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EMPLOYEES COMMITMENT TO CHANGE

KYLIE VERVELD

Student number: 11145323 THESIS FINAL VERSION

Date of submission: January 26, 2018

MSc. Executive Program in Management Studies – Strategy Track Amsterdam Business School, University of Amsterdam

Thesis Supervisor: Prof. Dr. J. Strikwerda

A study of the moderating effect of a project-based organizational structure on the relationship between organizational justice and employees’ commitment to change.

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STATEMENT OF ORIGINALITY

This document is written by Kylie Verveld, who declares to take full responsibility for the content 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.

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TABLE OF CONTENTS

ABSTRACT 4

1. INTRODUCTION 5

2. THEORETICAL FRAMEWORK 9

2.1AFFECTIVE COMMITMENT TO CHANGE 10

2.2INTERPERSONAL JUSTICE AND INFORMATIONAL JUSTICE 13

2.3PROJECT-BASED STRUCTURE 15

3. CONCEPTUAL MODEL 23 4. RESEARCH METHOD 24 4.1RESEARCH DESIGN 24 4.2DATA COLLECTION 25 4.3MEASURES 26 4.4SAMPLE 28 5. RESULTS 29 5.1CORRELATION ANALYSIS 30 5.2REGRESSION ANALYSIS 31 5.3MODERATION ANALYSIS 35 5.4ADDITIONAL ANALYSES 36 6. DISCUSSION 39 6.1SUMMARY 39 6.2CONCLUSION 39 6.3THEORETICAL IMPLICATIONS 40 6.4PRACTICAL IMPLICATIONS 41 6.4LIMITATIONS 42 6.6FUTURE RESEARCH 44 7. REFERENCES 47 8. APPENDIX 54 8.1THESIS QUESTIONNAIRE 54

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ABSTRACT

This study examines the relationship between organizational structure, interactional justice and affective commitment to change. While some relationships between types of justice and commitment to change have already been established, the moderating role of an organizational structure on the relationship between justice and affective commitment to change has not been addressed yet.

This research is based on a questionnaire completed by 80 employees who are working in different organizations that are facing or have faced organizational change. Results reveal that interpersonal and informational justices are both positively related to affective commitment to change of employees. No significant effect of project-based structure on the relationship between interpersonal or informational justice and affective commitment to change has been found. However, other findings demonstrate that there is a significant effect of project-based structure on affective commitment to change through either interpersonal justice or informational justice as mediators.

This study adds to literature on change management and organizational structure, as this research examines the links between the four main concepts in a context of change. Theoretical implications are discussed, as well as limitations and directions for future research.

Key words: Organizational structure, project-based structure, interpersonal justice, informational justice, affective commitment to change.

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1. INTRODUCTION

Organizational change has been the subject of research for many decades, from the reasons of organizations to acquire or merge (Porter, 1987) to the effects of organizational changes on behavior among employees and managers (Barton & Ambrosini, 2013; Meyer, Srinivas, Lal, & Topolnytsky, 2007; Foster, 2010). According to Moran and Brightman (2001), change management has been defined as ‘the process of renewing an organization’s direction, structure, and capabilities to serve the changing needs of customers’ (Cited by By, 2005).External drivers such as new technologies, consumer demand, competitive environment, government regulations and economic conditions, cause these organizational changes. In order to anticipate to the changing environment and to stay competitive, many organizations have to adapt and change their current strategies. Organizational changes should be embraced instead of feared, because these changes should strengthen the competitive advantage and position of an organization and also provide opportunities for future growth. Organizational change has a wide scope and is present in almost every business and industry, from small one-man businesses to big multinationals and from retail organizations to government institutions. There are many types of organizational changes including acquisitions, mergers, introduction of new products or services, innovation of processes, changes in financial structure and changes in (organizational) culture. This research addresses organizational change in general and is not focussing on one type in particular. In addition, this study focuses on individuals working for organizations that are facing or have recently faced organizational change. This focus group consists of employees working in bigger companies and multinationals with several business units or departments, but also

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employees of smaller businesses can relate to the concepts in this study, which I will elaborate later in detail.

Changes in strategy are mostly initiated and defined by higher management and need to be implemented on operational level by restructuring tasks and processes. It is important for management and employees to be on the same page concerning the new strategy to ensure a successful change implementation. Therefore, organizational change is accompanied with the involvement and motivation of employees. This motivation of employees can be difficult because it also involves changing employees’ behavior and tasks, which could raise either positive or negative reactions. Employees, who are skeptical about change initiatives and not willing to embrace it, show resistance to change. On the other hand, commitment to change comes from employees who see the benefits and opportunities of the new strategies. Commitment among employees is valuable for organizations, because it is assumed that organizational commitment reduces withdrawal behavior, such as lateness or turnover (Mowday, 1982). In this research, commitment to change is one of the main concepts and will be referred to as the perceived affective commitment to change of employees.

Studies about the antecedents of organizational indicate that there are links with personal characteristics such as perceived competences, stress level, skill variety, motivation, satisfaction, but also job related antecedents such as task interdependence, job involvement, perceived leadership, role states, performance and dimensions of organizational structure (Mowday, 1982; Allen & Meyer, 1991; Armenakis et al, 1993; Rafferty et al, 2012). One of these antecedents is organizational justice (Bies & Moag, 1986), which refers to employees’ perception of their organization’s behaviors, actions and decisions (Greenberg, 1987). Organizational justice is linked to the

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concept of fairness, which includes employees’ judgement of their organization as fair or unfair and how this perception influences their own attitude and behavior at work.

While organizational structure is mentioned as an antecedent of organizational commitment, only a few dimensions are being discussed, such as company size and centralization versus decentralization. Research about a specific type of organizational structure as a direct influencer on employee behavior and organizational commitment is lacking in literature about organizational structure and change management. Although there is no single option for organizational structure, it does have an influence on company performance. Also choosing a structure that is matching the organization’s goals and culture should avoid workplace problems and conflicts by clearly defining roles, systems, processes and authority.

