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ISSN: 2523-0417 (Online) ISSN: 2521-5876 (Print)

UW JOURNAL OF MANAGEMENT SCIENCES

Volume 3 (Issue 1)March 2019

Faculty of Management Sciences University of Wahwww.uwjms.org.pk www.uow.edu.pk

UNIVERSITY OF WAH

JOURNAL OF MANAGEMENT SCIENCES

(UWJMS)

Volume 3 (Issue 1)

March 2019

Department of Management Sciences

University of Wah, Wah Cantt

University of Wah Journal of Management Sciences (UWJMS)

Volume 3, Issue 1, March 2019

ISSN (Print): 2521-5876 & ISSN (Online): 2523-0417

ii

University of Wah Journal of Management Sciences

The ‘UW Journal of Management Sciences’ (UWJMS) is a bi-annual publication of the University of

Wah, Wah Cantt, Pakistan. UWJMS is an international journal dedicated to advancing the

understanding of the intricacies of management in private and public sector through empirical

investigations and theoretical analyses. UWJMS is a double-blind peer-reviewed journal that publishes

quality articles in the field of management sciences.

Aim and Scope

The Journal aims to provide a focus for worldwide expertise in the required techniques, practices and

areas of research; present a forum for readers to share common experiences across the full spectrum of

industries and sectors in which management research is conducted; cover all areas of industry and

management; and link theory with practice by publishing case studies and covering the latest important

issues in special series. The journal aims at wide circulation and visibility of its research to professionals

and practitioners both within Pakistan and internationally.

The editorial board welcomes quality research articles from all areas of management sciences. The

board also encourages quality research from the newly developing business and management fields.

Therefore, ‘UWJMS’ welcomes papers in the areas of:

Business,

Marketing,

Entrepreneurship,

Technology and Innovation,

Human Resource Management,

Finance,

Knowledge Management

Economics,

Employees/Consumers Psychology,

Business Ethics and

Sustainable Development etc.




iii

EDITORIAL BOARD

Patron

Prof. Khaliq Ur Rehman Shad

Vice Chancellor, University of Wah

Executive Editor

Prof. Mushtaq Ahmad

Dean, Faculty of Management Sciences, University of Wah

Editor-in-Chief

Dr. Faiza Saleem, Assistant Professor, Management Sciences, University of Wah

Associate Editor

Dr. Nasir Mehmood, Assistant Professor / Chairperson, Management Sciences, University of Wah

Assistant Editor(s)

Mr. Aamir Khan, Lecturer, Management Sciences, University of Wah

Mr. Kamil Hussain, Lecturer, Management Sciences, University of Wah

Mr. Ahmad Ali, Lecturer, Management Sciences, University of Wah

______________________________________________________________________




iv

ADVISORY BOARD

INTERNATIONAL MEMBERS

Prof. Amin U Sarkar

Dean, College of Business and Public Affairs, Alabama A&M University Huntsville, USA

Prof. Muhammad Shahbaz

Professor, Montpellier Business School, France

Prof. ZHANG Xiaojuan

Professor, Wuhan University, China

Prof. Kubilay Ozyer

Associate Professor, Gaziosmanpasa University, Turkey

Prof. Sema Polatci

Associate Professor, Gaziosmanpasa University, Turkey

Prof. Balal

Associate Professor, University of Science & Technology, China

Prof. Rabia Imran

Associate Professor, Department of Management Sciences, Dhofar University, Oman

Dr. Abdul Karim Khan

Assistant Professor, UAE University, UAE

Dr. Amjad Shamim

Assistant Professor, University Teknologi PETRONAS, Malaysia

Dr. Muhammad Imran Qureshi

Director & Senior Lecturer, University Kuala Lumpur, Malaysia

Dr. Aila Khan

Senior Lecturer, School of Business, Western Sydney University, Australia




v

NATIONAL MEMBERS

Prof. Rauf I Azam

Vice Chancellor, Professor, University of Education, Lahore

Prof. Farzand Ali Jan

Vice Chancellor, Professor, IQRA National University, Peshawar

Prof. Idrees Khawajah

Dean, Professor, Air University School of Management, Air University, Islamabad

Prof. Khurram Shahzad

Associate Dean, Department of Business Administration, RIPHAH, Rawalpindi

Prof. Abdul Raheman

Dean, Faculty of Management Sciences, University of Gujrat, Gujrat

Prof. Shujaat Mubarak

Dean, Faculty of Management Sciences, Muhammad Ali Jinnah University, Karachi

Prof. Mohsin Butt

Air University School of Management, Air University, Islamabad

Prof. Sajid Bashir

HOD & Associate Professor, Faculty of Management Sciences, Capital University Science & Technology,

Islamabad

Dr. Imran Hameed

HOD & Assistant Professor, Lahore Business School, University of Lahore, Lahore

Dr. Farida Faisal

Director, University Institute of Management Science, PMAS Arid Agriculture University, Rawalpindi

Dr. Hassan Rasool

Assistant Professor, Pakistan Institute of Development Economics, Islamabad




vi

The Editor’s Note

I am pleased to introduce ‘University of Wah Journal of Management Sciences’, the emerging journal in the

field of management sciences. UWJMS will provide a platform for the original research in the field of

management, marketing, finance, human resource management and economics. The objective of UWJMS is to

publish up-to-date, high-quality and original research papers alongside relevant and insightful reviews. As

such, the journal aspires to be vibrant, engaging and accessible, and at the same time integrative and

challenging. Each issue of the journal will incorporate mix of qualitative and quantitative research papers

covering emerging aspects of management sciences.

Our editorial policy is governed by independent quality control, blind peer-review, strict adherence to HEC

policy requirements, zero tolerance to plagiarism and adherence to academic ethics in publishing. These

guiding principles are guaranteed by our Editorial/Advisory Board that contains world class national and

international scholars of high repute who have great contribution in the field of management sciences. This

issue contains the research related to the areas of marketing, management, finance, and organizational change.

We are grateful to our contributors of this issue. Our team led by imminent scholars and administrators aspire

to lead this journal to reach the height of perfection, and authenticity in the field of management sciences. We

are pleased to share that we aspire to make this journal a world-class publishing platform by producing

original research and getting membership in renowned abstracting agencies. Our goal is to make it recognized

journal by all regulating agencies including HEC very soon. It is only possible when the contributors of this

journal share their valuable wisdom in the shape of up-to-date knowledge in the form of research papers

whether qualitative or quantitative to this journal.

In conclusion, I would like to thank our Vice Chancellor (University of Wah) and all members of our Editorial

Board/Advisory Board and Contributors for joining us in this new fascinating and promising academic

project.

Dr. Faiza Saleem

Editor-in-Chief





vii

UNIVERSITY OF WAH JOURNAL OF MANAGEMENT SCIENCES


Titles Page

1.

The Impact of Faculty Appreciation and Recognition on Employee Retention

1Muhammad Yar Khan, 2Majid Jamal Khan, 3Wajid Khan

01-11

2.

The Impact of Price and Country of Origin Labels on Food Product Quality

Perceptions among Pakistani Consumers

1Anam Javeed, 2Uzma Amer, 3Syed Sikandar Wali

12-27

3.

Paradigm for the Foreign Direct Investors in the Virtual Market of Pakistan

1Shahid Bashir, 2Muhammad Zeeshan

28-38

4.

Impact of Transformational Leadership and Employee Commitment on Organizational

Reputation

1Muhammad Zeeshan, 2Shahid Basheer, 3Farzeen Fatima, 4Raza Alam Shah

39-55

5.

Green Consumer Behavior: Effects of Demographic Characteristics on Consumer’s

Choice of Buying Green Products: An Empirical Study of Swedish Electricity Market

1Mubbasher Hassan Syed

56-73

6.

The Impact of Organizational Justice on Organizational Citizenship Behavior Using

Organizational Politics as Moderator (A Case of Public Sector Universities in Khyber

Pakhtunkhwa)

1Muhammad Nawaz Khan, 2Muhammad Tahir Khan

74-87

1,2 Comsats University Islamabad, Wah Campus, Pakistan: Email: [email protected],

[email protected], 3 Preston University, Kohat, Pakistan. Email: [email protected]


Volume 3, Issue 1, March 2019, pp. 01-11

The Impact of Faculty Appreciation and Recognition on Employee Retention 1Muhammad Yar Khan, 2Majid Jamal Khan, 3Wajid Khan

Article History:

Received:

10 Jan, 2019

Revised:

12 Apr, 2019

Accepted:

16 Apr, 2019

ABSTRACT

Purpose: The paper assesses the differentiations in the satisfaction of the faculty with

respect to appreciation and satisfaction. The argument is built in the perspective that

both of the above mentioned hold importance to overall job retention; these include

faculty appreciation and faculty satisfaction.

Design/Methodology: A self-administered questionnaire was projected to a sample of

250 respondents in the region of Rawalpindi, Islamabad and Wah Cantt. Famous

universities were selected for the study. Simple random sampling technique was

applied in order to scrutinize the respondents. Statistical Package of Social Sciences

(SPSS) was used to analyze the data set.

Findings: The results indicate that the satisfaction level of the faculty acts major

impact on the job retention of the university faculty. The appreciation policies and

packages also showed a positively significant relationship with job retention.

Implications: This paper posits an implication for the executives of the university to

make attractive faculty appreciation packages and policies in order to retain their good

staff. Additionally, they need to give keen attention towards elevating the satisfaction

level of their academic staff as the highly satisfied faculty member would possibly

retain its current position.

Keywords: Faculty appreciation, Job retention, Job satisfaction

1. Introduction

Retention of employees in an organization is one the biggest challenges for the

organization (Aguenza & Som, 2018). The retention of diversified faculty is important for the

students who belong to minorities as among many benefits one is that the faculty acts as role

model for the students and provides mentorship (Turner & Myers, 2000). The satisfaction of

employees plays most important role in the retention of labor force. Faculty diversity is now

among major goals for the institutions as student bodies become diverse Turner et al. (2008)

therefore, comprehending the relation of higher education and faculty satisfaction is imperative to

the success of an organization. . The National Center for Education Statistics (NCES 2013) tell us

mailto:[email protected]



Muhammad Yar Khan, Majid Jamal Khan, Wajid Khan

2

that the instructional faculty working full-time in postsecondary institutions are mostly white, the

ratio is seventy-nine percent, while Asians were 10%. The ratio of black people were 6% and 5%

of them were Hispanic. The faculty retention is often dependent on the satisfaction level of the

employees which can further be evaluated on several bases. The area of faculty satisfaction

evaluation that is quite underrepresented is in appreciation and recognition (Fletcher et al., 2018).

