THE INFLUENCE OF ORGANIZATIONAL CULTURE AND LEDERSHIP STYLE TO ORGANIZATIONAL COMMITMENT

2. LITERATURE REVIEW

2.1 Overview of Organizational Culture A culture historian Raymond Williams says culture is the rule of life, feeling and structure. Culture also set of rules which tell us how to life the live, what makes us different from another, some cultures will have some punishment for everyone who breaks the its rule (1992; cited from Oparanma, 2010) According to Schein culture can be defined as the way of life for entire society, a group culture come from the share of experiences which come out from some problems and how the group learned to solved its problem external adaptation and internal integration, which the result has considered valid to be taught to the new members as their way of thinking, feel, and correct way to perceive in the relation of those problems (1990; cited from Ojo,-) Forehand and von Gilmar think culture is a set of attributes which make one organization different with another organization (1980; cited from Shahzad, Luqman, Khan, Shabbir, 2012) Owens and Schein say that organizational culture has been categorized as the values or norms in solving the problem (1987, 1990; cited from Ahmad, 2012). The sources of competitive advantage from an organization comes from manifested in assumptions and beliefs, values, and attitudes from all member of organization (Hall, 1993; Peteraf, 1993).

Organizations strategic and values created a work culture in its organization, all the member of the organization and management are the keys factors to create work culture in an organization, take a look at the values and culture of organization are the first thing in deciding a job prospective (Ahmedabad, 2012). Azhar defines an organizational culture as unstated of assumptions within organization which shared for all the member in organization, and there are two major assumptions in common (2003; cited from Nganga, Nyongesa, 2012): 1. Beliefs are the result of reality which derived by the experiences 2. Values are ideal assumptions which are desirable and worth for stringing for Robbins explains the organizational culture as the same assumption or perceptions held by organization which has usual characteristic, descriptive, distinguish one organization with others, integrates individuals, groups and organization system variable (1989; cited from Nganga, Nyongesa, 2012). In an organization culture invested trough beliefs and assumptions, value, attitudes and behavior of its member, and these become valuable source for companys competitive advantage (Hall, 1993; Peteraf, 1993; cited from Ahmad, 2012). People who understand well about the culture in their organization will be able to interpreted organizational events, and these people will be able to share and socialize the culture and value to the new member of organization, so they can accept these norms and value easily (warner & desimone, 2010; cited from Gujarat, 2012)

Today organizational culture is important issue (Schein, 1992), increasing value for every employee is one of the investment from organization to its organization to keep the ability of learning both employee and organization, and the readiness to share its culture for the new members (Dasayanaka & Mahakalanda, 2008).

2.1.1 Characteristic of Organizational Culture Hodgetts & Luthans (2003) determine some characteristic of organizational culture : 1. Norms determined by how much of work done and coorperation level in organization between organization and employee. 2. The clear rules which teach employees behaviour associated to productivity, customer relation and intergroup coorperation. 3. Regular behaviour observation as formal procedure. 4. Good coordination among units in organization in order to improve efficiency to work, quality, producing products and services. 2.1.2 Dimension of Organizational Culture Hofstedes (1980) collected data from IBM employee, and found that more than 50 countries determine organizational culture into four dimensions: 1. Power distance (distant relationship formal and informal among employee and management) 2. Individualism (degree when employee create the distance between self interest and organization interest)

3. Uncertainty avoidance ( the degree when employees want to intigate uncertainty and tolerant of ambiguity) 4. Masculinity (when the success defined as the challenge and ambition)

2.2 Overview of Leadership Style It is important for an organization to effectively coordinate the behavior of people in order to achieve its aims and objectives. According to London (2001), objectives assest

executives in performing leadership by providing the basis for uniting the efforts of the workers within in the organization. It was further stressed that achieving set objectives help to give identity to an organization as well as recognation and status. Leadership has been identified as an important subject in the field of organizational behaviour. Leadership is one with the most dynamic effects during individual and organizational interaction. In other words, ability of management to execute collaborated effort depends on leadership capability. Lee and Chuang (2009), explain that the excellent leader not only inspires subordinates potential to enhance efficiency but also meets their requirements in the process of achieving organizational goals. Stogdill (1957), defined leadership as the individual behaviour to guide a group to achieve the common target. Fry (2003), explains leadership as use of leading strategy to offer inspiring motive and to enhance the staffs potential for growth and development. Several reasons indicate that there should be a relationship between leadership style and organizational performance. The first is that todays intensive and dynamic markets feature innovation-based competition, price/performance rivalry, decreasing returns, and the creative destruction of existing competencies (Santora et al., 1999; Venkataraman, 1997).