On the other hand, the recent technological developments and rapidly changing markets are also triggers for the establishment of new business models. For example, technological innovations have changed the way businesses operate and interact with each other. New models, such as outsourcing or overseas collaborations would not be possible without the high-speed communication the Internet provides. Also, organizations, which are dealing with acquisitions or mergers, may find the need to restructure and change their culture. Since the introduction of the Internet and other technologic innovations, such as smartphones and social networks, many industries and organizations have to adapt in order to meet new consumer demands and to survive among competitors. Besides, in many industries processes are being digitalized and innovated, for example in the banking industry, where services are being provided via Internet and mobile devices since a couple of years instead of face-to-face conversations. As a result of these innovations, many organizations are depending more and more on their human and intellectual capital such as knowledge,

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rather than their physical assets. Therefore, knowledge and information are valuable assets of today’s organizations.

This study explains the impact of organizational structure on employees’behavior in a context of organizational change. The type of organizational design this research is focusing on is a project- or process-based structure. In short, this structure is about focusing on projects and processes rather than on functional structure or existent hierarchy in an organization. Project-based working gives organizations the ability to combine knowledge that is organized in different business units, to be flexible and to create more value over functional departments (Strikwerda, 2012). Project- and process-based structures are relatively the same, but have a small difference within the context of this research, as projects are temporarily and will end when these are finished and processes have a more continuous character. The results of the survey, which is performed as part of this research, will reveal the level of project-based structure in the organizations of the respondents. As using the word “project” in the survey is more likely to appeal to the respondents’ imagination than talking about processes, the term project-based structure is being used in this research. The concept of project-based structure, as referred to in this research, is relatively new. I will review the literature and concept of project-based structure in depth in the next section.

The aim of this thesis is to have a better understanding of the concept of commitment to change and to examine the relationship between a project-based organizational structure and the employees’ affective commitment within organizations. This research will explain the effect of organizational project-based working on the relationship between perceived justice and commitment to change. Hereby, two types of organizational justice will be tested, interpersonal justice and

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informational justice. Furthermore, the moderator in this research, the variable that affects the relationship between other variables, reflects the structure of an organization and is therefore the concept of project-based structure. In this thesis I will address the following research question:

“How does the level of project-based structure affect the relationship between interactional justice and affective commitment to change in an organizational context?”

In the next section, relevant literature for this study will be discussed. The concepts of commitment to change, interactional justice and project-based structure will be defined, as well as the links between those concepts. Thereafter, the conceptual model and hypotheses of this research will be described. Next, the research design, measures and sample will be explained followed by the results of testing the hypothesis. Finally the conclusion, discussion and directions for further research will be discussed.

2. THEORETICAL FRAMEWORK

This study has had its focus on the interaction between three concepts in literature, commitment to change, organizational justice and organizational structure. I will review all three in the following paragraphs, starting with a review of commitment to change, followed by one of its antecedents, organizational justice. The final section will explain organizational structure, with as main topic project-based structure. The paragraphs are combined with the hypotheses that have been tested in this study.

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2.1 Affective commitment to change

Due to the emerging technological innovations and rapidly changing markets, organizational change occurs continuously today. One of the major challenges involved with change management is people’s tendency to show resistance to change, this occurs when employees perceive that a change initiative is a threat to them. Loss of status, loss of pay, or loss of comfort and certain group dynamics are described as antecedents to the resistance to change, which eventually can lead to loss of jobs (Dent & Goldberg, 1999). Dent & Goldberg (1999) also argue that it is not resistance to change that should be dealt with, but the antecedents themselves. While literature about resistance to change addresses more psychological and human behavioral arguments, does literature about change readiness and to change also mention external factors such as organizational environment, structure, processes and the planning of change implementation as influencers on organizational commitment (Armenakis, Harris & Mossholder, 1993; Rafferty, Jimmieson & Armenakis, 2012). Although the external factor, organizational structure, is mentioned as antecedent in general, there is a lack of research to the consequences of specific types of organizational structure on employee behavior, as characteristics of organizational structures and the links with commitment are not thoroughly explained.

Within the literature on organizational change, diversereactions of employees to the change initiative are of high importance. Bovey and Hede (2001) mention that when individuals have to deal with organizational change, they have to go through a reaction process, which can be either positive or negative, and are often influenced by the personal impact of this change (Self, Armenakis & Schraeder, 2007). Organizational change can increase the feeling of uncertainty for employees, as the current situation will differ from the new, unknown situation (Vakola & Nikolaou,

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2005).Thereactions towards this new situation play a big role in an employees’ level of commitment or resistance to organizational change and commitment is one of the important factors involved in employees’ support for organizational change (Armenakis, Harris, & Feild, 1999; Coetsee, 1999; Conner & Patterson, 1982).

Allen and Meyer (1991) created the Three-Component model of organizational commitment. They define three types of commitment: affective, normative and continuance commitment. Herscovitch and Meyer (2002) have built upon this model by adding the concept of organizational change and creating three scales of commitment to change. The affective component of commitment to change, proposed by the model, refers to employees' emotional attachment to, identification with, and involvement in, the organization and the desire to support change because of the belief that the change provides benefits. Continuance commitment represents the employees’ fear of loss and the idea that there are costs associated with them leaving the organization, when they are not providing support for the change. Finally, the normative component of commitment refers to employees' feelings of obligation to stay with the organization and to provide support. This research will mainly focus on the affective component of commitment, as it has been shown to have the strongest and most positive correlation with desirable work behaviors (Meyer, Stanley, Herscovitch & Topolnytsky, 2002; Morin, Meyer, Bélanger, Boudrias, Gagné & Parker, 2015).

Rogiest et al (2015) did research on the contribution of communication and participation in organizational change and they argue that employees’ participation within change or decision-making processes has a positive influence on affective commitment to change and hereby reduces the resistance to that change. Also the way an organizational change is being implemented and communicated, positively

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influences affective commitment to change (Lines, 2004; Rogiest, Segers & van Witteloostuijn, 2015).

