprises the dimensions of strategic vision, sensitivity to the environment, sensitivity to members’ needs, personal risk and unconventional behavior (Conger & Kanungo, 1998). These behaviors are assumed to impact on the affective commitment to change as they tend to motivate and inspire others to develop. With these qualities, charismatic leadership behaviors are more acceptable to their followers during organizational change because followers feel better about their work and strive to perform well (Conger & Kanungo, 1997, 1998). Further, House (in Pierce & Newstrom, 2011) showed that some of the characteristics of charismatic leadership are transforming values and beliefs, as well as stimulating and idealizing a vision for the future.

Charismatic leaders motivate their followers to work hard, develop a work ethic, and support organizational changes. However, other studies revealed a negative relationship between charismatic leadership and crisis management (Bligh, Kohles, & Pillai, 2005; Williams, Pillai, Lowe, Jung, & Herst, 2009). The ability to face and survive challenges and crises is one of the characteristics of resilience. Amidst these different findings and arguments, this research aims to test the roles of resilience and work ethics as mediators between charismatic leadership and affective commitment to change.

2. Analytical Framework

2.1. Affective Commitment to Change

Commitment to change, according to Herscovitch and Meyer (2002), is a mindset that drives an individual to take the action necessary for the successful implementation of organizational change. Affective commitment to change, as one of the dimensions of commitment to change, is a willingness to deliver support for the proposed organizational change in the belief that it is beneficial to the organization. This behavior is categorized as discretionary behavior and is projected as supportive behavior throughout the process of organizational change (Herscovitch & Meyer, 2002).

2.2. Charismatic Leadership

Charismatic leadership is the ability to express and articulate an inspiring vision through behaviors and actions that nurture the impression of an imaginative mission. Charismatic leaders are organizational crusaders who diagnose a need for change and express it in a dream of a better future (Conger & Kanungo, 1994). These charismatic leadership behaviors also include effective verbalization of the vision, sensitivity to the environment, unusual or risktaking behavior, and understanding of members’ needs (Conger & Kanungo, 1994).

2.3. Resilience

Siebert (2005) defines resilience as the ability of the individual to resist the condition of hopelessness when facing a problem. Resilient people are also able to make decisions under pressure and convert failures into success (Reivich & Shatte, 2002) and are, therefore, more flexible and better prepared to face organizational change (Dong et al., 2013; Luthans et al., 2015). Dong et al. (2013) developed a resilience tool based on the following four dimensions: flexibility, social and family support, spiritual support, and goal-orientation.

2.4. Work Ethics

A work ethic is a belief in work as a moral good, a set of standards that focus on the importance of work and the desire to work hard (Merriam Webster Dictionary, 2018). A work ethic is also defined as the collective belief of society in the willingness to be in charge of their governing destiny in the pursuit of regeneration, innovation, and persistence in the present possibilities and to imagine new opportunities (Abbas, 2013). A work ethic also means being adaptive to economic movements and continually striving to improve the wellbeing of individuals and society. As a result, practicing work ethics is a means to improve the performance of an organization, primarily when the organization uses a range of methods to create an ethical work culture (Valentine et al., 2011).

2.5. Charismatic Leadership, Resilience, Work Ethics, and Affective Commitment to Change

Charismatic leaders focus on transforming the values, beliefs, and attitudes of subordinates concerning an inspiring and idealized visualization of the future (Conger & Kanungo, 1994), including the appearance of the organization implementing change. With these features, charismatic leaders have confidence in their followers, and those followers, having confidence in their leaders, are likely to accept the organizational objectives and believe that they can contribute to accomplishing them (House in Pierce & Newstrom, 2011). Kahtani (2013) observed that leaders with charisma influenced people’s commitment during organizational change and Rowden (2000) revealed a positive correlation between charismatic leadership and organizational commitment. Moreover, Mangundjaya (2013) demonstrated a positive correlation between organizational commitment and commitment to change, including affective commitment. Based on these results, it may be assumed that charismatic leadership has a positive and significant correlation with affective commitment to change. Meanwhile, Michaelis, Segmaier, and Sonntag (2009) showed that affective commitment to change is positively correlated with charismatic leadership. Based on these discussions, this research proposes the following hypothesis:

H1: Charismatic leadership has a positive effect on affective commitment to change.