Studies have suggested that effective leadership behaviours can facilitate the improvement of performance when organizations face these new challenges (McGrath and MacMillan, 2000; Teece, Pisano and Shuen, 1997). In the daily business activities, the effectiveness of the manager leader in directing is a major factor in determining the success of the industry. Controlling as another duty of a leader is the function that provided the manager with the means of checking to ensure that the plans that were dveloped were properly implemented. According to Yukl (1994), leadership is the process of influencing followers. In organization, leaders play an important role to achieve the organizational goals by creating a climate that would influence employees attitudes, motivation, and behavior. Tead (1935) described leadership , it is an activity of influencing people to cooperate towards same goal which they come to find desirable. as it can be understood from that statement it necessitates an interaction between the two constituents: those who lead and those who follow. Northouse's (2007, P.3) said the definition of leadership, leadership is a process whereby an individual influences a group of individuals to achieve a common goal. For ages people have been looking for direction, purpose and meaning to guide their collective activities. Leadership is needed to foster purpose, direction, imagination, and passion, especially in times of crisis or rapid change. At such times people look to leaders for hope, inspiration, and a pathway which will lead them to somewhere more desirable (Bolman & Deal, 1994). Leadership is one with the most dynamic effects during individual and organizational interaction. In other words, ability of management to execute collaborated effort depends on leadership capability. Lee and Chuang (2009) explained that the excellent leader not only inspires subordinates potential to enhance efficiency but also meets their requirements in the process of achieving organizational goals.

Stogdill (1957) defined leadership as the individual behaviour to guide a group to achieve the common target. Fry (2003) explained leadership as use of leading strategy to offer inspiring motive and to enhance the staffs potential for growth and development. Several reasons indicate that there should be a relationship between leadership style and organizational performance. The first is that todays intensive and dynamic markets feature innovation-based competition, price/performance rivalry, decreasing returns, and the creative destruction of existing competencies (Santora et al., 1999: Venkataraman, 1997).

2.2.1

Level of leadership

Based on Hicks and Gullet (1975), A leader is anyone who directs and controls a group of people to achieve a set purpose. It was further commented by Hicks and Gullet (1975 ) that there might be two types of leaders: I. Unofficial leader: this leader is often not important in an organization, though the power as cribed to such leader may rise or fall. II. Official leader: the individual holding this postion is officially given charge over the subordinates who should be directed and controlled. In most cases official leaders could be called supervisors or managers and they reserve the power to reward or punish .

2.2.2

Leadership Theories

Theories for leadership within the past century have been developed. The trait approach that endured up to the late 1940s claimed that leadership ability is inborn. In the late 1940s to late 1960s behavioral approach became dominant advocating that effectiveness in leadership has to do with how the leader behaves. In the late 1960s to the early 1980s the contingency approach

became popular suggesting that effective leadership is dependent upon the situation (Bryman, 1993). Recent approaches to leadership focus on vision and charisma, the term used by sociologist max weber to describe leaders who can lead but who do not hold a sanctioned office (English, 1992).

