Towards a better understanding of the relationship between stakeholder culture and stakeholder reciprocity

Towards a better understanding of the relationship

between Stakeholder Culture and Stakeholder Reciprocity

An Empirical Analysis

Name Sepideh Nami

Student number 10818065

Supervisor Dr. Flore Bridoux

Date 22 June 2018

MSc. in Business Administration – Strategy Track

University of Amsterdam

Plantage Muidergracht 12 1018 TV Amsterdam The Netherlands.

Statement of Originality

This document is written by Sepideh Nami who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document are 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.

Abstract

Stakeholder thinking has emerged as a new narrative to understand the complexities of

today’s business challenges. In last decades, many scholars have made significant contributions to draw managerial implications and address the problems of understanding how value is created and traded while connecting this with topics of ethics and capitalism (Parmar, Freeman, Harrison, Wicks, Purnell, Colle, 2010). Theoretical contributions vary across a broad array of disciplines, however, there seems to be a major lack of empirical evidence on the impact of stakeholder cultures, in particular the effect on stakeholder reciprocity is neglected (Fassin et al., 2012). One could ask whether stakeholders, in a spirit of reciprocity, should treat the corporation well in exchange of good treatment of stakeholders. Using a survey of 127 employees working for various organizations in The Netherlands, this research empirically examines the direct relationship between stakeholder cultures - corporate egoist, instrumentalist, and moralist - and stakeholder reciprocity, in particular employees’ organizational citizen behaviour (OCB). Furthermore, the mediating role of organizational identification, and the moderating effect of corporate reputation are tested. The results provide evidence that stakeholder reciprocity can be influenced by stakeholder cultures. The more moralist the organization’s culture is, the more OCB employees report to engage in. Whilst the more egoist and instrumentalist the organization’s culture is, the less OCB employees report to engage in. Furthermore, organizational identification mediates the relationship between the three stakeholder cultures and OCB. No significant moderation of corporate reputation on stakeholder cultures and OI was found. Managerial implications are discussed.

Key words: Stakeholder cultures, Reciprocal Behaviour, OCB, Corporate Reputation,

Table of Contents

I. Introduction 5

II. Literature review

II.I Stakeholder Theory - Three Part Typology 9

II.II Stakeholder Cultures 10

II.III Stakeholder Reciprocity 13

II.IV Organizational Identification 15

II.V Corporate Reputation 16

II.VI Research Questions 17

III Theoretical Framework

III.I Direct relationship with stakeholder reciprocity 18

III.II Mediating effect of stakeholder organizational identification 21

III.III Moderating effect of corporate reputation 22

IV Methodology

IV.I Study design 23

IV.II Sample 24

IV.III Measurements 25

V Results 30

V.I Reliability and Factor Analysis 31

V.II Descriptives, Correlations, and Normality 35

V.III Regression Analyses 39

VI Discussion

VI.I Theoretical implications and Future Research 54

VI.II Practical Implications 56

VI.III Limitations 57

VII Conclusion 59

VIII References 60

VIV Appendix

VIV.I Appendix A – survey 65

I. Introduction

‘[A]s I step back and see the debate about stakeholder theory versus stockholder theory I believe we are involved in a small scale example of the problems surrounding conflicts over values. And there is way too much noise, way too much sloppy thinking, and way too little empirical evidence present.’ (Agle et al., 2008:171).

More than 10 years ago, corporate scandals like Enron and Tyco had reinforced the perception that organizations care little for their stakeholders and ethics in their pursuit of profit (Parmar

et al., 2010). The scandals illustrated that manipulative managerial actions that have been taken

could lead to a tremendous effect on a broad range of people all over the world, both on organizational and individual level (Clement, 2005).

The gradual adoption of the strategic business field, means that businesses are no longer built on solely meeting the shareholders’ interests, instead the importance of meeting all different stakeholders’ demand is key to the survival of a corporation in today’s environment (Harrison & Wicks, 2013). The focal of attention is altering from only the firm to all the constituencies of the firm, referred to as stakeholders (Freeman, 1984), incorporating, beyond shareholders, employees, clients, suppliers, and third parties who might be interested in a company’s activity (Clarkson, 1995). Therefore, this new phenomenon of stakeholder management advocates the importance of firms bearing responsibility for the implications of all their actions (Fassin, 2012). But the question still holds whether stakeholders also have a responsibility toward organizations. Whereas more scholars and practitioners have started the debate to discuss stakeholder rights, it still is very rare for CSR enthusiasts to discuss the responsibilities of stakeholders (Robins, 2005).

This change in paradigm has prompted the debate between shareholder vs. stakeholder advocates. One of the early adopters and advocates of shareholder wealth maximization is Milton Friedman (1970). His article “The Social Responsibility of Business Is to Increase Its Profits” had initiated controversial debate in social responsiveness theory as Friedman is under the belief that the sole responsibility of business is to increase profits. To the contrary, stakeholder theory argues that companies have a moral obligation not just to shareholders but to all the constituencies who are affected by the conduct of the firm. Companies should accordingly be managed in a way that maximizes outcomes for all (Baumfield, 2016).

Stakeholder theory was introduced in the 1980s before undergoing consolidation by amongst others the works of Goodpaster (1991), Clarkson (1994, 1995), Donaldson and Preston (1995), Mitchell et al. (1997), Rowley (1997), and Frooman (1999). The establishment of building relationships with stakeholders should be in alignment with the organizational objectives. Previous research focused mainly on corporate responsibility to firms (Goodstein and Wicks, 2007). If stakeholders’ expectations are met, managers should in return expect reciprocal behaviour of the organization’s stakeholders (Mainardes, Alves, Raposo, 2012).

So far very little empirical research has been conducted about an emerging model that investigates the claims of stakeholder reciprocity (Harrison et al., 2010; Bosse et al., 2009); treating stakeholders well will get them to reciprocate by creating value for the firm. To date, only one empirical paper of stakeholder theory has been presented on stakeholder cultures (Boesso and Kumar, 2016), which leads to a major literature gap in the establishment of empirical instrumental stakeholder theory.

Therefore, this paper takes an instrumental perspective (Jones, 1999) on the importance of stakeholder management and hopes to contribute to advancing stakeholder theory. Donaldson and Preston (1995) argue that even though normative concerns underpin stakeholder theory in all of its forms, instrumental and descriptive facets need to be more developed.

