ijcrb.webs.com INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS SEPTEMBER 2013 VOL 5, NO 5

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1 THE MEDIATION EFFECT OF ORGANIZATIONAL CULTURE AND ORGANIZATIONAL COMMITMENT IN RELATIONSHIP BETWEEN TRANSFORMATIONAL LEADERSHIP TO ORGANIZATIONAL CITIZENSHIP BEHAVIOUR Benny Hutahayan 1, Endang Siti Astuti 2, Kusdi Raharjo 2, Djamhur Hamid 2 1 Doctoral Student, Administrative Sciences Faculty, Brawijaya University, Indonesia 2 Administrative Sciences Faculty, Brawijaya University, Indonesia ABSTRACT Transformational leadership constitutes ways of acting conducted by leader as direct supervisor of subordinates in influencing staffs to achieve organizational goals which are characterized from its effect of idealism, inspirational motivation, intellectual stimulation, and individual consideration. Location of this research is in PT. Barata Indonesia (Persero) as a State- Owned Enterprises (SOEs) in Inodnesia. The results of this research showed that the direct effect of transformational leadership had no significantly effect to OCB. But it using mediation effect of Organizational Culture and Organizational Commitment shows that transformation leadership had significantly effect to OCB. The better the Transformational Leadership in PT. Barata Indonesia, the more strong the OCB will be if Organizational Culture and Organizational Commitment are also getting better. The highest the effect of idealism, inspirational motivation, intellectual stimulation, and individual consideration, the better the Transformational Leadership in the company and will make OCB better as well. The impact of improvement in the OCB will appear on the high altruism, conscientiousness, sportmanship, courtesy, and civic virtue of employees at PT. Barata Indonesia. Keywords: transformational leadership, organizational culture, organizational commitment, and OCB. 1. Introduction PT Barata Indonesia (Persero) is a State-Owned Enterprises (SOEs) and has a responsibility to make a profit so that the company cannot escape from competition with similar companies. With core business: engineering procurement & construction (EPC), industrial equipment manufacturing, and foundry, this company is not a single player in that field so that it must compete with other companies with similar field of business. The role of leadership is needed to determine the factors that drive employees to act to realize their wants and needs in achieving their objectives by joining in an organization, to get rewards (psychological needs), to feel safe (safety need), to have recognition (esteem needs), or even to be able to get achievement (self-actualization), as proposed by Maslow (1954). One of leadership form applied in PT. Barata Indonesia is transformational leadership. The topic of organizational citizenship behavior (OCB) nowadays continues to encourage the interest of researchers and practitioners. According to Ackfeldt and Coote (2005), it is caused by the results of the research, the emergence of willingness to perform OCB related to individual and organizational performance. It is also relevant to what Angadi and Naik (2011) reveal that the performance of an organization is a complex condition factor among other factors determined by the behavior of individual member. Conceptually, Organ (in Foote & Tang, 2008) describes OCB as behavior based on volunteers who can not be imposed on the boundaries of the work and will not officially receive the award but capable of contributing to the organization. In other words, OCB is the action of employees performed voluntarily and outside of their roles that can COPY RIGHT 2013 Institute of Interdisciplinary Business Research 618