As explained earlier, many of the antecedents of organizational commitment are categorized to personal characteristics, job characteristics, organization characteristics, role states and group relationships (Mathieu and Zajac, 1990; Mowday, Porter, & Steers, 1982, Bateman and Strasser, 1984). There is less research about specific antecedents of commitment in a context of organizational change, but it is assumed that these are relatively equal to the antecedents of organizational commitment (Herscovitch and Meyer, 2002). However, Kernan & Hanges (2002) found that various forms of perceived justice contribute to organizational commitment, which could result in support for change. Their study refers to ways of communication and participation that increases support for change or reduce negative reactions, through fairness and procedural justice (Kernan and Hanges, 2002). Understanding employees’ commitment to change requires understanding of the social dynamics, such as the relationship between an employee and his or her supervisor and the perceived justice within this relationship (Bouckenooghe, De Clercq & Deprez, 2013; Soenen and Melkonian, 2016; Armenakis, Harris & Mossholder, 1993). A review of 25 years of organizational justice research indicate that justice perceptions strongly affect the attitude of employees such as job satisfaction, turnover intentions, workplace behavior such as absenteeism and organizational citizenship behavior, but also organizational commitment (Colquitt, Conlon, Wesson, Porter, & Ng, 2001). As explained earlier, it is assumed that the antecedents of commitment to change are relatively the same to those of organizational commitment. Therefore it is predicted that organizational justice has a relationship with commitment to change as well.

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2.2 Interpersonal justice and informational justice

Organizational justice refers to the concept of how employees’ judges the behavior of organizations and the influence of this on employees’ behavior and attitudes at work. Organizational justice is closely related to the concept of fairness, as employees judge their employer’s decisions and behavior as fair or unfair. Because it can reduce disengagement of employees (Strom, Sears & Kelly, 2014), ensuring organizational justice should be a priority for organizations.

The study of justice and fairness is brought back to two main concepts in organizational studies: distributive justice (Adams, 1965; Leventhal, 1976) and procedural justice (Leventhal 1980; Leventhal, Karuza & Fry, 1980).

Later, Bies and Moag (1986) introduced the most recent component of organizational justice by focusing on the quality of interpersonal treatment people receive when procedures are implemented; interactional justice. Interactional justice refers to the treatment that an individual receives by giving explanations for decisions and bringing the news with respect and sensitivity (Bies & Moag, 1986). A study on dimensions of organizational justice by Colquitt (2001) suggests that interactional justice should be divided into two components: interpersonal and informational justice. Interpersonal justice refers to the type of personal treatment that employees receive from their managers, namely, the extent to which they are treated with dignity, respect, and consideration (Konovosky & Cropanzano, 1991). Several analyses indicate significant weak relationships between employees’ interpersonal justice perceptions and their affective commitment (Colquitt, Conlon, Wesson, Porter, & Ng, 2001) that suggests this relationship is affected by moderators or mediators (Bouckenooghe, 2010). Shin et al (2015) discuss the role of the informational justice in maintaining commitment to organizational change. Informational justice refers to

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the extent to which managers provide adequate justification and proper information when implementing procedures (Bies & Moag, 1986). This type focuses on information and explanations provided to employees about why procedures are used in a certain way or why and how processes and outcomes are distributed. It is found that informational justice positively moderates the relationship between early and later commitment to change and according to the authors this will eventually lead to more successful organizational change through employees’ behavioral support and low turnover intention (Shin, Seo, Shapiro and Taylor, 2015). As recent, longitudinal research already suggest there is a direct relationship between informational justice and commitment to change, the first hypotheses are based on this knowledge and are formulated in order to ensure an existing relationship between the two types of interactional justice and affective commitment to change. Therefore, I argue the following:

Hypothesis 1: Higher level of interpersonal justice leads to higher affective commitment to change

Hypothesis 2: Higher level of informational justice leads to higher affective commitment to change

As described earlier, organizational environment and structure are being discussed as antecedents for organizational commitment (Armenakis, Harris & Mossholder, 1993; Rafferty, Jimmieson & Armenakis, 2012). It is also found that organizational structure influences organizational justice. Ambrose and Schminke (2003) did research into the moderating effect of organizational structure on the

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relationship between organizational justice and social exchanges and the results indicate that indeed various types of organizational structure do have different effects on the existing relationships. However, Ambrose and Schminke (2003) used two opposite types of organizational structure in their study, a mechanic and an organic structure, mainly defined by the level of centralization and formalization in an organization and the company size. While these three dimensions are good measures to distinguish different organizational structures, can these two types of structure still be considered as high-level and abstract concepts, which cover many ways to design an organization. With today’s information, scholars have more detailed knowledge of other forms of organizational structure and their impact on performance and the organization. One of these structures, project-based structure, is a main concept in this research and will be reviewed in the next section.

2.3 Project-based structure

The focus of many organizations seems to shift from a functional structure towards a more process-based structure (Kohlbacher and Gruenwald, 2011). The first concept of process-based structure has links to business process orientation (BPO) and finds its origin in the work of Deming (Walton, 1996), Davenport and Short (1990) and Porter (1985). The general message in their work is that firms could adopt a process-view of the organization to increase their overall performance. The approach of process orientation emphasizes processes as the opposite of hierarchies (McCormack and Johnson, 2001). However, these researches about business process orientation are mainly referring to organizations that are reengineering processes with measureable outputs. This approach of redesigning had the attention decades ago. In the meantime, other publications have gone further with emphasizing the transition in organizations with knowledge-based output. Strikwerda performed research into

