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Role of Organizational Commitment on Work Performance in Distribution Department of AMCs

  • Mengchan XING (Othman Yeop Abdullah Graduate School of Business, University Utara Malaysia) ;
  • Indraah A/P KOLANDAISAMY (School of Business Management, University Utara Malaysia) ;
  • Hooi Sin SOO (School of Business Management, University Utara Malaysia)
  • Received : 2023.11.22
  • Accepted : 2024.03.05
  • Published : 2024.03.30

Abstract

Purpose: The current study focused on work performance of distribution department of AMC (asset management company) industry in China, outlines the challenges faced by distribution employees of Chinese four biggest national AMCs, aiming to enhance the ability of Chinese national AMCs to succeed in the face of external challenges such as economic, social, and technological changes. Research design, data and methodology: This study adopted quantitative methods, questionnaire was collected from 248 general distribution department employees of four national AMCs of China, these employees are from the top 5 developed cities in China, and software Smart PLS 3.0 and SPSS 25 was applied to data analysis. Results: The result of this current study through Smart PLS 3.0 has revealed that the significant effect of affective commitment on contextual performance, affective commitment on task performance, continuance commitment on contextual performance, normative commitment on contextual performance, and effect of continuance commitment on task performance and normative commitment on task performance were found to be non-significant. Conclusions: According to the important role of distribution department, managers in China's national AMCs can leverage the study's findings to enhance organizational commitment among employees of distribution department, and further positively influences distribution department employees' work performance.

Keywords

1. Introduction

Since the 1980s, several countries encountered a variety of financial crises that led to a substantial increase in nonperforming loans. The impact was felt globally, affecting both eastern and western nations. Among these nations, the United States faced a particularly severe crisis, as approximately 1,600 banks and similar financial institutions were unable to avoid the repercussions. To tackle this issue, the United States Treasury Department took action by establishing the Restructuring Trust Corporation (RTC) with the aim of addressing the non-performing loans. Over a span of five years, the RTC effectively managed financial risks and developed a framework for handling nonperforming assets of financial institutions, which could be utilized in different countries.

In 1997, China's economy suffered severe repercussions from the Asian Financial Crisis, leading to a substantial number of company bankruptcies and a significant volume of unpaid bank loans. This created a major challenge for the country's four largest national banks, as they grappled with a heavy burden of non-performing loans. Learning from the experiences of other nations in addressing similar issues, China took action in 1999 by establishing four national Asset Management Companies (AMCs). The primary objective of these AMCs was to assist the banks in effectively disposing of approximately 1.3 trillion RMB worth of non-performing assets.

An Asset Management Company (AMC) plays a vital role within the financial industry. The effectiveness of an AMC holds significant significance, asit not only affectsthe company's profitability and sustainability but also has a profound impact on the overall financial stability of the country. The performance of an AMC is closely intertwined with the overall health of the financial sector, and any negative consequences on AMC performance can have farreaching implications for the economy.

The performance of AMCs has been widely concerned especially in China’s context by the government (Chen & MA, 2022; Liu et al., 2020; Zhao & Lu, 2022), supervision agency (Li, 2021; Qing, 2022; Yang, 2022), bank sector (Liu & Wang, 2018; Zhang & Wang, 2022), non-bank sector (Chen & Li, 2015; Wang, 2022), investors (He & Chen, 2018; Sun & Ze, 2020) and AMCs (He, 2018; Lu, 2022; Xu, 2021) themselves because it has shown considerably impact on various aspects of Chinese society.

As the reform and regulation of Asset Management Companies (AMCs) continue to evolve and broaden, there is an increasing demand for high performance especially distribution employees within these companies. Consequently, employees working in AMCs must consistently improve their overall business skills through practical experience and foster individual innovative thinking and approaches to enhance their performance. (Marshall et al., 2021). Employees are a company's most valuable asset. Employee performance, according to Vosloban (2012), plays a significant role in driving a company's growth. When an employee's performance is subpar, it can have adverse effects on the overall performance of the organization. In simpler terms, the performance of employees serves as a reflection of the organization's performance. (Purwanto et al., 2022).