In this research, I examine the influence of the three different stakeholder cultures (corporate egoist, instrumentalist, and moralist cultures), identified by Jones, Felps, and Bigley (2017) on stakeholder reciprocity (Fassin, 2012). The focus will be on the employee level and organizational citizen behaviour. Furthermore, I research whether the relationship between the two aforementioned variables is mediated by stakeholder organizational identification - “the

perception of oneness with or belongingness to” the organization” (Ashforth and Mael, 1989:

p.21). Good corporate reputations are critical to a firm because it characterizes a global perception of a stakeholder group (Fombrun, 1996; Hall, 1992; Rao, 1994) and it indicates a potential of value creation (Fombrun & Shanley, 1990; Roberts and Dowling, 2002). Therefore, I will examine the moderating role of corporate reputation on the relationship between stakeholder culture and organizational identification.

The evidence presented in this study throws new light on our understanding of stakeholder theory and reciprocity. Overall, the results of the data analyses are congruent with the suggested predictions, with a few exceptions. Findings support a strong relationship between stakeholder cultures and OCBO, but no significant results are found in explaining In Role Performance. Furthermore, findings support the mediation effect of OI on the aforementioned direct relationship between stakeholder cultures and OCBO. However no correlation was found for

In Role Performance. Finally, results did not support the last hypothesis of the moderation of Corporate Reputation on stakeholder cultures and OI.

The paper is structured as follows: The first section introduces the “Literature Review” on the topic of Stakeholder Theory, continued with the “Theoretical Framework”, discussing the determinants of organization culture, stakeholder reciprocity, stakeholder organizational identification, and the moderating effect of corporate reputation on the aforementioned relationship. Section “Methodology” introduces the empirical context, sample, and data sources. The “Results” section reports and examines the outcomes before a final section concludes the research gap and provides some managerial implications.

II. Literature Review

II.I Stakeholder Theory three part typology

Business ethicist Dr. Edward Freeman (1984) pioneered the work in stakeholder management literature by providing the basic features of the concept in his book Strategic

Management: A Stakeholder Approach (Jones, 1995). Stakeholder theory (ST) became a

widely known perspective that explains the prevailing importance of proactively paying attention to your stakeholders (Freeman, 1984), not only for being morally correct, but also strategically in order to create more value for all stakeholders including shareholders (Baumfield, 2016). Ever since, theorists from disciplines as diverse as business management, business ethics, corporate law, public administration, network theory, and organizational theory have paid tremendous attention to this academic consideration (Baumfield, 2016). This, unfortunately had led to an increasing and evolving literature replete with contradictory evidence and arguments for the central theme of Stakeholder Management, providing a blurred character of the stakeholder concept (Brummer, 1991; Donaldson and Preston, 1995). As a response to the lack of clear status of the stakeholder concept in the work of Freeman (1984), Donaldson and Preston (1995) proposed that stakeholder theory explicitly and implicitly encompasses three different streams within the literature, naming the descriptive/ empirical,

normative, and instrumental stakeholder theory.

Descriptive stakeholder theory tends to describe and/ or explain how firms or managers actually behave, normative stakeholder theory purports to describe what firms/ managers ought to do from an ethical standpoint of view, whereas instrumental stakeholder theory demonstrates how firms/ managers behave in certain ways (Donaldson and Preston, 1995). The three-part

typology has been incorporated by various scholars in the stakeholder literature (Evan & Freeman, 1993; Freeman & Gilbert, 1987; Freeman & Reed, 1983).

I will take an instrumental perspective in this paper, identifying what would happen if managers adhered to stakeholder management principles (Jones, 1995). This stakeholder stream establishes theoretical connections between certain practices and certain end states (Jones, 1995). In the present research, the practices taken are stakeholder cultures defined by Jones (1995) and the end state is stakeholder reciprocity.

In other words, stakeholder cultures will be taken as an instrument for achieving stakeholder reciprocity. Testing the empirical validity of the relationship between the aforementioned two variables is an important contribution to stakeholder theory as little attention has been devoted to empirical work that contributes to questions regarding what it means to value creation (Harrison et al., 2010). To date, Boesso and Kumar’s paper (2016) on stakeholder cultures is the only empirical work available in the Stakeholder Literature, meaning that more research has to be done in order to significantly contribute to this important literature gap.

II.II Stakeholder cultures

Stakeholder culture is one dimension of organizational culture that focuses on how the organization’s managers manage relationships between various stakeholders and the organization. Stakeholder culture is defined as “the aspects of organizational culture consisting

of the beliefs, values, and practices that have evolved for solving problems and otherwise managing stakeholder relationships” (Jones, 1995:137). The interests of stakeholder groups

and the organization are often divergent, therefore, managers should handle trade-offs among competing stakeholder claims (Boesso and Kumar, 2016).

Jones et al. (2007) proposed a well-defined typology of stakeholder cultures that helps organizations to deal with stakeholders variably and predicts how organizations make stakeholder-related decisions (Chen, 2015). He defined five stakeholder cultures - agency,

corporate egoist, instrumentalist, moralist, and altruist - that lie on a continuum, ranging from

the agency culture (individually self-interested) to fully altruist cultures (other-regarding). Self-regarding behaviour posits that individuals or firms are acting in their own self-interest, and are not morally inclined to take into account others if it is not in their own self-interest (Jones, 2007). For firms pursuing self-interest means pursuing exclusively shareholders’ interests. Whereas other-regarding behaviour does take multiple stakeholders’ interests into account in decision making, using a “cost-benefit” calculus resulting in the greatest beneficial consequences minus harmful consequences for all stakeholders. The aim in managing relationships with stakeholders is to try to balance concern for the corporate interests (i.e. interests of shareholders) with concern for others’ interests (i.e. interests of stakeholder groups other than shareholders) (Jones et al., 2007). Only three out of five stakeholder cultures - corporate egoist, the instrumentalist, and the moralist cultures - tend to prevail in practice, whereas the other two cultures at the extremes of the continuum - fully self-regarding (agency culture) and the fully other-regarding (altruistic culture) - are improbable due to the market dynamics and external pressure faced by most organizations (Jones, 1995). Therefore, only these most prevalent cultures will be tested for this study.

Managers in egoist cultures emphasize the importance of maximizing short-term shareholder wealth as the primary goal of the organization. Managers have limited moral commitments to stakeholders other than shareholders (Boesso and Kumar, 2016). The corporate pursuit is to protect and advance the short-term interests of shareholders in a transactional, contractual, and opportunistic manner. Stakeholder groups (customers, suppliers,

employees, community) are only used as a means to achieve short-term profit maximization. Consequently, corporate egoist cultures regard the interests of a stakeholder group as important only if these stakeholders are able to affect the organization’s short term financial performance (Jones et al., 2007). Those stakeholders are prioritized because of the prevalence of three key stakeholder attributes – power, legitimacy, and urgency; also known as stakeholder salience (Mitchell et al., 1997). According to Arendt and Brettel (2010), those stakeholder with high power and urgent demands claim the highest salience in a corporate egoist culture.