Charismatic leaders focus on changing the values, beliefs, and attitudes of their followers to achieve a better future (House in Pierce & Newstrom, 2011). According to Yukl (2013), the outcome of that transformation will enable subordinates to participate in and contribute to organizational change. Meanwhile, through self-confidence and empowerment, individuals will increase their resilience when facing change in their organization. Based on this discussion, the proposed hypothesis is as follows:

H2: Charismatic leadership has a positive effect on resilience.

Charismatic leadership is defined as the capability of a leader to stimulate enthusiasm and action in their followers over the individual attributes, behaviors, and outstanding qualities of the leader (Sosik, Juzbasich, & Chun, 2011). House (in Pierce & Newstrom, 2011) also observed that charismatic leaders articulate clear ideological goals to their followers, in which it may be assumed that work ethic is included. Consequently, a charismatic leader can encourage people to act according to their philosophical goals and ethical code within the organization. Therefore, this research proposes the following hypothesis:

H3: Charismatic leadership has a positive effect on work ethic.

During organizational change, conditions of ambiguity, chaos, insecurity and uncertainty prevail. Consequently, one of the most significant capabilities required for managing change is resilience. Resilience helps individuals to react to and cope with change, and supports people in maintaining high levels of performance, improving their sense of welfare, and managing fluctuating emotions. Resilience allows people to make sense of change more rapidly and assists them to cope with multiple changes without becoming exhausted (Hodges, 2017). This type of resilience enables people to face organizational change better and more flexibly (Dong et al., 2013). Langvard (2007) and Amir and Standen (2019) demonstrated the positive impact of resilience on a commitment to change. Affective commitment to change is viewed as indicative of commitment to change. Thus, the following hypothesis is proposed:

H4: Resilience has a positive effect on affective commitment to change.

A work ethic comprises many beliefs, norms, and values about a job. Abbas (2013) suggested that a work ethic is a mindset that underscores the significance of being a social actor in the discovery and imagining of new opportunities. Consequently, people who master an excellent work ethic are assumed to have reasonable beliefs, norms, and values, including those behavioral characteristic required to produce good results. Manan et al. (2013) demonstrated a positive and significant correlation between an Islamic work ethic and organizational commitment. Meanwhile, organizational commitment had a positive correlation on the commitment to change, including affective commitment to change (Mangundjaya, 2013). Based on this discussion, this research proposes the following hypothesis:

H5: Work ethic has a positive impact on affective commitment to change.

The charismatic leader can inspire enthusiasm and action in their followers through their attributes, behaviors, and excellent qualities as a leader (Sosik, Juzbasich, & Chun (2011). With these qualities, the charismatic leader is able to empower their subordinates to participate in the transformation (Yukl, 2013) and create resilience during the process of change. Resilience itself has a positive effect on affective commitment to change (Dong et al., 2013). The following hypothesis is proposed:

H6: Charismatic leadership has a positive effect on affective commitment to change through resilience.

A work ethic is also characterized by finding new and excellent opportunities; hence, it is predicted that with a good work ethic, individuals will have high affective commitment to change in their organization, as they realize that change will improve the organization, making it more robust. A charismatic leader has a positive effect on work ethics (House in Pierce & Newstrom, 2011). Based on these findings, the hypothesis is as follows:

H7: Charismatic leadership has a positive effect on affective commitment to change through work ethic.

This research used four variables: charismatic leadership, affective commitment to change, resilience, and work ethic. Charismatic leadership is the independent variable and affective commitment to change the dependent variable, with resilience and work ethics the mediating variables. Figure 1 above illustrates the research model.