Committed employees exhibit a readiness to address challenges within their job responsibilities, enabling the implementation of innovative ideasin practice(Al-Hawari et al., 2019). An individual who possesses strong commitment to the organization tends to identify themselves as an integral part of the organization (Griffin & Moorhead, 2013). The level of employee commitment, as a job-related attitude, has the capacity to influence the extent to which employees demonstrate innovation in their work(Nijenhuis, 2015). When an innovation achieves success in the market, it generates significant value for the industry, consequently impacting the performance of the company (Purwanto et al., 2022).

To engage in innovative behavior, it is essential to have a strong sense of team membership. (Jafri, 2010). To foster a culture of innovation among employees and inspire their creative endeavors, managers within AMCs should effectively increase positive incentives. This will encourage individuals to actively engage in problem-solving and learning, leading to innovative behavior and substantial contributions to the company and the nation as a whole (Wang, 2019).

2. Literature Review

2.1. Work Performance

The study of work performance has been a significant area of research for several decades, as it stands as a crucial dependent variable (Jankingthong & Rurkkhum, 2012; Tuckera et al., 2004; Viswesvaran & Ones, 2000). In light of the growing acknowledgement by governments and corporations regarding the significance of work performance for their progress, these entities have begun prioritizing efforts to enhance the performance of individual employees, work groups, and organizational units(Tims et al., 2015). The measurement and management of employee performance are vital asthey allow companiesto effectively evaluate the productivity of their workforce.

Within the existing literature, work performance was initially defined as a series of work-related behaviors that can be distinguished by instances where individuals take actions that significantly contribute to the achievement of organizational objectives(Borman & Motowidlo, 1993). Individual work performance pertains to the conduct of an employee, which manifeststheir favorable attitudes towards the organization. Alternatively, scholars define performance as observable behaviors that are in line with the goals of the organization(Campbell et al., 1990). In this study, work performance of employees is defined as actions, behaviors, and outcomes that are scalable and contribute to the achievement of organizational goals (Viswesvaran & Ones, 2000).

The categorization of performance into task performance and contextual performance was initially introduced in 1993 (Borman & Motowidlo, 1993). Task performance refers to behaviors directly involved in producing goods or services, or activities that contribute to the technical core of the organization. Contextual performance, on the other hand, is defined as performance that is not formally required as part of the job, but that helps shape the social and psychological context of the organization (Borman & Motowidlo, 1993).

Research on work performance in China commenced in 1988, which was approximately forty years later than the initiation of such studies in Western academia (Zhao & Wang, 2016). Consequently, the theory of work performance in China initially drew inspiration from Western academia and was subsequently tailored to align with the specific circumstances of China. Through the literature review process, it became evident that research on work performance before 2000 was scarce, with only a handful of articles published each year (Xu & Wang, 1991). The initial research conducted on work performance in China centered around employees within the higher education sector. This study identified three psychological factors, namely, a sense of trust, a sense of commitment, and a sense of threat, which have an influence on the work performance of university staff. This study served as a milestone in the initiation of work performance research in China.

2.2. Organizational Commitment

Organizational commitment refers to an individual's psychological attachment and loyalty to an organization. It represents the extent to which employees identify with and are willing to exert effort on behalf of the organization's goals and values. It encompassesthree dimensions: affective commitment (emotional attachment to the organization), continuance commitment (perceived costs of leaving the organization), and normative commitment (sense of obligation to stay with the organization).

Affective Commitment refers to an employee's emotional attachment, identification, and involvement with the organization. Employees with high affective commitment demonstrate a strong desire to stay with the organization because they genuinely value and enjoy their work. Continuance Commitment focuses on the perceived costs associated with leaving the organization. Employees with high continuance commitment are motivated to stay due to factors such as financial stability, lack of alternative job opportunities, or the loss of benefits accrued over time. Normative commitment is based on an employee's perceived obligation and sense of duty to remain with the organization. It arises from social norms, moral obligations, or a sense of indebtedness. Employees with high normative commitment stay because they feel it is the right thing to do.