On the other side of the continuum, the moralist cultures stress the broad interests of all stakeholders as the primary goal. Managers within such organizations show a strong and genuine concern for all stakeholders and try to incorporate the interests of all stakeholders regardless of the economic considerations. Aside from extreme situations, ethical standards are not allowed to be violated in favour of financial goals (Boesso and Kumar, 2016). This other-regarding perspective tries to treat all stakeholders and shareholders with respect and fairness. Unlike the corporate egoist culture, stakeholders with a legitimate claim have the highest salience. If the claim is also urgent, this will add impetus to the legitimate claims of a stakeholder group (Boesso and Kumar, 2016).

Last, instrumentalist stakeholder cultures follow the principle of enlightened

self-interest, which entails an adaptive kind of morality that extends to those who contribute to the

organization’s long-term financial success (Jones et al., 2007). Stakeholder relationships are managed in a strategic and opportunistic manner, meaning that the recognition of “moral behaviour or the appearance thereof” is critical to the long-term financial well-being of the firm (Jones et al., 2007: p.145). The major difference between organizations with egoist cultures is that instrumentalist cultures maintain the appearance of morality. They do not exploit

short-company performance in the long term (Boesso and Kumar, 2016). The primary driver of stakeholder salience in an instrumentalist stakeholder culture are power similar to the egoist culture. Moreover, the legitimate claim is also accounted for in instrumentalist cultures, as they want to appear positively in the public eye and want to be viewed as trustworthy and fair (Galbreath, 2006).

II.III Stakeholder reciprocity

Corporate responsibility to stakeholders has been the major focus in the past, however, Goodstein and Wicks (2007) argue the importance of modifying this prevailing focus on stakeholder reciprocity. As the authors argue, it only makes sense that corporate responsibility should be discussed since corporations have become the most powerful institutions on the planet; they are the engines of human welfare and progress (Goodstein and Wicks, 2007). Nonetheless, business ethics should not be a one-way conversation, meaning that corporates should only be responsible for their actions. Interactions between stakeholders and the firm operate in both directions, since each can affect the other in terms of benefits and harms. This is why the reciprocal behaviour of individuals is of particular interest in the stakeholder literature. To date, stakeholder definitions implicitly, include the responsibility of the firm to the stakeholders, however, they do not imply any reciprocity or care for, consideration, and respect of the stakeholder towards the corporation (Fassin, 2012).

According to Frooman (1999), stakeholders should be held accountable for potential harm to companies and other stakeholders and for negative outcomes associated with their demands. This raises the question why certain stakeholders act unethically against the firm and emphasizes the importance of moral reciprocal behaviour in relationships between stakeholders and companies (Philips, 2003). (Secondary) stakeholders do not necessarily have to strive for the good of the company, in fact it could be quite contrary (Fassin, 2012).

Beyond the stakeholders’ rights specified in the contract, they may also have moral responsibilities and obligations, a topic in stakeholder theory which has been rarely discussed (Robins, 2005). Moral responsibilities involve loyalty and constant support or commitment to a person or organization (Fassin, 2012). It is expected that employees are loyal to the organization and vice versa. The mutual dependency is important for maintaining a corporate-stakeholder relationship (Friedman & Miles, 2006; Manetti, 2011; Porter & Kramer, 2006). Companies are dependent on stakeholders, especially the primary ones (i.e. typically comprise shareholders and investors, employees, customers, and suppliers) to develop products or services, to make profit, in fact to continue to exist. Reciprocally, stakeholders need companies for employment, wealth, etc (Meijer, 2016). Individuals act reciprocally by rewarding those actions of others they deem fair or are willingly incurring costs to punish those they deem unfair (Bosse, Philips & Harrison, 2009). This takes the assumption away that people always behave opportunistically and self-interestedly. Studying the behaviour of people and the influences their peers have on their perception of the firm and reciprocal behaviour will create new insights for managing stakeholders. It is argued that positive reciprocal behaviour of employees is generated when employers are perceived more distributionally fair by their employees (Bosse et al., 2009). This makes an interesting insight into the literature, as it makes an assumption that reciprocal behaviour is awarded by good treatment of their employees. This view is, however, at odds with the findings of behavioural economists and social psychologists, since they assert that not all stakeholders care about fairness (Bridoux and Stoelhorst, 2012). Within these two fields, motives to cooperate is demonstrated to be heterogeneous across individuals, which naturally affects behaviours in collective endeavours such as value creation (Bridoux, Coeurderoy, and Durand, 2011). The interests of both groups often diverge noticeably, not only from the firm, but also from each other. The expectations stakeholders

have might differ from the results, which will accordingly have an impact on reciprocal behaviour.

Empirical evidence assert two types of individual stakeholders: self-regarding and

reciprocal stakeholder(Fehr and Falk, 2002). Individuals who only care about their personal

payoffs and do not value fairness are called self-regarding individuals, whereas reciprocal stakeholders are inclined to reward a fair, and punish and unfair, treatment of themselves or others, despite the possibly incurred costs (Engelmann and Strobel, 2004; Fehr and Gachter, ¨ 2002).

III.IV Organizational Identification

Ashforth and Mael (1989) triggered an increase of research on OI as a unique construct, after they emphasized the relevance of social psychological theories to organizational behaviour research (e.g., Dutton, Dukerich, & Harquail, 1994; Elsbach, 1999; Mael & Ashforth, 1992; Pratt, 1998; Rousseau, 1998; Tyler, 1999; Wan-Huggins, Riordan, & Griffeth, 1998). Organizational Identification is used as a construct of attitudinal organizational commitment (AOC) in the construct of Porter and his colleagues (e.g., Porter, Steers, Mowday, & Boulian, 1974; Mowday, Steers, & Porter, 1979). From that point, OI and AOC have treated the terms as synonyms. The authors conceptualized OI as a cognitive construct, in particular, as the congruence of individual and organizational value, as the “perception of oneness with or belongingness to” the organization. To achieve this stage of identification, Tajfel (1982, p.2) stated that two components are necessary to be met; a cognitive one, the sense of awareness of membership, and an evaluative one, the sense that this awareness is related to some value connotations. Third component entails the emotional investment in awareness and evaluations.

