The Effect of Leadership Based on Transformation and Market Orientation on Organizational Commitment of Employees (Case Study: Tose Va Taavon Bank)

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1 International Research Journal of Applied and Basic Sciences 2016 Available online at ISSN X / Vol, 10 (1): Science Explorer Publications The Effect of Leadership Based on Transformation and Market Orientation on Organizational Commitment of Employees (Case Study: Tose Va Taavon Bank) Babak Sadeghzadeh, Mir Taher Pour Partovi * Department of Management and Economic, Buinzahra Branch, Islamic Azad University, Buinzahra, Iran * Corresponding author mtp2961@gmail.com ABSTRACT: The present study examines the importance of organizational capabilities in the fields of achieving consistent development in such organizations. The study emphasizes the concepts such as leadership, market orientation and organizational commitment as the resources to achieve consistent development in banking industry. So, one can expect that leadership behaviors are the determining factors of organizational commitment of employees. In addition, market orientation demonstrates the other factors of organizational commitment factors. The statistical population comprises of 34employees working in Tose Va Taavon Bank across Tehran. The data were collected through the use of questionnaire. The results indicated that the leadership based had an effect on three components f market orientation. Also, the leadership based was effective on organizational commitment through the intermediate variable of customer orientation and inter-task cooperation; however, no effect was found with respect to the competitor orientation variable. Hence, the leadership based has considerable effects on market orientation dimensions in Tosee Vaa Taavon Bank and the intermediate role of these dimension except for competitor orientation. Based on the obtained results, one can say that the leadership based played a great role in establishing the culture of customer orientation, competitor orientation and inter-task cooperation in organization. The bank should follow its way to establish the cooperation culture and customer orientation different sectors in an attempt to make the employees committed with respect to achieving the organizational goal along with empowering them to address those goals. Keywords: Tosee Va taavon Bank, leadership based, market orientation, organizational commitment INTRODUCTION The contemporary world experience the transformation with a rapid status. Although the changes are present across different eras, these changes are unrivalled in their positions. Known as the most eminent features of today s communities, organizations experience changes and the role of human force is inevitable in this regard. The development of individual and organizational performance is one of the important goals of every organization in case the human resource is regarded as the most important components of developing organizational performance, it is clear to some extent what the influencing factor on performance are. Commitment is one of those important factors affecting the human resource performance. Commitment is taken into consideration as one of the common components of society and there is an essence of commitment in every circumstances (Hajikarimi et al., 2012). Different researchers have captured their attention towards the concept of commitment in organization and their efforts results are the definitions and models dealing with organizational commitment. Matthew and Johns (19900 have focused on organizational commitment. It was found in the study that the researchers concentrated on two types of organizational commitment which were conceptualized by Moodi, Esteerz, and Porter (1997). In 1993, Moro offered a new approach of commitment which involved continuous, affective, occupational, cooperation in job