Meyer and Allen (1991) proposed the three-component model of organizational commitment, highlighting affective, continuance, and normative commitment as distinct dimensions. The authors developed and validated scales to measure each dimension and explored their relationships with various organizational outcomes. Allen and Meyer (1996) further examined the construct validity of the threecomponent model of organizational commitment. The authors provided empirical evidence supporting the distinctiveness of the commitment dimensions and their differential relationships with work-related variables. Riketta (2002) conducted a meta-analysis to examine the relationship between organizational commitment and job performance. The findings revealed a significant positive association between affective commitment and work performance, suggesting that employees with higher affective commitment tend to perform better in their roles.

Meyer and Vandenberghe (2004) proposed an integrative model that synthesized the concepts of organizational commitment and work motivation. The authors highlighted the reciprocal relationship between commitment and motivation, emphasizing the role of affective commitment in fostering intrinsic motivation and engagement. Mathieu and Zajac (1990) conducted a comprehensive review and meta-analysis of studies on organizational commitment. They examined various antecedents, correlates, and consequences of commitment, providing a broad understanding of the factors influencing commitment levels and its impact on organizational outcomes.

2.3. Organizational Commitment

In order to establish a competitive edge within the industry, companies must consistently foster innovation and allocate resources towards the development and introduction of new products and services (Balkar, 2015). Encouraging employee innovative behavior plays a vital role in fostering innovation within a company. Scholars have progressively directed their attention towards exploring strategies to stimulate and facilitate employee innovative behavior, with the aim of supporting overall enterprise innovation (Shalley & Gilson, 2017). The active involvement of employees is essential for companies to successfully engage in innovative activities. Consequently, employee innovative behavior has become a topic of interest for both scholars and managers. In today's competitive market, enterprise innovation is imperative, and the motivation and ability of employees to generate and implement creative ideas play a pivotal role in driving organizational innovation as a whole.

In the last twenty years, researchers have dedicated substantial efforts to examining employee innovative behavior amidst the vast array of studies focused on innovation (Abdullah et al., 2016). The significant impact of innovative behavior on improving a company's efficiency is widely acknowledged (Kim & Koo, 2017). Additionally, there exists a positive correlation between personal innovation and organizational success. Scott and Bruce (1994) introduced a framework that outlines the dimensions of employee innovative behavior, which encompass an individual's ability to identify problems, seek support, conceive new ideas, and successfully implement them. Based on Scott's research, Janssen (2005) highlighted that innovative behavior encompasses three distinct stages, specifically, idea generation, promotion, and implementation.

2.4. Creative Self-efficacy

Creative self-efficacy pertains to an individual's confidence in their capacity to generate creative outcomes within a specific context, and it is shaped by their distinctive personal attributes. These attributes can influence cognitive and emotional processes, leading to variations in how individuals perceive their creative self-efficacy (Dai, 2015). Consequently, individual characteristics are frequently employed as moderating variables in research on innovative behavior, with self-efficacy being recognized as a beliefrelated variable among these individual traits (Siregar et al., 2019).

Creative self-efficacy refers to an individual's selfperceived level of confidence in their ability to engage in innovative activities. This perception is shaped by their past experiences, personal judgment, and self-evaluation (Strauss et al., 2009). Creative self-efficacy acts as a guiding force for individuals' thoughts and behavioral choices. Individuals with a higher level of creative self-efficacy firmly believe in their ability to effectively undertake innovative activities, relying on their own efforts, even when confronted with challenges or obstacles (Siregar et al., 2019). Conversely, individuals with lower levels of creative self-efficacy exhibit less confidence in their capability to accomplish the objectives of innovative activities within their organization. Consequently, they may display reduced motivation and willingness to invest time and effort into engaging in innovative tasks (Dai, 2015). When exposed to similar environmental stimuli, individuals with varying levels of creative self-efficacy demonstrate distinct differences in their behavior.

3. Research Methods and Materials

3.1. Framework

This study falls under the category of quantitative research. The data collection method employed is a questionnaire distributed to a predetermined sample population from four national AMCs. The construction of the hypothetical model is based on previous research and a thorough review of the existing literature. The model is designed as follows (see Figure 1):

OTGHB7_2024_v22n3_1_f0001.png 이미지

Figure 1: Conceptual Framework

Work Performance (WP), Organizational Commitment (OC), Employees’ Innovative Behavior (EIB), Creative Self-efficacy (CSE )

3.2. Hypotheses

By considering the identified issues and existing research, the following hypotheses were formulated:

H1: There is a positive relationship between affective commitment and task performance.