2 make a positive contribution to the organization (company). In day-to-day life of the organization, OCB surfaces in the form of altruism, conscientiousness, sportsmanship, courtesy, and civic virtue (Organ, in Tschannen-Moran, 2003). PT. Barata Indonesia (Persero) is a State-Owned Enterprises (SOEs). PT. Barata Indonesia (Persero) has a vision to become the formidable Engineering, Procurement & Construction (EPC) and Manufacturing. One of the rolee of leadership in PT. Barata Indonesia is transformational leadership role. PT. Barata Indonesia (Persero) currently requires strong support of OCB from all employees in order to realize the success of the company. OCB is necessary so that each employee contributes to optimal and not just limited to work in accordance with the description of the task. With the strong OCB within each employee, it will further accelerate the achievement of corporate goals. However, it is not easy to encourage each employee to have a strong OCB. The purpose of this research was to examine the effect of transformational leadership to Organizational Citizenship Behaviour through the mediation of Organizational Culture, and Organizational Commitment. 2. Theoritical Background According to Bass and Avolio (in Sunarsih, 2001), transformational leader is able to treat others as individuals, consider the individual needs and aspirations, listen, educate and train subordinates; so that such a leader can give personal attention to subordinates, who sees subordinates as individual and offers special attention to develop them for good performance. Transformational leadership constitutes ways of acting performed by leader as direct supervisor in influencing subordinates to achieve organizational goals that are characterized by the influence of idealism, inspirational motivation, intellectual stimulation, and individual consideration. Besides giving effects on the OCB and organizational commitment, Transformational leadership is also identified to give impact on organizational culture. According Aydogdu and Asikgil (2011), transformational leader has an important role in creating organizational culture. The values adopted transformational leader can be easily adopted by his followers. Therefore, transformational leader must have the skills for being a role model for his subordinates. If the leader has a personality and deviant behavior, then this deviation will affect organizational culture. The transformational leader is one who is able to create organizational culture, help employees to get involved in the culture and help in creating stable organizational culture. Previous research conducted by Aydogdu and Asikgil (2011) proved that transformational leadership has a positive relationship with organizational culture, which includes cultural aspects of short-and long-term orientation, masculinity/femininity, power distance, individualism/collectivism and uncertainty avoidance. The result of Al Sardieh s research (2012) also proved that transformational leadership has an influence on organizational culture. In addition to its influence on organizational culture, transformational leadership also affect organizational commitment. 3. Research Methods The population in this research was all employees of PT. Barata Indonesia (Persero) from staff to director level whose branches spread all over Indonesia. Population size of approximately 522 people, with the following details: UPG & Corporations = 303 people, EPC = 22, UUM Tegal = 83 Bandung-Sukabumi = 28, Cilegon UUM = 42 and UUM Medan = 19 person. The samples in this research were some of employees at PT. Barata Indonesia (Persero), elected through a representative sampling procedures. Research using representative samples can COPY RIGHT 2013 Institute of Interdisciplinary Business Research 619

3 give results which are easily to be generalized. This research determined the sample as many as 230 people. This reserach included four variables: Transformational Leadership, Organizational Culture, Organizational Commitment, and OCB. The measurement of each variable involves a reflective indicator models for those five variables. The design of the structural model on the relationship between latent variables GSCA is based on the formulation of the research problem or hypothesis. Inferencial Statistics Method used in the data analysis of this research is the Generalized Structural Component Analysis (GSCA). The reason for using GSCA is that the causal relationship formulated in this research is using the model of two-way causality (back and forth) as well as one-way causality (recursive) and the measurement of variables that is formative or reflective (Solimun, 2013). In this research, the hypothesis will be tested : 1. The mediation effect of Organizational Culture for the Relationship between Transformational Leadership to Organizational Citizenship Behaviour 2. The mediation effect of Organizational Commitment for the Relationship between Transformational Leadership to Organizational Citizenship Behaviour 4. Analysis Result 4.1. Outer Model of GSCA GSCA analysis show the outer model (measurement model) of each variables using loading factor and the descriptive statistics using average score (interval scale of 1 to 5) as follow: Table 1: Outer Model Loading Average Variable Indicator Transformational Leadership (X1) Organizational Culture (Y1) Organizational Commitment (Y2) Organizational Citizenship behavior (Y3) a. Idealism influence (X1.1) b. Inspirational Motivation (X1.2) c. Intelectual Stimulation (X1.3) d. Personal Consideration (X1.4) a. Innovation (Y1.1) b. Stability (Y1.2) c. Respect for people (Y1.3) d. Result Orientation (Y1.4) e. Caution Against detailed matters (Y1.5) f. Team Orientation (Y1.6) g. Competitive aggressiveness (Y1.7) a. Affective (Y2.1) b. Rational (Y2.2) c. Normative (Y2.3) a. Altruism (Y3.1) b. Conscientiousness (Y3.2) c. Sportsmanship (Y3.3) d. Courtesy (Y3.4) e. Civicvirtue (Y3.5) Factor Score Transformational leadership (X1) constitutes ways done by leader of PT. Barata Indonesia (Persero) as the direct supervisor in influencing sub-ordinates to achieve organizational goals COPY RIGHT 2013 Institute of Interdisciplinary Business Research 620