The main objective behind this study is to expand the literature regarding job retention by

investigating the impact of faculty appreciation as well as level of satisfaction of the faculty

members.

This paper explores that how faculty appreciation and satisfaction does impacts the

retention of the employees on current job. The relationship between these acknowledgments and

the faculty member’s overall satisfaction with the institution, which may, in turn, influence

retention, is also examined. The particular study takes into account big universities in Rawalpindi

and Islamabad (Pakistan). Since Islamabad is the capital of Pakistan and Rawalpindi is its twin

city they have large number of universities and educational institutes located in them. People from

all around the country with variety of cultural backgrounds are residing here. Because of the fact

that numerous amenities and facilities exists in these two cities, Rawalpindi and Islamabad was

selected for data collection. A faculty satisfaction survey was used for the purpose of data

collection. Various universities in this region were selected in order to gather a diversified

portfolio of respondents.

1.1 Problem Statement

The management of human resource is one of the most highlighted issues for the

companies. The retention of the good workforce is which has a commitment and an experience is

vital for the performance of an organization. The process of appreciation of employees as well as

the satisfaction level casts a direct impact on retention of the employees on job. Furthermore, the

fact cannot be denied that appreciation of employees in the form of rewards and recognition has a

direct impact on the intention of the employees to stay on the current job. The appreciation system

of the organization for the employees has a direct impact on the satisfaction level which further

helps the employees to retain on current position. Since the retention of employees on job is the

major issue faced by all the organizations hence it is deemed necessary to study this current

challenge.

2. Literature Review

2.1 Employee Satisfaction

Ponjuan et al. (2011) investigated the views of tenured faculty members with along with

the senior faculty members within 80 developed universities. The article explored that level of


3

dissatisfaction of Asian and Black members was more dissatisfied in comparison to the other

faculty members. Similarly, the individuals who had just started their academic career were more

satisfied and willing to retain their current positions in the institutes. The discoveries bolster the

need to encourage ole clarity, self-efficacy, and social acceptance of faculty (Sahl, 2017). Majorly,

the labor force of the organizations have a tendency to encounter academic arena in most unusual

manner Turner and Myers (2000). Low level of satisfaction has been reported among white faculty

members of the universities (Bender & Heywood, 2006). The factors inspecting the satisfaction of

workforce have been explored as the burden of work on a particular employee, tasks and duties.

Hence it can be hypothesized that:

H1: Employee satisfaction has a positively significant impact on job retention.

2.2 Employee Appreciation

Another aspect that has been investigated on limited basis is the appreciation for the

employees of the employing organization. This is an imperative segment of staff fulfillment since

acknowledgment from associates, specifically, has been found to anticipate work fulfillment

(Hesli & Lee, 2013). According to the results of the study conducted in Carnegie research

institutions by Bozeman and Gaughan (2011) analyzed individual, work, and institutional

determinants of staff work fulfillment. Their outcomes propose colleague impression of

employees and their work were vital indicators of occupation fulfillment. Moreover, being

identified for research the level of satisfaction and appreciation policies of the organization

specifically important for the job retention of employees. Furthermore, particularly tried by

Bozeman and Gaughan (2011), it might be inferred by the outcomes that social acknowledgment

was vital for employees because of the relationship amongst recognition and job satisfaction.

Different examinations strengthened the outcome that acknowledgment is an applicable

determinant in personnel fulfillment, inspiration, and maintenance. Acknowledgment is

emphatically connected with work fulfillment and builds inspiration, which could prompt the

advancement and residency of personnel (Honan et al., 2013). Absence of acknowledgment, then

again, has been appeared to expand employee turnover (Daufin, 2001). The second hypothesis can

be stated as:

H2: Employee appreciation has a positively significant impact on job retention.

2.3 Job Retention

There are various past researches which have presented variety of findings with job

retention. According to the findings of Curry et al. (1986) a strong connection between the job

satisfaction level and job retention of the employees. On other hand findings by Feinstein et al.

(2006) found that job satisfaction is a powerful indicator for job retention of the employees.

Moving on further Freund (2005) also indicated that job satisfaction directly impacts the retention


4

level of employees. The major tool used by the organizations for retaining their talented

employees. The appreciation to the employees can be given intrinsically (non-monetary) or

extrinsically (monetary). The appreciation impacts the employees in a long lasting manner.

According to the findings of Walsh and Taylor (2007) the appreciation system of the organizations

can directly impact on job retention as well as the motivation level of the employees.

Figure 1: Theoretical Framework

2.4 Theoretical Framework and Hypothesis Development:

The environment of an organization with respect to its appreciation and satisfaction

policies is an important challenge. Previous studies have shown that there exists a strong

connection within the faculty job retention and organizational socialization theory Tierney (1997)

which is proven as a way to get an idea regarding the satisfaction level of the employees and

appreciation policies. Utilization of organizational socialization theory to the faculty of the

institutes takes into consideration the collective basis of the culture. It has further been endorsed

by Tierney (1997) that socialization within the organization consists of the faculty learning

environment and culture via rewards and appreciations.

From the very first day when the employees enter into an organization to the time they

exit, they are encountered with various experiences. The individuals devote themselves to various

types of memberships and references groups. The individuals as a part of organization lead their

lives in relationships and under the shadow of rewards and punishments. The process of

organizational socialization involves transmitting of information and organizational values which

ultimately makes organizational culture. The culture of an organization contains variety of rules

and a special organizational ideology. The ideology helps to edit the experience of the members

with the organization every single day. The employees would ultimately have the shared

experience and shared standards. Since this study focuses on the job retention and its contribution

factors in organizations hence the social organizational theory is deemed as relevant.

Employee

appreciation

Employee

Satisfaction

Job retention


5

Refreshed by Bauer et al. (2007), three components of organizational socialization theory

are role clarity, self-efficacy as well as social acceptance. However, comprehension of the

undertakings needed to secure the confidence can be termed as self-efficacy of the person.

Women and racial minority staff, specifically, are affected as they are probably going to get less

approval from their companions (August & Waltman, 2004; Bonner et al., 2004). The component

of social acceptance entails to the sentiments of acknowledgement and preference among the

social circle. It is further explained by profitability, work fulfillment, sense of duty regarding the

work environment, and maintenance (Bauer et al., 2007). Women and staff of color, specifically,

have been found to battle with social acknowledgment in their academic working environment

(Aguirre Jr, 2000; August & Waltman, 2004; Wargo‐Sugleris et al., 2018).

3. Research Methodology

3.1. Research Design

The present investigation looks at the fact that how the employee retention is being

impacted by faculty appreciation and satisfaction level of employees. A self -administered

questionnaire was floated among the faculties of renowned universities in Rawalpindi, Islamabad

and Wah Cantt. A sample of 250 faculty members participated in the survey. Employee retention

has been selected as an outcome variable whereas the job satisfaction and job performance have

been taken as independent variables in the study. The determinants of recognition of faculty are

applicable to the organizational socialization theory via self-efficacy and acceptability in the

society.

These measures of appreciation and acknowledgment propose faculty members pick up

confidence by getting approval (self-efficacy) and feeling acknowledged by others (social

acknowledgment). The methods of faculty gratitude and acknowledgement can be further

differentiated in two distinct collections. The declaration of workers and their assertion from other

colleagues as compared to their future endeavors, academic success and administration

commitments. The categorization of the phenomenon carries out after the desired factor of

education, research and administration. The level of satisfaction of the faculty members can be

measured through appreciation as well as acknowledgment from other executives and its

colleagues. For each variable, the responses are recorded on a scale of 1 to 5, where 1 is Very

Dissatisfied and 5 is Very Satisfied.

3.2 Unit of Analysis

As the problem statement is focused on exploring the factors which impact the retention

of job in Pakistani universities. The faculty members in Pakistani universities are considered as the

unit of analysis for the study (Khan et al., 2014). The response from each of the individual is


6

considered as separate data source in the study. The unit of analysis in Pakistani context has been

taken by following the study of (Nasir & Mahmood, 2018).

4. Analysis and Discussion

4.1. Statistical Package of Social Sciences

SPSS is famous software used for the data analysis which is used by various researchers

in social sciences and business research. Many marketing related organizations use this software

for analysing the market data and predict the recent market trends. There are various statistical

methods which can be applied using Statistical Package of Social Sciences. These methods

include descriptive statistics (frequencies, cross tabulation), bivariate analysis (ANOVA,

correlation and other non-parametric tests), regression, factorial analysis and cluster analysis.

4.2. Population and Sample of Study

The sample is selected on the basis of their characteristics and properties so that the

results could be generalized over the whole population (Uma & Roger, 2003). While conducting

the investigations, it is practically impossible to collect data from large population, hence the

sample is chosen (Ibrahim et al., 2018). A sample of 150 respondents was taken to collect the data.

Table 1: Gender

Frequency Percent Valid Percent Cumulative Percent

Valid

1 150 60.0 60.0 60.0

2 100 40.0 40.0 100.0

Total 250 100.0 100.0

Table 1 shows the gender distribution of the respondents who have participated in the

research comprised of 60% of males and 40% females. Furthermore, table 2 shows the age group

of the respondents. 8.8% of the respondents fall into the age group of 20-25 years. Whereas,

41.2% of them belonged to the age tier of 26-30 years. The highest number of respondents

belonged to the age group of 31-35 years. Only 3.6% fell into the category of 36 years and above.

Since most of the staff in the universities is young so less number of respondents belonged to 36

years and above age category.


7

Table 2: Age Group


Valid

1 22 8.8 8.8 8.8

2 103 41.2 41.2 50.0

3 116 46.4 46.4 96.4

4 9 3.6 3.6 100.0

Total 250 100.0 100.0

As concerned to academic qualification of the respondents, table 3 shows that 41.2 % of

the respondents were bachelors and 46.4% were masters. 3.6% of the candidates held an academic

qualification of doctorate.

Table 3: Academic Qualification


Valid

1 22 8.8 8.8 8.8

2 103 41.2 41.2 50.0

3 116 46.4 46.4 96.4

4 9 3.6 3.6 100.0

Total 250 100.0 100.0

The above tables give a brief description regarding the characteristics of the sample being

used in the study. Overall the sample consisted of educated and young respondents. Majority of

them were males however quite a fair number of respondents were females also.

4.3. Model Fit

The model summary presents the forte if the model under study is fit for further analysis.