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organizational design in the 21st century in 2012, research into project-portfolio

management in 2014 and research into end-to-end processes in 2017, which all contain and discuss aspects of the concept of project-based structure used in this research. According to Strikwerda (2012), the methods of business design of previous century became obsolete. Important reasons for that are innovations in business models, a rapidly changing environment, decreasing costs of information and communication and the switch from tangible to intangible assets. Intangible assets, such as knowledge, give the concept of process-oriented working a whole different context. In the previous century businesses complied with “structure follows strategy”, while nowadays customer value proposition is key focus and organizations understand the urge of switching to a business design that complies with “process follows proposition” (Osterwalder, 2005; Strikwerda, 2012). “Process follows proposition” refers to the internal design of an organization that starts with the customer value proposition and from which all internal processes are derived in order to perform on this proposition. Processes need to be designed in a way that the output is exactly what the organization assures its customer. This also means that processes go right across the activities of different business units when necessary and is not limited by functional business units and departments such as production, sales and logistics. The difference is that now processes are first planned in terms of human capital, organization capital and information capital, and then followed by the investments of needed tangible assets. This approach of business design finds its origin in the United States, where the investments in intangible assets are already higher than in Europe. This seems to correlate with a growing economy and labor productivity in the United States (Strikwerda, 2012). Based on previous information there is a new type of structure introduced, which called process-based structure. For

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this research we refer to project-based structure instead of process-based structure, which is reasoned in the introduction section. It is a structure wherein top management decides that processes or projects have a higher status in resource allocation than functional business units or departments. Other characteristics of a project-based structure are that projects are planned upfront in terms of capital, budget and performance, also employees are assigned to a project team but have a permanent functional business unit such as sales, production or logistics. Furthermore, independent project managers are being assigned and take responsibility for a project next to unit managers, who are responsible for their business unit or department. Figure 1 shows the basics of a project-based business model and the hierarchy of management and resource allocation.

Figure 1. Basics of a project-based business model

Thus, with understanding this project-based working, some old dilemmas become obsolete. Now, teamwork and cross-business cooperation can be realized because it is understood that resources and responsibility across business units now

Business unit Business unit Business unit Business unit Project A Project B Project C Unit manager Unit manager Unit

manager manager Unit

Project manager Project manager Project manager Top management

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have a clear hierarchy. Also projects, processes, intangible assets, human- and information capital are now financially linked to budgets and are no longer overruled by accounting data or tangible assets. Besides, information and knowledge can be shared and is not protected by business units. By sharing knowledge between business units, it also becomes possible to share information about cause-and-effect relationships and about how to create value. And also, the use of resources is now determined by projects and not by functional business units (Kaplan & Norton, 2004; Strikwerda, 2012). Another side effect of project-based working and the participation of employees in processes and projects is that employees are also involved in decision-making processes and have access to more and different information than before. Increasing this level of transparency across the organization could lead to better understanding of management decisions and change initiatives, which is related to employee engagement or commitment.

Based on previous information, one can wonder what causes the switch to project-based thinking in terms of organizational structure. The source of this movement can be found in the rise of the knowledge economy and the growth of intellectual capital in organizations (Strikwerda, 2012, 2014, 2017; Foss & Mahoney, 2010). As machines replaced human and animal labor during the Industrial Revolution two centuries ago, now intelligence and knowledge is improving or taking over machines, energy and muscles in the Knowledge Economy. Businesses with more intellectual capital require a different type of organization than manufacturing companies. This transition towards knowledge-based economy and organizations is explained in many publications about knowledge governance and knowledge management. Knowledge governance, as reviewed by Foss and Mahoney (2010), concerns choosing organizational structures and mechanisms that can influence the

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process of using, creating, sharing and developing of knowledge in preferred directions. This covers how intellectual capital is being managed in an organization. They reveal key issues around the concept of knowledge government, but also mention there still remain many unsolved issues, such as how knowledge-related behaviors influence organizational outcomes (Foss & Mahoney, 2010).

In 2004 Kaplan and Norton contribute to the concept of project-based structure by developing the strategy maps. The authors are also known for the introduction of the Balanced Scorecard, a tool used by many organizations and managers to keep track of performance and to link current actions to long-term goals. However, the strategy map (Kaplan & Norton, 2004) is a guide for the implementation of new strategies and allows managers to align investments in people, technology and capital in order to succeed the implementation of a strategy. Improving internal processes such as operations, innovation, culture and customer relationships, and investing in intangible assets such as, human capital, information capital, and organization capital management can implement a structured plan to achieve strategic success (Kaplan & Norton, 2004). The strategy map is contributing to project-based structure by discussing the importance of defining key processes and assets in an organization and building a strategy upon these in order to create value. In addition, Kaplan and Norton published a book in 2008 about the execution of strategy and how to link an organization’s strategy to its operations. They argue that breakdowns in a company’s management system cause a company’s underperformance, for example when the management has less time for evaluating strategy execution and alignment, because operational subjects and issues are more urgent in companies’ weekly meetings. When a company falls into this trap, their operational system is moving on as usual, but they will never concentrate on and

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examine their strategy in order to adjust this and generate growth opportunities. Therefore they discuss a method to balance organizations’ strategy and operations. Their book in 2008 is looking further than previous publications by providing in-depth guidance for the integration of an organization’s strategy. The recommendations in their book will provide managers of a complete management system that helps setting clear strategic goals, allocate their resources according those goals and recognize the strategic and operational impact of those decisions (Kaplan & Norton, 2008).

Also the other side of this concept can be questioned. Why do many organizations not make the full transition to project-based working? One of the reasons could be the complexity of this transition. It does not only concern defining a new structure and strategy, informing employees and assuming everyone is committed to work towards this new vision. It is the planning of an implementation upfront, before informing of employees at operational level, which is really important. Strikwerda mentioned this as “systemic change” in his article about end-to-end processes in 2017. First higher management has to prepare the strategy execution by defining and planning processes, information flows, communication and structures. After building a clear framework, it is time to explain lower management and employees how the new strategy affects their work and instruct how to change their departments and tasks according to the new strategy. The moment employees are involved and made aware of well-considered plans, they are more willing to participate and adapt, than when plans are still vague and inaccurate (Strikwerda, 2017). Furthermore, this preparation is important because the result of it creates shared confidence and reassures employees. By providing clear and effective communication and information from higher management, employees are more open

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to engage in the transition, which could lead to lower resistance to change. This process of “systemic change” contributes to successful change implementation, but is rarely entirely executed by organizations (Strikwerda, 2017). It could be a lack of time or a lack of knowledge or skills that explain why organizations are holding back. Another potential problem is the changing dynamics of power and authority when a project manager is appointed, especially when this project manager is external or not related to any of the existing business units. In a new situation where project managers have priority in resource allocation over unit managers, the existing hierarchy can be changed and the authorities and responsibilities of unit managers will be different. Therefore, another issue to discuss is whether changing management and hierarchy as described above leads to a decreasing level of commitment to change at (middle) management level, because of the perceived identity loss of (unit) managers. However, there is no empirical research on the relationship between identity loss and changing to project-based structure. For that reason, this potential problem is excluded from this research.