OI is derived from social identity theory (SIT), which is defined as “that part of an individual's self-concept which derives from his knowledge of his membership of a social group (or groups) together with the value and emotional significance attached to that membership” (Tajfel, 1978; p.63). Social identities are shared by members of a group and distinguish between separate groups (Ashforth and Mael, 1989). Those groups exist because of people that tend to classify themselves and others into various social categories, such as gender, religious affiliation, age cohort, and organizational membership (Tajfel and Turner, 1985). The prototypical characteristics of the category are assigned to the people classified to one specific group (Ashforth and Mael, 1989). SIT comprises a personal identity, encompassing idiosyncratic characteristics such as abilities, bodily attributes, psychological traits, interests, and a social identity, encompassing salient group classifications (Ashforth and Mael, 1989). One could perceive him- or herself as an actual or symbolic member of the group(s) as his/ her own. This could possibly mean that employees working at a company with a corporate egoist culture perceive another sense of belongingness to some human aggregate than an employee working at a company with a moralist culture. This would mean that a stronger sense of belongingness to a human aggregate will increase the relationship between stakeholder culture and reciprocity of responsibility and commitment. If employees belonging to a company are only working as a means to gaining short- and long term financial goals, employees would sense they are only ‘used’ for one purpose. The connection with the organization’s culture is lacking.

III.V Corporate Reputation

Corporate reputation, the collective opinion of a company held by its stakeholders, is identified as one of the key construct playing a significant role in amongst others improving firm value (Brammer and Millington, 2005) and raising employee productivity, morale and

According to Brammer and Millington (2005), corporate reputation in the eyes of stakeholders is related to signals concerning philanthropic activities, ownership, industry, media visibility, size, board composition, and financial performance, board composition. Further evidence was provided by Williams and Barrett (2000) that founded a positive link between philanthropic actions and firm reputation. They argue that this link between philanthropy and reputation becomes stronger among companies that more frequently violate occupational health and safety and environmental regulations (William and Barrett, 2000). As they argue “charitable giving appears to be a means by which firms may partially restore their good name following the commission of illegal acts” (Williams and Barrett, 2000, p. 348). Accordingly, due to the critical stakeholder perceptions to the companies, it is of no surprise that corporate reputation is of managerial interest and might affect the stakeholders’ identification with the firm.

III.VI Research Questions

Stakeholder literature posits a wide chasm between stakeholder culture and stakeholder reciprocity. Therefore, in this thesis, I will empirically test the mediating role of organizational identification on the aforementioned relationship. Lastly, the moderating effect of corporate reputation will be tested. The focus of this study will be on the employee level in order to draw insightful managerial implications on the topic of stakeholder culture.

1. What is the impact of the corporate egoist, instrumentalist, and moralist culture on stakeholder reciprocity, specifically loyalty and commitment?

2. Are these relationships mediated by stakeholder organizational identification?

3. Does corporate reputation moderate the relationship between stakeholder culture and stakeholder organizational identification?

III. Theoretical Framework

In this section a theoretical framework is developed on the stakeholder cultures and stakeholder reciprocity, specifically responsibility and commitment. This thesis aims to further understand the drivers of stakeholder reciprocity and what mediating effect stakeholder organizational identification has on reciprocity. It is argued that stakeholder cultures have a direct influence on the stakeholder identification and employees’ reciprocity. Furthermore, corporate reputation will alter the organizational identification, meaning when corporations are behaving badly in the eyes of the public, employees would like to distance themselves from the company.

Figure 1. Research model

III.I Direct relationship with stakeholder reciprocity

The direct relationship between stakeholder culture and stakeholder reciprocity can be divided into the three mentioned cultures: corporate egoist, instrumentalist, and moralist cultures.

Egoist culture Organizational Identification Stakeholder _Reciprocity

Corporate Reputation H1 (-) H5 (-/+) H4 (-) Moralist culture Instrumentalist culture H3 (+) H2 (-)

Bowie (1991) points out that moral relations are reciprocal; to the extent that firms have obligations and responsibilities to its stakeholders, stakeholders in turn are responsible for fulfilling duties to the firm (Goodstein and Wicks, 2007). As mentioned before, people do not always behave opportunistically and self-interestedly (Bosse, Philips & Harrison, 2008), instead they act reciprocally by rewarding those actions of others they deem fair or are willingly incurring costs to punish those they deem unfair. Positive reciprocal behaviour is expected that when employers are perceived more distributional fair by their employees (Bosse et al., 2008). If companies focus on stakeholders, by managing their interests and treating them well, this should be beneficial for the overall firm performance (Donaldson & Preston, 1995; Freeman, Harrison and Wicks, 2007; Harrison, Bosse & Philips, 2010).

It is predicted that an egoist culture has a negative direct effect on the stakeholder reciprocity. Corporate egoist cultures emphasize the primary importance of maximizing short-term shareholder wealth, meaning they only regard the interest of other stakeholder groups as important if these stakeholders could affect the organization’s short term financial performance (Jones et al., 2007). Accordingly, I hypothesize:

H1: The more an employee perceives his/ her organization as egoistic, the lower his/ her reciprocity. Organizations with instrumentalist follow the principle of enlightened self-interest, maintaining the appearance of morality while only caring for those stakeholders that actually can contribute to an organization’s well-being (Jones et al., 2007). Due to the similarity of egoist cultures of still pursuing self-interested behaviours, it is predicted that the employees working in organization with an instrumentalist culture will report lower stakeholder reciprocity. Accordingly, I hypothesize:

On the other side of the continuum, the interests of society is the primary aim of the moralist cultures. Managers in organization with moralist cultures are extensively other-regarding, pursuing moral principles in their decision making. Contrary to the previous cultures

H3: The more an employee perceives his/ her organization as moralistic, the higher his/ her reciprocity.

III.II Mediating effect of stakeholder organizational identification

In past research, organizational identification (OI) has been an attractive field research as many outcomes with OI have been organizationally relevant. According to Haslam and Ellemers (2005), OI has a natural connection with collective-level outcomes due to its social nature. Two conditions should be met in order for OI to occur (Pratt, 1998: p.194): "(a) the individual must perceive the organizational identity to be salient, and (b) the individual must self-categorize him or herself in terms of his or her organizational identity." It is predicted that group identification results in a higher member’s level of OI. When employees vary in the degree to which they identify this can have a result on their organizational citizen behaviour (OCB) (Dukerich, Golden, & Shortell, 2002), which encompasses behaviours of individuals that often lie outside of their specified contractual obligations. It promotes the effective functioning of the organisation (Organ, 1988), as employees go beyond the minimum efforts required to do a merely satisfactory job. In organizations, employees who identify with a group or a particular system may be likely to engage in extra-role behaviours such as to minimize costs and to improve quality (Dukerich et al.,2002). A likely consequence would be that employees in moralist cultures may direct more towards citizen behaviour, thereby helping the collective. This reciprocal behaviour is predicted due to good stakeholder treatment of the organization. The more moralist an organization is, the more OCBO can be expected. This relationship gets stronger as employees identify more with the moralist organization. An

employee in a moralist could perceive him- or herself as an actual or symbolic member of the group(s) as his/ her own.

