THE IMPACT OF LEGITIMACY:
The influence of legitimacy of control on trust and employee effort
Master thesis, BA Organizational & Management Control
D.E. van den Boogaard S1998285 University of Groningen Faculty of Business Economics
2
ABSTRACT
This study investigates employees of a Dutch non-profit organization in the field of social
security, using data of a survey study among 757 employees, who are employed in different locations throughout the country. The present study investigates whether the relationship between output control and trust in supervisor and the relationship between output control and effort of employees are moderated by legitimacy of output control. Further, it tests the mediating effect of trust in supervisor on the relationship between output control and effort of employees. Based on the literature reviewed, I propose that output control, if perceived legitimacy is high, will have a positive effect on effort of employees and trust in supervisor. However, output control, if perceived
legitimacy is low, will have a less positive effect or will have a non-positive effect on effort of employees and trust in supervisor. I further expect that if output control is perceived as legitimate, trust in supervisor will mediate the relationship between output control and effort of employees. This study contributes by expanding the insights into efficient mechanisms of governance. Since the role of control as a mechanism of governance has changed due to recent organizational
developments and external pressures, this might be a very useful contribution for managers. Furthermore, by using legitimacy of output control as a potential moderator, this study may help to find new perspectives on the trust versus control nexus in the literature.
Keywords: output control, trust in supervisor, effort of employees, legitimacy of output control,
3 Table of Contents
ABSTRACT... 1
INTRODUCTION ... 4
THEORETICAL BACKGROUND ... 8
Control and Output Control... 8
Trust in Supervisor ... 9
Effort of Employees ... 9
Relation of Output Control and Effort of Employees ... 9
Relation of Control and Trust ... 10
Legitimacy of Output Control ... 11
Moderating effect of Legitimacy of Output Control ... 12
Relation of Trust in Supervisor and Effort of Employees ... 13
METHODOLOGY ... 15
Participants and Design ... 15
Procedure ... 16 Level of Analysis ... 16 Measures ... 17 RESULTS ... 18 Factor Analysis ... 18 Normality ... 19 Multicollinearity ... 21
Descriptive Statistics and Correlations ... 22
Testing of Hypotheses ... 28
DISCUSSION AND CONCLUSION ... 29
Implications for Practice ... 33
Limitations and Implications for Future Research ... 34
REFERENCES ... 36
Appendix A: Survey Items ... 43
4
INTRODUCTION
5 present study will contribute by focusing on subordinates by investigating not only the degree of management control they perceive, but also their interpretations of management control, instead of what is commonly done: investigating the interpretations of management control by managers. This study focus on the individual level, since the employees’ interpretations and perceptions of management control are expected predictors of the effort of employees provided.
Due to the organizational developments mentioned, the importance of trust as a mechanism of governance has increased in the last decade. By now, trust is widely regarded as an important ingredient of organizational effectiveness (Albrecht & Travaglione, 2003). Moreover, organizational structures are still becoming flatter, people are still becoming more autonomous, teams are still becoming more self-directing, while managers and supervisors expect that work will be done more efficiently (Bijlsma-Frankema et al., 2010). A sustainable trusting relationship between subordinates and supervisors seems necessary to meet these demands. Additionally, since extra-role behaviors, which are important components of effort, cannot be enforced by control mechanisms and have been shown to be promoted by trust, we have even more reason to investigate the relationship between trust and control as mechanisms of governance (Chalykoff & Kochan 1989; Niehoff & Moorman, 1993).
6 So far, empirical research has not yielded clear evidence on how trust and control are related. Some studies positively support the complementary perspective, while other studies positively support the substitution perspective (Bijlsma-Frankema and Costa, 2005). Consequently, another path of examination is needed to find an explanation for these mixed results. Tyler and Blader (2005) showed that employees are more likely to comply with control mechanisms when they feel that legal authorities are legitimate and ought to be obeyed. Moreover, the fairness heuristic theory (FHT; Lind, 2001) predicts that information of legitimacy components, such as fairness and procedural justice, is used in examining whether an authority can be trusted or not. Therefore, variations in legitimacy might explain the mixed outcomes of the control and trust nexus.
The pioneering part of this study is my proposition that legitimacy of control will moderate the relationship between control and trust, and the relationship between control and effort (see conceptual model on p. 15). Legitimacy is, in this study, based on the definition of Suchman (1995). He defined legitimacy as "a generalized perception or assumption that the actions of an entity are
desirable, proper or appropriate within some socially constructed system of norms, values and definitions". We therefore can suggest that employees will accept a control mechanism if it is
deemed appropriate by them, resulting in positive consequences for the organization in the form of in-role and extra-role behaviors (Chalykoff & Kochan 1989; Niehoff & Moorman, 1993).
7 attain the goals set by management. This includes the choice of employees whether or not to show extra-role behaviors relevant to performance (Chalykoff & Kochan 1989; Niehoff & Moorman, 1993). Next to examining the moderating effect of legitimacy of output control on the relationship between output control and trust in supervisor and between output control and effort, I will investigate whether the relationship between output control, if perceived as legitimate, and effort of employees, is mediated by trust in supervisor.