A project-based structure also requires a higher level of complexity in information in comparison to a unit-based organization. Information is not limited by business units anymore, and now has to go back and forth between teams, departments and layers. However, these new streams of information can have other benefits, and also lead to emerging questions.Does a project-based organization have more ability to steer information flows throughout the entire organization and not only on management level? And if so, are employees better informed about their contribution, processes, goals, results and ambitions, and therefore more willing and able to commit to changes? This is where organizational justice comes in. Not only information flows are important, but also fairness and transparency of

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decision-making procedures are applicable. For example, do employees feel that their contribution to the end product is higher and more visible in a project-based organization and do they understand and agree with how decisions are being made?

Here we are on a crossroads between a positive and negative impact of project-based structure and the answers can be find out by testing these constructs in a model. The construct that is tested, has project-based structure functioning as a moderator on the relationship between interactional justice and commitment to change. In other words, will the implementation of a project-based approach in an organization have an effect on the existing relation between organizational justice and commitment to change? In relation to previous question, the following is predicted:

Hypothesis 3: A higher level of project-based structure has a positive effect on the relationship between interpersonal justice and affective commitment to change.

Hypothesis 4: A higher level of project-based structure has a positive effect on the relationship between informational justice and affective commitment to change.

If above hypotheses are being tested and the model shows that project-based structure does impact the relationship between justice and commitment to change, it can also be questioned whether there is a direct relationship between project-based working and affective commitment to change, without influencing the perceptions of justice. This hypothesis predicts that a project-based organization creates an

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organizational environment where employees tend to commit to change faster than in organizations that have a functional approach.

Hypothesis 5: A higher level of a project-based structure leads to higher affective commitment to change

3. CONCEPTUAL MODEL

It is predicted that interpersonal justice will have a positive influence on the employees’ affective commitment to change, as the employees experience positive personal treatment from managers. It is also predicted that informational justice has a positive impact on affective commitment to change, as employees are better informed about projects and decision-making processes. The level of project-based structure is expected to strengthen both relations, as it improves the organizational environment, cooperation and transparency within the organization. Finally, it is also predicted that the level of project-based structure has a direct and positive effect on the level of affective commitment to change. The relations between the different concepts are visualized in the conceptual model (see Figure 2).

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Figure 2. Conceptual Model

4. RESEARCH METHOD

This section describes the research design and methodology of this study. First, the research design is outlined. Second, the procedure of data collection is presented. Finally, the used measure scales are explained with examples.

4.1 Research Design

This research is explanatory in nature, as the objective is to explain how the concepts of interactional justice, the level of project-based structure and affective commitment to change are related to each other. In addition, this research is specifically about commitment in the context of organizational change, and is therefore focusing on individuals and organizations that are facing or have recently experienced change, to explain the relationship between above-mentioned concepts. The data for this study has been collected by the use of a questionnaire, which was digitally distributed. The method of data collection via a survey was preferred for a

+

Interpersonal Justice Informational Justice Affective Commitment to Change H2 H3

+

+

Project Based Organizational Structure H4

+

H5

+

H1

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number of reasons. First of all, by the use of an online survey more respondents have been available to collect data from to provide a more generalized outcome for this study. In addition, the use of an online questionnaire provides the opportunity to collect data from several companies and levels within the companies, within a limited timeframe. Last, the conceptual model is easier to be tested by numerical data analyses, than is it by using qualitative data sources, such as interviews. The survey has been sent out at one point in time, therefore the data is cross-sectional. In addition, the questions in the survey are also translated to Dutch. The survey has been available in two languages in order to make it accessible for Dutch employees, as this is the main focus of this research, and as well for international employees.

4.2 Data collection

To obtain only relevant information, the sample for this survey has been taken from the working population. Furthermore, this population must have experienced or are able to imagine a situation of change in an organizational context. Due to the large size of the population, there is no clear sampling frame. Therefore, the sampling technique that is being used is non-probability convenience sampling. To avoid over representation of a single organizational culture, the sample is taken from different organizations. To avoid type 1 and type 2 errors a minimum sample of 50 respondents must be obtained, but to improve statistical power, the objective was to obtain responses from a minimum of 100 participants (Van Voorhis & Morgan, 2007).

All respondents have been contacted via e-mail, directly or via a colleague, to participate in an online survey concerning the effect of organizational structure on the level of commitment to change. Respondents were informed the survey is a part of a master thesis research and the results would only be used for the purpose of the thesis research and data would not be provided to third parties or any of the participating

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organizations. The questionnaire was set up in Qualtrics and a link to the online survey was sent in the emails.

When clicking on the link, the first page of the survey was shown. A short description of the subject, research and questionnaire is presented. The respondent’s consent is asked and it is explained that their response is anonymous. Furthermore, contact details are provided, in case respondents want to gain more information about this research or questionnaire.

The first part of the questionnaire contains questions with statements about affective commitment to change (ACC). All statements in the second part are aimed at the project-based structure in an organizational context (PBS). The third part of the questions is also about project-based structure, but has a different type of questioning. These questions contain two opposites statements. The respondent is asked to which extent they agree with the first or the second statement. In the fourth section the respondent is asked to answer questions about interactional justice. In this questionnaire, the subject of ACC comes before the concept of PBS. Arranging the concepts in this order made it possible for the respondent to answer questions about their experiences with recent change, before they were able to realize which type of structure could possibly influence their thoughts.

For the complete questionnaire, see Appendix.

