Impact of cultural intelligence and self-efficacy
on individual performance within MNE’s:
moderating effects of working environment and
motivational tools
Tatjana Kovacevic
11374926
23 June 2017
MSc Business Administration - International Management
University of Amsterdam
Final Version Master Thesis
Supervisor: Dr. Mashiho Mihalache
Second Reader: Dr. Markus Paukku
Statement of Originality
This document is written by Tatjana Kovacevic, who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Tatjana Kovacevic
Abstract
The main purpose of this paper was to fulfil the research gap concerned with understanding an individual at the workplace rather than the whole team, and how the former contribute to company’s performance. Moving the analysis from a group level to the individual level, this paper tried to investigate and establish how, and to what extent particular individual characteristics such as self-efficacy and cultural intelligence (level of multiculturalism) impact one individual’s performance. Moreover, to provide an in-depth analysis, working environment and motivational tools were introduced as moderators to see if there are any additional effects on performance.
Referring to the methodology, it was decided that only employees from multinational companies are allowed to participate in the specifically designed survey, distributed through an online software Qualitrics. Hence, 109 surveys were collected and further processed in IBM SPSS software. Throughout analysis, strong support for the direct relationship between individual characteristics (self-efficacy and cultural intelligence) and individual performance was established, however moderations showed no significant effects. Furthermore, it is argued that the higher the efficacy and notion of cultural intelligence, the higher is one’s individual performance.
_____________________________________________________________________________________________________ Keywords: Self-efficacy, Cultural Intelligence (multiculturalism), Performance, Working Environment, Compensation, and Promotion.
Table of Contents
1. Introduction ... 1 2. Literature Review ... 5 2.1 Self-efficacy ... 5 2.2 Cultural Intelligence (Multiculturalism) ... 9 2.3 Working Environment ... 13 2.4 Motivational Tools ... 15 2.4.1 Compensation ... 17 2.4.2 Promotion ... 18 3. Theoretical Framework ... 20 3.1 Self-efficacy and individual performance ... 20 3.2 Multiculturalism and individual performance ... 23 3.3 Motivation as a moderator ... 25 3.4 Working environment context as a moderator ... 27 4. Methodology ... 29 4.1 Sample and data collection ... 29 4.2 Measures ... 30 4.2.1 Independent Variable (Cultural Intelligence and Self-efficacy) ... 31 4.2.2 Dependant Variable (Self-performance) ... 32 4.2.3 Moderating Variables (Motivational Tools and Working Environment) ... 32 4.2.4 Control Variables ... 33 4.3 Pilot test ... 334.4 Method and model specification ... 34 5. Results ... 36 5.1 Analytical strategy and pre-tests ... 36 5.2 Hierarchical regression ... 38 5.3 Moderating effect ... 40 6. Discussion ... 43 6.1 Academic Relevance ... 44 6.2 Managerial Implications ... 46 6.3 Limitations and Future Research ... 47 7. Conclusion ... 49 References ... 51 Appendices ... 58
List of Figures
Figure 1: Conceptual Model...28List of Tables
Table 1: Means, Standard Deviations and Correlations...38 Table 2: Hierarchical Regression Model of Individual Performance...39 Table 3: Moderator Analysis for hypothesis 3a...40 Table 4: Moderator Analysis for hypothesis 3b...41 Table 5: Moderator Analysis for hypothesis 4a...42 Table 6: Moderator Analysis for hypothesis 4b...421
1. Introduction
Over the past few decades, the research field of International Business (IB) has produced substantial amount of papers arguing the success drivers behind Multinational Enterprises (MNE’s). One of the many reasons for increased interest towards MNE’s emerged with the rise of globalisation and a common occurrence of companies operating in multiple systems across the world borders. Precisely these companies were defined as multinational enterprises (George and Jones, 2015). In the existing papers, the main concerns of transnational organizations functioning’s worldwide were reviewed, including how organizations control and maintain multicultural environments, how they conduct and control dispersed operations, how they deal with cross-border integrations and transfers of management practices throughout different regions and working environments (Brannen, 2004; Fiss and Zajac, 2004; Kostova and Roth, 2002; Strang and Soule, 1998).By focusing on multinational organizations and their performance, Brannen (2004) came to the conclusion that every multinational corporation works in a highly complex environment that requires a certain level of multiculturalism. According to Lucke et al. (2014, p. 169) multiculturalism is a phenomenon defined as an “internal representation of multiple cultural meaning systems” within MNE’s. Moreover, Lucke et al. (2014) denoted that various studies used this phenomenon as a measure to indicate the level of multiculturalism one company possess, and as a measure that explains how companies deal with diverse workforce. However, so far, employees’ multiculturalism was only referred to in plural - in terms of team’s diversity, failing to acknowledge
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potential power of individual systems within MNE’s – potential employees who could assist and support better transitions, integrations and learning cognition across countries on an individual level.
As Sahin and Gurbaz (2014) argue, main characteristics one individual needs to possess to be referred to as multicultural are cultural intelligence, self-efficacy, international expertise and experience. These characteristics impact how one individual performs in a company, indicating that a person on its own could contribute the change and help generate competitive advantage on an international level. Furthermore, Sahin and Gurbaz (2014) claim that individual differences within MNE’s are mainly due to prior experience and self-efficacy one individual possesses. Nevertheless, no prior research examined how cultural intelligence may account for performance changes beyond expertise, self-efficacy and experience. Recently Stahl and Ting (2015) found out that leveraging on employees has been strictly monocultural, and that companies neglect the fact that individuals could be of multicultural value leading them to a specific intangible assets. Trying to follow a trend of cultural diversity in organizations and teams, stirred many researches to investigate how working in a multicultural environment impacts performance, or how difficult it is for people to adapt to multicultural systems and societies with different norms and customs (Curado, 2006). However, no one yet showed interest in cultural intelligence of individuals and impact it could have on their performance. Besides, all studies done up to date have been focused on a different level of analysis – a group level. For instance, Fitzsimmons et al. (2016) acknowledged how valuable multicultural employees are as a group and how they change global workplaces, however what he failed to recognize is
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individual level prevalence of performance, motivation and context of work environment. Such studies might lead to unexplainable results in terms of companies performances, as no one so far was able to depict what are the primary drives that cause efficiency, high performance and overall success of multinational organizations. Hence, without individual characteristics and its relationship to individual’s performance – companies’ levels of multiculturalism are not accessible and success drives are still relatively unknown. Therefore, this study aims to fill out this gap by focusing on an individual level of analysis.