Many studies have found that a high level of trust in supervisor leads to positive effects on individual performance, such as effort of employees (Aryee et al, 2002; Colquit et al, 2007; Dirks & Ferrin, 2002). This strong effect of trust in supervisor on effort is explained by an higher level of directedness at goals, set by the organization (Dirks and Ferrin, 2001), more pro- organizational focused behavior (Ashforth & Lee, 1990; Lapidot, Kark & Shamir, 2007; Mayer & Gavin, 2005; Nooteboom, Berger & Noorderhaven, 2007) and more sociable behaviors of employees (Kramer, 1999). In the literature, the importance of trust as a mechanism of governance to increase effort is clearly demonstrated (Aryee et al, 2002; Colquit et al, 2007; Dirks & Ferrin, 2002). Therefore, I expect a mediating effect of trust in supervisor on the relationship between output control and effort, if output control is perceived as legitimate.
8 mediated by trust in supervisor. This is relevant because, if output control leads to trust, it will enhance the effort of the employees.
THEORETICAL BACKGROUND
In this chapter I will clarify the concepts and definitions used, starting with control and output control, followed by trust in supervisor and effort of employees. Thereafter, I will examine output control in relationship with effort of employees. Furthermore, the controversial relationship between trust and control and the concept of legitimacy of output control will be examined. Subsequently, the moderating effect of legitimacy of output control will be explained. Finally, the relationship between trust in supervisor and effort of employees will be hypothesized.
Control and Output Control
Control is generally defined as “any process whereby managers direct attention, motivate, and
encourage organizational members to act in desirable ways, to achieve the organization’s objectives”
(Merchant, 1985; Ouchi, 1977, 1979; Sitkin et al., 2010 p.56). Managers measure and monitor the work of their employees by comparing their performance against established standards or targets. Based on these evaluations, managers provide rewards or sanctions for their employees (Jaworski et al., 1993). Jaworski et al. (1988) have conceptualized three types of formal control targets that managers use to align the goals of their subordinates with those of the organization. These types are distinguishable from each other by the timing of management intervention. ‘Input controls are
9 Trust in Supervisor
Most authors seem to agree that positive expectations and the willingness to become vulnerable are critical elements to define trust (Bijlsma-Frankema & Costa, 2005). Both characteristics are worded in the definition of Rousseau et al. (1998 p. 395), ‘trust in supervisor is a psychological state
of employees comprising the intention to accept vulnerability based on positive expectations of the intentions or the behavior of the supervisor’. More specifically, positive expectations are in this study
confident beliefs held by the employee that the supervisor is competent, honest and will bring about desirable events, or prevent undesirable events, in areas which the employee experiences as
relevant (McKnight, Cummings & Chervany, 1998). The willingness of employees to accept vulnerability reflects an intention which depends on the supervisor (McKnight, Cummings &
Chervany, 1998). “Making oneself vulnerable is taking a risk. Trust is not taking risk per se, but rather
it is willingness to take a risk” (Mayer, Davis & Schoorman, 1995; p. 712).
Effort of Employees
Theamount of energy put in to accomplish work is a commonly used partial definition of effort (Naylor, Pritchard, and Ilgen,1980; Brown & Peterson, 1994; Yeo & Neal, 2004). De Jong and Elfring (2010) enhanced the definition by defining effort as “the extent to which organizational members
devote their resources, energy, attention and time, to executing tasks” (p.537). So, the level of
employees’ effort partly depends on choices involving the direction, intensity and persistence of behavior (Brown & Peterson, 1994). Moreover, it is to the discretion of employees to put in full or lesser effort (Mulvey, Bowes-Sperry & Klein, 1998). In this line of reasoning, Organ (1998) argues that effort partly consists of extra-role behaviors, such as exploration of opportunities and participation in organizational learning.
Relation of Output Control and Effort of Employees
10 up of markets, virtualization and flexibilization of organizational forms, work relations between managers and subordinates have become looser and more distant, (Bijlsma-Frankema & Costa, 2005) thus creating barriers for the exercise of control. Subsequently, cause-effect knowledge which may include extra-role behavior of employees, become increasingly relevant and important to performance. However, past studies found that control is hardly an effective mechanism of governance in the leverage of intangible resources, such as skills and knowledge about productive and managerial processes (Chalykoff & Kochan 1989; Niehoff & Moorman, 1993). Extra-role behavior cannot be enforced by command- and control styles of management, since these behaviors are discretional in nature (Chalykoff & Kochan 1989; Niehoff & Moorman, 1993). Moreover, output controls do not specify employees’ actions, which hold that the responsibility for cause-effect knowledge has been delegated to the employees (Jaworski, 1988). Therefore, independent of the degree of control, individuals have the ability to put effort in their work in the form of extra-role behaviors, but they can also choose not to do so (Kerr, 1983).
Relation of Control and Trust
11 1988; Gulati, 1995; Powell, 1990). Therefore, the higher the level of trust in relationships, the lower the costs of monitoring and other control mechanisms (Cummings and Bromiley, 1996). Inversely, Inkpen and Currall (1997) note that lower trust levels lead to more formal operational procedures, such as more detailed contract documentation and more frequent board meetings. The substitution view is consistent with more traditional management perspectives that conceptualize trust and control as equivalent strategies for reducing uncertainty, complexity and dealing with the freedom and indeterminacy of others (Knights et al., 2001). Both trust and control allow for the development of expectations with regard to employees’ future behaviors, and increase predictability (Nooteboom, 2002). Therefore, they are considered to be alternate routes for arriving at stable orders to which employees can orient their behavior (Gulati, 1995; Bijlsma-Frankema & Costa, 2005).