4.3 Measures

Four variables are tested: affective commitment to change, project-based structure, interpersonal justice and informational justice. This section describes the measures of each variable.

Commitment to change. Organizational commitment measurement can be based on the 15-item scale developed by Porter, Steers, Mowday (1979). However, for this

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research it is more relevant to focus on the aspect of change within organizational commitment and to measure commitment to change. Therefore the 18-item scale from Herscovitch and Meyer (2002) is used. This scale measures each of the three dimensions of commitment to change; affective commitment, continuance commitment and normative commitment. Each dimension is measured by using six items that can be answered by using a 7-point Likert scale ranging from strongly disagree to strongly agree. This scale is a reliable scale, as α = .93. Example items are: ‘I believe in the value of this change’ and ‘Things would be better without this change’. All items of affective commitment to change, developed by Hersocovitch and Meyer (2002), are shown in the appendix.

Project Based Structure. To test hypothesis 3, 4 and 5, data collection of the respondents’ knowledge about the organizational design of the company is needed. The results of this part of the survey should tell more about the structure of organizations and whether these organizations focus more on functional structure, or have a project-based approach. For this variable we have designed new items. Based on literature (Strikwerda, 2012, 2014 and 2017; Ostenwalder, 2005), we defined the core characteristics of project-based working and with this information we created twelve statements which can be answered by a 7-point Likert scale, ranging from strongly disagree to strongly agree. The statements are formulated closest to the concept of project-based working. In the second part of this concept, the items consisted of two opposite statements, which can be answered by a 7-point scale, ranging from strongly agree with statement (A) to strongly agree with statement (B). These statements are formulated in a way that statement B is closest to the concept of project-based working each time. Example items are: “There is one project

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owner/manager, who is independent and not working in one of the functional departments.”and “(A) My manager decides in which projects I participate versus (B)

I can choose for myself in which projects I participate.” All items are shown in the appendix.

Interpersonal and informational justice. Each of the four dimensions of justice can be measured with the 20-item scale developed by Colquitt (2001). While only two types of justice remain in this research, the four items of interpersonal justice and the five items of informational justice are used. Each item has been answered by using a 7-point Likert scale ranging from ‘to a very small extent’ to, ‘to a great extent’. Example items are: ‘Are you treated in a polite manner?’ and ‘Are you treated with respect?’ All items, developed by Colquitt, are shown in the appendix.

4.4 Sample

Data for this research was collected from 106 respondents from different companies located in the Netherlands. 25% of the respondents did not complete the whole questionnaire, and therefore no additional information is available on these respondents. The rest of the respondent group consisted out of 42 males and 38 females. The size of the organizations ranged from under 1-10 employees to over 200 employees, with a large amount of employees working in large companies with over 200 employees (34,0%). Due to the anonymity of the questionnaire, there is no information about the companies these respondents work for.

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5. RESULTS

The data collected via the survey have been analyzed using SPSS to find support for the hypotheses and theoretical model. The total respondent group consists of 128 respondents, but 22 of the respondents only opened the survey and did not answer any question. Therefore these rows were deleted from the dataset. 26 respondents answered only the questions in the first part of the questionnaire about affective commitment to change, and dropped out afterwards. As these individuals answered more than 10% of the questionnaire and covered at least one variable, this data is kept in the dataset and has therefore impact on frequencies, means and standard deviations. In correlation and regression analyses the used data is adjusted to the number of respondents that answered items of all needed variables, and therefore correlation and regression analyses are not being affected by the missing values. First, a frequency test was run for all variables to find out if the data consisted of errors and to prepare data for analysis. In the questionnaire respondents had the option to enter ‘no answer’ to each question, when they were not able to answer the question or could not relate to the subject. These answers are also recoded as missing values in the dataset. Second, the data set was checked on counter-indicative items. The data set revealed that three items of affective commitment to change had to be recoded. A reliability analysis was run for all four variables, in order to make sure that all items per scale were consistent with each other. All scales were reliable as α >.70. The differences between the values of the Cronbach’s Alpha if item deleted and the overall Cronbach’s Alpha of the scale was < .10 for all scales, therefore, no items were deleted. Next, scale means were computed for affective commitment to change, project-based structure, interpersonal justice and informational justice and these were coded into ACCtot, PBStot, IPJtot and INJtot. Table 1 provides information on the

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means, standard deviations, correlations and reliability of and between the different constructs in this study. When looking closer to the means, it becomes clear that all means are above the average in their scale. Affective commitment to change and project-based structure were both measured on a 7-point Likert scale and therefore have a middle value of 4. Both means are above 4, which indicate an above average level of commitment to change and an above average level of project-based structure under the respondents. The same results can be seen at the other variables. The two types of justice were measured on a 5-point Likert scale, and both means are above the middle value of 3.

5.1 Correlation Analysis

Table 1: Means, Standard Deviations, Correlations and Cronbach’s Alpha.

N M SD 1 2 3 4 5 6 1. Affective Commitment to Change 106 5.85 .947 (.893) 2. Project-based Structure 89 4.62 .879 .070 (.778) 3. Interpersonal Justice 80 4.14 .651 .336** .416** (.884) 4. Informational Justice 80 3.52 .778 .308** .483** .407** (.843) 5. Gender 80 .48 .503 -.035 -.207 -.040 -.144 6. Company Size 80 4.26 1.847 .094 .154 -.023 -.220 -.068

** Correlation is significant at the 0.01 level (2-tailed)

The correlation values in table 1 have the ability to give insights on the relationship between variables. The correlations between affective commitment to change and both forms of justice are substantial and significant (Correlations are .336

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and .308), even to the 0.01 level. In other words, this indicates that if the level of justice increases, the level of commitment to change also tends to increase. The table shows that there is also a significant positive correlation between project-bases structure and the two types of justice (Correlations are .416 and .483, p < .01). Also this means that when the level of justice increases, the level op project-based structure also tend to increase. However, these correlations do not tell explain about causal relationships. Therefore we do not know yet if justice tends to influence project-bases structure or vice versa. Finally, such a positive relation between variables is also visible on interpersonal justice and informational justice (Correlation is .407, p < .01). This was expected, as interpersonal justice and informational justice both found their origin in the interactional justice type (Colquitt, 2001). In order to express this relationship in figures, a regression analysis is being performed. The results are shown in table 2.