4 (Bass & Avolio, in Sunarsih, 2001). Transformational Leadership variables in this study are four (4) indicators and they are indicators idealism influence, inspirational motivation, intellectual stimulation and individualized consideration. Based on the analysis, the highest factor loading value of is an indicator of an individual consideration with an average value of 3.88, then to increase the transformational leadership in best way is to improve individual consideration and the consideration of individual employees is currently in good condition. According to Bass and Avolio cited by Jojo (2001), individual attention can be seen in some form. One of the most important is the revealing expression of appreciation for well-done work. But leaders can also perform this in the form of criticism upon the weaknesses of sub-ordinates that are carried out constructively. Leaders can also show it by giving a special project assignment that can increase the confidence of subordinates, optimize special talent possessed by subordinates, and provide an opportunity to learn. Organizational culture (Y1) is a value system that was developed in PT. Barata Indonesia (Persero) to act as a reference for a common goal (O'Reilly, Chatman & Caldwell, in McShane & Von Glinow, 2008). Organizational culture variable in this research consicts of 7 (seven) indicators such as indicator of Innovation, Stability, Respect for people, Result orientation, Caution Against Detailed matters, Team orientation, Competitive aggressiveness. Based on the value of loading factor, the maximum value obtained for the variable Organizational Culture is and the indicator is Caution against detailed matters with an average value of 3.96, then the best way to improve the organizational culture is by improving the ability of employees in paying attention to things in details and now their ability is in good condition. Paying attention to detail matters is the extent to which employees of PT. Barata Indonesia can be innovative and brave to take risks (Robbins, 2003). Moreover, paying attention in the details may also average scoreto what extent the employees are expected to carry out the precision, detail analysis on the job until (O'Reilly, 1991). In order to make organizational culture high, the employee are expected to be innovative and brave to take risks. In an organizational context, innovation is defined as a specific tool possessed by entrepreneurs, how they exploit change into an opportunity for various businesses and services. Innovation can be a discipline, something that can be learned, and something that can be trained. Organizational commitment (Y2) is a drive or strong desire of employees PT. Barata Indonesia in identifying their active involvement and participation in organization (Mayer & Allen, in Luthans, 2008). Organizational Commitment variable in this research consists of 3 (three) indicators; affective, rational and normative. Based on the value of loading factor, the highest value for this variable reaches with average value 3.95, then the best way to increase Organizational Commitment is by increasing indicator of affective and now this indicator is in good condition. Hartmann and Bambacas (2000) state that affective commitment is a feeling of belonging and being part of the organization and has had relationships with personal characteristics, organizational structures and work experience. To create high commitment in each employee in PT. Barata Indonesia, it can be identified from his involvement in the organization and his feeling comfortable as a member of the organization. Desire to remain in the organization as a form of commitment is influenced by certain factor and can be shaped by antecedents that helps in forming. Organizational citizenship behavior (Y3) is the action of employees performed willingly and outside the role that would make a positive contribution to the organization (Organ, in Trschannenp-Morran, 2003). OCB variable in this research has five (5) indicators; indicator of altruism, conscientiousness, sportsmanship, courtesy, civic virtue. Based on the value of loading COPY RIGHT 2013 Institute of Interdisciplinary Business Research 621

5 factor, the highest value of OCB variable is 0.734, occurred on Conscientiousness indicator and Civic Virtue with the average value amounted to 3.89 and 3.91, then the best way to improve OCB is to increase Conscientiousness and Civic Virtue and now Conscientiousness and Civic Virtue of employees are in good condition. In order to improve the OCB, it is necessary to consider strategies to improve Conscientiousness and Civic Virtue. Steps to do are (1) an increase in the efficient use of time, (2) an increase in utilization hours of dedicated work for the benefit of the company, (3) always keep the company reputation, and (4) put priority for the company s interests Inner Model of GSCA Table 2 presented the results of testing for analysis of the effect of leadership on OCB through mediation of organizational culture and organizational commitment in PT. Barata Indonesia (Persero). Table 2: The Mediation effect of Organizational Culture and Commitment for the Relationship between Transformational Leadership to OCB No Relationship Coefficient P-value 1 Transformational Leadership > OCB Transformational Leadership > Organisasional culture * Organisasional culture > OCB * Transformational Leadership > Organisasional culture > OCB * 2 Transformasional Leadership > OCB Transformasional Leadership > Organisazional Commitment * Organisazional Commitment > OCB * Transformasional Leadership > Organisazional Commitment > OCB * Note: * significant at 5% Organizational Culture (Y1) Transformational Leadership (X1) OCB (Y3) Organizational Commitment (Y2) Figure 1. The Mediation effect of Organizational Culture and Commitment for the Relationship between Transformational Leadership to OCB COPY RIGHT 2013 Institute of Interdisciplinary Business Research 622