Figure 1: The model of the research

3. Methodology

3.1. Sampling and Respondents

The respondents were employees of two banks and two insurance companies in Jakarta, Indonesia, representing both private and state-owned institutions and categorized as large, well-known companies in Indonesia, which have conducted organizational change in the areas of strategic management, human resource policy, and organizational structure. A total of 355 employees participated, comprising 90 respondents from Bank A (a private bank), 85 respondents from Bank B (stateowned bank), 88 from Insurance A (private insurance), and 92 from Insurance B (state-owned insurance). The respondents met the following criteria; they were permanent staff, who had worked for at least two years in the company and were aware of the organizational changes in their company. Based on these criteria, the respondents were chosen using convenience sampling. The respondent profile was male (61.69%), with a bachelor’s degree (62.54%), aged between 44 and 56 years old (46.48%), who has been working for more than 20 years (42.53%) as a member of staff (41.41%). This sample is in line with the profile of employees in the organization, where the majority of employees are male, with a bachelor degree, aged between 44 and 56 years old, and have been working in the company for more than 20 years.

3.2. Data Collection Tools

Four types of questionnaire were used in this study: Affective commitment to change was measured using the commitment to change inventory developed by Herscovitch and Meyer (2002). Affective commitment to change consists of six items, and the scale was modified to six gradings from 1 to 6, translated into Bahasa Indonesia with a Cronbach’s Alpha score of 0.778. The commitment to change inventory has been used in many studies by Mangundjaya (2015, 2018a, 2018b) and has significant confirmatory factor analysis. Charismatic leadership was measured using the Conger and Kanungo questionnaire (the C–K Scale) (Conger et al., 1994, 1997, 1998), modified into Bahasa Indonesia, with six grades from 1 to 6, consisting of 5 dimensions and 30 items, with a Cronbach’s Alpha score of 0.979. Resilience was measured using the modified CDRISC (Dong et al., 2013), which consists of four dimensions and 32 items, with a Cronbach’s Alpha score of 0.977. The scale was modified into six grades from 1 to 6 and translated into Bahasa Indonesia. Work ethic is a unidimensional variable consisting of six items. The questionnaire used six grades from 1 to 6 and was translated into Bahasa Indonesia with an original Cronbach’s Alpha score of 0.618, revised to 0.709 after revision and testing.

3.3. Method of Analysis

Descriptive analysis was used to analyze the demographic data and structural equation modelling to test the model. The Structural Equation Modelling (SEM) used in this study will also analyze the dimensions from each of the variables.

Table 1: Mean, Standard Deviation, Correlation, and Reliability among Variables

4. Results

4.1. Inter-Correlation Analysis

To identify any inter-correlations, a correlation analysis was conducted between the four variables. Table 1 shows the descriptive statistics, standard deviations, and intercorrelations between variables.

The results show significant correlation amongst the four variables, with the highest correlation score between work ethic and resilience.

4.2. Descriptive Analysis

The results of the descriptive analysis are shown in Table 2.

Table 2: Descriptive Analysis

Note: AC2C = Affective Commitment to Change.

Table 2 shows relatively high scores for respondents on all the variables, as the scores lie above 4 on a scale of 1 to 6, indicating that the respondents’ scores on affective commitment to change, charismatic leadership, resilience, and work ethic in general are above average.

4.3. SEM Results

Figure 2 and Table 3 below show the results of this study analyzed by SEM.

Figure 2: The result of SEM

Chi-square=49.51; df=35; p-value=0.052; RMSEA=0.034

Table 3: The results of path analysis and hypothesis testing

Figure 2 shows that charismatic leadership has a significant and direct impact on affective commitment to change and that resilience acts as a partial mediator. Meanwhile, there is no significant correlation between work ethic and affective commitment to change. Table 3 below shows the path analysis of the four variables.