5.2 Regression Analysis

Table 2: Hierarchy Regression Model of Affective Commitment to Change

R R2 R2 Change B S β t Step 1 .330 .109** Interpersonal Justice .467 .153 .330** 3.04 Step 2 .335 .112 .003 Interpersonal Justice .505 .169 .356** 2.98 Project-based Structure -.071 .135 -.063 -.53

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Hierarchical multiple regression analysis was performed to investigate ability of justice and the level of project-based structure to affect the levels of affective commitment to change. In order to test hypothesis 1 and 3, this first regression analysis includes the variables interpersonal justice and project-based working. In the first step of hierarchical multiple regression analysis, only one predictor was entered: interpersonal justice. This model was statistically significant F (1, 76) = 9.29; p < .01 and explained 10.9% of variance in affective commitment to change. At step 1, interpersonal justice has a significant Beta value (β = .33, p < .01). In other words, if interpersonal justice increases for one, the commitment to change will increase for 0.33. With his information hypothesis 1 can be accepted and therefore a higher level of interpersonal justice leads to higher affective commitment to change. After entering project-based structure at Step 2 the total variance explained by the model as a whole was 11.2% F (2, 75) = 4.74; p < .05. The introduction of project-based structure explained additional 0.3% variance in affective commitment to change. In the final model only one variable was statistically significant, with interpersonal justice recording a Beta value of .35 (p < .01). The Beta value of project-based structure is not significant (β = -.07). As this last Beta value is not significant, there is no evidence that a higher level of project-based working has a positive effect on the relationship between interpersonal justice and affective commitment to change. Therefore, hypothesis 3 cannot be accepted.

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Table 3: Hierarchy Regression Model of Affective Commitment to Change R R2 R2 Change B S β t Step 1 .306 .094** Informational Justice .357 .126 .306** 2.82 Step 2 .314 .099 .005 Informational Justice .403 .145 .346** 2.78 Project-based Structure -.092 .140 -.082 -.65

** Correlation is significant at the 0.01 level

In order to test hypothesis 2 and 4, this second regression analysis includes the variables informational justice and project-based working. In the first step of hierarchical multiple regression analysis, again one predictor was entered: informational justice. This model was statistically significant F (1, 77) = 7.96; p < .01 and explained 9.4% of variance in affective commitment to change. At step 1, informational justice has a significant Beta value (β = .30, p < .01). In other words, if informational justice increases for one, commitment to change will increase for 0.30. With his information hypothesis 2 can be accepted and in conclusion one can say that a higher level of informational justice also leads to higher affective commitment to change. After entering project-based structure at Step 2 the total variance explained by the model as a whole was 9.9% F (2, 76) = 4.16; p < .05. The introduction of project-based structure explained additional 0.5% variance in affective commitment to change. In the final model only one variable was statistically significant, with informational justice recording a Beta value of .34 (p < .01). The Beta value of

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project-based structure is not significant (β = -.08). In conclusion, without this last Beta value being significant, hypothesis 4 cannot be accepted and there is again no evidence that a higher level of project-based working has a positive effect on the relationship between informational justice and affective commitment to change.

Table 4: Hierarchy Regression Model of Affective Commitment to Change

R R2 R2 Change B S β t Step 1 .330 .109* * Interpersonal Justice .336 .165 .237* 2.04 Informational Justice .286 .145 .229* 1.96 Step 2 .335 .112 .003 Interpersonal Justice .403 .170 .284* 2.37 Informational Justice .376 .157 .301* 2.39 Project-based Structure -.207 .142 -.183 -1.45

* Correlation is significant at the 0.05 level

Although it was not hypothesized, there were two more regression analyses performed. One analyses was performed in order to explain the effect of both types of justice in combination with project-based structure. Now, in the first step of regression analysis, two predictors were entered: interpersonal and informational justice. This model was statistically significant F (2, 75) = 6.76; p < .01 and explained 15.3% of variance in affective commitment to change. After entering project-based

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structure at Step 2 the total variance explained by the model as a whole was still 17.6% F (3, 74) = 5.27; p < .01. The introduction of project-based structure explained additional 2.3% variance in affective commitment to change. In the final model two variables were statistically significant, with informational justice recording a higher Beta value (β = .30, p < .05) than interpersonal justice (β = .28, p < .05). However, the Beta value of project-based structure is not significant (β = -.18). In other words, if interpersonal or informational justice increases for one, the commitment to change will increase for 0.28 or 0.30, but the level of project-based structure has no significant effect on this relationship.

Finally, there is one more regression analysis performed to investigate the effect of project-based structure as an independent variable on affective commitment to change. This analysis included only one model with one predictor: project-based structure. This model was not significant F (1, 87) = .424 and explained only 0.5% of the model. However, without significant values hypothesis 5 cannot be accepted and there is no evidence that a higher level of a project-based structure directly leads to higher affective commitment to change.

5.3 Moderation Analysis

Moderation analyses have been performed in light of the hypotheses 3 and 4, based on Hayes’ moderation/mediation macro for SPSS (Hayes, 2012). However, as the multiple regression analyses already suggested, there is no evidence for any significant moderation of project-based structure on the relationship between interactional justice and commitment to change. Although the models accounted for 12.6% and 9.8% of the variance in affective commitment to change, the table shows that the interactions (XM) are not statistically different from zero. Thus, the effect of interpersonal or informational justice on affective commitment to change does not

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depend on project-based structure and moderation does not take place. Therefore hypotheses 3 and 4 are not confirmed. The results are shown in table 5.

Table 5: Simple Moderator Analyses of Project-based Structure via Interpersonal and Informational Justice on Affective Commitment to Change (N=78).