6 Based on the analysis, the coefficient of the relationship between transformational leadership with OCB is equal to with a p-value The result of analysis p-value > 0.05, indicating that transformational leadership has no significant effect on OCB. Based on the analysis, the coefficient of the relationship between transformational leadership and the Organizational Culture is with a p-value The results of analysis p-value < 0.05, indicating that transformational leadership has significant influence on Organizational Culture. Coefficient is positive indicating one way relationship. This means that the increase of Transformational Leadership has significant affect on the increase of Organizational Culture, the higher the value of Transformational Leadership, the higher the value of Organizational Culture would be. Based on the analysis, the coefficient of relationship between OCB and Organizational Culture is with p-value of The results of analysis p-value < 0.05 indicating that the Organizational Culture has significant influence on OCB. Coefficient is positive, indicating one way relationship. This means that the increase of Organizational culture has significant affect on the increase of OCB, the higher the value of Organizational culture, the higher the value of OCB. Testing of effect for mediation of Organizational Culture on the influence of transformational leadership on OCB is obtained a coefficient of 0.058, p-value of Because p-value less than 0.05, thus it indicates that there is a significant influence between transformational leadership on OCB through organizational culture. As the coefficient is positive, this indicates that the better Transformational Leadership, the better OCB will be with organizational culture gets better as well. The results of this research reinforce the theoretical support by Aydogdu and Asikgil (2011), as well as Asikgil and Aydogdu s research (2011), Al-Sardieh (2012); Sabir (2011) who found leadership has influent on organizational culture. In organization, a leader is a person that drives the direction of the organization so that he has an important role in the organization's value changes. One model of leaderships that can create organizational culture is transformational leadership. According to Aydogdu and Asikgil (2011), transformational leader has an important role in creating organizational culture. The values adopted transformational leader can be easily adopted by his followers. Therefore, transformational leader must have skills for being a role model for his subordinates. If the leader has a personality and deviant behavior, the organizational culture can be affected by such deviations. The transformational leader is one who is able to create the organizational culture, help employees involve in the culture and help in creating stable organizational culture. The presence of organizational culture effects on OCB is supported by theorists Paine and Organ (2000). The results were consistent with previous researches that Kar and Tewari (1999), Jiang and Fu (2011). Organizational culture is a set of values that is built and is believed to be shared by all members of the organization so that it becomes a reference in the spoken word, attitude and behavior as well as in solving organizational problems and a member of the organization, it can also affect employee OCB. Organizations (companies) that have superior values and massively internalized to the employee will be a role model for employees in carrying out their daily duties. Organizational culture that can accommodate as many expectations, interests, and needs of members of the organization will be deemed conducive by members of the organization. Organizational culture that is conducive to encourage member organization to support the efforts and measure to promote the organization. Positive values that have been internalized within the organization members will also encourage the spirit and the extra effort of the members for the realization of organizational goals. In addition, the values of a positive COPY RIGHT 2013 Institute of Interdisciplinary Business Research 623