More into depth, the study aims to examine how individual characteristics such as self-efficacy beyond prior experience, and cultural intelligence impact one individual’s performance, when moderated by motivational tools and working environment contexts. By examining the moderating role of motivational tools such as compensation and promotion and working environment, this paper tries to establish the real world case scenario of how employees are driven to perform better. Having said that, self-efficacy will be monitored across different aspects of motivational tools analyzing how compensation and promotion impact self-efficacy/performance relationship, whereas working environment will track how cultural intelligence (level of multiculturalism) may be stimulated according to how one individual feels in their work setting. Furthermore, moderators will examine whether individuals within multicultural MNE’s could and should be motivated in the same manner as monocultural employees.
In order to reach a comprehensive conclusion, the rest of this study is structured as follows. The next chapter represents literature review, developed according to latest
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and most important theories and studies in regards to key concepts in question. Followed by a theoretical framework chapter that aims to depict research gap and hypothesis this paper will try to prove or disapprove. Subsequently, chapter four outlines data collection procedure and research method details. Results based on the data collected are discussed in chapter five. Penultimate chapter is the most important chapter concerned with main findings, academic relevance, managerial implications and limitations. Finally conclusion section summarizes the study as well as it proposes number of suggestions for further research.
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2. Literature Review
Initially, the literature review provides theoretical foundation of key concepts this paper aims to investigate. Therefore, individual characteristics such as self-efficacy and cultural intelligence are discussed in referral to work performance. In addition, studies of working environment are presented as well as how specific working conditions may or may not help improve an individual’s performances. Finally, motivational tools are deliberated with main emphasis being on compensation and promotion.
2.1 Self-efficacy
The first person to introduce the concept of self-efficacy was Bandura in 1977. Primarily, self-efficacy was understood as individual’s confidence to handle difficult tasks or problems at workplace. Then, it was comprehended as one’s belief to be able to successfully perform a task (Bandura, 1977). Leading to a conclusion that self-efficacy is a “judgment of how well one can execute courses of action required to deal with a prospective situation“ (Bandura, 1982, p. 122).
Since the introduction of the notion there has been continuous interest in impacts of self-efficacy levels. According to Judge and Bono (2001) there has been visible correlation between self-efficiency and job satisfaction, and self-efficiency and job performance. Both empirical and theoretical evidences of self-efficacy mediating effects were observable, defining self-efficacy as a personal resource that supports individuals in time of stress. As Nauta (2004) argues self-efficacy soon became extremely valuable characteristic to possess in an occupational environment. This is
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primarily due to the fact that individuals with a higher sense of self-efficacy are proven to perform better at work, and endure longer in the time of hardships and obstacles (Rigotti et al., 2008).
Thus, self-efficacy related to work performance has been called occupational self-efficacy. Organizational self-efficacy became extremely relevant in the process selection of new employees. According to Bandura (1997) self-efficacy develops over time, through repetition, experience, model learning, verbal persuasion and physical arousal. However, occupational self-efficacy is task related kind of self-efficacy, meaning that a person has a confidence only when already experienced in a particular job. As argued in the later stage of his research, Bandura (1982) depicted that self-efficacy is the primary influencer of one employee’s goals at the workplace, and that self-efficacy influences learning and efforts individuals exert at their work. Hence, employees with low self-efficacy are expected to set relatively low and easily achievable goals. Conversely, to a high-level self-efficacy individuals who are most willing to go beyond their primary capabilities to reach targeted goals. Bandura (1982) emphasizes that high efficacy individuals are most willing to perform on the same levels as their self-efficacy beliefs, not their actual capabilities. Confidence and persistence are said to be the drivers that influence development of one person’s self-efficacy. Thus, Lunenburg (2011) argues that those people who have high beliefs of their self-efficacy are the ones who at the same time have as much as confidence to learn and develop to overcome any potential obstacles to perform a particular task. Therefore, Bandura and Locke (2003) came to a conclusion indicating that occupational self-efficacy is extremely connected to
7 the level of expertise individual has, and if occupational self-efficacy is not stable, it can be influenced through various personal developments and trainings. On the other side, Schyns and Von Collani (2002) emphasize the importance of personality in occupational self-efficacy, disagreeing how experience is not always of primary importance, thus it is the willingness to solve the problem. Furthermore, Riggoti et al. (2008) found out the correlation between occupational self-efficacy and job satisfaction and commitment, as well as performance and job insecurity. Berings et al. (2007) uncovered the relationship between occupational self-efficacy and learning styles, leading to results that self-efficacy is self-thought, and it requires learning and reflecting by oneself. Nevertheless, all these research studies were diminished by Hugenholtz et al. (2008) failure to prove the effects of trainings on occupational self-efficacy, and in this sense questioning whether self-efficacy is actually a self-developed characteristic.
Referring to performance, Stajkovic and Luthans (1998) depicted positive relationship between self-efficacy and work performance. Additional meta-analyses by Judge and Bono (2001) further strengthened Stajkovic and Luthans findings, indicating that self-efficacy highly impacts individual’s performance, when measured by locus of control and emotional stability. Gits and Mitchell (1992) established relationship between ability to self-regulate and success of task performance, indicating how important is to be independent in decision making. Nonetheless, recent studies found out that self-efficacy is a fluctuating characteristic in a short run, where individuals could experience 48-63% of fluctuation in variance of self-efficacy (Tims et al., 2011). Such fluctuations are explained by numerous external factors that impact one person’s
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self-efficacy. For instance, tiredness and problems outside of working environment are said to be main factors distorting the level of occupational self-efficacy. Similarly, the correlation has been drawn to performance as well. Hence, the fluctuation of performance is said to covariate from 44-57% on a daily basis implying strong reliance of performance on occupational self-efficacy (Xanthopoulou et al., 2009). To illustrate, on a high-level self-efficacy day an individual is more likely to provide higher performance than on average, whereas on days when self-efficacy is rather low, the performance is expected to be bellow the average (Xanthopoulou et al., 2009). Thus, on a long run, there is positive relationship establish between self-efficacy and performance (Tims et al., 2014).