Trait Theories of Leadership The study of special traits of leaders emerged from the belief that leadership and abilities such as intelligence were inherited. In addition to intelligence other factors such as birth order, status and liberal parents highly correlate with leadership abilities (Carlson, 1996). This

approach dominated the study of leadership up to the 1950s. It tried to define any distinguishing physical or psychological characteristics of the individual that explains the behavior of leaders (Hoy & Miskel , 1991). It claims that leadership ability is inborn. As the distinguished philosopher aristotle (cited in Hoy & Miskel, 1991) enunciated that from the hour of birth, some are marked out for subjection, others for rule. however, some shortcomings of this approach were identified. Firstly, it is not clarified which of the traits are most important and which are not. Secondly, some traits overlap. For example, tact, judgement, and common sense are listed as separate traits. But the last one covers the preceeding ones. Thirdly, trait studies do not distinguish between traits helping to become a leader and those enabling it to be maintained. Fourthly, most trait studies are descriptive. There is an assumption that the leaders traits existed prior to leadership and most of them have failed to approach the study of personality as an organized whole (Gouldner, 1965). Gibb (cited in Campell, Corbally & Ramseyer, 1966) argued that failure to outline leadership traits should not be accounted for their absence, but for lack of measurement and comparability

of data from different kinds of research. Recent trait studies utilized measurement procedures focusing on managers and administrators. Gary yukl emphasized leader effectiveness rather than leader traits based on the assumption that becoming a leader and becoming an effective leader are different tasks (Hoy and Miskel, 1991).

Behavioral Theories of Leadership Behavioral studies of leadership aim to identify behaviors that differentiate leaders form non-leaders (Robbins, 1998). Behavioral theories of leadership support that a set of particular behaviors can be named as a style of leadership. Leadership style refers to a distinctive behavior adopted by persons in formal positions of leadership (Campell, et al., 1966) and several studies were conducted to identify those. Contingency Theories of Leadership The contingency view of leadership emerged from systems theory and its impact on organizational and administrative theory. According to this model, specific leader behaviors relate to group performance and satisfaction. In order to achieve this, certain variables interact with each other such as the leader himself, the position he holds, group members, internal, and external environment of the organization. A successful match between the leader and the groups performance and satisfaction is contingent upon these variables. Three situational variables intervene between the leaders style and effectiveness which are leader-member relations, task structure, and power position. Groups are classified as either favorable or unfavorable based on this criteria (Monahan & Hengst, 1982).

2.3

Organizational Commitment

Organizational commitment is very important for the company to know whether their employee is satisfied or not because from their job satisfaction we can measure that they have commitment to achieve the companys goal or not.

2.31

Concept of Organizational Commitment

Organizational commitment has an important place in the study of organizational behaviour. This is in part due to the vast number of works that have found relationships between organizational commitment and attitudes and behaviours in the workplace. Bateman and Strasser state that organizational commitment has been operationally defined as multidimensional in nature, involving an employees loyalty to the organization, willingness to exert effort on behalf of the organization, degree of goal and value congruency with the organization, and desire to maintain membership (p.95). Mowday, Steers, and Porter (1979) identified commitment-related attitudes and commitment-related behaviours. Porter et al. (1974) Schultz, 3 discuss three major components of organizational commitment as being a strong belief in and acceptance of the organizations goals, a willingness to exert considerable effort on behalf of the organization, and a definite desire to maintain organizational membership. Sheldon (1971) defines commitments as being a positive evaluation of the organization and the organizations goals. According to Buchanan (1974) most scholars define commitment as being a bond between an individual (the employee) and the organization (the employer), though his own definition of commitment.

2.3.2

Theories of Organizational Commitment

Organizational commitment is the intensity of the identification and dedication an individual has towards organizational goals and missions (Porter, Steers, Mowday and Boulian, 1974). It is the solidarity that glues employees together in an organization, as well as a proud sense of belonging (Jaworski andKohli, 1993). Meanwhile, Mowday, Porter and Steers (1982) believe that outstanding individuals and organizations can have good interactions and achieve good outcomes via organizational commitment and organizational connections (Wang, 2012). Meyer and Allen (1991) and Dunham et al (1994) identified three types of commitment; affective commitment, continuance commitment, and normative commitment. Normative commitment is a relatively new aspect of organizational commitment having been defined by Bolon in 1993. Affective commitment is defined as the emotional attachment, identification, and involvement that an employee has with its organization and goals (Mowday et al, 1997, Meyer& Allen, 1993; OReily & Chatman). Porter et al (1974) further characterize affective commitment by three factors (1) belief in and acceptance of the organizations goals and values, (2) a willingness to focus effort on helping the organization achieve its goals, and (3) a desire to maintain organizational membership. Mowday et al (1979) further state that affective communication is when the employee identifies with a particular organization and its goals in order to maintain membership to facilitate the goal (p.225). Meyer and Allen (1997) continue to say that employees retain membership out of choice and this is their commitment to the organization