However, this could possibly mean that employees working at a company with a moralist culture perceive another sense of belongingness to some human aggregate than an employee working at a company with an egoist culture (Ashforth and Mael,1989). In egoist cultures the pursuit of short-term shareholder wealth is the primary goal. It is predicted that stakeholders will not feel identifiable to a group or organization if stakeholders know they are only used as a means to achieve short-term profit maximization (Boesso and Kumar, 2016). For hypothesis 1 I proposed a negative relationship between egoist cultures and reciprocal behaviour. This negative relationship gets stronger as employees identify less with the egoist organization.

Last, instrumentalist cultures follow an adaptive kind of morality that extends to only those who contribute to an organization’s long-term success, also defined as enlightened

self-interest (Jones et al., 2007). Organizations with this culture try to appear as trustworthy and

fair (Galbraith, 2006), and only develop stakeholder relationships if companies’ performance is enhanced. When employees would sense they are only ‘used’ for one purpose. The connection with the organization’s culture might be lacking. Consequently, I propose that the negative relationship proposed in hypothesis 3 will get stronger as employees identify less with the organization with an instrumental culture. Therefore, I hypothesize:

H4: The relationship proposed in H1-3 are mediated by organizational identification (OI), so that this relationship gets stronger for employees who identify more with the organization.

III.III Moderating effect of Corporate reputation

For various fields, including strategy, economics, marketing, organisation theory, sociology, communications, and accounting the same construct for corporate reputation has been used (Fombrun, Gardberg, and Sever, 1999). All disciplines jointly suggest that

“corporate reputation is a collective construct that describes the aggregate perceptions of multiple stakeholders about a company’s performance (Fombrun et al., 1999; p. 242). It

calibrates a relative standing in its competitive and institutional environments; externally with its stakeholders and internally with employees. It is the aim of a corporation to provide valued outcomes to a representative group of stakeholders (Fombrun et al., 1999).

It is predicted that the relationship between stakeholder cultures and organizational identification is moderated by corporate reputation. When someone perceives themselves as an actual or symbolic member of a group in an organization, the organization’s identification is perceived to be high (Ashforth and Mael, 1989). The definition of the self and others are rather “relational and comparative” (Tajfel & Turner, 1985, p.16), meaning an individual defines oneself relative to individuals in other categories. Given that corporate reputation might affect ones perception of an organization, I hypothesize:

H5: The relationships proposed between stakeholder cultures and OI are moderated by corporate reputation: the higher corporate reputation, the stronger the relationships.

IV. Methodology

This chapter introduces the empirical context of the study. It continues with explaining the data collection process and methodology used, including a detailed operationalization of the dependent, independent, moderating, mediating, and control variables.

IV.I Study Design

This research is of explanatory nature as it aims to expand the current literature of Stakeholder Cultures. To answer the proposed research question a quantitative study has been performed, specifically a survey. All measurements were taken by means of an online questionnaire.The advantages of using an online survey is that it is cheap, it reduces time, and it allows for convenient collection (Kaplowitz, Hadlock and Levine, 2004). Coomber (1997) argues that online surveys are also considered useful when particularly sensitive issues are being researched. The anonymity possible on the Internet helps to facilitate the sharing of experiences and opinions. Furthermore, it includes convenience of having automated data collections, access to individuals in distant locations and the ability to reach difficult to contact participants (Wright, 2005). This young and evolving type of data collection also has its disadvantages that should be considered when contemplating using online survey methodology. Amongst others these concern low respondent rates (Kaplowitz et al., 2014), validity uncertainty of the data and sampling issues, but also the concern of the research design, implementation, and evaluation of an online survey (Wright, 2005). Moreover, it is not possible to get insight into the response rates and non-response bias. Non-response bias could involve people refusing to participate, poorly constructed surveys, people who simply forgot to return the survey, the survey did not reach all the members, or certain groups were more inclined to answer.

A questionnaire, furthermore, always involves the possibility of errors and biases, when respondents are directed to answer in a socially desirable manner. This could be prevented by using existing scales and doing pre-tests for example.

To maximize the number of respondents of participants, the survey was provided in both Dutch and English. Together with two other students and our supervisor several presets were made to develop the best instrument to measure the three stakeholder organizational cultures.

IV.II Sample

The respondents were obtained through the means of convenience and snowball sampling, meaning I used my own network or social media to gather participants. This type of sampling is relatively easy to use. It is a popular type of sampling as many researchers in a variety of disciplines may find the Internet a fruitful area for conducting survey research (Wright, 2005). On the opposite, Farrokhi and Mahmoudi-Hamidabad (2012) address the presence of outliers as a problem of convenience sampling because it reduces the generalizability of the data collected. The population sample consists of everyone actively employed at an organization, since they can sense the stakeholder culture the best. It is interesting to know the difference between employees and top managers for example. Only two prerequisites were that the respondent needed to work at least 16 hours a week for a period of longer than six months at an organization. Respondents were gathered through my network, such as family, friends and acquaintances. Furthermore, I aimed to distribute the study among co-workers and peers of University.

IV.III Measurements

This section will fully assess the measures of stakeholder cultures that were created by ourselves and the measures adopted from other studies. The measurements and reliability of each scale will be discussed and explained in more detail. The entire survey and all the complete scales are provided in Appendix A. Items were presented in mixed order within the same scale. Since the questionnaire was provided in Dutch and English, items were translated in both languages.

Stakeholder Reciprocity

The dependent variable stakeholder reciprocity was measured with two scales. The existing scale of Williams and Anderson (1991) included in role performance, OCB-O, and OCB-I. However, only in role performance and OCB-O were addressed in the survey, since these two subscales were measured toward the whole organization and OCBO was conceptualized for making suggestions to improve the department, whereas OCB-I was directed at other individuals. Using Williams and Anderson (1991) scales, Turnley et al. (2003) reported the following results. Firstly, the 7-point item scale Organizational Citizen Behaviour in organizations (OCB-O) shows a high internal validity of Cronbach’s alpha .88. The Cronbach’s Alpha is a measure used to assess the reliability or internal consistency of test items or a set of scale. The minimum acceptable value is 0.70, whereas higher than 0.80 shows a high reliability. The OCBO scale has items like “I attend functions that are not required but that

help the image of my organization”. The second scale used to measure stakeholder reciprocity

is in-role performance. Cronbach’s alpha for the six-item In role performance scale was .93. This measure has items like: “I adequately complete all of my assigned duties”. In each case, responses were given on a 7-point scale ranging from 1 (Strongly Disagree) to 7 (Strongly Agree).