As said by Frese et al. (1996) and Buchanan and McCalman (1989) key requirements for efficacy are proactivity and ingenuity. These drives for self-efficacy are derived from various trends, such as requiring employees to be more responsible, self-observant, flexible to the situation and willing to change. According to Parket et al. (1994) interpersonal skills are further requirement for self-efficacy. Thus, in order to gain capabilities and self-esteem that allows high level of self-efficacy a person must possess particular interpersonal skills that allow that individual to make decisions and to solve processes on its own, faced with group decision making, various confrontations and conflict management approaches. These competencies are required in contemporary occupational self-efficacy as they stand for independence (Tims et al., 2011). Being able to resolve conflicts, to be a team player/leader, to coordinate and communicate across boundaries means a person has a high level of interpersonal competencies simultaneously attesting person’s self-efficacy levels and capabilities
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(Buchanan and McCalman, 1989). Consistent with Bandura’s definitions of self-efficacy, Parker (1998) emphasizes importance of individuals to think they can, than they actually can.
2.2 Cultural Intelligence (Multiculturalism)
Ability to understand and deal with cultural multiplicity became extremely important task for MNE’s. Especially due to consequences this conduct could have on global integration, cross boarder transfers of management etc. (Kostova and Roth, 2002; Fiss and Zajac, 2004). According to Brannen (2004), such tasks could only be handled by individuals, who have extensive understanding of various cultural systems. Based on Oyserman and Sorens (2009) cognitive work on culture, it was depicted that a culture could be also expressed cognitively in an individual format. As argued by Strauss (2005), cognitive perspective of culture refers to the everyday interpretation, communication and functioning within a society. Whereas the difference of individuals’ perception of culture is how they internally acknowledge different view, ideas and perspectives.
Furthermore, in this paper, two notions were denoted in terms of gauging the level of multiculturalism one individuals possesses. The first notion, the multiculturalism itself, refers to multicultural individuals who are capable of identifying themselves in more than one culture (Brannen and Thomas, 2010; Lucke et al., 2014). On the other side, cultural intelligence refers to individual’s capabilities to function and manage effectively in a different cultural environment than usually accustomed (Brislin et al. 2006). Therefore, from now on in this study multiculturalism and cultural
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intelligence will be understood as the same construct, with slightly broader meaning that does not only include identification of an individual with different cultures, but also his/hers ability to function in culturally diverse setting.
From the business perspective, neither being multicultural or culturally intelligent does not make any difference to managers. Hence, what they are all concerned with is whether the person is capable of contributing the company beyond average expectations; can he or she make better decisions in cross-cultural contexts; and whether he or she is capable of communicating and negotiating more effectively on an international level (Imai and Gelfan, 2010; Elenkov and Manev, 2009). Assessed from the perspective of intelligence, Ng and Earley (2006, p. 337) argue how cultural intelligence refers to “people’s capabilities across cultures”. Thomas (2006) further denotes that cultural intelligence entails the ability to communicate and cooperate with individuals coming from different culturally diverse settings. Thus, it is said that cultural intelligence is quite distinct form of intelligence individuals may possess that enables them to grasp, reason and behave effectively in a culturally diverse situations (Ang et al., 2007; Hampden Turner and Trompenaars, 2006). According to Earley and Peterson (2006), cultural intelligence provokes cross-cultural confusion and inability to identify with only one culture. On the other hand, Earley and Masakowski (2004) argue that cultural intelligence diminishes individual’s judgments in terms of other cultures values and differences. Fairly recent researches, contribute the literature with findings how cultural intelligence is a complex system of skills, knowledge, and capabilities closely correlated with cultural metacognition allowing individuals to “adapt, select and shape the cultural aspects of their environment” (Bucker et al., 2015, p. 261).
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According to theory developed by Ang et al. (2007), cultural intelligence is a multidimensional concept consisting of four dimensions. First dimension represents metacognitive cultural intelligence, which is concerned with the level of consciousness and awareness of cultural cues one person has when interacting with culturally diverse individuals. Moreover, metacognitive cultural intelligence is understood as a process of acquiring and understanding different cultural knowledge. Second dimension is cognitive cultural intelligence and it refers to level of knowledge one individual has in regards to norms, practices, customs, economic and legal systems of different countries and different cultures. These are mostly acquired through education and personal experiences when traveling or living abroad (Ang and Van Dyne, 2008). The third dimension represents motivational cultural intelligence, and capability of individuals to learn about different cultural differences. In the human interaction, motivational cultural intelligent person would focus on gaining attention and energy from an individual coming from a different cultural background. Those people who have motivational cultural intelligence are said to be much more confident in their personal cross-cultural skills and communication. As proven by Ng and Earley (2006) high level of motivational cultural intelligence results in a high level of self-efficacy. The final dimension is behavioral cultural intelligence and it refers to capabilities of individuals to use appropriate verbal and nonverbal behavior when around people from other cultures (Ang et al., 2006). According to findings in Ang et al. (2007) people who have high levels of behavioral cultural intelligence enjoy respect and much smoother communication when interacting with individuals from different cultures. Behavioral cultural intelligence also includes appropriate words, tones, gestures and facial
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expressions. In international business surroundings, having high behavioral cultural intelligence may help overcome cultural barriers between two very culturally distinct partners (Ang et al., 2007).
Neglecting all the previous research that perceive cultural intelligence as a multidimensional construct Brannen and Thomas (2010), Fitzsimmons et al. (2011), Nguyen and Benet-Martinez (2010) ad Tadmor et al. (2010) reflect to the level of individual’s presence in another culture during their lifetime. In the existing literature of multiculturalism, the researches acknowledge only two processes individuals go trough - identification and socialization. The central proposition says that those individuals who were exposed to different cultures during their life are much more keen to have bicultural identity, cultural intelligence towards other cultures as well as capabilities to socialize and internalize in value structures and beliefs of other cultures. According to Lucke et al. (2014) cultural intelligence is gained over time and over experience of working, living or identifying with other cultures throughout the lifetime of an individual. Furthermore, Cerulo (2002) and Peterson and Wood (2008) argue that cultural cognition is developed through exposure to different social phenomena and contexts. They argue that cultural intelligence cannot be developed without experiencing other cultural aspects. Therefore, cultural intelligence is developed when individuals acquire multicultural experience and when they foster different cognitive structures. As Makrus and Hamedani (2007) argue social process including modeling, direct and indirect experience, rewarding system when using appropriate behavior in different cultures and instructions are of vital importance for cultural learning process. In respect to business world one can observe differences in managers in respect
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to their cultural experiences. Often, managerial styles are impacted by the cultural intelligence of managers and by amount of cultures he or she has been exposed. Hence, the intensity of managers international experience could impact his/hers cultural cognition and how he or she approaches their employees (Kitayama et al., 2003).