REFERENCE

Ahmad, M., Shakil. (2012), Impact of Organizational Culture on Performance Management Practices in Pakistan, Business Intelligence Journal, 5(1). Shahzad, Fakhar., Luqman, Rana Adeel., Khan, Ayesha Rashid., Shabbir, Lalarukh. (2012), Impact of Organizational Culture on Organizational Performance: An Overview, Interdisciplinary Journal of Contemporary Research in Business, 3(9). Nganga, Maya James., Nyongesa, Wesonga Justus. (2012), The Impact of Organizational Culture on Performance of Educational Institutions, International Journal of Business and Social Science, 3(8). Ojo, Olu. (2010), Organizational Culture and Coorporate Performance: Empirical Evidence from Nigeria, Journal of Business System, Governance and Ethics, 5(2). Gujarat, Ahmedabad. (2012), Impact Assesment of Organizational Culture on Employee Pharul Bhati, Pinnacle research Journals, 1(5). Opranma, A. O. (2010), Impact of Culture on Employee Job Performance in Nigerian, EuroJournal Publishing, Inc. http://www.eurojournals.com/african.htm, 10(3). London M.(2001) Leadership development : paths to self- insight and profession a growth, Lawrence Erlbaum Associates, Incorporated. Yukl, G. A. (2006). Leadership in Organizations. Upper Saddle River. Yukl, G. (1994). Leadership in organizations (3rd ed), Upper Saddle River, N.J: Prentice-Hall. Lee and Chuang (2009). The Impact of Leadership Styles on Job Stress and Turnover Intention: Taiwan Insurance Industry as an Example. www.hclee@ttu.edu.tw

Stogdill, R.M. & Coons, A.E. 1957. Leader Behavior its Description and Measurement. Ohio: Bureau of Business Research,The Ohio State University, 88,1-27 Fry, L. W. (2003). Towards a Theory of Spiritual Leadership. The Leadership Quarterly, 14, 693-727 Bryman, A. (1993) Charisma and leadership in organizations.London: Sage Publications. Hoy, W.K., & Miskel, C.G. (1991). Educational administration: Theory, research, and practice. (4th ed.) New York: McGraw Hill Campell, R.F., Ramseyer, J.A. (1966Corbally, J.E., &). Introduction to educational administration. (3rd ed.) Boston: Allyn & Bacon. Robbins, S.P. (1998). Organizational behavior: Concepts, controversies, applications. (8th ed.) New Jersey: Prentice Hall Campell, R.F., Corbally, J.E., & Ramseyer, J.A. (1966). Introduction to educational administration. (3rd ed.) Boston: Allyn & Bacon Monahan, W.G., & Hengst, H.R. (1982). Contemporary educational administration. New York: MacMillan Stodgill, (1997). Leadership, membership, organization. In K. Grint (Ed.), Leadership: Classical, contemporary, and critical approaches (114-115). New York: Oxford University Press

SEMINAR ON HUMAN RESOURCES MANAGEMENT

LITERATURE REVIEW

THE INFLUENCE OF ORGANIZATIONAL CULTURE AND

LEDERSHIP STYLE TO ORGANIZATIONAL COMMITMENT

Group 6 AYU ROSIANA PRATIWI MIRA SEPTIA. A NIKOS JOSHUA H.S 1010522104 1010522025 1010522033

INTERNATIONAL CLASS OF MANAGEMENT ECONOMIC FACULTY ANDALAS UNIVERSITY 2013

2.3 Hypothesis 1. Organizational culture influences organizational commitment Leadership Style in organization influences to the organizational commitment

2.4 Theoretical Framework

Independent Variable IV ORGANIZATIONAL

CULTURE

Independent Variable
LEADERSHIP STYLE

EMPLOYEE COMMITMENT Dependent Variable