4.4. Hypothesis Testing

Figure 2 and Table 3 show that charismatic leadership had a significant positive effect on affective commitment to change (t-value 2.26 > 1.96), and Hypothesis 1 is therefore supported: charismatic leadership had a positive effect on affective commitment to change and employees will show higher affective commitment to change if they have a charismatic leader. Charismatic leadership also had a significant positive effect on resilience (t-value 2.14 > 1.96), and Hypothesis 2 is supported. This finding showed that a charismatic leader is able to influence their subordinates to be more resilient. Furthermore, charismatic leadership had a significant positive impact on work Ethic (t-value 3.23 > 1.96), and Hypothesis 3 is supported: a charismatic leader has the power to influence their subordinates to have a good work ethic. The results show that resilience has a significant positive effect on affective commitment to change (t-value 6.93 > 1.96), so Hypothesis 4 is supported: individuals who score highly for resilience will also have a high score for affective commitment to change. However, the results showed that work ethic did not have a significant correlation with affective commitment to change (t-value –0.98 < 1.96), so Hypothesis 5 is not supported: although individuals may score highly on work ethic, they do not necessarily support and commit to organizational change. This, in turn, means that there is no correlation between charismatic leadership and affective commitment to change through work ethic, and Hypothesis 7 was not supported. In other words, work ethic did not act as a mediator between charismatic leadership and affective commitment to change. However, the results also supported Hypothesis 6, showing a positive impact of charismatic leadership on affective commitment to change through resilience: resilience may play a role as a partial mediator between charismatic leadership and affective commitment to change.

The results showed that charismatic leadership can have a direct, positive, and significant impact on affective commitment to change without mediators, and that resilience can act as partial mediator. In addition, in order to discover more about the relationship between work ethic and resilience, the relationship between these variables was also examined, and the results showed that work ethic had a positive impact on resilience (t-value 7.4 > 1.96). Furthermore, work ethic had a significant and positive effect on affective commitment to change through resilience. In other words, resilience is a full mediator for the impact of work ethic on affective commitment to change: Without resilience, work ethic alone had no significant effect on affective commitment to change.

5. Discussion

The purpose of this research was to examine the effect of charismatic leadership on affective commitment to change through resilience and work ethic. The results showed, firstly, that Hypothesis 1 is supported: Charismatic leadership has a significant positive impact on affective commitment to change. Unconventional behavior, such as a personal approach, as well as sensitivity to members’ needs, plays an essential role in the development of an affective commitment to change (Conger & Kanungo, 1998). People who feel their leaders are attentive to them will be willing to follow their leader. These findings supported those of Michaelis, Segmaier, and Sonntag (2009), which showed that charismatic leadership has a positive correlation with affective commitment to change.

Secondly, Hypothesis 2 was supported: Charismatic leadership has a significant positive effect on resilience. Charismatic leaders, with their strategic vision, sensitivity to members’ needs, and sensitivity to the environment, influence their followers to be resilient in facing changes in the environment, in order to achieve their targets and objectives. This result supported the findings of Conger, Kanungo, and Menon (2000) that followers of charismatic leaders have high levels of trust and satisfaction with their leaders and in return, gain a heightened sense of shared identity and enablement, which then develop into a sense of resilience. However, this study does not support previous studies showing a negative relationship between charismatic leadership and crises (Bligh, Kohles, & Pillai, 2005; Williams, Pillai, Lowe, Jung, & Herst, 2009). It is assumed that the terminology of facing crises is not the same as resilience.

Third, charismatic leadership had a significant positive impact on work ethic, supporting Hypothesis 3. When a leader shows individual behavior rather than following strict rules, taking a personal risk, followers will feel supported. Consequently, they trust that the organizational change proposed by their leaders will lead to improvement, and this enables the employees to practice their work ethic. Fourth, Hypothesis 4, that resilience has a significant positive effect on affective commitment to change, is supported. According to Luthans et al. (2015), resilient people are more agile and adaptive to change and, consequently, will also commit to change. Fifth, Hypothesis 5 is not supported, in that the results showed that work ethic did not have a significant correlation with affective commitment to change. This is in contrast to previous findings by Manan et al. (2013), which showed that Islamic work ethic and organizational commitment were positively correlated. These findings are somewhat surprising, as individuals with a strong work ethic usually have a positive work attitude, including resilience and affective commitment to change. It is likely that other variables, such as organizational commitment (Mangundjaya, 2013), job satisfaction, employee engagement, and individual readiness for change (Mangundjaya et al., 2015) also influenced the results. Sixth, charismatic leadership has a positive impact on affective commitment to change, through resilience.