2.3 Working Environment
With the rise of Internet and alternations in communicational methods companies are using it was clear how workplaces were about to change (Challenger, 2000). Pressured to accommodate rapid changes meanwhile still maintaining contemporary work, led organisations to suddenly move towards teamwork. According to Eby and Sundstrom (1998) multinational companies were among first entities to utilize and profit on teamwork. Various cross-functional teams and self-managing groups were formed to overcome challenges, to adapt to globalization, the era of Internet, and the era of multiculturalism. As Terricone and Luca (2002) argue, not everyone welcomed the change with spread arms. A lot of resistance has been visible in the working environments. Thus, changes contributed also more flexible working conditions that somehow compensated the fear of unknown and change (Becker, 2002). Moreover, during the process of acclimatising to changes, many workplaces were restructured so to be able to provide flexibility, open workspaces where different working cultures could be nourished, especially if the teamwork is promoted. According to Becker (2002) exploiting workplace flexibility is determined to increase organizational effectiveness. However, by promoting interpersonal access and ease of communication in the workplace resulted with problems such as lack of concentration
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due to noise and visual distractions, as well as lack of privacy (Evans and Johnson, 2000). As argued by Lee and Brand (2015) each organization is different, and a workplace should be designed in a manner to support the core activities of employees. Foremost, it is crucial to provide personal control in the workplace, as seen from companies’ failures, that experience decreases employees’ efficiency and motivation. Quite often, simple changes like moving the furniture and allowing personalization of a cubicle motivates an individual to perform better due to increased satisfaction of feeling pleasant at work. According to Brennan et al. (2002) ambient of an office can highly impact one individual’s attitudes, behaviours, satisfaction and performance at work. Hence, the ambient includes all sorts of features such as lighting, temperature, amount of personal space, level of noise etc. Some studies investigated and managed to prove that noise is the most stressful and demotivating factor at work, through which high levels of distraction and disturbance result in poor performance and losses of concentration (Evans and Johnson, 2000). Also, not having substantial amount of privacy may result in employees feeling intimidated and nervous (Lee and Brand, 2015).
In order to depict what are the most important elements affecting employees at working environment Haynes (2008) divided working environment to physical and behavioural components. Moreover, physical components reflected on how employees connect with each other at work, how working setting design influence their productivity, whether they have sufficient amount of comfort etc. On the other side, behavioural environment referred to interactions and distractions (Haynes, 2008). As proven by Stallworth and Kleiner (2006) when human needs in working environment
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are satisfied, then the employees will result with higher efficiency and possibly with higher performance. According to Haynes (2008) physical design of the offices may result up to 10% increase in productivity. In terms of job involvement and job satisfaction, Scott (2000) argues that is also important to provide appropriate working conditions that match required standards of employees.
Furthermore, physical environment highly affects how employees interact, perform and are monitored and supervised. According to Smith (2011) workplace environment is crucial for keeping employees satisfied. In constantly changing environment the employee-employer relationship completely changed, and Smith (2001) argues how we now live in a contemporary business environment in which businesses need their employees, more than their employees need their jobs. The level of reliance on workforce is immense, and failing to satisfied workforce may lead to inefficiency and finally to losses. Therefore, it is extremely important to understand humans needs at workplace, or if working environment is already established, in the process of selection companies must assure that a particular individual will fit in their work setting and be satisfied by it (Mike, 2010).
2.4 Motivational Tools
Employees’ motivation was always an important matter for companies. However, with time, needs and wants of personnel changed making it much more difficult for organizations to satisfy their employees. Hence, the psychology behind motivation is rather complex. There are numerous theories that try to explain how employees should be motivated at work, however they are all created in a different time
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and in practice they are not highly applicable nowadays. For instance, McGregor’s Theory X and Y discusses types of employees and how they should be led according to their characteristics and performance. What this theory fails to acknowledge is, how types of employees who are demotivated, lazy, not performing at their best could be motivated to change and be more efficient (Herzberg, 1987). According to Kenrick et al. (2010) only Maslow’s theory of hierarchy of needs should be used as a motivational framework that generates foundation for contemporary businesses.
In 1943, Maslow developed a theory that argues how individuals have different levels of needs to be satisfied and according to specific levels these individuals have different motivational drives. Furthermore, Maslow’s hierarchy has at the core physiological needs, followed by safety needs, belongingness/affiliation, achievement and esteem and self-actualization needs. As argued, certain needs have to be fulfilled in order for a human to be motivated (George and Jones, 2015). As soon as one need is satisfied, an individual strives towards a higher level. Referring to the hierarchy of needs in a corporate environment, it is said that individuals first desire to satisfy physiological and safety needs that represent a stable job and monthly salary. However, as soon as their primary needs are fulfilled, individuals strive for more, and their motivational drives change. According to Hall and Nougaim (1968) the more advanced within the organization you are more likely to strive for affiliation, self-esteem, achievement, and self-actualization, and it is a company’s responsibility to provide corresponding motivational forces.
Bernadette van Rijn et al. (2012) denote that self-construal and career motivations are main upper level needs companies should strive to enable to their
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employees. This is important due to fact that self-fulfilment and emotional stability are highly correlated with one individual’s performance (Li and Alhostrom, 2015). Hence, the higher one person climbs in the Maslow’s hierarchy, the more difficult it is to motivate him/her. Individuals are no longer motivated by monetary rewards and bonuses, but rather with more psychological and philanthropic motivations such as promotions, acknowledgments, abilities to progress and to develop as a person, etc. Therefore, it is said that companies are under constant pressure to include other forms of motivations that are appropriate for individuals’ wellbeing in order to retain them in the organization.
2.4.1 Compensation
As argued by Dulebihn and Werling (2007) rewarding of employees is among key components of every organisations human resource management. Moreover, it is proven that rewarding system within organizations provokes satisfaction and stimulates positive behaviours and attitudes, whereas lack of rewards initiates demotivation and disappointment (Williams et al., 2006).