In this case the dependent variable is the job retention upon which the impact of two independent

variable namely faculty appreciation. The value of R shows the coefficient of multiple

correlations. This value is linear correlation which is in between the observed and predicted

values of the model. The higher values indicate a strong relationship. The values of R and R

square for this study are in acceptable range for this study.

Table 4: Model Summary

Model R R2 Adjusted R2 Std. Error

Change Statistics

R2

Change

F

Change df1 df2

Sig. F

Change

1 .307a .094 .087 .682 .094 12.849 2 247 .000

a. Predictors: (Constant), ID, NV


8

Regression has been applied on this model to test the hypotheses. The results exhibit that

faculty appreciation and level of satisfaction shows a positively significant relationship with job

retention of the employees. Level of satisfaction shows a strong positive and significant

relationship with job retention. The significance value is 0.000. Whereas, on the other hand the

variable of faculty appreciation shows relatively weak impact on job retention. The value for this

relationship is 0.031.

Table 5: Regression

Model Unstandardized

Coefficients

Standardized

Coefficients

t Sig.

B Std. Error Beta

1

(Constant) 1.418 .508 2.792 .006

FA .208 .096 .135 2.172 .031

LS .420 .104 .249 4.023 .000

a. Dependent Variable: JR

The outcomes of the study show that faculties of the universities will be inclined to retain

their current job if they get a fair appreciation for achievements and duties. Also if the level of

satisfaction is higher among the faculty members then more potential towards the retention of job

exists.

4.4. Research Limitations and Implications

Every study consists of certain limitations. These outcomes have been derived from the

universities of Islamabad, Rawalpindi and Wah Cantt only. Despite the fact that speculation is

constrained, this examination contributes a more profound comprehension of an underrepresented

zone of faculty satisfaction. Second, this study is comprised of full-time tenured, tenure-track, and

non-tenure-track academic faculty only. This prohibits different sort’s personnel and staff and the

satisfaction they may have with recognition and acknowledgment. Third, the factors in this

examination depend on self-reported survey responses on perceived appreciation and recognition.

Since these are observations, the real measure of recognition and acknowledgment might be

under-spoken to. Given these restrictions, the discoveries still propose one part of faculty

fulfilment depends on the recognition and acknowledgment an employee sees and from whom

these affirmations are made. These measures of fulfilment additionally affect regardless of

whether staff are happy with their establishment as a work environment, which eventually impacts

profitability and maintenance.


9

5. Conclusion

Keeping in mind the end goal to keep up an assorted workforce, recognition and

acknowledgment ought to be recognized as a feasible measure of their fulfilment. Colleges and

organizations ought to possess formal as well as casual policies for recognizing the

accomplishments of the workforce and the affirmations should originate from the supervisors and

colleagues. Comprehending the importance of recognition and acknowledgment and tending to

these necessities are critical factors in the difficulties of differentiating this college and different

foundations.

5.1 Future Recommendations

The future researchers can add more variables to the theoretical framework under study

to get deeper insights. The addition of variables as moderators or mediators to the model could

further yield interesting insights from the model. The research could be carried out in manner that

gender comparison between male and female employees and their retention could be studied.

Similar research steps could be undertaken in other countries and contexts to generalize the results

in a broader manner. Furthermore, sample size could be increased in order to get deeper and wider

view of the phenomenon.

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1 Universiti of Wah, Wah Cant., Pakistan. E mail: [email protected] 2 International Islamic University Islamabad; [email protected] 3 Comsats University Islamabad, Wah Campus; [email protected]



The Impact of Price and Country of Origin Labels on Food Product Quality Perceptions

among Pakistani Consumers

1Anam Javeed, 2Uzma Noor, 3Syed Sikandar Wali

Article History:

Received:

16 Jan, 2019

Revised:

12 Apr, 2019

Accepted:

14 Apr, 2019

ABSTRACT

Purpose: The main objective behind the study is to probe into the impact casted by

price and country of origin labels on product quality perceptions among Pakistani

consumers. The argument is based on the proposition that both of the variables are

important in the formation of quality perceptions.

Design/Methodology: A self-administered questionnaire was floated among 504

respondents using a systematic random sampling technique. Big and famous malls of

Rawalpindi and Islamabad were selected on the basis of customer turnout. PLS-SEM

was used for inferential analysis of the data.

Findings: The results indicate that country of origin does not have an impact on

product quality perceptions in Pakistani consumer market whereas price casted a major

impact on the perceptions.

Implications: The perceptions of the consumers regarding food packaging cues has

not been addressed taking a comprehensive set of cues in a holistic view which is a

theoretical gap this study fills up.

Key Words: Price; Country of origin, Product Quality Perceptions; Food packaging.

1. Introduction

Taking into consideration the enhancement of the life standards, the modern consumer has

become much more witty and alarmed about their health and consumption. The packaged is

replacing the loose food due to contemporary trends (Magnusson et al., 2003). In order to make

their product look noticeable at the shelves and points of displays, the companies spend a huge

budget because packaging stays with the consumer (Ab Talib & Johan, 2012). Furthermore, the

argument is strengthened by Hasenbeck et al. (2014) that the marketing professionals as well as the

packaging designers are giving substantial percentage of their budget to the packaging of the

products in order to devise them in a way that they are handy as well as attractive. Miao and Mattila

(2013) have also argued that product packaging have become the most popular advertising tool.




Anam Javeed, Uzma Noor, Syed Sikandar Wali

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With the passing time and increase in research, a wide variety of innovations in food

packaging have incurred (Risch, 2009). The food packaging is becoming more handy and

convenient to use as well as they are embedded with the quality cues for the consumers (Fernqvist

& Ekelund, 2014).The companies are investing a lot to embed attractive and understandable quality

cues on the food packages. The demand of the quality food by consumers is increasing day by day,

hence contributing to the innovative packaging (Piqueras-Fiszman & Spence, 2012). The attitudes

and beliefs regarding food packaging may integrate with the consumer knowledge to evoke a greater

value proposition (Tiwari & Herstatt, 2012). Previous studies have established that consumer tends

to have confidence in price of the packaged food product as quality cue. Looking at the Pakistani

context there is very less research on packaged food price and perceived product quality (Joiya &

Shahzad, 2013). According to the results of Zaidi and Muhammad (2012) price is a major indicator

of quality in Pakistani consumer purchase cycle. The perception of food quality by looking at the

price is influenced by both rational and psychological factors. Kirmani and Rao (2000) suggested

that the nexus of price and packaged food product should be tested in various markets to check its

generalizability. By considering the suggestion of Kirmani and Rao (2000) investigating the

existence and strength of the relationship between price and product quality perception would be an

important contribution. Country of origin is an effective stimulus which impacts the consumer

quality judgments about the product ((Tran & Fabrize, 2013). A strong and positive country of origin

image not only contributes to the image of the brand but also promotes the positive country image

(Chattalas et al., 2008). Pakistan posits enormous investment opportunities because of its growing

economy (Saeed et al., 2013). The Pakistani elite class consumers take country of origin into

consideration as a symbol of quality and class while going for any purchase, with reference to the

extrinsic cues like price, brand name and product quality (Khan et al., 2012).


Consumer behavior is an area of foremost interest in marketing (Horner & Swarbrooke,

2016). The product quality perception is a vibrant topic in the domain of consumer behavior (Kaya,

2016). The quality perceptions of the consumers regarding the food product have a unique affection

with the organization (Kaya, 2016). The cognitive processing of the food packaging cues and

perceived product quality is complex and less investigated (Diallo et al., 2015). It is indicated by

Diallo et al. (2015) that quality perceptions regarding the packaged food products is an important

area for further research. The issue of perceived product quality is always an area of interest for the

researchers, because quality is the basic and major concern of the consumer (Magnier et al., 2016).

Accordingly, the study of the product quality perceptions of consumers in Pakistan

developed from food packaging cues is vital from the perspective of marketing. The increasing

number of households and growing trend of urbanization in Pakistan makes it prospective market

for the usage of packaged food items (Anam et al., 2018). Most of the past studies have taken into

The Impact of Price and Country of Origin Labels on Food Product Quality Perceptions among Pakistani

Consumers

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account the effect of food packaging cues on the purchase intention and generally reported a positive

association (Li et al., 2012). The necessity of studying perceptions of the consumers based on the

food packaging cues in variety of markets has been stressed by various researchers (Qasem et al.,

2016).

Even though, the scholars have attempted to explain the phenomenon of perceived product

quality with various perspectives Argo and White (2012), they tend to neglect the important aspect

of extrinsic packaging cues (Wardy et al., 2017). In signaling context, the product quality

perceptions are greatly influenced by the cues (Amine et al., 2005). From the practical perspective,

the packaged food industry in Pakistan has flourished (Zafar et al., 2017). The trend of urbanization

is increasing in Pakistan and urban consumers are changing lifestyles as compared to their rural

counterparts. This trend has given a boost not only to the packaged food processing companies in

Pakistan but also to the media houses to develop advertising campaigns. The food companies have

invested in packaged food production but the perceptions of the consumers regarding the quality of

them still remains uncertain.

2. Literature Review and Hypotheses Development

2.1 Product Quality Perception

The concept of product perceived quality has been defined by Aaker and Joachimsthaler

(2000) as “product perceived quality is a unique kind of association created in the mind of consumers

which not only impact the brand associations on the minds of consumers but also the profitability

of the manufacturer.” In the studies of marketing the concept of perceived product quality is

explained on the foundations of the cues that the consumer can extract from the shopping

environment. The marketers are obliged to understand the perceptions of the consumers regarding

the product quality in order to develop an offering which comply with expectations. According to

Loebnitz and Grunert (2018) the perceived product quality is a vast concept which cannot be

captured in few words. Ergin and Akbay (2010) established his study by concluding that

comprehension of the consumer perceptions is the part and parcel of the establishment of an

attractive product offering. The product oriented quality refers to all physical aspects of the product

which gives an overall precise description of the product. The process oriented quality refers to the

way the food has been manufactured. The quality controls refer to the fact that which standards a

product needs to conform in order to be approved as quality food product. The technical

specifications of the product are linked to the objective quality of the product, and the marketers

aim to keep improving the products according to the perceptions of the consumers (Schnurr et al.,

2017).