2 an operational ethics. The review of literature on organizational commitment indicates that the concept of organizational commitment in 90s was under the attention. The importance of theory and offering a model for organizational commitment was addressed. Myer and Allen were the prominent figures in this regard. These authors introduced three subscales of commitment, namely, affective, continuous and normative. The affective commitment was much more regarded by the researchers compared to other components (Myer & Allen, 1997). Three capabilities of leadership, namely, change in direction, market orientation and committed employees led to the ambiguous understanding of the possible impact (Shoham et al., 2005). One interpretation can be that the conducted studies hold different views of the role of different components dealing with market orientation (Zhou et al., 2007). Consequently, the analyses of marketing structure so as to offer clear picture of the effect of these variables on performance of companies was important for the researchers. Adopting analytic approach for market orientation structures enable the researchers to make meticulous modelling leading to better understanding of market orientation results (Chung, 2012; Cadogan et al., 2008). This is consistent with the analysis of Nobel et al. (2002) who demonstrated that the disintegration of market orientation structure is considerable from two methodological and theoretical perspectives. Such a disintegration leads to better control of errors which can influence the evaluating of total perspectives. The focus of the present study is to address the effect of transformation leadership based on the transformation and market orientation on organizational commitment. Along with the leadership, competitor orientation is emphasizes as the other factors of forming consistent development in organizations with higher levels of performance. Review of literature The transformation leadership is defined as the process in which the leaders and followers help each other to attain higher levels of ethics and motivation. Unlike the traditional theories of leadership which focus mainly on intellectual processes, the leadership theory emphasizes on emotions and values (Yu & Liang, 2014). Transformational leadership is after finding the association between individual and collective interests so that the adherents make efforts through the cling of this way. These leaders view the values and attitudes of organizations as non-dynamic and follow the changes and transformations in lie with the goals and organizational missions consistent with environmental conditions Magliocca, L. A; Christakis, A. N. 2001). Market orientation Market orientation is one of the dimensions of organizational culture in which employees with higher levels of values are excelled with regard to the benefit of enterprise and preserving the customer. Market orientation is a type of normative behavior which his extended across organization ad addresses the needs of customers and markets through creating novelty. Also, it acts in a response to the opportunities and threats. The main value in market orientation is that the organization gets prepared to confront new circumstances of business and can obtain the required information. Such a culture of market orientation for organization is regarded as a competitive advantage which cannot be imitated (Slater & Olson, 2001). Customer orientation It is defined as the set of rules which determines the benefit of customers without excepting tem form other people such as the owners, managers and employees with a purpose of establishing benefit-making organization, the researchers have conceptualized the customer orientation from two perspectives; first. The individual level which was proposed by Sa and Wittz. Based on their view, customer orientation is the concept in which the seller helps the buyers to make their decisions without any excess pressure, thus increasing their satisfaction. Second, the organizational level which can be inferred from the studies of Laferti and Hitt. Customer orientation consist of the information expansion regarding the customers across organization, determining some strategies and specific techniques to address the,market needs in a practical way and the responsibility as well as commitment across organization. It is their beliefs which prioritize the needs of customers so that the benefits of shareholders and managers are considered in corresponding classes (Rahimnia, Kafashpor, & Porreza, 2013). Competitor orientation Competitor orientation is defined as the weak, strong points and capabilities along with the strategies of competitors. There are many reason of why the competitor orientation can help the performance. First, an organization should examine how these products can provide the need of customers and the way they act to response to such needs. Second, competitor might be considered as proper resource to offer new ideas. Third, perceiving strong point or strategies of competitor might help the organization so as to know which markets are 67

3 liable to be entered. Finally, the acts of competitors can affect the organization which enables the organization to have the preparation of activities on the part of competitors and reduce the negative effects in this regard (Rahimnia, Kafashpor, & Porreza, 2013). Organizational commitment Commitment means the task or guarantee with respect to the person or thing. Induvial commitment implies those tasks which have accomplished based on the obligations. These tasks and obligation might be determined by the individual, are bilateral or be written. Commitment is different according o the set of works done by individual commitment (Majidi, 2010). Commitment has been defined differently which are given as follows. Motahari defines commitment as sticking to the promises and contracts to which humankind is believed and demonstrate that a committed person is the one which is cleave to the promises and makes efforts to attain its goals. Kanter expresses commitment as offering the energy and self-loyalty to the social system. Salankik perceives the commitment as the linkage of individual to the factors and individual actions. This means that commitment is addressed when the individual feels responsible for what is done (Alhoseini, 2001). Moedi et al. define commitment as the action beyond the responsibilities. Practical offering of commitment is essential for reaching the activities, particularly in the case of important jobs. Cook and Wall have proposed three concepts for commitment, namely, loyalty, identification and identity feeling, and preparation (Majidi, 1997). DESIGN OF THE STUDY The study is survey, applied and descriptive in terms of design, goal and quality of data collection. The statistical population comprised of 3800 employees working in Tehran Tosee Va Taavon Bank and the sample size was determined as 348. Using Cronbach alpha coefficient was estimated as 0.84 which shows a strong command of reliability. Inferential statistics Based on the results of the measured model. The items or variables of the study were obtained as less than 0.05 level of significance and critical value greater than 2. The items which are less than 0.05 factor value are excluded form the analysis process. Thus, items 4,10,13,15 were excluded in this analysis due to the less value of factor. Figure 1 presents the measuring model of research variables, the model is examined followed by the modifications. Figure 1. Measuring model of study (prior to modification) 68