Among many rewards employees could enjoy at their workplace, compensation is said to be the most influential one. Having said that, Gerhart and Rynes (2003) argue how compensation reflects one employee’s worth. Furthermore, compensation is considered to be an extrinsic motivator, or in other words the one that oughts to explain employees’ productivity (Dulebohn and Werling, 2007). According to Rynes et al. (2004) compensation as a motivational system represents crucial driver for employees’ behaviours and attitudes. Nevertheless, in the research of Gietern and Hofmans (2015) it was discovered that effect of compensation highly depends on the
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type of employee and his/her position. What was also revealed in the study of Gietern and Hofmans (2015) is that compensation only surely impacts task performance, not the overall attitude and behaviour at workplace.
According to Arnolds and Boshoff (2002) compensation belongs to esteem needs on Maslow’s hierarchy of needs pyramid. As they argue, compensation, when monetarily high, enables the feeling of satisfaction and self-esteem for the work done. However, when compensation is monetarily low, then it is understood as appreciation for the work well done, but it does not provoke any sort of motivation. What is more, compensation has different impacts on employees depending on their rank in the company (Wilson et al., 2008). Therefore, compensation is said to have high motivational impact on frontline employees as it enhances their image amongst peers, and contributes their popularity in terms of acceptance and respect (Koopmans et al. 2011). Meanwhile, on the other side employees at the higher rank are used to having compensation for good performance. However, in higher rank employment compensation is not the strongest motivational tool (Dubinski et al., 2000).
2.4.2 Promotion
As denoted earlier, promotion represents a highest rank of motivational needs according to Maslow’s hierarchy. Moreover, promotion simultaneously fulfils self-esteem needs, meanwhile enriching one individual’s self-actualization (Kian and Yuzoff, 2015). Thus, promotion stands for change in upward status within the company. As noted by Stephen (2009) promotion fulfils the needs of self-advancement, as well as it increases opportunities for further personal development. However, in the same time promotion increases the level of responsibility and the amount of work one individual
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is in charge of (Samnani and Sighl, 2014). According to Jane et al. (2012) promotional opportunities are strongest drives for employees to work harder in order to get to a higher yet challenging position.
Furthermore, there are various promotional systems companies engage. For instance, promotion could be earned strictly on absolute and relative merit system or in other words based on past performances; or promotion could be base on seniority-based level, which means that individuals with longest tenure in the company are most likely to be promoted (Phelan and Lin, 2001). Also, there are random promotional systems that could be based on capabilities, monitoring of those capabilities and to what extent a person would be fit for the promotional employment etc. (Lin, 2000).
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3. Theoretical Framework
This chapter oughts’ to provide the most significant findings from the current literature concerned about self-efficacy and cultural intelligence and how they impact performance of an individual. Besides current studies, this section represents hypothesis this paper wishes to test. Hence, all possible correlations are shown in proposed hypotheses. Theoretical framework section ends with a research model illustrated to show the main relationships and correlations of independent and dependent variables, as well as moderators.
3.1 Self-efficacy and individual performance
As previously denoted, self-efficacy represents one of the most desirable characteristics individuals should have to be able to perform well. According to Bandura’s (1997) and Stajkovic and Luthans (1998) acclamations self-efficacy has an extensive theoretical foundation and application in the workplace. Known as a social cognitive theory, self-efficacy represents one individual’s belief of its own capabilities to perform particular activities successfully and efficiently. As argued by Kanter (2006) and Brockner (1988) self-efficacy is also expressed through self-confidence and task-specific version of self-esteem. Hence, self-efficacy is said to have three dimensions that are measured in – (1) magnitude, (2) the level of difficulty person believes it can overcome, and (3) strength. These three dimensions highly impact an individual’s ability to perform and further determine its perceptions, motivations and performance (Bandura, 1997). For instance, if all three dimensions are positive and an individual believes that he/she is capable of performing a task their performance is most likely to
21 be successful. On the other side, if dimensions are negative, and an individual does not have confidence in its own capabilities they are most likely to not even try to perform due to fear of failure (Lunenburg, 2011).
As argued by Bandura and Locke (2003, p.2) self-efficacy is a “powerful determinant of job performance”. This is said due to fact that self-efficacy helps determine individual goals according to skilfulness and level of knowledge. If individuals are confident and have high goals, but no knowledge, the desire to succeed and their self-efficacy would influence the learning process and effort he or she provides for reaching the goal (Griffin and Hesketh, 2003). Moreover, self-efficacy nourishes persistence and willingness to succeed and overcome complex tasks. Individuals with high self-efficacy are said to be problem solvers, whereas individuals with low self-efficacy are called defeatist.
Referring to sources of self-efficacy, Bandura (1997) designates four principal sources such as past performance, vicarious experience, verbal persuasion and emotional cues. The past performance is considered as the most important source of self-efficacy, however vicarious experience and verbal persuasion are not to be neglected either. Vicarious experience and verbal persuasion are denoted as motivational boosters. Seeing someone else succeed, and support you in doing the same has shown to be highly motivating. Furthermore, the impact of self-efficacy is seen in collective efficacy, change management, innovation and leadership. Aspects of self-efficacy have shown to be important for managers, new employers and precisely for organizations that strive to develop successful, goal oriented and well-performing workforces (Ivancevic et al., 2011).
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In terms of organizations, more and more managers refer to self-efficacy levels and it is considered that individuals with high self-efficacy are genuinely more motivated, engaged and better performing in the workplace (Lunenburg, 2011). Self-efficacy also became an important aspect considered during promotional process. The more one organization is fulfilled with self-efficacy employees the more likely their performance is to meet desired goals (Cole and Hopkins, 1995). High levels of job performance are destined to contribute advantage to competition, and nurture a motivated, efficient and successful workforce in organization, which is a potential for creating a unique organizational culture other companies cannot copy (Simosi, 2012).
Bandura (1991), Cole and Hopkins (1995), Griffin and Hesketh (2003) and Stoke et al. (2010) all argue that self-efficacy is a correlation of performance. However, none of these studies refer to individuals within MNEs and to what extent employees of multinationals must be self-efficient to be to be able to perform as expected and beyond expectations. Therefore, taking into account previous research findings, this paper suggests that individuals within MNEs are to behave in the same manner as any self-efficient employees and are to perform adaptively. Thus, the first hypothesis states the following: Hypothesis 1: Self-efficacy as a personal characteristic of one individual within an MNE is positively related to an individual’s performance.