H2: There is a positive relationship between affective commitment and contextual performance.

H3: There is a positive relationship between normal commitment and task performance.

H4: There is a positive relationship between normal commitment and contextual performance.

H5: There is a positive relationship between continuance commitment and task performance.

H6: There is a positive relationship between continuance commitment and contextual performance.

H7: Employee’s innovative behavior will mediate the relationship between affective commitment and task performance.

H8: Employee’s innovative behavior will mediate the relationship between affective commitment and contextual performance.

H9: Employee’s innovative behavior will mediate the relationship between normative commitment and task performance.

H10: Employee’s innovative behavior will mediate the relationship between normative commitment and contextual performance.

H11: Employee’s innovative behavior will mediate the relationship between continuance commitment and task performance.

H12: Employee’s innovative behavior will mediate the relationship between continuance commitment and contextual performance.

H13: Creative self-efficacy will moderate the relationship between affective commitment and employee’s innovative behavior.

H14: Creative self-efficacy will moderate the relationship between normative commitment and employee’s innovative behavior.

H15: Creative self-efficacy will moderate the relationship between continuance commitment and employee’s innovative behavior.

4. Results and Discussion

4.1. Results

The study aimed to explore the relationships between work performance (WP), organizational commitment (OC), and employee innovative behavior (EIB) in Chinese national AMCs, with a specific focus on financial staff. A total of 12 hypotheses were tested in this research. The empirical results offer support for five out of the six direct hypotheses and five out of the nine indirect hypotheses.

To analyze the research model, the Partial Least Squares (PLS) method, recommended by Hair et al. (2018), was employed. The analysis was facilitated using Smart PLS 3.0 software. PLS serves as an alternative approach to Structural Equation Modeling (SEM) and proves valuable in addressing complex relationships between variables.

Based on Hair et al. (2019), the loading factor matrix is initially assessed with a minimum acceptable level of around 0.3. A loading factor of approximately 0.5 is considered preferable, while a loading factor exceeding 0.7 is typically regarded assignificant. However, in this specific study, a loading factor threshold of 0.7 was employed (see Figure 2).

OTGHB7_2024_v22n3_1_f0002.png 이미지

Figure 2: Hypotheses Testing

The estimation results of the PLS model, asillustrated in the figure above, show that all indicators have loading factor values greater than 0.8. This indicates that the model meets the requirements for convergent validity (see Table 1).

Table 1: Cronbach's Alpha, Composite Reliability, and Average Variance Extracted (AVE)

OTGHB7_2024_v22n3_1_t0001.png 이미지

Table 2. illustratesthe outcomes of hypothesistesting for all variables that possess a direct or an indirect impact.

Table 2: Hypothesis Result of the Structural Model

OTGHB7_2024_v22n3_1_t0002.png 이미지

4.2. Discussion

Hypothesis 1: There is a positive relationship between affective commitment and task performance.

The outcomes obtained through the PLS path modeling indicated a statistically significant and positive association (β=0.213, t=3.740, p=0.000<0.05) between affective commitment and task performance within the China national Asset Management Company (AMC) industry. This finding is consistent with previous studies conducted by scholars such as Li and Zhang (2017), Wang and Liu (2020), and Li and Wang (2021) in related industries.

Hypothesis 2: There is a positive relationship between affective commitment and contextual performance.

The research revealed a significant and positive correlation (β=0.195, t=4.068, p=0.000<0.05) between affective commitment and contextual performance, indicating that affective commitment serves as a significant predictor of employees' involvement in contextual performance.

The findings of this study are consistent with previous research in the field. For instance, a study by(Li & Li, 2019) on Chinese financial institutions also reported a significant and positive relationship between affective commitment and contextual performance. Similarly, Chen and Zhang (2020) conducted research in the Chinese banking sector and found that affective commitment significantly predicts employees' engagement in contextual performance. Collectively, these studies provide support for the idea that affective commitment plays a crucial role in fostering contextual performance within Chinese organizational contexts.

Hypothesis 3: There is a positive relationship between normative commitment and task performance.

In the context of the national asset management company (AMC) industry, the analysis revealed a significant and positive relationship (β=0.195, t=4.068, p=0.000<0.05) between normative commitment and task performance. However, the corresponding assessment of effectiveness yielded an f2 value of 0.019, which is below 0.02. Therefore, the path relationship is not supported.