Organizational Identification

The measurement of mediator Organizational Identification was based on scales used by Mael and Ashforth’s (1992). The authors portray identification as a “solely cognitive

process of self-categorization, and commitment as a possible consequence” (Boroş, 2008: p.2).

Responses were given on a 7-point Likert scale ranging from 1 (Not at all) to 7 (a very large extent). The scale consists of six items and it shows a high reliability reported in Boroş (2008). In this study Cronbach’s alpha is sufficient at a α = .85. An example of one item is: “If my

organization is criticized in the media, it would embarrass me”.

Corporate Reputation

For the moderator, Corporate Reputation, the scale development of Fombrun et al. (1999) is used. After reviewing existing reputation surveys, Fombrun et al. (1999) suggested that previous operationalisations do not capture perceptions for multiple stakeholder groups, and demonstrate a fundamental flaw to define reputations on the basis of a restrained set of financially oriented stakeholders (i.e. analysists and CEOs). Consequently, the authors suggested to establish the multidimensionality of the construct to create a valid measure of corporate reputation, eliciting the perceptions of multiple stakeholders. The scale is a 17-item measure, consisting of different subscales. Changes in reputation affect all stakeholders, therefore, companies monitor their reputation closely based on these six subscales: emotional

appeal (respect, trust, admiration), products and services (innovativeness, value, quality), vision and leadership (eye for opportunities), social and environmental responsibility (support

of good causes), and workplace environment (appealing workplace, employee talent, well-managed). After running three pilots in Fombrun et al. (1999), they report factor loading and coefficient alpha were above the threshold value. The Cronbach's alpha for the entire model

Control Variables

Control variables may serve several functions. It is a variable that reduces the error variance and hence increases the sensitivity of statistical tests. Furthermore, it compensates for fluctuations in the dependent variable due to otherwise uncontrolled differences among the groups (Lord, 1960). Several control variables such as gender, age, tenure, education level, size of the organization, job position, industry, and type of organization were considered in the survey (Table 1). The first variables that this study controls for are gender and age. Men and women differ in terms of behaviour, namely men are argued to be more self-oriented, whereas women are more socially oriented (Van Lange, P. A., De Bruin, E., Otten, W., & Joireman, J. A., 1997). Furthermore, Lange et al. (1997) reported that younger people generally behave more competitive and individualistic compared to older people whose behaviour becomes more pro-social and other-interested during the years. Next, I take nationality as a control variable. Comparing Dutch and non-Dutch respondents will give more insights into the differences that arise between Western and non-Western countries. Hofstede (1980) makes the distinction between Individualism versus Collectivism. Individuals who are expected to take care of only themselves and their immediate families are allocated at the high side of this dimension, called individualism. Its opposite, Collectivism, represents societies in which individuals are integrated into strong and cohesive families. Individuals can expect relative to look after after them in exchange for unquestioning loyalty. Dutch people, with a high score of 80, are said to be more individualistic compared to non-Dutch countries such as e.g. Bulgaria (30) or Iran (41). Also Hofstede’s Masculinity dimension indicates whether society will be driven by achievement, success, and competition. Feminist societies are driven by caring for the quality of life and caring for each other. Interesting is whether individuals are inherently motivated by wanting to be the best (masculine) or liking what they do (feminine). Individualistic and masculine societies are more appealed to success compared to collectivist and feminine

societies. Consequently, nationality could have an interesting impact on the reciprocal behaviour of stakeholders (OCBO). Furthermore, education was included as a control variable as it could correlate with employee attitudes such as OCB and value commitment (Deckop, J.R., Mangel, R. and Cirka, C.C., 1999). Also tenure is included as a control variable. Evidence from previous literature found that longer tenured employees generally show greater OCB and in-role performance (Thomas, W.H. and Feldman, D.C., 2010). Across 350 empirical studies, with a cumulative sample size of 249,841 the authors also found that the relationship between tenure and performance was stronger for women, younger workers, and college-educated workers. Size of the organization tends to limit the identificatory potential of members of an organization (Indik, 1961), whereas type of organization is reported to have a strong effect on work and workplace attitudes (Freund, 2005). Job position is also expected to correlate with OCBO, and therefore included as a control variable (Bommer, H., Dierdorff, E.C., Rubin, R.S, 2007). Due to the use convenience and snowball-sampling, industry is also included as a control variable, to see how varied the sample is and to see whether it possibly correlates with one of the stakeholder cultures.

Stakeholder cultures

The independent variable measure of stakeholder cultures did not exist; therefore, we developed our own scale. The first fundamental step in designing a scale was generating a large pool of items. The items are mainly built from the stakeholder culture measures of Jones

et al. (2007) and Boesso and Kumar (2016). Due to the highly competitive and dynamic market,

the agency culture (fully self-regarding) and altruistic culture (fully other-regarding) are improbable to use (Jones, 1995). Therefore, we excluded these two ends of the continuum (agency and altruistic) from our stakeholder culture scale. Together, with two students and with the help of experts we created 25 items for each stakeholder culture. Consequently, in total we

had created a pool of 75 items that were ready to pre-test. “Pre-testing is a method of checking

that questions work as intended and are understood by those individuals who are likely to respond to them” (Hilton, C.E., 2017: p.1). Furthermore, pretesting has the capacity to increase

questionnaire response rates and reduce sampling error (Drennan, 2003; de Leeuw, 2001). Pre-tests were done with multiple part-time students who work next to their studies. The students were asked to read the items out loud and explain whether they understood them. In case of doubt or misinterpretation we either refined or eliminated the items from the development of the new scales. After this step, the items were once again checked by an expert in the strategic business field. On the basis of the results we selected 10 items for each stakeholder culture scale. Stakeholder culture scale is divided into three subscales: corporate egoist, instrumentalist, and moralist culture. Every subscale consists of 10 items that were measured on a 7 point Likert scale ranging from 1 (strongly disagree) to 7 (strongly agree).. Due to cross-loadings between the egoist and instrumentalist culture, item 5, 6,7, and 9 from the egoist scale and item 4 from the instrumentalist scale were excluded. This will be explained in the Results section.

After the data was collected and the items above were excluded, the Cronbach’s alpha was computed to check the internal validity of the scale The stakeholder cultures report a high internal validity for all cultures: Cronbach’s ! =.910 (Egoist), ! =..872 (Instrumentalist), and ! =.892 (Moralist). An example of one of the corporate egoist culture is: “My organization

only considers stakeholder interests if it can affect profits in the short-term”. For the

instrumentalist culture: “My organization claims to care for stakeholders but in fact only cares

for shareholders”. And for the moralist culture: “My organization shows a genuine concern for all its stakeholders”.