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2.2 Country of Origin

Not long ago, the domestic markets were self-sufficient and there were no foreign

competitors. The growing trend of globalization has circulated the products. The foreign products

are entering into the markets which not only give competition to the domestic products also increases

the range of consumers to choose from (Kalicharan, 2014). With the increased internationalization

has made country of origin as an important variable to study. The findings of this study will enable

the enterprises to plan better about their products and devise unique marketing strategies (Amine et

al., 2005). From past few decades, the effect of country of origin on consumer’s quality perception

has taken a vivid place in consumer behavior studies.

Before employing country of origin as an extrinsic cue in the studies, customer used price

and brand names to evaluate the quality extensively till 1960’s. The preliminary studies on country

of origin started to capture attention by the researchers in early 1960’s (Sadiq Sohail, 2005). The

investigation on this area stared to get popular in 1965 in Finland and Guatemala. In this era scholars

asserted that country of origin label has an impact on the quality perceptions (Zbib et al., 2010).

Furthermore, discussing about the scenario of country of origin effect in Pakistani market, consumers

base their opinions on the country of origin image of the product. Country of origin is an effective

stimulus which impacts the consumer quality judgments about the product (Tran & Fabrize, 2013).

The recent academic debates are focusing on the expansion of the concept of country of origin

(Carsana & Jolibert, 2017; Hsu et al., 2017). The term country of origin is now combined with region

of origin and province of origin (Bruwer & Johnson, 2010). According to Newman et al. (2014) the

country of origin casts an impact on the minds of consumers in the context of food products. Various

studies have shown the relationship that country of origin labels cast a positive impact on the

perceptions of quality in the minds of consumers (Diamantopoulos & Zeugner‐Roth, 2010; Rezvani

et al., 2012). Taking into consideration of the previous studies that have proved the positive effect

of country of origin on perceived product quality this study hypothesizes that:

H1: Country of origin label has a significant impact on perceived product quality.

2.3 Price

According to (Grewal et al., 1998) consumers infer quality from the price being displayed

on the product. Grewal et al. (1998) studied the impact of price along with the cue of store name

and brand name on quality perceptions of the consumer. A positive relationship between price and

perceived quality has been reported. It has been proposed by that the price as a cue is of central

importance which can be used reciprocally to infer the quality of the product (Cristo et al., 2017).

Kirmani and Rao (2000) suggests that the impact of price on quality perceptions in newly launched

products is significant, hence more product categories should be selected like food items and

vehicles to test the relationship. The link between price and perceived quality should be tested in

various markets to check its generalizability (Mazumdar et al., 2005).


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The relation between price cue and the quality perception is statistically significant

(Fraccaro & Macé, 2014). Similar, kind of findings have been reported by (Rao & Monroe, 1989).

Many scholars have reported a significant relationship of price cue with product quality perception

(Bolton et al., 2010). It has been suggested by Campbell (2007) that price should be fair for the

positive evaluation of the product, negative consequences could occur with unfair pricing which

could tarnish the brand image.

Previous studies have established that consumer tends to have confidence in price of the

packaged food product as quality cue (Cristo et al., 2017). Looking at the Pakistani context there is

very less research on packaged food price and perceived product quality. According to the results of

(Zaidi & Muhammad, 2012) price is a major indicator of quality in Pakistani consumer purchase

cycle. Past studies have proved the relationship between the price and product perceived quality.

The factor of the price tag on food package casts a psychological impact of superior quality. Brucks

et al. (2000) reported a significant relationship between price and product quality perception.

Similarly, Widyastuti and Said (2017) demonstrate a significant nexus between price and the product

quality perception.

H2: Price has a significant impact on perceived product quality.

2.4 Signalling Theory

The signalling theory has been presented by (Spence, 1978). Connelly et al. (2011) stated

that signalling theory practically aids in the mapping of consumer behaviour. The prior studies using

signalling theory considered consumer purchase behaviour and formation of quality perceptions

through packaging elements serving as quality signals (Kirmani & Rao, 2000). According to the

argument of Connelly et al. (2011) the signals extended towards the consumers are in the form of

favorable cue regarding the product about to be sold. Piqueras-Fiszman and Spence (2015) stated

that the fundamental focus of the theory is towards the reduction of information asymmetry among

the buyers and sellers. Connelly et al. (2011) argue that the consumer interprets the signal being

communicated to him by the seller. The signals sent out towards the consumers include price,

advertising appeals and all other apparent extrinsic cues.

In marketing, signals can be shown by delivering information about seller characteristics

to buyers to examine and appraise the validity and credibility of a seller’s qualities, and the costs of

deceptively making up a signal must exceed the benefits of faking it (Mavlanova et al., 2012). In

addition, for companies, systematic approaches for formulating an effective signal can help reduce

information asymmetries for their customers and can provide a strong competitive edge (Moss et

al., 2015). The desired goal of signaling primarily focuses on positive information communication

to deliver the positive attributes of product quality, service quality, or organization function to

facilitate purchase intentions, investment, etc. (Wells et al., 2011). Pezzulo et al. (2013) based on

signalling theory propose that various apparent signals communicate the quality meanings of the


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product or service. DeAndrea (2014) based her argument on signalling theory that the external cues

like warranties for life time gives an impression about the quality of the product as well as the

credibility of company. Recently, various researchers have used signalling theory in terms of

communication perspective (Spence, 2002).

The impact of food packaging cues on food quality perception has not been yet tested in

developing country context in general and in Pakistani market specifically (Khan et al., 2018). The

independent variables in this study consist of country of origin Kalicharan (2014) and price (Cristo

et al., 2017). The framework that presents the variables under study is illustrated below:



Methodology is referred as the process of development of research by the researcher

whereas method is actually the technique used by the researcher. The sections explain research

design, variables ‘operationalization, population and sampling issues, instrumentation aspects,

sources and methods of data collection, analysis methods, reasons to rely on structural equation

modelling, and the pilot test and its analysis. This study was conducted using survey method in

shopping malls across the metropolitan cities of Pakistan i.e., Islamabad and Rawalpindi (Javeed et

al., 2018). The questionnaire was personally administered in the seven big shopping malls of the

cities. Data collection for this particular study was carried out for several weeks after pilot testing.

A self-administered questionnaire was used to collect the data from the Pakistani consumer market.

In the early stage of data analysis, an official letter from Universiti Utara Malaysia (UUM) was

obtained. This letter helped the researcher to get responses from the target sample. The data collected

for the study was analysed on Statistical package of social sciences (SPSS) for descriptive analysis

whereas PLS-SEM was used for hypotheses testing.

PRICE

COUNTRY OF

ORIGIN

PERCEIVED

PRODUCT

QUALITY


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3.1 Research Design

Methodology is defined by Holloway (1997) as “Principles and philosophy on which

researchers base their procedures and strategies, and the assumptions that they hold about the

nature of the research they carry out.” An attempt to explore the solution to a problem through

methodological manner is called research. The outcomes of the study ultimately add to base of

knowledge.

3.1.1 Quantitative Research

The theories are being confirmed and verified by using a relationship among the variables

in the quantitative study design. Quantitative study starts with the theory and formation of study

hypotheses. Objectivity as well as neutrality is maximized by applying quantitative research. In this

particular study the quantitative research design was followed. The questionnaire was used for

collecting the data in the study as this is the most widely used in the hypotheses based studies.

4. Analysis

4.1 Response Rate

Among 504 distributed questionnaires by the researcher, all of them were returned back on

the spot receiving a response rate of 100%. Out of the returned questionnaires, 478 of them could

be used by the researcher which achieved a valid response rate of 95%. The unusable questionnaires

had missing entries because of which they could not be administered to analysis.

4.2 Descriptive Analysis

The descriptive analysis of the study gives an overview regarding the principle features of

the collected data. The descriptive analysis comprises of mean, standard deviation and variance

(Sekaran & Bougie, 2010). Table 1 shows the descriptive analysis of the model under consideration.

Table 1: Descriptive Analysis

Construct N Minimum Maximum Mean Standard

Deviation

Country of origin 478 1 5 3.8316 0.8513

Price 478 1 5 3.9979 0.6455

Perceived quality 478 1 5 4.0553 0.6787


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4.3 Evaluation of Outer Model (Measurement Model)

Reliability and validity are the basic standards for measuring the measurement (outer)

model (Hair et al., 2013). According to Uma and Roger (2003) reliability measures the consistency

of measuring instrument whatever it is measuring whereas validity measures how well the

instrument measures for which it is intended to measure. The assessment of outer model largely

depends on the nature of model either it is comprised of reflective or formative measures.

4.4 Content Validity

The content validity connotes the suitability of the indicators to measure the main concept

under the study. Moving on further, principal component analysis (PCA) is preferred by (Heise &

Bohrnstedt, 1970). Principal component analysis (PCA) is being used by Smart PLS, hence it was

used to generate all the factor loadings for the indicators. It is necessitated that the respective items

must portray highest loadings on theory construct as compared to any other construct. All the

indicators selected for the study were selected only after assuring that they belong to the respective

constructs. The factor loadings of all the items of the questionnaire are depicted in Table 2.

Table 2: Factor Loading

Variable Item Loading t-value p-value

Country of

origin

0.867 0.794 0.623

COO1 0.775

COO2 0.856

COO3 0.859

COO4 0.648

Price

0.861 0.800 0.553

PR4 0.728

PR5 0.722

PR6 0.775

PR7 0.752

PR8 0.741

Perceived

product quality

0.907 0.885 0.524

PQ1 0.712

PQ2 0.743

PQ3 0.726

PQ4 0.720

PQ5 0.785

PQ6 0.777


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Table 2: Factor Loading

Variable Item Loading t-value p-value

PQ7 0.758

PQ8 0.724

PQ9 0.537

4.5 Discriminant Validity

According to Hair et al. (2013), discriminant validity is termed as the extent to which

construct measures what it is intended to measure. The correlation among the items as well and the

overlapping constructs is being assessed through discriminant validity. Hair et al. (2013) suggests

two criteria for checking out the discriminant validity. The prior one is Fornell and Larcker’s criteria

which is the square root of AVE of each construct. The discriminant validity as per Fornell-Larcker

criteria is shown in Table 3.

Table 3: Fornell- Larcker Criteria

COO PR PQ

COO 0.789

PR 0.513 0.724

PQ 0.358 0.487 0.744

The cross loading values of all the items of the instrument are shown in Table 4.