On the other hand, there is the complementary perspective that suggests that trust and control can be positively related and mutually reinforcing (Sitkin, 1995; Das & Teng, 2001; Bijlsma-Frankema & Costa, 2005). In these studies it was suggested that the use of formal control mechanisms, such as output control, may enhance a trusting relationship by narrowing down the domain and severity of risk (Poppo and Zenger, 2002). This can be justified, since most theorists agree that trust is intimately associated with risk (Coleman, 1990) and that trust and risk can be considered “mirror images” of each other (Das & Teng, 1998b). Moreover, Velez et al. (2008) stated that output control can build trust since they provide evidence with a greater appearance of objectivity, by setting objective rules and clear measures. A greater appearance of objectivity is an important precondition for trust as it makes the supervisor more predictable (Luhmann, 1979; Zucker, 1986). Both the substitution and complementary perspective point to studies which support their ideas. So far, the mixed findings of empirical research have not yielded conclusive evidence on how trust and control are related. Legitimacy of Output Control
12 of appropriate interpretations of rules and controls by managers and employees central in his study of managerial control and consequences of control. He posed the question as to whether organizational rules and procedures served the interests of managers and/or employees or neither party. Gouldner distinguished three types of bureaucracy in a study of a gypsum mine: representative, both union and management endorse the rules; punishment centered, one side endorses the rules and enforces them with the other party; and mock bureaucracy, the rules are imposed by ‘outsiders’ and not endorsed by either party. Interestingly, Gouldner found that the relationship between managers and workers in the representative bureaucracy leads to more productivity because both parties believe the rules to be appropriate. If authority is in place, followers will willingly obey the rules or directives that managers have set. This insight is based on the work of Weber (1968) who already pointed out the importance of authority as a form of legitimate power of management. Building on his work, the concept of legitimacy is, furthermore, a core concept in institutional theory. Institutional theory argues that, next to a technical environment that poses effectiveness and efficiency demands, organizations are also embedded in an institutional environment which poses legitimacy demands. Managers must deal with these two types of demands and with tensions that may occur between them (Bijlsma-Frankema & Costa, 2010). If the demands are contradictory, meeting legitimacy demands are more important for survival of the organization than meeting task demands (Bijlsma-Frankema & Costa, 2010). This means that it is recommended in research on organizational control to make it encompasses more than exploring considerations of individual managers and studying formal structures, but to include legitimacy interpretations of subordinates as well (Scott, 2001). As Gouldner, stated, legitimacy of control interpretations of employees do matter to performance.
Moderating effect of Legitimacy of Output Control
13 system is seen as legitimate. If an output control mechanism is deemed appropriate by organizational members, they will accept it, voluntarily comply, and positive consequences for the organization can be expected like trust of managers (Tyler & Blader, 2005) and higher effort (Chalykoff and Kochan, 1989; Niehoff and Moorman 1993). Moreover, the fairness heuristic theory (FHT; Lind, 2001) predicts that information of legitimacy components, such as fairness and procedural justice, is used in examining whether an authority can be trusted or not. Furthermore, Bijlsma-Frankema and Sleebos (2008) stated that an employee may trust his or her supervisor if the supervisor helps to improve the employees performance and avoid a poor performance assessment. Therefore, I contend that output control, if perceived legitimacy is high, will have a positive effect on effort of employees and trust in supervisor. However, output control, if perceived legitimacy is low, will have less positive effect or non-positive effect on effort of employees and trust in supervisor. Accordingly, this leads to the first two hypotheses:
H1: Legitimacy of output control will moderate the relationship between output control and effort of employees, such that, if perceived legitimacy of output control is high, the relationship will be positive and if legitimacy is perceived as low, the relationship will less positive or non-positive.
H2: Legitimacy of output control will moderate the relationship between output control and trust in supervisor, such that, if perceived legitimacy is high, the relationship between output control and trust in supervisor will be positive, if perceived legitimacy is low, the relationship will less positive or non-positive.