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3.2 Multiculturalism and individual performance
A second personal characteristic worth exploring when comparing individual personality and performance is the level of multiculturalism one individual possesses. By multicultural individuals one refers to all those individuals who identify and internalize themselves with more than one cultural system (Brannen and Thomas, 2010; Lucke et al., 2014). Belonging to more than one cultural group allows individuals to develop a unique set of capabilities and skills that enable them easier adaptation to multicultural working environments, and teams, driven by global leaders (Lucke et al., 2014; Fitzsimmons et al., 2011). The pivotal role of multiculturalism is to mitigate consequences and instabilities brought by changes as well as to facilitate cultural diversity within organizations. However, to be able to perform its roles, multiculturalism has to be firstly recognized by senior management of companies (Earley and Peterson, 2004). Assessing multicultural organizations is difficult task, and understanding how culturally intelligent employees think and behave is of crucial importance for companies’ performances.
Stahl and Tung (2015) denote that multiculturalism was diminished precisely due to the fact that employees were assessed as monocultural system, instead of multicultural pools of individuals with specific skills and knowledge that can enrich one organization. Dow et al. (2016) acknowledges the rising of cultural diversity within companies, emphasizing the positive outcomes cultural intelligence of employees generate to organizations. Hence, Chen et al. (2013) argues that positive outcomes of cultural diversity are only visible if assessed on an individual level of employees. Assessing multiculturalist from a perspective of cognitive and social psychology, as
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done by Nguyen and Benet-Martinez (2007), provides a foundation how to manage these individuals, how to utilize their expertise, experience, knowledge and skills and how to further develop it. By focusing on special characteristics multicultural employees have, the idea is to not only perceive them as an asset, but to also utilize them to create even more intangible and irreplaceable advantages. Individuals’ cultural identities, often referred to as identity plurality, ranging from mono to multicultural, are often used as social capital by companies that wish to generate network relationships requiring various intercultural skills driven only by culturally intelligent employees (Oyserman and Sorensen, 2009).
Thus, to be able to leverage their multiculturalism, individuals’ cultural identities should be integrated rather than kept separate (Benet-Martinez and Haritatos, 2005). Importance of identity integration is highly valuable in a decision-making process. Hence, multiculturalists are said to perceive and interpret information differently than monoculturals when performing a task, which means that a person from more cultural frames may come to different problem a solutions to benefit to a company. Furthermore, Lucke et al. (2014) argues that multicultural individuals develop unique skills through their cognitive connectionism. Rather than assessing only cognitive mechanisms, Lucke et al. (2014) introduce motivational mechanisms as well to explain the relationship between level of cultural intelligence and individual performance. Whereas cognitive mechanisms only refer to knowledge and cognitive capabilities, motivational mechanisms focus on more goal-oriented, process-oriented and regulative activities that impact how individuals express and behave themselves.
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Hence, the side effect multiculturalism is a requirement that dictates culturally intelligent persons to behave as expected from their superiors. Meaning that, individuals who are more multicultural are obliged to step up their game and to outdo those who are monocultural (Fitzimmons, 2013; Dow et al., 2016). This is often seen in companies that are multilingual, and where particular individuals are pressured to overtake larger proportion of activities due to his/hers language skills. Multiculturalism does not require someone to be of a different race, religion or ethnicity. It only requires experience, example driven differences in language, identity plurality systems etc. (Fitzimmons et al., 2016). Individuals with unique identity patterns are expected to perform better as they are driven by higher cognitive complexity. Tadmor et al. (2012) argue that bicultural professionals are more likely to enjoy promotions at higher speed due to implied better performance and ability to multitask and perform more complex tasks. Therefore, the second hypothesis will test whether the level of cultural intelligence and identity plurality positively or negatively impact performance. Hypothesis 2: A high level of cultural intelligence (multiculturalism) is positively correlated with one individual’s performance.
3.3 Motivation as a moderator
Furthermore, due to common trend of job-hopping, Willyerd (2014) argues that it is much more difficult to keep the workforce motivated and willing to work for the company. If an individual is dissatisfied with the working conditions and motivational levels in one organization, he or she is more likely to switch jobs. Constant changes of
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employees cost money, so it is in the companies’ best interest to provide enough incentives and motivational drives to keep them satisfied and performing at their best. However, that is easier said than done. Primarily companies must be able to assess their employees’ core needs and identify what are their main motivational drives. Failing to appropriately assess employees results in mismatch of needs and motivations and individuals’ dissatisfaction with the organization and the workplace itself. This often leads to poor performance, as individuals are not interested and are indifferent towards the job they are performing. Therefore, the following two hypotheses will try to depict to what extent motivational tools and drives impact individual characteristics relationship with performance.
Hypothesis 3a: Motivational tools and drives positively impact the relationship between self-efficacy and individual performance.
Maslow’s hierarchy of needs explains how individuals’ motivational drives change over time and how one person’s needs contribute to such changes. Bearing in mind the definition of self-efficacy, motivation is expected to positively contribute to performance, as the more an individual is motivated and sure of its own capabilities the more improved his/her performance will be. On the other side, individuals who are highly multicultural and culturally intelligent will face constant pressure at work, and appraisals companies may perform might diminish one individual’s performance precisely due to level of multiculturalism he or she possesses as more expectations are put on them. Therefore it is said that multiculturalism and motivation are not well
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integrated, and multicultural individuals cannot be motivated and appraised in the same manner as monocultural employees.
Hypothesis 3b: Motivational tools and drives negatively impact the relationship between cultural intelligence (multiculturalism) and individual performance.
3.4 Working environment context as a moderator
Additionally, the working environment has been considered as an extremely important factor influencing individual’s performance. According to Congdon and Gall (2013) working surroundings, colleagues and overall job atmosphere can highly impact how one individual performs. If a person is set in a hostile environment he or she will not perform the best way they could as their motivational drives are diminished (Spector et al., 2006). On the other side, if an individual is situated in an environmental context that supports, develops and motivates his or her goals, the outcomes of their job will be extremely positive. The on-going pattern in organizations nowadays, is an open concept working space with premises that provide chill out zones, fun zones, where people can meet and cooperate, and share ideas (Lee and Brand, 2005). A strict working environment is considered as the old school totalitarian approach that diminishes freedom of thoughts, innovation, motivation and performance. Providing numerous supporting mechanisms to succeed in a working environment drives individuals to perform better, to work for the team, and to achieve their personal, team and organizational goals. Therefore, the following hypothesis will try to test to what extent
28 working environment contributes the performance, and how it influences the primary relationship between individual characteristics and performance. Hypothesis 4a: A friendly working environment positively influences relationship between self-efficacy and individual performance.