In the context of the Chinese AMCs, one potential reason for the non-significant relationship between normative commitment and task performance could be the influence of cultural factors. Chinese culture places a strong emphasis on collectivism and loyalty to the organization. Normative commitment, which refers to an individual's sense of obligation and loyalty to the organization, may be highly prevalent among employees in the Chinese AMCs.

Hypothesis 4: There is a positive relationship between normal commitment and contextual performance.

The research results and data from the national AMC of China indicate a significant and positive relationship (β =0.146, t=3.207, p=0.001<0.05) between normal commitment and contextual performance, providing empirical evidence for the impact of normal commitment on employees' engagement in contextual performance. This finding aligns with previous research conducted in Chinese organizational contexts of Wang and Liu (2021) and Zhang and Li (2020).

Hypothesis 5: There is a positive relationship between continuance commitment and task performance.

The analysis revealed a non-significant relationship (β=0.074, t=1.508, p=0.132>0.05) between continuance commitment and task performance within the studied context.

One plausible explanation for the non-significant relationship between continuance commitment and task performance could be: Individuals who feel trapped in the organization due to high perceived costs of leaving may experience reduced job satisfaction and engagement, leading to decreased task performance (Rhoades & Eisenberger, 2002). Additionally, high levels of continuance commitment may result in a focus on self-preservation rather than discretionary behaviors that contribute to task performance (Vandenberghe & Tremblay, 2008).

Hypothesis 6: There is a positive relationship between continuance commitment and contextual performance.

The research results and data from the national AMC of China reveal a significant and positive relationship (β =0.187, t=4.021, p=0.000<0.05) between continuance commitment and contextual performance, providing robust empirical evidence for the impact of continuance commitment on employees' engagement in contextual performance. These findings are consistent with previous research conducted in similar contexts. For instance, a study by Zhou and Qian (2022), Li et al. (2021) .

Hypothesis 7: Employee’s innovative behavior will mediate the relationship between affective commitment and task performance.

The research results and data predict that employee’s innovative behavior mediating the relationship between affective commitment and task performance is nonsignificant (β = 0.012, t = 1.267 < 1.96, p = 0.206 > 0.05), therefore, rejects the hypothesis 7.

Hypothesis 8: Employee’sinnovative behavior will mediate the relationship between affective commitment and contextual performance.

The research result predicts that employee’s innovative behavior mediating the relationship between affective commitment and contextual performance is significant (β = 0.010, t = 1.312 < 1.96, p = 0.190 > 0.05), therefore, rejects the hypothesis 8.

Hypothesis 9: Employee’s innovative behavior will mediate the relationship between normative commitment and task performance.

The research result predicts that employee’s innovative behavior mediating the relationship between normative commitment and task performance is significant (β =0.022, t =2.158 > 1.96, p=0.031 < 0.05), therefore, supports the hypothesis 9.

Hypothesis 10: Employee’s innovative behavior will mediate the relationship between normative commitment and contextual performance.

The research result predicts that employee’s innovative behavior mediating the relationship between normative commitment and contextual performance is significant (β = 0.019, t = 2.005 > 1.96, p = 0.046 < 0.05), therefore, supports the hypothesis 10.

Hypothesis 11: Employee’s innovative behavior will mediate the relationship between continuance commitment and task performance.

The research result predicts that employee’s innovative behavior mediating the relationship between continuance commitment and task performance is significant (β = 0.031, t = 2.446 > 1.96, p = 0.0415 < 0.05), therefore, supports the hypothesis 11.

Hypothesis 12: Employee’s innovative behavior will mediate the relationship between continuance commitment and contextual performance.

The research result predicts that employee’s innovative behavior mediating the relationship between continuance commitment and contextual performance is significant (β = 0.027, t = 2.240 > 1.96, p = 0.026 < 0.05), therefore, supports the hypothesis 12.

Hypothesis 13: Creative self-efficacy will moderate the relationship between affective commitment and employee’s innovative behavior.

The research result predicts that Creative self-efficacy moderating the relationship between affective commitment and employee’s innovative behavior is non-significant (β = 0.030, t = 0.744 < 1.96, p = 0.457 > 0.05), therefore, rejects the hypothesis 13.