V. Results

In this section the hypotheses are tested and analyses are performed to eventually draw insights and managerial implications in the discussion chapter. This section will merely describe the procedures and display all the relevant statistics. Unexpected results derived from the factor analysis and regression will be explained thoroughly in the discussion section.

The sample consisted of 182 participants (n = 182) of which 127 (n = 127) completed the entire survey. The other 55 responses were redirected to the end of the survey as they did not meet the requirements to take part in the study. Participants were only allowed to complete the questionnaire if they work at a company for at least 16 hours per week for a period longer than 6 months. Of the participants, 51% (n = 65) identified as male and 49% (n = 62) identified as female. The mean age of the participants was 30.82. The sample reflected the working stakeholder group, stake watchers and activist groups were left out in this sample. The majority of the respondents identified themselves are employees (75%), 13 % as middle managers, and 12% as top managers.

Before analysing, the data acquired should be checked on any errors and missing values. Respondents were not able to continue to the next set of questions, before every set of questions were completed. Therefore, I did not have to deal with any missing values and I did not have to exclude cases listwise. Counter-indicative items were recoded in in order to avoid directing participants in an affirmative direction (Dillman, 2000). We made sure that our own designed construct, stakeholder cultures, did not contain any counter-indicative items. Only in-role performance contained two items (i.e., ‘I sometimes fail to perform essential duties of my job’ and ‘I sometimes neglect aspects of the job that I am obligated to perform’). Thereafter, categorical variables such as nationality, gender, sector, and size of the organization had to be recoded into dummy variables to compute correlations with other variables and run the

IV.I Reliability and Factor Analysis

As an indication of how well the set of items measure a latent construct, Cronbach’s ! is used. Cronbach’s ! measures whether scale items are homogeneous and covers the meaning of the theoretical construct. The higher the Cronbach’s !, the better the internal validity of the scales (Dillman, 2000). If Cronbach’s alpha for some subsets falls below 0.7, one should be aware of the internal validity. The table below displays that all variables have a very high Cronbach’s alpha, which explains a better internal validity of the independent scale.

Table 2. Cronbach’s ! ! Egoist culture .911 Instrumentalist culture .891 Moralist culture .892 Organizational Identification .859 Corporate reputation .865 In role performance* .741 OCBO .877

*. After reverse coding IRP_05 and IRP_06

Every stakeholder culture was measured 10 items. For these scales it is likely that reliability will be an issue as items could load on several cultures, this is especially likely for the corporate egoist and instrumentalist culture. These two cultures show great similarity and people could interpret them in similar ways. To test the internal validity of this new measure an Exploratory Factor Analysis (EFA) was run in SPSS. Conducting EFA allows a researcher to generate a model, or theory from a relatively large set of latent constructs that are represented by a set of items (Henson, R.K. and Roberts, J.K., 2006). Even though there is no rule of thumb that explains what should be the minimum number of cases, it should be emphasized that sample sizes are important in factor analysis. Hair et al. (1995) discussed the sample size should

be 100 or greater to run an EFA, whereas others argue for sample sizes greater than 300. Those rules of thumbs are, however, misleading and often do not take the complex dynamics of a factor analysis into account. MacCallum, Widaman, Zhang, and Hong (1999) illustrate sample sizes can be relatively small when each factor is defined by several items and communalities are high (greater than .60). Therefore, we can assume the sample size of this study (N=127) may be adequate for factor analysis. To assess the suitability of the respondent data, Kaiser-Meyer-Olkin (KMO) Measure of Sampling Adequacy was .934, above the recommended value of .6, verifies the sampling is adequate. Furthermore, Bartlett’s test of sphericity was also significant as χ2 _{(435) = 2484,499, p<.000), which shows the validity and suitability of the}

responses collected.

In Table 3 the results of the PFA for the stakeholder cultures scale are shown. The number of factors are fixed to three as there are only three cultures that should be identified. Item load above .4 (or below -.4) is taken as a threshold for factor loading. I assume factor one is the moralist culture, factor two is the instrumentalist culture, and three the egoist culture. In total, there are five cases of cross-loadings. Corporate egoist items 6 (“My organization

bargains hard over prices with customers and suppliers”), 7 (“My organization rarely acts based on moral principles”), and 9 (“When my organization has power over stakeholders, it exploits It”) had a stronger loading for the second factor, and will thus be excluded. Item 5

(“My organization only considers stakeholder interests if it can affect profits in the

short-term”) also had a stronger loading on factor 2, however, even though the loading on factor 3

was still above the threshold of .4 (.473), the item was excluded from the corporate egoist scale. Since it was already expected that the corporate egoist and instrumentalist cultures would have to deal with cross loadings, I already accounted to exclude some items.

the scale as it loads more on factor three. As can be derived from the last table of stakeholder culture loading, the moralist culture did not have to deal with excluding cases due to cross loadings. They all loaded on the first factor.

Table 3. Stakeholder cultures factor loading

Egoist Culture Items 1 2 3

1. My organization mainly cares about quick profits for shareholders. -.364 .304 .723

2. My organization is primarily driven by short-term financial performance. -.114 .334 .697

3. The only stakeholders my organization cares about are shareholders. -.347 .326 .603

4. My organization’s major concern is making money for shareholders in the short-term. -.209 .359 .690

5. My organization only considers stakeholder interests if it can affect profits in the

short-term. -.351 .580 .473

6. My organization bargains hard over prices with customers and suppliers. -.149 .397 .353

7. My organization rarely acts based on moral principles. -.412 .437 .187

8. Maximizing short-term profit is the only principle my organization follows. -.357 .251 .738

9. When my organization has power over stakeholders, it exploits it. -.178 .554 .273

10. The key objective of my organization is to increase short-term financial performance. -.162 .342 .645

Note: Factor loading over .4 appear in bold.

Table 4. Stakeholder cultures factor loading

Instrumentalist Culture Items 1 2 3

1. My organization professes to care about many stakeholders, but in reality, it only cares

about those stakeholders that can influence financial performance. -.286 .537 .432

2. My organization is self-interested, but it tries to conceal it. -.375 .483 .332

3. My organization only acts morally toward stakeholders to make money for shareholders. -.287 .366 .620

4. My organization claims to care for stakeholders but in fact only cares for shareholders. -.461 .504 .423

5. My organization pays much more attention to stakeholders that can affect profits in the

future than to the ones that cannot affect profits. -.128 .435 .281

6. My organization tries to appear moral, but it only follows moral principles when it is

economically advantageous to do so. -.415 .617 .266

7. My organization pretends to be moral, but it only acts morally when this enhances

financial performance. -.387 .580 .265

8. My organization can be best described as appearing moral but in practice only focusing

9. My organization only acts morally towards stakeholders in order to increase its profits in

the long term. -.274 .584 .337

10. The key objective of my organization is to realize its long-term financial objectives. .257 .467 .192

Note: Factor loading over .4 appear in bold.