Hypothesis 4b: A friendly working environment positively moderates the relationship between cultural intelligence and performance
The following graph represents research model design and main correlations this paper wishes to test.
Figure 1: Conceptual Model
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4. Methodology
The main aim of this chapter is to provide details in regards to research design. Firstly, the sample is discussed, followed by the description of construct in use together with the adopted measures of dependent, independent and moderating variables. After denoting all measurement scales used for this paper, control variables are touched upon, leading to final section that denotes which tools and techniques are used to assess probability of hypothesis and data analyses.4.1 Sample and data collection
As said, this study is a cross sectional research that oughts’ to investigate to what extent individual characteristics of cultural intelligence and self efficacy impact individual’s performance within MNEs, when taking into consideration working environment and motivation. Bearing in mind the main prerequisite of this paper, the sample is based on employability within multinational companies. Therefore, the sample is consisted of individuals – employees of various multinational companies from Netherlands, Serbia, China, Italy, Belgium and USA. Thus, concentration has been mainly on Dutch, Serbian, Chinese, Italian and American multinational employees.
Due to lack of time and strings in the corporate world, direct access to multinational companies was not established, thus the sample was collected through acquaintances and snowball technique of passing the survey to co-workers and friends who qualify for the survey. Moreover, employees come from various multinational companies, and from variety of industries. As known to the researcher, half of the participants belong to maritime, oil and transportation industries, whereas the other half belongs to hospitality and more service oriented industries.
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Referring to the sample size, from 123 employees who were fulfilling the survey, only 107 respondents fully completed the questionnaire (87% response rate). The average age of respondents was 35,8 years, with highest percent of those aged 23-30 years (38.3%). Share of the oldest age group (respondents older than 50 years) is the lowest – only 8 of them belong to this age group. Following the age distribution is the tenure distribution. Three out of 4 respondents is working up to 10 years, leaving 24.2% working for more than 10 years. 28 respondents have been working for MNE for less than 3 years, 5 of them just started (less than a year). The sample consists of educated persons – 38,3% has Bachelor’s, while 39,3% has Master’s degree. Only 5 (4.7%) of them has only finished secondary school, while just one respondent has PhD. Gender distribution is more inclined towards males – 53,3% of them agreed to participate in this survey. More statistical details about the sample size are available in Appendix.
4.2 Measures
In this section of methodology, the variables used in this thesis are presented throughout widely acknowledged and adopted scales and operational definitions. Central constructs to the thesis include – cultural intelligence, self-efficacy, promotion and compensation, working environment and self-performance. In order to measure this constructs, this thesis adopted several valid and reliable scales. Hence, validity of scales is proved by the previous studies and Cronbach’s alpha exceeding 0.7. According to Cronbach, exceeding 0.7 proves internal consistency, reliability and impartiality. All items and scales were indicative. Also, all items were measured on a 5-point Likert scale
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ranging from (1) “Strongly disagree”; (2) “Somewhat disagree”; (3) “Neither agree nor disagree”; (4) “Somewhat agree”; (5) “Strongly agree”. However, individual’s self-performance intervals ranged from (1) “Very badly” to (5) “Very well”.
4.2.1 Independent Variable (Cultural Intelligence and Self-efficacy)
To measure the independent variable of self-efficacy, the scale of Schyns and Collani (2002) was adopted. Thus, the scale consists of 6 items, all of which are indicative. The sample items are similar to – “I can remain calm when facing difficulties in my job because I can rely on my abilities”; “Whatever comes my way in my job, I can usually handle it.” Schyns and Collani (2002) reported Cronbach’s alpha of 0.88 for 6 items construct, however after SPSS calculations Cronbach’s alpha for this scale has shown to be slightly lower α=0.844.
Second independent variable is cultural intelligence. The scale this paper uses is among first scales ever created to measure this construct. Hence, Ang’s et al. (2007) cultural intelligence scale is consisted of 20 items divided to four groups – metacognitive (Items 1-4), cognitive (Items 5-10), motivational (Items 11- 15) and behavioural (Items 16-20). Each and every group had sufficient reliability according to Ang’s et al. (2007) calculations - metacognitive α = 0.76, cognitive α = 0.85, motivational α = 0.76, and behavioural α = 0.83. Example of metacognitive cultural intelligence is “I am conscious of the cultural knowledge I use when interacting with people with different cultural backgrounds”. Example of cognitive cultural intelligence is “I know the legal and economic systems of other cultures”. Example of motivational cultural intelligence is “I enjoy living in cultures that are unfamiliar to me”. Example of behavioural cultural intelligence is “I change my nonverbal behaviour when a
cross-
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cultural situation requires it.” Afterwards, new Cronbach’s alpha is calculated and the mean of all types of cultural intelligence is α=0.914, expressing extremely valid scale.
4.2.2 Dependant Variable (Self-performance)
There is only one dependent variable and that is individual self-performance rating. Hence, self-performance is simultaneously the main limitation of this study as likely from participants to be bias. Abramis’s (1994) self-performance scale is consisted of 6 items that are measured on a Likert interval scale from “Very badly” (1) to “Very well” (5). According to study of Guest and Clinton (2006) the internal reliability of this scale is α = 0.82, nevertheless the mean response of sample is usually 4.04 with standard deviation of 0.52 indicating little variability in responses when using this scale. This is explained by Spector (1994), who argues that self-reported measures of job are impacted by social desirability responding or self-report bias. Despite all potential issues with self-measuring scales, the newly calculated Cronbach alpha resulted α=0.883. Example of self-performance rating is “In your own judgement, how well you fulfil the following tasks: Perform without mistakes?”
4.2.3 Moderating Variables (Motivational Tools and Working Environment)
First moderator is motivation, and as main representatives of motivational tools impacting performance the researcher has chosen compensation and promotion. One of most validated scales for such motivational tools is Van Harpen, Van Praag, and Cools (2003) scale. Scale consisted of 23 items segmented into transparency drives of motivation, fairness drives of motivation, controllability of work, intrinsic and extrinsic motivation, and work satisfaction was altered to fit 16 items reduced scale with
33 Cronbach’s alphas ranging from 0.77 to 0.83 indicating satisfactory validity. However, after thorough analysis of specific 16 items it was discovered that Cronbach’s alpha for this scale is actually much higher α=0.929. Example of motivational scale of promotion and compensation is “The manner in which I am compensated ensures that I am motivated to give the fullest effort possible”; “I have full control over my ability to get promoted”.