Relation of Trust in Supervisor and Effort of Employees
14 directedness toward goals, as defined by the supervisor (Dirks & Ferrin, 2001). Dirks (2000) concludes that trust in supervisors makes employees suspend their personal motives and channel their energy towards ‘the roles specified by the leader’ and ‘to work towards the performance-related objectives
and strategies set by the leader’ (p.1005). Secondly, in situations of lower trust, less employee effort
can be expected, because employees spend a lot of attention on reducing their own vulnerabilities and self-protection instead of pro-organization focused behavior (Ashforth & Lee, 1990; Lapidot, Kark & Shamir, 2007; Mayer & Gavin, 2005; Nooteboom, Berger & Noorderhaven, 2007). The third effect of trust in supervisor on effort mentioned in the literature is the shift from avoidance behaviors, in situations of low trust, to approach behaviors of employees when trust is high. Kramer (1999) argues that these approach behaviors result in engaging more sociable behaviors, such as cooperative-, altruistic- or extra-role behaviors. Moreover, an important component of effort is extra-role behavior, which cannot be enforced by control and which has been found to be promoted by trust. So in this line of reasoning, I predict that the level of subordinates’ trust in supervisor will affect the considerations that motivate employees to exert effort. Accordingly, this leads to the third
hypothesis:
H3: Trust in supervisor will have a positive effect on effort of employees
The fourth hypothesis will test the complete conceptual model, since I expect that trust in supervisor will mediate the relationship between output control, if perceived as legitimate, and effort of employees. This is relevant because, if output control leads to trust, it will enhance the effort of the employees. Therefore, in line with the first 3 hypotheses, I formulated the last hypothesis:
15 Figure 1: Conceptual model
METHODOLOGY
Participants and DesignIn this study, secondary data were used. The research setting was a Dutch non-profit
organization in the field of social security. This organization has approximately 4000 employees that operate within approximately 300 teams in different locations throughout the Netherlands. The relevant questions for this research were part of a larger set of research questions for which a survey questionnaire was sent to 3790 employees. 1248 employees responded, which resulted in a
16 Procedure
A quantitative survey design using written questionnaires has been used, given the number of employees this was the most suitable approach. To increase the response rate of the employees, the questionnaire was made as short as possible with a maximum time of 12 minutes needed to
complete. Moreover, since everybody of the target pool understood the Dutch language, the questionnaire was set up in Dutch, avoiding misconceptions due to language deviation. Additionally, in the email it was stated that personal answers remained confidential and the privacy of the employees was guaranteed. Furthermore, the aim of this study was shortly explained in the
invitation mail to increase the attention of the target group. More specifically, it was mentioned that this study tries to provide insight into factors which are essential for the functioning of teams in this particular organization. All participants voluntarily took part in this study.
All variables within the employee and supervisor survey were measured using a seven-point Likert-scale. At the end of the questionnaire the opportunity to give comments was provided. A validation questionnaire was sent to the supervisors to check which employees belonged to their team.
Level of Analysis
In the secondary dataset I used both the data of output control perceived by employees and the data of output control perceived by supervisor were included. The data of output control based on the perception of the supervisor has the advantage that by using this data, common source bias is avoided. Common source bias could occur if both questions regarding output control and legitimacy of output control would be answered by the same respondent. However, Evans (1985) found that when moderator analyses are used to investigate the conditional relationships between two predictors and a dependent variable, then the existence of the interaction term reduces the
17 output control. However, using team level ratings would be a restriction for this study, since
individual ratings and individual perceptions of output control are needed to explain variation in this model. Therefore, in this study output control based on the perceptions of employees is used.
In this research, it is thus intended to explain variation in the dependent variable effort, by variation in output control, trust in supervisor and legitimacy of output control. Since, the degree of the level in trust in supervisor highly depends on the individual perception of employees and since the variation of putting effort into work may be explained by individual ratings, I will test the proposed hypothesis at the individual level. In conformity with my study, all questions asked in the secondary dataset were framed as individual questions.
Measures
As previously stated, all participants responded to the statements (see for an overview of the scale items Appendix: A) in the questionnaire on a Likert scale ranging from 1 (disagreement) to 7 (agreement) on the following constructs:
Output control. Output control was measured using a seven-point scale (1= ‘completely
disagree’, to 7= ‘completely agree’) from Jaworski, Strathakopoulos and Krishnan, (1993). Likert-type statements like ‘The assessment of employees’ work is mainly based on the achieved targets’ and ‘The production targets for my team are set by authorities’ are used.
Effort. Effort of employees was measured using a seven-point scale (1= ‘completely disagree’, to
7= ‘completely agree’) from Mulvey, Bowes-Sperry, and Klein (1998). Five Likert-type statements like ‘I work very hard to accomplish all my tasks correctly’ and ‘I keep trying my best, even if something goes wrong for a moment’ are used.
Trust in supervisor. Trust in supervisor was measured using a seven-point scale (1= ‘completely
18
Legitimacy of output control. Legitimacy of output control was measured using a seven-point
scale (1= ‘completely disagree’, to 7= ‘completely agree’) from Rousseau and Tijoriwala (1999). Likert-type statements like ‘It is appropriate that the output targets and standards are set by the management’ and ‘It is appropriate that employees have to justify themselves to the management when they do not meet output targets or the set standards’ are used.
Control variables. Age and gender were used as control variables, to rule out potential
confounding factors (Badea et al., 2010). Data Analysis
First both datasets were verified to ensure a sample of high quality, and after verification of the data, the two datasets were combined. Subsequently, an exploratory factor analysis was conducted to examine the underlying structure of the included factors of this research (see: Results). The internal reliability was tested by computing measurement scales’ Cronbach’s Alpha. Furthermore, since the data was not normally distributed, bias-corrected bootstrapping (Hayes, 2013) analyses were used to test the hypotheses. The variables of age and gender were tested and included as control variables. All statistical analyses were done by using SPSS, with standardized variables. For the analysis, a significance alpha level of .05 was applied.
RESULTS
Factor Analysis19 items had to be removed (Ferguson & Cox, 1993). The explanatory factor analysis thus showed evidence that the scales in question are quite unidimensional in nature.
Moreover, table 1 shows the Cronbach’s alphas. The Cronbach’s alpha is used to measure internal consistency, explaining how closely related a set of items are as a group. In this study, the lowest Cronbach’s alphas are measured for output control (.84) and for legitimacy of output control (.84), which are above the critic value of α ≥ .70 for scale reliability (Nunnally’s (1978). The
Cronbach’s alphas for trust in supervisor (.93) and effort (.94) showed also reliable representations of the variables.