4 The results ar reported in table 1. The items with less than 0.05 factor value were excluded from the analysis. Regarding the factor values and inter consistency of items, the validity of each items is accepted and this shows that every item is estimated well. Table 1. The results of measuring models and structural model of study Variables Questions Factor values Cronbach alpha Item Item Transformational leadership Item Item Item Item Item Customer orientation Item Item Item Item Item Competitor orientation Item Item Item Item Inter-task cooperation Item Item Item Item Organizational commitment Item Item Item The structural model Having excluded the afore mentioned questions which were demonstrated by less factor value, the structural model was developed for the research variables (fig 2). Figure 3 presents the structural model in PLS algorithm form. Figure 2. Structural model of the study (bootstrapping mode) 69

5 Figure 3. Structural model of study (LS algorithm mode) Table 2 presents he results of structural model for testing the research hypotheses. Regarding the provided values from this table, when the significance is greater than 1.96 or less than and the p-value is greater than 0.05, one can say that the hypothesis is accepted. Hence, all hypotheses are accepted except for hypothesis 6. Hypothesis Hypothesis 1 Hypothesis 2 Hypothesis 3 Hypothesis 4 Hypothesis 5 Hypothesis 6 Table 2. Standard coefficient and significant values for research variables Standard Significance Direction coefficient values Customer orientation Competitor orientation Inter-task cooperation Customer Organizational orientation commitment Competitor Organizational orientation Inter-task cooperation commitment Organizational commitment Hypothesis result accepted accepted accepted accepted rejected accepted The results of the table above show that the leadership based affects the organizational commitment directly and indirectly. Dimension of market orientation undergo the leadership based on transformation and organizational commitment. The reason for non-effect status of competitor orientation on organizational commitment can be attributed to the fact that the effect is not direct and the fell of belonging can be weakened when being associated with other competitor banks and this can lower the level of organizational commitment in Tosee Va Taavon Bank. REFERENCES Alhoseini, Seyedhasan. (2001). Organizational transcendence. Tehran: Baharie Publications. Hajikarimi, Z., Godarzi, A., Ftahi, Z. (2012). Inter-leve model for determining the relationship between perceiving organizational commitment, perceiving organizational respect on cooperation in decision-making with organizational commitment. Journal of Management Accounting, 6(19). Magliocca, L. A; Christakis, A. N. (2001), Creating transforming leadership for organizational change: the cogniscope system approach, System Research and Behavioral Science, Vol. 18, pp: Majidi, Abdolah. (2010). Examining the effect of transferring on job satisfaction and organizational commitment. MA thesis of Management. Tehran. Tarbiat Modares University. 70

6 Majidi, Abdolah. (2010). Investigating the effect of transferring on job satisfaction and organizational commitment. MA thesis of Management, Tehran. Tarbiat Modares University. Rahimnia, Fariborz; Kafashor, Azar; Porreza, Malihe. (2013). Offering a model for examining the effect of customer orientation, competitor orientation, tendency to innovation and expense orientation on marketing capabilities. International management conference, entrepreneurship and economic development. Slater, S. F., & Olson, E. M. (2001). Marketing's contribution to the implementation of business strategy: An empirical analysis. Strategic Management Journal, 22(11), Yu, C., and Liang, F.S. (2012), "The strength of human resource practices and transformational leadership: impact on organizational performance", The International Journal of Human Resource Management, Vol. 23, No. 20, November 2012,