7 culture will also encourage the creation of a positive organizational climate, so as to create an atmosphere of mutual help, cooperation and awareness for both fully responsible towards their duties. In other words, conducive organizational culture can encourage the growth of extra-role behavior or OCB. Based on the analysis, the coefficient of the relationship between transformational leadership with OCB is equal to with a p-value by The results of analysis p-value > 0.05 indicate that transformational leadership has no significant effect on OCB. Based on the analysis, the coefficient of the relationship between Transformational Leadership and Organizational commitment is equal to with a p-value The results of analysis p-value < 0.05 indicate that transformational leadership has significant influence on Organizational Commitment. Coefficient is positive, indicating one way relationship. This means that the increase of Transformational Leadership has significant influence on the increase of Organizational Commitment, the higher the value of Transformational Leadership, the higher value of Organizational Commitment will be. Based on the analysis, the coefficient of relationship between Organizational Commitment with OCB is at with p-value The results of analysis p-value <0.05 indicate that the Organizational Commitment has significant effect on OCB. Coefficient is positive, indicating one way relationship. The higher Organizational Commitment, the higher OCB will be. Testing of the effect for mediation of Organizational Commitment on the influence of transformational leadership on OCB is obtained a coefficient of 0.047, p-value of 0.00 Because p-value less than 0.05, it indicates a significant influence between transformational leadership on OCB through organizational commitment. As the coefficient is positive, it indicates that the better Transformational Leadership with the mediation of Organizational Commitment, the better OCB will be. The presence of transformational leadership effect on organizational commitment is supported by theorist Kinicki and Kreitner (2008). The results were consistent with previous researches that Walumbwa, et al. (2005); Sabir (2011); Suhramanian (2011); Zabri & Hashizeidi (2012). In organizational life, it has been a general awareness that leaders occupy a central position. Leader is navigator whose role is to direct and give effect to every member of the organization in order to work optimally in achieving organizational goals. It is certain that in the process of giving direction or influence, leaders exhibit behaviors that vary according to the style and leadership approach chosen. Behaviors exhibited various forms, such as in the words and the ways adopted in advising employees, motivate employees, and set an example for employees. Leader behaviors during the process of giving the effect bring a significant impact on the attitude of members of the organization. If the behaviors demonstrated are perceived positively by members of the organization, it will lead to positive attitudes to them. And vice versa if the behaviors exhibited are judged negatively or not in accordance with expectations, it will lead to the emergence of negative attitudes of the members. Attitudes arising from this behavior, one of them is the effort to do the best for the organization. The influence of organizational commitment on OCB supported theoretically by Yilmaz and Cokluk-Bokeoglu (2008); Lepine, et al. (2002). The results were consistent with previous research by Feather and Rauter (2004); Jahangir, Akbar and Begum (2006); Johangin, et al. (2004); Jo & Joo (2011); Alotaibi (2001). Although it is not visible by naked eye, organizational commitment is an important force in self-employees in the dynamics of organizational life. Organizational Commitment is a strong desire or passion in identifying employee involvement and active participation of the organization. Employees with affective commitment, rational and COPY RIGHT 2013 Institute of Interdisciplinary Business Research 624

8 strong or high normative will tend to do things or actions best for the organization, including doing extra role behavior (OCB). According to Yilmaz and Cokluk-Bokeoglu (2008), employees with a high level of organizational commitment will have a high OCB. Lepine, et al. (2002) also revealed that organizational commitment is important factor that contributes to strengthen the OCB. Thus it seems clear that organizational commitment has significant effect on OCB. 5. Reccomendation Based on the results above shows that the direct effect of transformational leadership had no significantly effect to OCB. But it using mediation effect of Organizational Culture and Organizational Commitment shows that transformation leadership had significantly effect to OCB. The better the Transformational Leadership in PT. Barata Indonesia, the more strong the OCB will be if Organizational Culture and Organizational Commitment are also getting better. The highest the effect of idealism, inspirational motivation, intellectual stimulation, and individual consideration, the better the Transformational Leadership in the company and will make OCB better as well. The impact of improvement in the OCB will appear on the high altruism, conscientiousness, sportmanship, courtesy, and civic virtue of employees at PT. Barata Indonesia. The better the transformational leadership that is visible from the higher influence of idealism, inspirational motivation, intellectual stimulation, and individual consideration will result in better OCB too in PT. Barata Indonesia. The impact of improvements in the OCB will appear on the high altruism, conscientiousness, sportmanship, courtesy and civic virtue employees at PT. Barata Indonesia. COPY RIGHT 2013 Institute of Interdisciplinary Business Research 625

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