Normality
20
Table 1: Factor analysis and Cronbach’s alpha
Effort Trust in supervisor Legitimacy of output control Output control Cronbach’s alpha (.94) (.93) (.84) (.84) Effort 1 .91 Effort 2 .90 Effort 3 .87 Effort 4 .89 Effort 5 .80 Trust in supervisor 1 .87 Trust in supervisor 2 .82 Trust in supervisor 3 .82 Trust in supervisor 4 .90 Trust in supervisor 5 .88
Legitimacy of output control 1 .68
Legitimacy of output control 2 .83
Legitimacy of output control 3 .81
Legitimacy of output control 4 .78
Legitimacy of output control 5 .67
Output control 1 .85
Output control 2 .81
Output control 3 .74
Output control 4 .69
Output control 5 .66
21
Table 2: Shapiro-Wilk test for normality
Descriptive Shapiro-Wilk test
Variable Skewness Kurtosis Statistic
Legitimacy of output control -.58 .39 .97*
Trust in supervisor -1.24 1.66 .90*
Effort -2.04 6.88 .82*
Output control -.54 .30 .98*
Note. n = 757, * p < .001,
Table 3: Multicollinearity analyses
DV= Effort Test of multicollinearity
Variable Tolerance VIF
Legitimacy of output control .80 1.25
Trust in supervisor .87 1.15
Output control .82 1.22
Note. n = 757,
Multicollinearity
A multicollinearity analysis was conducted to check whether there should be concern for correlation between the predictors, legitimacy of output control, trust in supervisor and output control in a regression analysis. In general, an indication for a potential problem with
22 Descriptive Statistics and Correlations
In table 4 the descriptive statistics mean and standard deviation are presented. Moreover, this table shows the Pearson Zero-order correlations of the four variables and the control variables age and gender. Correlations enable us to examine how the variables are associated, however the variables are not designated as dependent or independent variables. The correlations of output control and trust in supervisor (r= .28, p <.01) and output control and effort (r= .29, p <.01) were both found significant. These relationships are interesting in combination with the concept of legitimacy of output control, since the expectations are that if legitimacy is perceived as high, output control will have a positive effect on effort of employees and trust in employees and if legitimacy is perceived as low, output control will have less positive effect or will have non-positive effect on effort of
23 Mediation Effects
Legitimacy of output control is posed as a central and critical element in the hypotheses and in this research as a whole, since it is expected that output control, if perceived as legitimate, will result in effort of employees and in trust in supervisor. Moreover, it is claimed that trust in supervisor mediates the relationship between output control, if perceived as legitimate, and effort. Therefore, by testing the hypotheses, it is essential to find out the impact of legitimacy of output control. In this research, this is done by performing a mediation analysis without the concept of legitimacy of output control first, followed by multiple moderation analyses including the concept of legitimacy of output control.
Firstly, a mediation analysis without moderators was performed, using bias-corrected bootstrapping (Hayes, 2013; model 4). In table 5 the regression results for the indirect mediation effects of trust in supervisor are presented. In this analysis output control was used as the independent variable, effort as the dependent variable and age was used as a control variable.
Table 4: Descriptive statistics and Pearson Zero-order correlations
Variables M SD p 1 2 3 4
1 Leg. of output control 4.74 1.14 <.001
2 Trust in supervisor 5.41 1.28 <.001 .31**
3 Effort 6.13 0.87 <.001 .26** .31**
4 Output control 5.00 1.13 <.001 .39** .28** .29**
5 Gender 1.52 0.50 - -.01 -.02 .04 -.03
6 Age 45.77 10.64 - -.08* -.05 .08* .03
24
Note. n = 757 employees , Standardized regression coefficients are presented. p* < .05, p** < .01, p*** < .001
In addition of the mediation analysis, a hierarchical regression analysis further assessed the explained variance in effort that was the result of adding trust in supervisor and the result of adding output control to the model.