Table 4: Cross Loadings

COO PQ PR

COO1 0.775 0.316 0.256

COO2 0.856 0.312 0.344

COO3 0.859 0.358 0.344

COO4 0.648 0.233 0.240

PQ1 0.339 0.712 0.343

PQ2 0.344 0.743 0.373

PQ3 0.361 0.726 0.282

PQ4 0.280 0.722 0.289

PQ5 0.276 0.785 0.368


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Table 4: Cross Loadings

COO PQ PR

PQ6 0.261 0.777 0.390

PQ7 0.289 0.758 0.389

PQ8 0.236 0.724 0.285

PQ9 0.097 0.537 0.133

PR4 0.322 0.412 0.728

PR5 0.242 0.244 0.722

PR6 0.237 0.301 0.775

PR7 0.263 0.307 0.752

PR8 0.315 0.353 0.741

4.6 Hypotheses Testing (Direct Paths)

Primarily, the function of algorithm was applied to produce the path coefficients.

Furthermore, as a next step bootstrapping is carried out with 500 sample size. The sample size

selected while running Smart PLS must be greater than the actual sample size which a condition is

recommended by (Hair et al., 2013). The path coefficient values which are nearer to +1 depict

positive nexus however, the values closer to -1 represent negative relationship. If the path values

are insignificant or opposite to the hypothesized relationship the hypothesis is supposed to be

rejected. Bootstrapping is run in this research to get the t-values and standard error for each path

coefficient. Table 5 shows the results of the hypotheses under consideration.

Table 5: Hypotheses Results

Hypotheses Relationship B-values T-values P-values Decision

H1 COO-->PQ 0.027 0.646 0.519 Rejected

H2 PR-->PQ 0.082 2.056 0.040 Accepted

H1: The results (β= 0.027, t= 0.646, p= 0.519) indicate that no significant relationship exists between

country of origin perceived product quality.

H2: The results (β= 0.082, t= 2.056, p= 0.040) indicate that price has a positively significant impact

on perceived product quality.


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5. Discussion of Results

The first hypothesis of the study H1, which was defined as a positive and significant relation

exists between country of origin was not accepted as shown by the results. The absence of the

significant relationship between the variables can be attributed to the fact that country of origin cue

is subjugated in the presence of other marketing cues. The results can be otherwise explained that

Pakistani consumers are less aware of the country of origin labelling as most of researches were

being carried out in European markets. The results corroborate with the findings of Kalicharan

(2014) who unveiled that significant relationship does not existent between the cue of country of

origin and perceived product quality.

The second hypothesis H2 of the study proposed that price impacts the perceived product

quality significantly. The hypothesis was accepted. The positively significant relationship possibly

emerges from the fact that Pakistani packaged food consumer is becoming health conscious, they

expect the value from the product in exchange of money as well as they believe in the genuineness

of the product. The results of the study agree with the findings of Miyazaki et al. (2005)who claimed

that the price of the product is a sheer indicator of quality for the consumers prior to its actual usage.

6. Implications and Future Recommendations

The prior consumer behaviour studies focused mainly on the heuristic perspective,

however few studies focused specifically on the explicit food packaging cues. It has been proposed

byArgo and White (2012) that the consumer behaviour studies focusing on the food packaging cues

and their impact on quality perceptions is still to catch up. Based on the research upshots, it is

confirmed that Pakistani consumers are expressively influenced by price and country of origin

consider them as the quality indicating cues. Moving on further, the perceptions of the consumers

regarding food packaging cues has not been addressed taking a comprehensive set of cues in a

holistic view which is a theoretical gap this study fills up.

The empirical analysis of the study confirms the relationship among the constructs together

with the moderating effects. These relationships have been confirmed or disconfirmed statistically.

From the standpoint of practitioners, this study provides a significant contribution in the form of

understanding the mind set of consumers in a shopping situation. It may also assist the marketers to

devise the marketing strategies to create favourable product perceptions and long term relations with

the consumers. Marketing is a stream which has advanced from commercials to every single aspect

of the product including the packaging of the product. The target of the cues embedded in the form

of labelling on food packages is linked to the minds and perceptions of consumers. This study

confirms that the Pakistani consumers are significantly been influenced by packaging cues. The

results of the study entail that marketing managers should embed the cues intelligently keeping

clearly in mind that they are considered as the quality signals of the enclosed product by the

consumer. Another theoretical contribution of this study is that is that it contributes to prevailing


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literature in terms of signalling theory by authenticating distinct extrinsic cues (brand name, country

of origin, price, nutritional label, precautionary label and Halal logo) as signals of quality. Taking

into consideration the intricate challenges of the product packaging, food packaging cues need to

be enhanced more in order to achieve higher quality perceptions.

Further studies in future related to extrinsic cues and perceived product quality can broaden

their scope to other product categories for instance cosmetics, technology products etc. Making cross

product comparisons for determining the consumer behaviour could also be a major step. The scope

of the study could be broadened in future by including more cities as well as rural and semi urban

areas of Pakistan. Furthermore, it is proposed that future studies should take into consideration more

demographic aspects of respondents like ethnicity, religion and employment status in order to

comprehend that how different groups of consumer perceived quality in response to various extrinsic

cues.

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1 SZABIST Islamabad, Pakistan: Email: [email protected] 2 University of Central Punjab, Lahore, Pakistan. Email: [email protected]



Paradigm for the Foreign Direct Investors in the Virtual Market of Pakistan 1Shahid Bashir, 2Muhammad Zeeshan

Article History:

Received:

14 Jan, 2019

Revised:

4 Apr, 2019

Accepted:

6 Apr, 2019

ABSTRACT

Purpose: The Foreign Direct Investment (FDI) is currently low in Pakistan due to the

recent wave of terrorism and political instability. In this situation, the impression of

online global companies can be obliging. In view of that, this research assesses the

attractiveness of Pakistan’s virtual sector for investment by multinational companies.

Findings: The findings reveal that conventional transaction systems, lifestyles and

cultural differences, irrelevant market contents, business models, fragmentation,

purchasing power, undeveloped payment systems, language differences, logistics, and

unethical competitors are the major push to avoid this industry. On the other hand, the

pulls are supportive government initiatives, increasing number of personal computer

and Internet users, and reduced bandwidth tariff.

Implication: It is recommended that the change in global business trends, such as fast,

easy and low-priced trade initiation process, does indicate future potential of e-

business growth in Pakistan.

Recommendations: Although previous studies have investigated the pertinent issues

about e-business. However, very few studies have been conducted in developing

counties like Pakistan. Furthermore, this study proposes findings which could be

helpful for online companies and financial sector of Pakistan like banks.

Keywords: Foreign Direct Investment, Virtual Market, Pakistani Finance and

Economy, Marketing

1. Introduction

Since last decade, the economy of Pakistan is observed to be underperforming. According

to a report by the World Bank (2016), Pakistan’s annual Gross Domestic Product (GDP) growth

rate was around 8% at the end of fiscal year 2004-2005. Later, it declined to around 2% at the end

of fiscal year 2009-2010, and currently it is around 5% (Pakistan Economic Survey, 2015). Such

figures can be assumed as worse if compared by the GDP growth rate of China (around 7%

percent) and India (around 8%). The analysts (e.g., Yousaf et al., 2008) confirmed that one of the

most important indicators of underperformance in the Pakistani economy is low inward Foreign



Shahid Bashir and Muhammad Zeeshan

29

Direct Investment (FDI). Khalid et al. (2012) found that during fiscal years 2008-2011, the FDI

inflow decreased from $5.4 billion to $1.57 billion. It contributed less than 4 percent of GDP,

which was extremely low even if compared to average GDP contribution rate (7.5%) of

developing countries (Rehman et al., 2009). The report further suggested that companies have

shown less interest in investing in Pakistan due to various factors ranging from unstable political

environment to conflict between investors and the government, plus the recent wave of terrorism

could be another significant factor towards this fall.

In the present scenario, the impression of online global giants to set-up their business in

Pakistan can be obliging to enable the country to tackle the issue of foreign direct investment. Like

most developing countries, Pakistan considers FDI as its major external source of funding to fill

its resource gaps and increase economic growth. Moreover, as Pakistan is facing an issue of

increased unemployment (Pakistan Economic Survey, 2016), the FDI in the virtual sector can

prove to be one of the best sources of promoting small and medium enterprises (SMEs) and reduce

unemployment. E-business can create various income generating opportunities. For instance,

people can create e-shops on e-marketplaces (e.g. eBay, Amazon etc.) to promote their SMEs or

family businesses. There are examples where SMEs or family businesses have played important

roles in the economic success, and made considerable contributions to the societies. In the United

States, family businesses were estimated to represent 90–98% of all businesses, offer jobs to over

50% of the workforce, and create 40–60% of the GDP whereas in Europe, the family business

sector represented over two thirds of all enterprises and accounted for about half of the GDP-

economic activities and private employment. As this study is for Pakistan, market for online

shopping is very slow in adopting the change as Pakistan was the 2nd slowest online shopping

adopter in the world (Adnan, 2010).

Nevertheless, since the beginning of global e-business, the trend of Pakistani Internet

users towards e-shopping is observed to be low. According to Alam (2013) the estimated market

size of e-commerce was between $25-30 million up until the end of year 2012, with 10% annual

growth rate. This growth rate is low if compared to the observed annual growth rate of neighbor

country, India (around 57%) (Forrester, 2012). Considering a situation like this, the question is

how FDI in the virtual sector can be made more attractive in Pakistan? The existing literature is

found to be unable to clearly answer this question. A detailed examination of the present elements,

such as attractive and unattractive indicators, is required to clarify the extent of this relevant area.

Moreover, the future potential of the e-business has to be explored, and a paradigm has to be

developed that can provide a direction to foreign direct investors to position themselves in the

virtual sector of Pakistan. The study aims to answer the following three research questions.

a. What factors are contributing the growth of FDI in e-business sector in Pakistan?

b. What are the problems faced by Pakistan’s e-business organization and consumer?

c. What are the challenges and opportunities in e-business sector in Pakistan?


30

To address the above mentioned research gap and questions, it was decided to involve the

industry practitioners in this study. For that reason, interview sessions were conducted with those

people who are engaged with the e-business industry in Pakistan. Moreover, a focus group with a

few e-consumers was conducted. Lastly, the relevant data on several related publications in

Pakistan were also observed. The outcomes are analyzed below

2. Attractive Indicators of FDI in e-business Sector of Pakistan

Since the early 21st century, Pakistan has pooled its resources to compete with the digital

world. The government had announced its IT policies along with action plan-2000. The focus of

such initiatives was not only to attract foreign investment but also to establish new Information

Technology (IT) institutes. This initiative brought several IT universities, trainers, and

professionals to Pakistan (e.g., COMSATS and Virtual University). Under action plan-2000,

several IT seminars, competitions, and exhibitions were also arranged inside the country. To create

IT awareness and Internet use, Cyber Cafes were also opened. The government established several

IT task forces to take care of multiple technology areas. Other than this, IT centers and IT parks

were also observed to be established (Abbas, 2015).