Table 5. Stakeholder cultures factor loading

Moralist Culture Items 1 2 3

1. Moral principles are important drivers of my organization. .687 -.282 -.139

2. Moral principles are important drivers of my organization. .708 -.282 -.190

3. My organization cares for all its stakeholders. .610 -.244 -.112

4. My organization shows a genuine concern for all its stakeholders. .740 -.210 -.180

5. Being ethical is very important to my organization. .677 -.343 -.196

6. My organization sticks to moral principles, even when there are financial incentives to

ignore them. .521 -.358 -.237

7. My organization tries to “do the right thing”, even when it costs money. .678 -.283 -.183

8. My organization considers serving stakeholder interests as a goal in itself, besides financial performance.

.431 .135 -.192

9. My organization would not violate ethical standards in order to make more money. .603 -.125 -.192

10. A key objective of my organization is to treat its stakeholders in the best way possible.

Note: Factor loading over .4 appear in bold. .573 .011 -.225

After excluding item 5, 6,7, and 9 from the egoist scale, the Cronbach’s ! was computed again. The results (Table 7) show that the internal validity is very similar to the previous computed Cronbach’s !, reporting a value of .910. After deleting item 4 from the instrumentalist scale, the Cronbach’s ! was .872. Even though these values show a lower Cronbach’s ! than before deleting the items that were cross-loading, the results show the Cronbach’s ! is still very high (above .8). To conclude, all scales are reported to be very reliable in this test.

Table 6. Cronbach’s !

!

Egoist culture* .910

Instrumentalist culture** .872

IV.II Descriptives, correlations, and normality

The following control variables were considered in our survey: gender, age, nationality, tenure at organization, hours worked a week, education, industry of employment, level of employment, size of organization, and type of organization. Due to the large amount of dummy variables, only the dummy variables that showed a significant correlation with the main variables are shown in the descriptives table. The most significant correlations, including means, and standard deviations are shown in table 5. These offer some interesting insights. For instance, a significant positive correlation (r = .229, P = .005) was found between the results of the OCBO scale and men. This is interesting as previous results indicate that OCBs in general is expected more of women than of men (Farrel & Finkelstein, 2007). Social role and gender socialization theory suggest that women are inherently more relationship oriented than success oriented and thus engage more in organizational citizenship than men (Cloninger, Ramamoorthy & Flood, 2012). This is in contrast to the correlation found in this study in which males report higher OCB than women. Furthermore, age was negatively, albeit weakly, correlated with the egoist culture (r = -.199, P = .05) and instrumentalist culture (r = -.186, P = .05) showing that older participants perceived their organizational culture as less egoist and instrumentalist, but more moralist (r = .182, P = .05). Moreover, as expected, participants working in a for profit organization positively highly correlated with the egoist (r = .361, P = .01) and instrumentalist cultures (r = .420, P = .01), and negatively with the moralist culture (r

= -.176, P = .05). For profit organizations are more focused on gaining short- and long-term

profits. All significant correlations with the control variables (at 0.01 and 0.05) are also shown in the table 7.

Correlations with the main variables

Examining the correlations, one can see that almost every variable significantly correlates with the other variables in the research model. The scales OCBO and In role performance, measuring the dependent variable stakeholder reciprocity, show a significant difference in the correlation table. Whereas OCBO significantly correlates with all variables, the scale In role performance does not. This suggest that when running the regression analyses, the hypotheses cannot be confirmed when using the In role performance scale. However, it is way more likely that using the OCBO scale hypotheses will be supported.

The dependent variable, OCBO, significantly correlates at a 1% level with egoist (-.308**) and instrumentalist culture (-.326**), organizational identification (.590**), and corporate reputation (.402**), and it significantly correlates at a 5% level with the moralist culture (.284*). The strong correlation with mediator OI suggests that the higher an employee reports OI, the higher their stakeholder reciprocity (OCBO). It also suggests possible mediation effects of OI on the relationship between stakeholder cultures and OCBO. Furthermore, the significant correlation between corporate reputation and OCBO employees explain employees who report high on corporate reputation would also report high on OCBO. Surprisingly, OCBO did not correlate with In Role Performance (.053).

Continuing with the moderating variable, corporate reputation, the results show negative correlation (at 1% level) with the egoist .138**) and instrumentalist culture (-.206**). The moderator positively significantly correlates with the moralist culture (.391**) at the 1% level. These results suggest egoist and instrumentalist cultures report a lower corporate reputation than in a moralist culture. Egoist and instrumentalist cultures are mainly driven by the pursuit of short- and long-term profits, respectively, while not genuinely caring for their stakeholders (Jones, 2007). These cultures either hide (instrumentalist) it or are openly honest

report corporate reputation very high compared to moralist cultures. Moreover, corporate reputation did also significantly correlate with OI (.345**) at a 1% level. This statistically high correlation suggests that employees who report higher on corporate reputation identify more with the organization.

Lastly, OI significantly correlated with egoist (-.236**), instrumentalist(-.249**), and moralist culture (.341**) at a 1% level. The negative correlations with egoist and instrumentalist culture implies that employees identify less in organization with those cultures. Whereas, in organization with a moralist culture people have a high organizational identification. These significant results show circumstantial evidence for hypothesis 4.

Normality

Prior to testing the hypotheses through linear regression, the distributional shape of the data should be tested and tell whether the variables are normally distributed. Kurtosis measures how flat or how peaked or measure is, whereas skewness measures the symmetry, or more precisely the lack of symmetry. Skewness and Kurtosis of zero show a perfect normal distribution. The results (table 6) show that skewness ranged between -.695 and .722. Negative values for skewness indicate that data are skewed left, whereas positive values indicate data are skewed on the right. The values of kurtosis ranged between -.741 and 1.11. Positive values for kurtosis indicate that data distribution is more peak-topped than a normal distribution; also called leptokurtic. Negative kurtosis values are said to be more platykurtic. This kind of distribution has less major fluctuations and outliers compared to normal distributions (mesokurtic). Both skewness and kurtosis values are in the acceptable range between -2 and +2 (George & Mallery, 2010; Gravetter & Wallnau, 2014; Trochim & Donnelly, 2006) to run the regression analysis. See Appendix B for the normality tests, including the histograms of all variables.