Table 5: Mediation effects of trust in supervisor
Mediator variable model (DV = Trust in supervisor) R² = .08***
Predictor B SE t p
Constant .00 .03 .00 1.00
Age -.02 .04 -.44 .66
Output control .28 .04 8.00*** < .001
Dependent variable model (DV = Effort) R² =.14***
Predictor B SE t p
Constant 6.13 .03 209.42*** < .001
Age .04 .03 1.51 .13
Trust in supervisor .22 .03 7.07*** < .001
Output control .19 .03 6.23*** < .001
Total effect model DV = Effort) R² = .08***
B SE t P
Total effect control on effort .25 .03 8.28*** < .001
Direct effect control on effort .19 .03 6.34*** < .001
Mediation model (Indirect effects)
Effect Boot SE BootLLCI BootULCI
Control trust effort .06 .02 .04 .11
Ratio of indirect to total effect .24 .07 .13 .39
25
Table 6: Explained variance in effort of employees
Model summary
Model R R Square Adjusted R Square
1 .04a .01 .001
2 .29b .09 .09
3 .38c .14 .14
a. Predictors: Age
b. Predictors: Age, Output control
c. Predictors: Age, Output control, Trust in supervisor
Table 5 reveals, in a mediation model without legitimacy of output control, a positive and significant relationship between output control and trust in supervisor in the mediator variable model (
β
= .28; p <.001). The relationship between trust in supervisor and effort of employees is shown in table 5 as well. The dependent variable model in table 5 demonstrates a positive and significant relationship between trust in supervisor and effort of employees (β
= .22; p <.001).Moreover, table 6 demonstrates the difference of R square in case of inclusion (R²=.14) and in case of exclusion (R²=.09) of trust in supervisor (mediator). This analysis thus shows that trust in supervisor accounts for an additional 5% in effort of employees. This is in line with the ratio of the indirect effect of trust in supervisor to the total effect on effort (.24), which is presented in table 5. Furthermore, table 5 shows, that the direct relationship between output control (independent variable) and effort (dependent variable) is positive and highly significant (
β
= .19; p <.001). The relationship between output control and effort is partially mediated by trust, since there is also an indirect effect of output control on effort (β
= .06; p <.001). Moreover, table 5 shows that output control explained 8% (R² = 0.08) of the variance in effort of employees.27
Table 7: Moderated mediation effects
Note. n = 757 employees , all variables are standardized regression coefficients, ^p < .10 * p < .05, ** p < .01, *** p < .001, Interaction 1 = output control x legitimacy of output control, Interaction 2 = output control x legitimacy of output control
Moderated mediation model
Mediation variable model (DV = Trust in supervisor) R² = .13***
Predictor B SE t LLCI ULCI
Constant -0.02 .04 -.50 -.09 .05
Output Control .20 .04 5.22*** .12 .27
Legitimacy of output control .24 .04 6.53*** .17 .31
Interaction 1 .05 .03 1.72^(.09) -.01 .10
Age -.02 .03 -.45 -.08 .05
Dependent variable model (DV = Effort) R² = .16***
Predictor B SE t LLCI ULCI
Constant 6.15 .03 202.97*** 6.09 6.21
Output control .14 .03 4.34*** .08 .21
Trust in supervisor .20 .03 6.40*** .14 .26
Legitimacy of output control .10 .03 2.99** .03 .16
Interaction 2 -.06 .02 -2.66** -.10 -.02
Age .04 .03 1.40 -.02 .10
Conditional direct effects of output control on effort at different values of the moderator Leg. of output
control Effect SE LLCI ULCI
-1.00 .20 .04 .13 .27
.00 .14 .03 .08 .21
1.00 .08 .04 -.00 .17
Conditional indirect effects of output control on effort at different values of the moderator Mediator Leg. of output
control Effect Boot SE BootLLCI BootULCI
Trust in supervisor -1.00 .03 .01 .01 .06
Trust in supervisor .00 .04 .01 .02 .07
Trust in supervisor 1.00 .05 .02 .02 .09
28 Testing of Hypotheses
Table 7 contained findings of the moderated mediation analysis, by which all four hypotheses are tested in relation to each other.
Hypothesis 1 Hypothesis 1 stated that legitimacy of output control will moderate the relationship
between output control and effort of employees, such that, if perceived legitimacy of output control is high, the relationship will be positive and if legitimacy is perceived as low, the relationship will be less positive or will be non-positive. The dependent variable model in table 7 shows that legitimacy of
output control moderates the relationship between output control and effort. However, these findings do not support the hypothesis, since the moderation effect of legitimacy of output control on the relationship between output control and effort is negatively significant instead of positively (
β
= -.06; p <.01). This is shown by the absence of zero within the 95% confidence interval [-.10, -.02]. Moreover, the conditional direct effects of output control on effort at different values of the moderator are presented in table 7 as well. However, the conditional effects on effort are counter-predictive, since the findings shows that output control, if perceived as low, has a higher effect on effort (.20) than when output control is perceived as moderate (.14) or as high (.08).
Hypothesis 2 This hypothesis stated that legitimacy of output control will moderate the
relationship between output control and trust in supervisor, such that, if perceived legitimacy is high, the relationship will be positive and if perceived legitimacy is low, the relationship will be less positive or will be non-positive. Findings in table 7 showed that legitimacy of output control does not
29 perceived as moderate (.04) or as low (.03).
Hypothesis 3 Hypothesis 3 stated that trust in supervisor will have a positive effect on effort of
employees. Completely in line with the hypothesis, the dependent variable model in table 7
demonstrates a positive and significant relationship between trust in supervisor and effort of employees (
β
= .20; p <.001). Moreover, table 6 demonstrates the difference of R square in case of inclusion (R²=.14) and in case of exclusion (R²=.09) of trust in supervisor (mediator). Thus, this analysis showed that trust in supervisor accounts for an additional 5.3% in effort of employees. Therefore, hypothesis 3 is accepted.Hypothesis 4 This hypothesis stated that trust in supervisor will partially or fully mediate the
relationship between output control and effort of employees, if output control is perceived as
legitimate. In this study, legitimacy of output control does have a significant interaction effect on the
relationship between output control and effort (β =-.06; p <.01) but not on the relationship between output control and trust in supervisor (β =.05; p =.90). Preacher, Rucker and Hayes (2007) stated that moderated mediation occurs when mediation relations are contingent on the level of the moderator. At the bottom of table 7 the index of moderated mediation is presented, these findings confirmed that the moderation-mediation model is not significant by demonstrating the presence of zero in the 95% confidence interval [-.01, .03], which means that the mediation relation does not significantly differ for high, middle and low legitimacy conditions.