Figure 1: Foreign Direct Investment (Pakistan) Source: Pakistan Board of Investment (BOI)

Consequent to action plan-2000, the growth of personal computers (PCs) was observed to

be increased. In 2003, the country claimed a record import of new systems. According to Ibrahim

(2004) the import figure was 0.35 million (quantity). Among these numbers, sixty-five percent

were not branded and thirty-five percent were branded laptops. The import of computer hardware


31

and linked devices was also increased up to twenty million dollars. By the end of 2005,

approximately two million PCs existed in Pakistan (Zarmeene, 2006; Park & Kim, 2003). In

addition, the observed software export figure was approximately 2.3 million dollars. Similarly,

around ninety percent of telephone lines were observed to be converted to digital (Kundi, 2007).

Since 1995, the internet facilities were observed to be started by the ISPs (internet service

providers) and as of 2007, more than two hundred and fifty of those ISPs were found to be

operational (Kundi, 2007). To encourage an IT culture, the government reduced bandwidth tariff

from eighty-seven thousand dollars to fourteen hundred dollars. Hence, the end users were

provided with a price relief.

After 2005, the trend of Internet users was observed to increase rapidly in Pakistan.

Approximately twelve million people were Internet users until the end of 2006 (Kundi, 2007).

This figure rose to around twenty-one million within next five years (Central Intelligence Agency,

2012). Similarly, the telecom sector was observed to see its highest growth rate at one hundred

and seventy percent (Pakistan Telecommunication Authority, 2007). Such high growth was due to

incentives by the government, i.e., Broadband Policy-December 2004, Telecom Deregulation

Policy-July 2003, and Mobile Cellular Policy-January 2004 (Economic Survey of Pakistan, 2005-

2006). Until 2007, approximately sixty million cellular phone subscribers were observed to be

using Internet in the country (Pakistan Telecommunication Authority, 2007). Seyal et al. (2004)

conducted a survey of fifty-four small and medium size businesses in Pakistan. Their survey

confirmed several outcomes in the early 21st century: First, approximately eighty-five percent of

the companies had internet access in Pakistan. Second, around sixty percent of SMEs have either

vendor supported or in-house web servers. Third, around seventy percent of SMEs have their own

webpages. Last, around forty-five percent claim to be e-business adoptive SMEs.

3. Unattractive Indicators of FDI in e-business Sector of Pakistan

Many of the Pakistani people prefer cash transactions rather than through credit cards.

Although, the existing researchers (e.g., Alam, 2013) found several innovative approaches in

recent years, the emergence of such payment method seems to be widely discussable. The privacy

protection and e-transactional security are of serious concerns. For that reason, the practitioners

have emphasized the role of government as well as suitable regulations. In fact, the government

had announced few policies to ensure e-security. Such policies include ECA-2007 and ETO-2000.

The tenacity of these policies is to build the confidence of the online community. Nevertheless, the

online users are found to be shaking confidence in digital signatures as well as other authenticated

procedures.

The social diversity is shrinking worldwide due to globalization (Robertson, 1992;

Mukherjee & Nath, 2007). From the use of IT, a universal culture is emerging. Such universality

has a significant role in the success or failure of e-businesses. To establish successful customer


32

relations, an understanding of web-fit in a country’s culture is necessary. According to Morrison

and Wise (2000) the websites should be friendly to target online consumers. Moreover, it should

have the national or local language as well as English. However, in Pakistan, around ninety

percent of the Pakistani web-content is in English. Most of the people in Pakistan cannot

understand the English language due to illiteracy. Therefore, translation-based websites are

urgently needed for e-business to succeed in the country.

Differences among individual’s lifestyles and cultural behaviors (e.g., risk aversions) can

also lead to success of e-business. For instance, most of the people of Pakistan are observed to be

exploiting the benefits of Internet. Instead of seeing it as a revolutionary gadget, they see Internet

as an enjoyment tool. Moreover, the people of Pakistan are influenced by uncertainty avoidance

and collectivism culture. Under such environment, the introduction of e-business among

consumers is difficult (Bohn, 2005). The e-business in Pakistan confronts various other concerns

such as irrelevant market content, business models (B2C11 and B2B2)2, fragmentation, purchasing

power, undeveloped payment system, language differences and logistics (Frederick & Elliot,

2004; Mukti, 2002; Jennex & Amoroso, 2002). For instance, most of the Internet connections and

telephone lines pass through Pakistan Telecommunication Company Limited (PTCL). This creates

limited choices for the private service providers. On the other hand, the less common websites in

Pakistan are business to business (B2B). The core reason behind such scenario is there is no

mutual interest based partnerships among businesses. According to Bushra (2002) the businesses

interested in B2B are essential to have partnership with co-businesses to help in their expansions

(Bushra, 2002). In this way, they can gain efficiency in understanding market culture, consumer

behavior, and business practices. Furthermore, they can control multiple barriers of e-business,

e.g., business regulations, tariffs, logistics, and language.

The foreign inflows from China which was the main investor of the country under the

project CPEC, China Pakistan Economic Corridor, in the six months of year 2016 remained 204

million dollars. The foreign inflows from the Netherlands during the same time bracket was 462

million dollars. Total inflows from these two countries were 61 percent of total foreign direct

investment got in the first six months of the year 2016. Foreign direct investment is receiving from

a handful of countries which indicated that the country was still not attractive for the international

business community (Iqbal, 2017).

E-business ethics are also observed as an overlooked issue. The web-based businesses are

found to be lacking in adaptation of open, collaborative, and flexible models. Their successful

adoption can help in overcoming traditional business practices. For instance, in the traditional

1B2C Business-to-customer marketing refers to the tactics and best practices used to promote products and

services among consumers. 2B2B Business-to-business (B2B) refers to a situation where one business makes a commercial transaction

with another. This typically occurs when: A business is sourcing materials for their production process (e.g. a

food manufacturer purchasing salt).


33

business environment of Pakistan, the firms usually compete in an unfriendly manner to gain their

short-term business advantages (Sahar and Ahmed, 2012). Nevertheless, e-businesses can offer

friendly-based competition in contrast. Such competition requires opening several scrutiny types

and sensitive information sharing (Miles et al., 2005). In other words, the web-based companies

need network relationships to enhance their opportunities in the e-business market of Pakistan. In

modern business ethics, such network relationships are valued highly to gain consumer trust. The

consumers tend to trust such network relationships, as it ensures them maximum security and risk

avoidance in their e-trade. For instance, the highly trusting people may not feel reluctant to

provide their credit card information on the internet for making their transactions. Moreover, the

increasing trust of consumers can help the e-vendors facilitate more good privacy and security

options. As their business increases, the e-vendors can invest more to enhance privacy and security

features in their websites. Thus, the consumer can feel more likely to rely on websites.

4. Future Potential of E-Business in Pakistan

The global business trend is observed to be changing from mass production to demand-

driven, possibly customized, just-in-time manufacturing systems. According to Gunasekaran et al.

(2002), the key for such change is introduction of e-business among marketplaces. For example,

firms like General Motors, Boeing, IBM, and General Electric assemble their products based on

manufactured parts in several locations. Sub-assemblers gather parts and materials from their

respective vendors and use more than one manufacturing tiers. E-businesses facilitate those sub-

assemblers to coordinate, communicate, and collaborate. One of the possible modes is through

using system of electronic bidding. Such system is adoptable and flexible in Pakistan, as it allows

rapid changes in low cost.

E-business can bring a fast, easy, and low-priced trade initiation process in Pakistan. The

search for the right supplier, specification of product quality, price negotiation, delivery

arrangements, and product marketing can no longer be a difficult, expensive, and time-taking task

(Terzi, 2011). Thus, trade would be more likely to be promoted through Internet in the same way

as lifting other trade barriers would. Activities like inventory management, research and

development, computing, accounting, quality control, personnel management, distribution,

advertising and marketing can be traded in Pakistan. All that is required is that the cost, speed, and

quality of communication between seller and buyer be enough (Terzi, 2011).

E-business can enable Pakistani banks to enhance their services for existing clients. In

addition, it can help the banks to attract new customers while operating at a low cost. Nazir et al.

(2010) observed that Pakistani banks comprise their largest share from financial service sectors.

Such sectors are found to be engaged in providing both commercial and retail products/services.

With transformation of e-commerce, the banks can help these institutes to increase businesses.

Moreover, such transformation can be a good source of employment for Pakistani people. At


34

present, the financial sector accounts for approximately fifteen percent of GDP. Hence, it has a

critical role to play in the success of Pakistani economy.

E-business can be an alternative delivery channel for the financial institutions in Pakistan.

This delivery channel can allow the firms to retain existing customers as well as attract new

customers. Moreover, this delivery channel can provide increased customer convenience and

services at the lowest operational costs. Consequently, the economic efficiencies can be offered to

Pakistani institutions. Besides, in search of e-business opportunities, the companies can add

several products and services to their offering portfolio. Such addition might come as a result of

online financial service/product demand taking hold. Therefore, the opportunity for

product/service and market diversification can also increase.

E-commerce can provide opportunities for SMEs to compete with big market giants. The

prime reason behind such opportunities is that e-commerce facilitates the lowest possible cost as

well as skills to information, culture, contact, and market. As a consequence, the chances for

deregulation of financial markets can get lower in Pakistan. Moreover, new internal processes can

also be developed in accordance with modified market-product structure in the country (Yang,

2000).

E-business can directly and indirectly create new jobs for the people of Pakistan. The

direct jobs in information related services and goods, digital products, software and entertainment

whereas indirect jobs via productivity and demand increase. The benchmarks for such are the

United States and European Union, where ICT, business, finance, and e-commerce related sectors

account for almost one-third and one-fourth of total employment, respectively (Terzi, 2011).

E-business offers flexible, convenient, significant, and time efficient services to clients.

Generally, consumers are observed to look for easy ways to conduct transactions and share

information. They perceive the Internet as an important commercial opportunity. E-business can

facilitate not only convenient services and products delivery but also empowerment and control to

consumers as well. Moreover, e-business can eliminate consumers need to physically move for

their financial transactions. Such empowerment may lead towards enhancement of their

confidence and trust. Moreover, with such a high confidence and trust, the consumers may desire

to transfer their personal financial transaction to a web setting (Anckar and D'incau, 2002).