4.2.4 Control Variables
Control variables represent items that are able to regulate results of the current study. For this paper – Age, Gender, Tenure and Education were chosen as control variables. They are included in the final section of questionnaire, as visible in Appendix.
4.3 Pilot test
Before the final survey outlook was distributed to the sample, a pilot testing was performed in order to cancel out any potential issues that may arise along the way. A total of 5 people, both academic and non-academic, were asked to participate in a pilot test, and to indicate whether instructions were clear; whether the time allotted is correct; whether the layout is clear and attractive enough to keep focus; whether the statements are comprehensive and whether questions were measuring the construct they were supposed to measure to assure face validity. Additionally, respondents were also asked to point out if come across to potential misspelling or errors in terms of layout.All feedbacks from the pilot test were positive, assuring face validity of the construct. The respondents agreed that questions are clear, and it is comprehensive
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what the measurement construct is supposed to measure. Finally, small adjustments have been made in the demographics section to clarify how respondents should reply on questions with the blank space answer option (E.g. How long have you been working for multinational organizations in total? Please indicate your answer in years or half years, for example, 0.5 or 2.5) and to make it more applicable to the context and easier comprehension of sample.
4.4 Method and model specification
All data is collected by the means of an online survey. Moreover, online program Qualitrics is used as a main tool to distribute and collect the data. Survey distribution started on March 12th 2017 and it ended by 21st of April of the same year. After all surveys were collected, the data was exported to Statistical Software Package for Social Sciences (SPSS). Firstly, in the SPSS checking of scale reliabilities, descriptive statistics, skewness, and kurtosis and normality tests were performed in order to perceive if the sample is valid and according to expectations. After proved that data collected is reliable, correlation and hierarchical regression analysis were applied as the main examination instrument, due to having control variables and requiring to predict dependent variable based on independent.
Direct relationships were examined by the use of hierarchical regression, which adds item to the regression model in stages. At each stage, an additional item/variable was added to the model and the change in R2 was calculated. A hypothesis test was done to test whether the change in R2 was significantly different from zero. The hierarchical regression analysis was conducted to examine the relation between the independent variables (Self Efficacy and Cultural Intelligence) and the dependent variable
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(Individual’s performance). In step one, the control variables gender, age, education, and job tenure were entered into the equitation. In step two Self-Efficacy and Cultural Intelligence were entered.
In order to test this moderating effect, the Process macro written by Andrew F. Hayes for SPSS was used, version 2.16. This macro uses an ordinary least squares or logistic regression-based path analytic framework for estimating direct and indirect effects in single and multiple mediator models (parallel and serial), two and three way interactions in moderation models along with simple slopes and regions of significance for probing interactions, conditional indirect effects in moderated mediation models with a single or multiple mediators and moderators, and indirect effects of interactions in mediated moderation models also with a single or multiple mediators. In the macro, Bootstrap and Monte Carlo confidence intervals were implemented for inference about indirect effects, including various measures of effect size. In other words, the macro used can estimate moderated mediation models with multiple mediators, multiple moderators of individual paths, interactive effects of moderators on individual paths, and models with dichotomous outcomes.
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5. Results
This section discusses research results after all data collected is analysed in the SPSS. At first, pre-test results are provided indicating validity of the data collected. Then, more specific analyses are performed, investigating direct relationship between individual’s characteristics and performance through hierarchical regression. Afterwards, moderating effects are provided, also through regression, emphasizing effect of working environment and motivational tools on the main relationship.5.1 Analytical strategy and pre-tests
First step was examination of errors in the data, resulting in no errors found. Second check were missing values, keeping only cases without missing data. There were no counter-indicative items, i.e. no recoding was performed.
After this, descriptive statistics, skewness, kurtosis and normality tests were performed. The items of Self-Efficacy have skewness between -0.5 and -1, indicating moderately negative distribution, except Self-Efficacy 2, which is below – 0.5 (-0,278), being normally distributed. Kurtosis, on the other hand is either normal (Self-Efficacy 3, 5, 6 – between -0.5 and 0) or between -0.5 and -1, which indicates the distribution might be a bit flatter. For Cultural intelligence, majority of items have skewness between -0.5 and 0 (Cultural Intelligence 1, 2, 3, 4, 5, 7, 8, 9, 10, 14, 15, 16, 17, 18, 19, 20), that is normal distribution. Other items (Cultural Intelligence 6, 11, 12, 13) are with the skewness between -0.5 and -1, showing moderately negative distribution. Regarding kurtosis, for Cultural Intelligence 02, 09 and 16 is between -1 and -2 meaning that the distribution is flatter than normal, while for the other items of this construct is either
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close to normal, or more pointy than aforementioned items of the same construct. Motivational tools and means show almost perfectly normal distribution for each item. Only Motivational Tools 16 is bit more skewed with skewness between -0.5 and -1. All items have kurtosis between -0.5 and -1, showing bit flatter distribution curve. Exceptions are Motivational Tools 5, 6, 15, 16, with kurtosis near 0 (between 0 and -0.5). Working environment for majority of items has almost normal skewness (between 0 and -0.5), Working Environment 1 is a bit skewed on positive side (skewness = .464) and Working Environment 11 (skewness = -.653) on a negative side. Kurtosis for items of this construct is mainly between -0.5 and -1, while for Working Environment 3 and 9 distribution is even flatter (kurtosis = -1.135 and -1.233). Individual performance is moderately skewed to the negative side (skewness between -0.5 and -1), and moderately pointier (Individual Performance 1 kurtosis = .520) or moderately flatter (Individual Performance 5 kurtosis =-.867), while other items are close to normal.
A reliability analysis has been done for all items of the variables - Self-Efficacy, Cultural intelligence, Motivational tools and means, Working Environment, Individual performance, as well as subsets of items that are already validated. Cronbach’s alpha of all the constructs has showed to be above or near 0.7 (Self-Efficacy α=0.844, Cultural intelligence α=0.914, Motivational tools α=0.929, Working Environment α=0.636, Individual performance α=0.883), which means that all scales are respectable. From the Working Environment analysis one item is removed - I have adequate privacy in my primary, individual work area, as suggested by Reliability Statistics, as the variance, correlation and Cronbach’s alpha are improved.