DISCUSSION AND CONCLUSION
30 moderator legitimacy of output control, which is proposed to clarify the mixed results between control and trust in the literature. In this study, trust in supervisor is introduced as a possible mediator between output control, if perceived as legitimate, and effort of employees.
31 control and legitimacy of output control on effort by using cross-tabulations (Appendix B). The scores of the variables of output control and legitimacy of output control were divided in 3 parts with equal range, since this may help to see whether parts show extraordinary results. In this study, cross-tabulation contributed by giving insight in the negative interaction effect on effort, since this table showed the possible variations in effort for different levels of control for low, middle and high levels of perceived legitimacy. Given a low level of legitimacy of output control, effort of employees increases on a seven point scale with 1.4 point from low (4.9) to high (6.3) control levels. However, a 1.4 point increase in effort is not even possible for a given high level of legitimacy due to the ceiling effect, since the value of effort for a low level of control and a high level of perceived legitimacy is already 6.0. Moreover, the mean of the ratings on effort of employees is quite high, 6.13 out of 7, which signifies restricted variation possibilities. Therefore, the restricted variation possibilities due to the ceiling effect, may explain the higher effect in effort for given low levels of legitimacy (.20) than for moderate (.14) and high (.08) levels of legitimacy.
32 for examining whether a superior can be trusted by employees (Lind, 2001). Furthermore, there was found a conditional effect for output control on trust in supervisor for separately, low, moderate and high values of the moderator. This conditional effect shows, in line with the expectations, that if legitimacy of output control is perceived as high, the positive effect on trust in supervisor (.05) is higher than if the legitimacy is perceived as moderate (.04) or low (.03).
Consistent with previous findings (Aryee et al, 2002; Colquit et al, 2007; Dirks & Ferrin, 2002) and hypothesis 3, a strong positive relationship between trust in supervisor and effort was found (
β
= .20; p <.001). These findings provide support for the idea that trust in supervisor can lead to positive organizational results by increasing the directedness at goals (Dirks and Ferrin, 2001), increase pro- organizational focused behavior (Ashforth & Lee, 1990; Lapidot, Kark & Shamir, 2007; Mayer & Gavin, 2005; Nooteboom, Berger & Noorderhaven, 2007) and increase sociable behaviors of employees (Kramer, 1999).Further, this study was the first that examined the mediation relationship of trust in supervisor between output control, if perceived as legitimate, and effort of employees (hypothesis 4). This was interesting since, if output control leads to trust, it will enhance the effort of the employees. Preacher, Rucker and Hayes (2007) stated that moderated mediation occurs when mediation relations are contingent on the level of the moderator. However, the moderator does not have a significant effect on the relationship between output control and trust in supervisor while it does have a slightly negative effect on the relationship between output control and effort. These findings are not in line with the literature, since it was expected that if output control is perceived as appropriate, this would lead to higher commitment, trust (Tyler & Blader, 2005) and effort of employees (Chalykoff and Kochan, 1989; Niehoff and Moorman 1993).
33 can be indicated as the breaking point between legitimate and not legitimate. So, in analyzing the results, it is unknown if a legitimacy of output control score of e.g. 3 is seen as appropriate or not. For hypothesis 1, 2 and 4 it is relevant to get a better understanding of the perceived range of legitimacy since the concept of legitimacy seemed to be triggered in a punctuated way, and seems to be considered in terms of presence or absence (rather than in terms of high or low).
Moreover, it was expected that trust in supervisor only would mediate the relationship between output control and effort if output control was perceived as legitimate. However, table 5 showed that trust in supervisor partially mediated the relationship between output control and effort without taking legitimacy into account. This means that the relationships between output control and effort, output control and trust in supervisor and between trust in supervisor and effort were all positively significant. Despite the mediation effect, the index of the moderated mediation effect is not significant.
Implications for Practice
An obvious implication for practice of this research is that trust in the supervisor is essential for performance of employees, especially with regard to promoting effort of employees. This study showed that trust in supervisor clearly has a considerable main effect on effort of employees (
β
= .20; p <.001). Managers should address the importance of trust as a mechanism of governance, since extra-role behaviors, which are important components of effort, cannot be enforced by control mechanisms and have been shown to be promoted by trust. Moreover, organizational structures are still becoming flatter, people are still getting more autonomy, teams are still becoming more self-directing, while, managers and supervisors expect that work will be done more efficiently (Bijlsma-Frankema et al., 2010). A sustainable trusting relationship between subordinates and supervisors seems necessary to meet these demands. Therefore, managers should address the importance of trust as a mechanism of governance to gain and maintain competitive advantage.34 expected interaction effects with output control on trust in supervisor and on effort of employees, it did show considerable main effects of legitimacy on trust and on effort. So managers must put attention to legitimacy demands, as this study shows, in line with the institutional theory that meeting legitimacy demands are important to organizations, since it leads to positive consequences in the form of trust and higher effort of employees.
Limitations and Implications for Future Research
This research was not without limitations. In calling attention to these limitations, the directions for future research are simultaneously suggested.