5. Paradigm of Foreign Direct Investment in the Virtual Sector of Pakistan

To clarify the extent of the relevant area of current study, a detailed analysis of attractive

and unattractive indicators was performed, and the future potential of the e-business was also

explored. Based on this, a paradigm (Figure 2) is proposed to provide guidance to foreign direct

investors to position themselves in the virtual sector of Pakistan. A future study in this area can be

conducted to assess this paradigm in the context of a particular found, which can authenticate its

means.


35

Figure 2: Paradigm of Foreign Direct Investment in the Virtual Sector of Pakistan

6. Conclusion

The study has established that the traditional intermediaries are transformed as a result of

modern computer-mediated relationships. Therefore, to increase interactive promotions (of

products and services), information-riches, and client contacts (direct and indirect), the businesses

in developed countries usually set-up their virtual channels of distribution. In contrast, in a

developing country like Pakistan, e-business is currently not resulting in a substantial saving of

information delivery cost and time to the customers. Moreover, it is not increasing customer

services by enabling clients to find detailed online information. Conventional transaction systems,

lifestyles and cultural differences, irrelevant market contents, business models, fragmentation,

purchasing power, undeveloped payment system, language differences, logistics, and unethical

competitors are the major push to avoid this industry. On the other hand, the pulls are supportive


36

government initiatives (e.g., action plan-2000), increasing number of personal computer and

Internet users, and reduced bandwidth tariff. It was found out that change in global business trends

(such as fast, easy, and low-priced trade initiation process) does indicate future potential of e-

business growth in Pakistan, especially for the online global giants to create an alternative delivery

or service channel for the local financial institutions and banks. Markets are networks where

people usually interact to exchange information, payments, services, and products. If a network

becomes online-based, the people may not require a physical building to interact or transact.

Instead, a corporate website would bring buyers and sellers together in the same place and in the

same point of time. The advent of Internet has brought changes in the new-era practices.

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1 University of Central Punjab, Lahore, Pakistan: E-mail: [email protected] 2 SZABIST- Islamabad, Pakistan, E-mail: [email protected] 3,4 University of Central Punjab, Lahore, Pakistan.



Impact of Transformational Leadership and Employee Commitment on

Organizational Reputation 1Muhammad Zeeshan, 2Shahid Bashir, 3Farzeen Fatima, 4Raza Alam Shah

Article History:

Received:

14 Jan, 2019

Revised:

5 Apr, 2019

Accepted:

7 Apr, 2019

ABSTRACT

Purpose: The purpose of the paper is to examine the effect of transformational

leadership and employee commitment on the organizational reputation.

Methodology: Data from 142 employees was analyzed using multiple regression

analysis, descriptive and correlation analysis using Statistical Package for Social

Sciences version 21.

Findings: The findings confirm that transformational leadership and employee

commitment do effect the organizational reputation of the employees.

Implications: This study provides the HR practitioner the underlying factors effecting

the organization reputation as by empowering the leaders within the organization and

by increasing the commitment of employees towards the organization can lead to good

reputation of the organization in the market. Empirical findings of the study can

provide help to the organizations to understand how retaining and attracting the good

employees along with the transformational leadership style increase the reputation of

the organization.

Keywords - Organizational reputation, transformational leadership, employee

commitment.

1. Introduction

“Leadership is the capacity to translate vision into reality.” Leadership is one of the major

factors for engaging employees or subordinates to achieve organizational goals and objectives.

Leadership is defined as “the behavior of an individual directing the activities of a group towards a

shared goal” (Arnold et al., 2001). Another definition of leadership is as that “leadership is the ability

of an individual to influence, motivate, and enable others to contribute toward the effectiveness and

success of the organization” (Hamdia & Phadett, 2011). Leaders use different styles for directing,

motivating and engaging subordinates. Recent studies narrate that using effective leadership styles

can enhance employee commitment.



Muhammad Zeeshan, Shahid Bashir, Farzeen Fatima, Raza Alam Shah

40

In the era of 21st century would anyone deny the importance of organizations in our life?

Organizations now a day holds almost all the aspects of human life and contributed a lot in

development of a society or a country. Except all these contributions organizations have their own

goals that needs to be fulfilled, for the purpose of achieving organizational goals organizations

require committed human resource. Employee commitment is necessary for achieving

organizational growth and attaining sustainable growth. Leaders can play a role in employee

commitment. Employee commitment means that employee with his/her full internal intentions and

with higher involvement wants to achieve organizational goals and build an emotional relationship

with the organization (Jyoti & Bhau, 2016). Leaders can effectively create organizational

commitment. Various studies conducted that determine the relationship among leadership and

organizational commitment. Some of these narrate that leadership style positively influencing

organizational commitment (Wiza & Hanganipai, 2014).

Many researchers focus on the concept of organizational reputation in last decade.

Organizational reputation is one of the aspects in public relation, because overall objective of an

organization is to attract public. So if an organization has a good reputation among public it can help

organization to achieve goals and sustain growth. Organizational reputation defined as “knowledge

of shareholders, psychological and emotional reaction aspect of an organization that is formed with

time” (Yahaya & Ebrahim, 2016). Organizational reputation depends on many factors like customer

loyalty, customer retention, and employee empowerment. And by linking leadership style and

employee commitment with organizational reputation has its own importance in the body of

knowledge. Previous studies examine relationship among organizational commitment with

reputation and leadership style with commitment separately with different context. This research

fulfils the gap between leadership and commitment in context of organizational reputation and

internal effectiveness of achieving organizational reputation.

The objective of this study is to illustrate the relationship among transformational

leadership, employee commitment and organizational reputation by empirically testing the

hypothesized model of leadership and commitment. First of all we study the link between

transformational leadership on employee commitment and then test the impact of both

(transformational leadership and employee commitment) on organizational reputation. At the end

of the study it is justified whether both of these constructs have a significant impact in achieving

organizational reputation or they have no contribution in achieving organizational reputation.


2.1 Organizational Reputation

Organizational reputation is in developing stage in the context of management studies.

Many researchers have contributed in the field of organizational development (Jackson et al., 2013;

Impact of Transformational Leadership and Employee Commitment on Organizational Reputation

41

Jyoti & Bhau, 2016). These researchers generally agreed that organizational reputation is the

shareholder’s knowledge about the organization and the sentimental-emotional reactions of public

about the organization (Jogulu & Wood, 2006).

Organization reputation considered as an important aspect of organizational performance.

Some presumes reputation as a tight coupling between past actions of an organization and future

expectations along with organizational evaluation. According to Knippenberg and Sitkin (2013)

organizational reputation is the comprehensive knowledge that stakeholders have about the overall

features of an organization. Some define organizational reputation as the organizational past

behavior that shows organizational ability to deliver remarkable results to the shareholders (Nkosi,

2015). A good reputation protect organization from negative results or gossips during the crisis time

period (Jogulu, 2010). Reputation is all about perception of people and the process includes creating

and sustaining positive people perception (Laohavichien et al., 2009).

Organizational reputation is the organizational behavior that shows in everyday decisions

or activities (Krishnan, 2004). From all above discussion is it presumed that organizational

reputation is a strategic resource of the firm? According to Jaskyte (2004) organizational reputation

is an intangible resource of a firm that represents the overall current position and future expectations

of the firm. Hellriegel and Slocum (2006) proposed that organizational reputation is an important

strategic asset of the company. Furthermore, Knippenberg and Sitkin (2013) in their study of

organizational reputation suggested that organizational reputation is best achieved by management

competencies and a remarkable leadership.

What are the perception of stakeholders about the organization to meet the prescribed goals

and expectations? In this regard Jogulu and Wood (2006), explains the organizational reputation as

a reputed and distinct feature of an organization that evaluates the organization’s stakeholders, this

evaluation is based on live experiences of the stakeholders with the organization. According to

Gatling et al. (2016) organizational reputation consist of six components. These components are

used to measure the organizational reputation these are services, leadership, products, social

responsibility, organizational image and social identity.

2.2 Transformational Leadership

The concept of transformational leadership was first defined by Hartog et al. (1997). The

study described transformational leadership as a positive relationship among leader and subordinate

and said that they both interact with each other to achieve high level of performance and motivation.

Transformational leaders match the abilities and self-concepts of the subordinates with the vision

and mission of the organization and transform their activities with loyalty by promoting the culture

of respect for the leaders (Gupta, 2015). Leaders by using transformational style of leadership

encourages subordinates to purely work for the favor of the organization and put all their efforts to

accomplish the organizational goals (Glavas & Godwin, 2013). Researchers found that there is a


42

positive relationship among transformational leadership and subordinate’s attitude and behavior

toward organization (Jaros et al., 1993).

2.3 Transformational Leadership and Organizational Reputation

“A good Reputation is more valuable than money” stated by roman writer, PubliliusSyrus.

Reputation is an intangible asset of an organization, according to the latest statistics 53% of Fortune

500 companies’ worth may consist of intangible assets – 25% of the world’s wealth may be tied up

in intangibles, reputation is well-defined by Epitropaki and Martin (2005), it’s an evaluation and

judgment of firm in relative to provide esteem results to its agents. Reputation depends on level of

goodwill that has been built up in the market by organization’s representatives (top

management/leaders, employees and clients), and it is believed that what workers utter about the

firm is often perceived to be much more reliable, trustworthy and authentic as compared to what top

and senior management convey therefore there’s strong association between organizational

reputation and two internal predecessor features called leadership and employee empowerment.

To combat twenty first century’s increased contingencies and run successfully along with

others, an organization require efficient and effective leaders because leaders/top management paly

a salient character to achieve the ultimate success in relative to motivated environment which

influence and enhance the employee’s efficiency, attitude and behavior as stated by Dhawan and

Mulla (2011) that leadership motivate, influence and enhance its supporters. In this context other

social scientists delineated leadership that effective leader is one who empowers his workforce

which leads towards ultimate success so it is asserted that there’s strong relationship between

leadership and reputation of firm and to attain the good and effective reputation internally and

externally, firm need charismatic leaders as transformational leaders are charismatic in nature,

according to Bahrami et al. (2016), transformational leaders create motivated environment in

accordance to employees values and norms which ultimately push them towards to achieve their

vision of success.