5.4 Additional analyses

Although it was not part of the conceptual model, additional analyses have been performed on the mediating effect of interpersonal and informational justice between project-based structure and affective commitment to change. The correlation values show a significant relationship between project-based structure and the two types of justice. Also, the types of justice seem to have a significant correlation with commitment to change. This is a reason to belief that this type of organizational design could affect commitment to change through organizational justice. Table 4

Coeff. SE t p Intercept i1 5.894 .104 56.343 < .001 X (IPJ) c1 .503 .169 2.977 .003 W (PBS) c2 -.022 .141 -.159 .874 (XW) IPJ*PBS c3 .169 .155 1.094 .277 R2 = .126, p = .018 F (3, 74) = 3.57 Intercept i1 5.930 .106 55.900 < .001 X (INJ) c1 .401 .147 2.735 .007 W (PBS) c2 -.088 .164 -.541 .589 (XW) IPJ*PBS c3 .004 .123 .037 .970 R2 = .098, p = .049 F (3, 74) = 2.74

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shows that adding project-based structure to the model does not explain significantly more of the variance. However, when performing a mediation analysis with Hayes’ macro for SPSS (Hayes, 2012), other results are coming up. An alternative model with mediation (figure 3) is established in order to test this statistically. Results are shown in table 6.

Figure 3: Alternative conceptual model with mediator

Table 6: Multiple Mediation Analysis of Project-based Structure via Interpersonal and Informational Justice on Affective Commitment to Change (N=78).

M (IPJ) M (INJ) Y (ACC)

Antecedents Coeff. SE P Coeff. SE P Coeff. SE P

X (PBS) a1 .330 .083 <.001 a2 .359 .096 <.001 c1 -.206 .142 .151

M (IPJ) a3 .271 .120 .027 b1 .402 .169 .020

M (INJ) b2 .376 .157 .019

Constant iM1 2.604 .389 <.001 iM2 .705 .516 .175 iY 3.909 .711 <.001

R2 = .17 R2 = .29 R2 = .17

F (1, 76) = 15.88 F (2, 75) = 15.74 F (3, 74) = 5.27

Interpersonal Justice Informational Justice Affective Commitment to Change Project Based Organizational Structure a2 2 a1 2 a3 2 b1 2 b2 2 c1 2

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The direct effect of project-based structure on affective commitment to change is not significant (c1, p = .151). On the other hand, two indirect effects illuminate the underlying process. The first indirect effect is the specific indirect effect of project-based structure on commitment to change through interpersonal justice. This effect indicates that those employees who work for an organization with a higher level of project-based structure, experience significant increase in interpersonal justice (a1 = .330, p < .001), which is further associated with increased commitment to change (b1= .402, p < .05) independently of the perceived informational justice. This indirect effect can be interpreted as significantly positive because the bootstrap confidence interval is entirely above zero (indirect effect = .133, SE = 0.058, CI = 0.035 to .263). The second indirect effect is the effect of project-based structure on commitment to change through informational justice. Employees who work for an organizational with a project-based structure experienced significantly higher level of informational justice (a2 = .359, p < .001), which in turn was associated with higher affective commitment to change (b2 = .376, p = .019) regardless of employee’s perceived interpersonal justice. This effect is significantly positive (indirect effect = .135, SE = .072, CI = .006 to .293). The third indirect effect in this model is the effect of project-based structure on commitment to change through interpersonal and informational justice in serial. Employees who work for an organizational with a project-based structure experienced significantly higher level of interpersonal justice, which was also related to higher level of informational justice (a3 = .271, p = .027) and this increase of informational justice is further translated into showing more commitment to change (b2= .376, p = .019). However this specific indirect effect is not significantly positive (indirect effect = .033, SE = 0.024, CI = -.009 to .086). In conclusion, this analysis states there is found a significantly relationship between

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project-based structure and affective commitment to change through either interpersonal justice or informational justice as a mediator.

6. DISCUSSION

6.1 Summary

The purpose of this study was to explain the links between interactional justice, project-based structure and affective commitment to change. First, it was predicted that interpersonal and informational justices have a positive relationship with affective commitment to change in hypotheses 1 and 2. In addition, it was predicted that the positive relationship between interpersonal justice and affective commitment to change is being moderated by project-based structure. The fourth hypothesis was that project-based structure moderates the relationship between informational justice and affective commitment to change. Finally, it was also predicted that project-based structure has a direct and positive relationship commitment to change. Thereafter, two additional analyses were performed, in order to give this study an exploratory character.

6.2 Conclusion

The findings of this study have provided diverse results on the five hypotheses. Support was found for the positive relationship between the two types of interactional justice with affective commitment to change, but it was found that no moderation takes place between these two constructs by the level of project-based structure. Also the direct relation between project-based structure and affective commitment to change has not been supported. Because both hypotheses where moderation was being tested are not supported, additional analyses were performed to

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explore other relationships. There is statistical evidence found that the two types of interactional justice function as mediators in the relation between project-based structure and affective commitment to change. In other words, this means that the level of project-based structure in an organization has positive impact on employees’ level of interpersonal and informational justice, and this increasing level of these types of justice leads to higher commitment to change. In order to answer the main question of this research, it can be said that no moderation takes place, but the relation between project-based structure and affective commitment to change is based on the mediating character of interpersonal and informational justice.

6.3 Theoretical implications

The results of this research show that higher perceived interactional justice leads to a higher level of affective commitment to change. These results are consistent with earlier literature, that states that informational justice has a positive relationship with organizational commitment and commitment to change (Shin et al, 2015). In addition to this literature, now the positive relationship between interpersonal justice and affective commitment to change is tested as well, and shows to have a positive relationship. This information adds on the research of Shin et al (2015), but also on the research of Ambrose and Schminke (2003), who argue that interactional justice is related to organizational support.

Although there is still limited information about project-based structure and its consequences in earlier research, this research gives insights in the impact of a project-based structure and contributes to literature about organizational structure and organizational change. The outcomes do not confirm hypothesis 3 and 4, which means that a project-based structure does not moderate the relationship between interpersonal justice and commitment to change, same as for the relationship between

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