Hypothesis 14: Creative self-efficacy will moderate the relationship between normative commitment and employee’s innovative behavior.

The research result predicts that creative self-efficacy moderating the relationship between normative commitment and employee’s innovative behavior is significant (β = 0.089, t = 2.324 > 1.96, p = 0.021 < 0.05). However, the corresponding evaluation effectiveness f2 value was 0.010, which was lower than 0.02, so it indicated that the moderating effect of CSE between NC and EIB was rejected.

Hypothesis 15: Creative self-efficacy will moderate the relationship between continuance commitment and employee’s innovative behavior.

The research results predicts that Creative self-efficacy moderating the relationship between continuance commitment and employee’s innovative behavior is significant (β = 0.130, t = 3.193 > 1.96, p = 0.001 < 0.05), therefore, supports the hypothesis 15.

5. Conclusions

The objective of this study was to examine the impact of organizational commitment, including affective commitment, continuance commitment, and normative commitment, on employees' work performance in terms of task performance and contextual performance, in distribution department of China AMCs. Utilizing Smart PLS 3.0, the analysis of this study has identified significant effects of affective commitment on contextual performance, affective commitment on task performance, continuance commitment on contextual performance, and normative commitment on contextual performance. However, the effects of continuance commitment on task performance and normative commitment on task performance were found to be non-significant.

The study aimed to explore the mediating role of employees' innovative behavior in the relationship between organizational commitment and employees' work performance in distribution department of China AMCs. The findings indicated that the mediating effect of employees' innovative behavior was significant between normative commitment and task performance, continuance commitment and task performance, normative commitment and contextual performance, and continuance commitment and contextual performance. However, the results revealed that the mediating effect of employees' innovative behavior was non-significant between affective commitment and contextual performance, as well as affective commitment and task performance.

The study aimed to examine the moderating role of creative self-efficacy in the relationship between organizational commitment and employees' innovative work behavior in distribution department of China AMCs. The findings indicated that the moderating effect of creative self-efficacy was significant between continuance commitment and employees' innovative work behavior. However, the moderating effects of creative self-efficacy between affective commitment and innovative work behavior, as well as normative commitment and innovative work behavior, were found to be non-significant.

The study has made a valuable contribution by providing empirical evidence that highlights the significant influence of organizational commitment, employee innovative behavior, and creative self-efficacy on work performance in distribution department of China AMCs. The results have effectively supported the underlying theoretical propositions and successfully addressed the research questions posed in this study. These findings contribute to the theoretical framework of research, particularly in the context of China's national asset management companies. By focusing on the factors impacting work performance within this specific organizational context, the study enhances our understanding of the functioning, dynamics, and challenges faced by these organizations. This advancement in knowledge helps bridge the existing gap in the literature and establishes a solid foundation for future research in this field.

The findings of this study contribute to the enhancement of organizational commitment within distribution department China's national asset management companies (AMCs). Managers in these organizations can utilize the study's insights to strengthen organizational commitment among their employees. Implementing strategies such as fostering a clear sense of purpose, offering career development prospects, and cultivating a supportive and inclusive workplace can help foster a stronger commitment to the organization. This, in turn, positively impacts employees' task performance and contextual performance. By focusing on these areas, managers can create an environment that promotes higher levels of organizational commitment and ultimately improves overall performance.

There are several limitations to this study. Firstly, it focuses solely on exploring the direct and indirect effects of organizational commitment on work performance, specifically through the variables of employee's innovative behavior and creative self-efficacy. Other important factors, such as motivation, competency, management knowledge, and organizational culture, could potentially influence work performance as well. Therefore, future research should consider examining and analyzing these variables to gain a more comprehensive understanding.

Furthermore, it is important to note that this study was conducted specifically within the distribution department within the AMC industry, which may limit the generalizability of the findings to other departments or industries. Therefore, it is recommended to conduct further research in diverse industries, regions, or even countries to determine if similar patterns emerge. Additionally, comparing the results between small and medium-sized enterprises and larger organizations could provide valuable insights.

For Conclusions, the main conclusions of the study may be presented in a short Conclusions section, which may stand alone.

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