Results show resilience acting as a partial mediator on the correlation between charismatic leadership and affective commitment to change. The results showed resilience to be a full mediator between charismatic leadership and affective commitment to change. In other words, resilience is the significant variable in developing an affective commitment to change. In contrast, although charismatic leadership had a significant impact on work ethic, work ethic had no significant impact on affective commitment to change.

Furthermore, the results showed that the goal-oriented dimension had the highest score for resilience: People with high goal orientation will be more resilient. The findings also showed that unconventional behavior had the highest score in the charismatic leadership dimension, indicating that a leader who shows unconventional behavior (such as paying sincere attention to their subordinates) will become a good charismatic leader who can influence their subordinates. This dimension is followed by sensitivity to members’ needs and personal risk. The characteristics of unconventional behavior and sensitivity to members’ needs enable charismatic leaders to make their subordinates feel that they are seen as unique and that their leader is concerned for their well-being, which consequently engenders loyalty to their leader. These findings also support the social exchange theory, as these actions are likely to lead to higher levels of affective commitment to change, as subordinates want to repay their leader for the care, support, and reassurance they have received (Michaelis, Stegmaier, & Sonntag, 2009). These findings also supported the previous findings by Siswanti and Muafi (2020), which revealed that empowering leadership has a positive influence on psychological empowerment, which make their followers felt empowered and self-confidence which as a result has high resilience. Moreover, these findings also support the pervious findings by Pancasila, Haryono, Sulistyo, and Tung, (2020), which showed that leadership had positive impact on job performance, and transformational leadership has a positive effect on learning orientation (Kittikunchotiwut, 2020). In other words, an understanding leader, enable to influence their followers to perform better both in job performance and in learning orientation.

This empirical study has some limitations. First, all data were collected based on questionnaires, which may have led to social desirability bias (Podsakoff et al., 2003). It is recommended that future studies are conducted using different data collection tools and/or over a different period. Second, the sample was collected from two insurance companies and two banks, and differences in corporate culture may have affected the results. Future studies are recommended in different types of organizations with different kinds of organizational change in various locations in Indonesia. Third, this study only assessed charismatic leadership; it is assumed that other types of leadership style, such as transformational, servant and change leadership, may have different effects. Future research is recommended into different kinds of leadership style, using different independent and mediator variables.

6. Conclusion

These results showed that charismatic leadership had a direct and indirect effect on affective commitment to change. Charismatic leaders, as outstanding agents of organizational change (Levay, 2010), are crucial in the implementation of an ethical climate (Grojean, Resick, Dickson, & Smith, 2004; Neubert, Carlson, Kacmar, Roberts, & Chonko, 2009; Zehir et al., 2014). These findings supported previous research by Michaelis, Segmaier, and Sonntag (2009), that showed charismatic leadership to be positively and significantly correlated with affective commitment to change. The results are also consistent with Langvardt (2007) in showing a positive relationship between resilience and commitment to change. However, in this study, resilience acts only as a partial mediator between charismatic leadership and affective commitment to change. Meanwhile, charismatic leaders had no significant impact on affective commitment to change through work ethic as a mediator, as there is no significant correlation between work ethic and affective commitment to change. Thus, work ethic does not act as a mediator, as charismatic leadership can have a positive impact on affective commitment to change without the mediation of resilience. It can be concluded that work ethic is unrelated to the emergence of affective commitment to change. Conversely, resilience has some impact, although this is only partial, as charismatic leadership will directly influence the emergence of affective commitment to change.

The implications of this research are beneficial for change management in organizations, especially in addressing the strategic role of leaders as change agents as, according to Gilley et al. (2008) and Giley and Gilley (2009), these play a critical role in the success or failure of organizational change. The results revealed that, by developing and assigning a charismatic leader as change leader, the level of affective commitment to change in employees can be increased, and this will accelerate the process of organizational change. Furthermore, this research also adds to the findings on charismatic leadership, work ethic, and affective commitment to change, filling the gap in existing research regarding charismatic leadership and affective commitment to change.