The first limitation is that in this study the distinction of effort in in-role and extra-role behaviors is not consequent made. In the theoretical background, the distinction was clearly made between in-role and extra-in-role behavior as parts of effort (Organ, 1998). However, the statements about effort in the questionnaire were not specifically focused on either in-role or either on extra-role behavior. Consequently, in the analyses, there could not be drawn any conclusions about how effort was made up of in-role and extra-role behaviors. For future research, it might be interesting to question in-role and extra-role behaviors separately since extra role behaviors cannot be enforced by command- and control styles of management while in-role behaviors can (Chalykoff & Kochan 1989; Niehoff & Moorman, 1993). In future research it would be interesting to investigate trust in supervisor in relationship with extra-role behaviors, such as exploration of opportunities and participation in organizational learning since they are seen as critical success factors for organizations.
35 A third limitation is the sample of the study. Although, the secondary data used consisted of answers of 757 employees and has a representative sample for gender and age, the results are not necessarily generalizable. The findings might not be translatable to other contexts since the data was gathered from one organization. Concepts such as control, trust and legitimacy of control might be used differently than perceived in, for example a competitive for profit organization. Therefore, in further research, it might be interesting to investigate organizations in different fields and countries to assess the generalizability of the findings of this study.
A fourth limitation is the time frame of the data collection. In this study, a cross-sectional study was used instead of a longitudinal study. Using a longitudinal section might be better in future research, since a longitudinal study may achieve more confidential and stable relationships between output control, trust in supervisor, legitimacy of output control and effort of employees (Rindfleish, Malter, Ganesan & Moorman, 2008).
Lastly, this study does not yield clear evidence on how control and trust are related. This study proposed to give managers more insight in the control and trust nexus by using legitimacy of control as a possible moderator, which might clarify the mixed results between control and trust. However, it is still unknown for which levels of legitimacy of output control, output control will have positive effect on effort of employees and trust in supervisor. It is also not known for which levels of
36
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43
Appendix A: Survey Items
TABLE A1
Output control perceived by employees
Output control 1 The production targets for my team are set by the management.
Output control 2 The supervisor checked/monitored whether my team met our production targets. Output control 3 If my team does not met our production targets, we have to justify for it.
Output control 4 The supervisor let us know to what extent we met our targets.
Output control 5 The supervisors’ appreciation for our team is mainly based on our results. TABLE A2
Legitimacy of output control perceived by employees To what extent it is appropriate that…
Leg. of output control 1 … production targets are set by the management. Leg. of output control 2 … your supervisor/ team coach checked/monitored whether or not you meet
Leg. of output control 3
your production targets.
…you have to justify yourselves whether you do not met your production targets. Leg. of output control 4 …your supervisor/ team coach let you know, to what extent you met your Leg. of output control 5
targets.
… the appraisal for your input is mainly based on the results achieved.
TABLE A3
Effort of employees
Effort 1 I work very hard to accomplish my tasks correctly.
Effort 2 I truly do my best to accomplish my work.
Effort 3 I completely make an effort to obtain good results.
Effort 4 I keep trying my best, even if something goes wrong for a moment. Effort 5 I do everything I can to meet team targets, even if other people do not so.
TABLE A4 Trust in supervisor
Trust in supervisor 1 I can be sure that my supervisor/ team coach will help me when I have difficulties Trust in supervisor 2
when executing my work
I assume that my supervisor/ team coach considers my interests when making Trust in supervisor 3
decisions.
I trust that my direct supervisor / team coach will keep me Trust in supervisor 4
informed concerning my work.
44
Appendix B: Cross-Tabulations
Statistics of effort for low, moderate and high levels of perceived output control and perceived legitimacy of output control. The scores of variables are thus divided in 3 parts with equal range.
Legitimacy of Output Control
(Low) 1 2 (High) 3
Output Control 1 (Low) M= 4.9 SD= 1.8 N= 21 R= 2-7 M= 5.5 SD =1.4 N= 14 R= 2-6.8 M= 6.0 SD= 1.0 N= 10 R= 4.2-7 2 M= 5.6 SD= 1.1 N= 25 R= 2.8-7 M= 6.0 SD= .8 N= 237 R= 2.8-7 M= 6.2 SD= .8 N= 76 R= 1-7 3 (High) M= 6.3 SD= 0.6 N= 21 R= 5.6-7 M= 6.2 SD= .9 N= 139 R= 1-7 M= 6.4 SD= .5 N= 214 R= 4.4-7
M= mean values of effort, SD= standard deviation, N =number, R= range.
Statistics of trust in supervisor for low, moderate and high levels of perceived output control and perceived legitimacy of output control.
Legitimacy of Output Control
(Low) 1 2 (High) 3
Output Control 1 (Low) M= 4.2 SD= 2.0 N= 21 R= 1.6-7 M= 4.2 SD = 1.7 N= 14 R= 1-7 M= 5.1 SD= 1.6 N= 10 R= 1.4-6.6 2 M= 4.4 SD= 1.8 N= 25 R= 1-6.4 M= 5.3 SD= 1.2 N= 237 R= 1-7 M= 5.4 SD= 1.3 N= 76 R= 1-7 3 (High) M= 5.2 SD= 1.2 N= 21 R= 1-6.6 M= 5.2 SD= 1.1 N= 139 R= 1-7 M= 6.0 SD= .9 N= 214 R= 1-7