Transformational leaders generate emotional attachment with co-workers as they are

cordially interested in employee’s well-being which is strikingly delineated by Avolio et al. (1999),

identification, thoughtfulness, concern, kindness and construct a strong association with employees

is one of the basic concern and element of transformational leaders. As mentioned earlier that there’s

robust association between firm’s reputation and leadership and transformational leaders are the

ones who genuinely fight for the success of an organization along with their charismatic

characteristics. i.e. Transformational leaders appreciate and practice two way communication,

maintain good relationship with employees, being role-models, trustworthy environment, focus on

developing advance skills and capabilities and involve the employees in decision-making process

which ultimately leads towards maximum revenue generation.


43

Transformational leadership and organization reputation move parallel as it is shown by

famous and well-reputed organizations along with their leaders i.e. Steve Jobs: Apple, Richard

Barson: Virgin, Jack Welch: General Electric because a great collaboration always makes things

easier in spite of contingencies and challenges and there are many benefits of having a good

reputation .i.e. better competitive advantage in the market, attracting top talent and better

collaboration and partnerships consequent to transformational leadership. Therefore, this study

hypothesized that:

H1: There is a relationship between transformational leadership and organization reputation.

2.4 Employee Commitment

Commitment can be defined by different researchers and practitioner in different ways and

it changes from time to time. As Abdel and Rizkallah (2015) defined commitment as personal

interest and consistency. According to Carlos and Filipe (2011) commitment is the emotional

affiliation, involvement and identification of an employee within a company. A committed

employee wants to contribute in the overall success of company and achieved it through the process

of learning (Chung, 2013). Organizational commitment sometimes refers to the employee’s

perception of their affiliation with the organization (Adesola et al., 2103).

There are different models for commitment i.e. three component model presented by Reilly

and Chatman, Allen and Meyer model and other dimensional models. According to these models

commitment is divided into different dimensions that affect the organization in different ways.

These are identification, moral and complain (Bahrami et al., 2016). Some said that affective

commitment is the employee’s psychological affiliation with the organization. Aydogdu and Asikgil

(2011), presented a theory of commitment called Becker’s bet theory according to him employee

put a large investment in term of time spend in the organization so leaving the organization resulted

in loss for the employee so he/she shows commitment and remain attached with the organization.

Individual with high commitment are more attached with the organization and feel happy

to be the part of the organization (Dias & Silva, 2016). Commitment is divided into three sub

categories i.e. affective commitment means the employees affiliation, involvement and attachment

with company and his desire to remain the part of that company. Continuous commitment an

employee’s feeling that he/she has no other option except this specific organization. In this situation

employee thought that there is no other perfect match for his/her capabilities and competencies than

this organization (Chung, 2013) and finally normative commitment which means employee’s

individual attachment towards a good deed of an employer.

Organizational commitment is the capacity of an employee to remain loyal and performed

his/her duties and responsibilities in best regard of the organization (Epitropaki & Martin, 2005).

Organizational commitment is the strong attachment of an employee with the organization and the

extent to which the employee feels pleasure with being a part of that particular organization. Gross


44

(2015) argued that employees with low emotional stability have more stress, fear or feeling of

helplessness in dealing with the challenges occurred in the organization. Consequently, the level of

commitment in these employees is very low and they have negative feelings about the organization.

Some researchers emphasized that employee commitment is one of the most important

measure of organizational success. Worker’s commitment results in improved organizational

performance. As a study examined that high level of commitment is associated with 11% boost in

the productivity of an organization (Gatling et al., 2016). Another study about commitment showed

that an organization with committed employees have experienced 34% employee turnover that

explains the cost to the organization 100% and 15% of annual salary of departing employees.

Employees who are committed and loyal with the organization adopts the organizational goals and

values and shows their full intentions to remain the part of that organization and proved to be the

most efficient resource and increase productivity of the organization. This can also help to promote

employee performance and decreases employee absenteeism that ultimately results in organizational

growth (Jogulu & Wood, 2006).

2.5 Transformational Leadership and Employee Commitment

Leadership is one of the most important functions of organizational management. A strong

leadership can help organization to be more competitive and achieve its goal through the most

effective and efficient use of people, timings and resources. Transformational leadership plays a

vital role in developing personal skill, rewards and self-esteem enhancement that in result enhances

employee commitment (Avolio et al., 1999). Carlos and Filipe (2011) narrated that Social exchange

theory (SET) is among the most powerful theoretical models for understanding workplace

performance. Though diverse opinions of social exchange have developed, theorists generally agree

that social exchange contains a sequence of communications that produce responsibilities. Within

SET, these communications are frequently seen as dependent and depending on the actions of

another individual (Dias & Silva, 2016). Therefore, researchers proposed that SET is most

appropriate to the nature of this research which is related to the association between organizational

commitment and transformational Leadership (Gupta, 2015).

Employee’s commitment can best achieved by effective leadership behavior. Hellriegel

and Slocum (2006) suggested a positive relationship among leadership and commitment. According

to Jyoti and Bhau (2016) leadership behavior is positively associated to employee’s affective and

normative commitment while reverse in relation with continuous commitment. Some of the

researchers that have their research in the field of employee commitment suggested that many of

the employees left the job due to the poor behavior of their leaders.

Laohavichien et al. (2009) found a well build relationship between affective commitment

and transformational leadership. He derived that transformational leadership develop strong


45

affective commitment the reason behind is that it enhances employee emotions and create a vision

and fulfill the self-esteem of the employee and satisfy the needs of the employee by combining the

interests that results in good perception about the organization. Researchers concluded that

organizations should have to build leadership structure and adopt transformational leadership to

enhance employee commitment and retain the talent that best matches with the organization (Yahaya

& Ebrahim, 2016).

Transformational leadership can enhance employee’s organizational commitment in

different ways as Krishnan (2004) narrated that transformational leaders treated employees on the

basis of their emotions rather than rational. Firstly transformational leadership inspires employees

by giving them a vision that encourages them and increases the employee’s confidence.

Transformational leaders develop employee’s loyalty and became the role models so the employees

remain committed to the head and the organization as well. According to Knippenberg and Sitkin

(2013) transformational leadership unites employees towards a common goal in other words

employees work for the common good of the organization. By this hey motivate employee to get

more attached with the organization. In last transformational leader encourages employee to ask

questions and challenge the leaders in any field by developing innovative approaches whether to

follow indistinctively. So by processing these ways transformational leaders generate an

environment that is more innovative and encourages employees to get involved in the operations to

achieve organizational goals by solving complex problems through innovation that ultimately

enhances employee commitment with the organization (Jogulu & Wood, 2006). Therefore, this

study hypothesized that:

H2: Transformational Leadership and employee’s commitment to the organization are related to

each other.

2.6 Employee Commitment and Organizational Reputation

Employee commitment is one of the crucial factors to increase organizational efficiency

and productivity (Jackson et al., 2013). A good reputation beneficial for the development of

belonging an employee has with the organization. According to Jyoti and Bhau (2016) an individual

working in a firm with high or favorable reputation have perceived a positive self-esteem by

generating a positive image of the organization so he/she strongly attached with the organization,

Jogulu (2010), said that employee’s perception about organization relates positively with the

organizational commitment.

Employee commitment possess that employees feel proud to work with the organization

and perform extra responsibilities for the organization (Arnold et al., 2001). Affiliation with a

reputed organization enhances self-esteem of an employee. If we talk about job seeker’s perspective

then a good reputation develops a good and positive word of mouth that enhances intentions to work

with that organization (Abdel & Rizkallah, 2015). The positive relationship among employee


46

commitment and organizational reputation is examined by many researchers through an empirical

investigation. If we talk about a study conducted by Adesola et al. (2103), the study revealed a

positive relationship among employee commitment and organizational reputation by examining 527

French managers. According to Bahrami et al., (2016) high level of organizational reputation

increases organizational commitment and also affects the entry of employees in the organization

and the percentage of leaving the organization decreases.

Employee commitment effect on costs that occurred by leaving the organization a

committed employee will never leave the organization with a good reputation because he has a

positive affiliation with the organization. Chung (2013) argued that commitment as a type of

employee’s psychological affiliation with the organization. This affiliation described as the damage

an employee have by leaving that organization. In other words commitment is termed as the cost

that occurs due to absence from the organization. This type of commitment means that the individual

thought about the benefits that will occurred to him by remaining the part of that organization

(Carlos & Filipe, 2011). Normative commitment is referred as the employee’s perception about the

obligations and feeling of being the part of the organization. Individuals with this dedication trust

that proceeding with movement in association is their commitment and they presumed to be the part

of the organization. As already discussed issues and exploration of some researchers like Jaros it is

observed that these two factors have negative connection among them. At end note it is stated that

if we increase the normative commitment of an employee the employee turnover ratio decreases

(Dhawan & Mulla, 2011). Therefore, this study hypothesized that:

H3: There is a relationship between employee commitment and organizational reputation.

2.7 Research Model

Based upon the literature review and the hypothesis the following model is developed, that

is shown in the figure 1. This model shows two independent variables that are transformational

leadership and employee commitment are associated with each other and also have an impact on the

organizational reputation that is the dependent variable.


47

Figure 1: Research Framework


3.1 Instrument

A self-administrated questionnaire was used for the purpose of data collection. A

questionnaire method is preferred because it allows gathering a larger number of responses in short

time period (Gross, 2015). Firstly using convenience sampling and then snowball sampling a sample

of 180 is drawn from the employees of 3 private academic organizations that include UCP, Imperial

College of business studies and Sharif engineering college. For the survey purpose a scale was

constructed that reflects (a) the items are simple and easy to understand. (b) A brief questionnaire

reducing the burden of the respondent. Likert scale was used ranging from 1 to 5, “1 representing

strongly disagree” to “5 representing strongly agree” for each item.

3.2 Data Collection Procedure

The data was collected in a time period of 2 weeks. Potential participants were requested

to fill the form by personally contacting them. Some of the respondents were reached by sending an

online link of the questionnaire of Google docs. Total 180 questionnaires were distributed and from

them 143 responses were received. According to Roscoe (1975) a sample size of 30-500 samples is

consider to be reasonable. The questionnaire consisted of two sections. Section A includes the

demographics while in section B it was required by the respondents to examine certain factors

regarding the transformational leadership and employee commitment affecting the dependent

variable (organizational reputation). Primarily the sample includes female respondents (53.6%) and

male respondents (46.4%). One response was excluded with missing values. So, the tests were

applied on the data from 142 responses.

Transformational leadership

Employee Commitment

Organizational Reputation


48

3.3 Data Analysis

All the final responses were aggregated on SPSS. And the data was analyzed using

correlation analysis, multiple regression analysis and descriptive statistics on statistical Package for

Social Sciences version 21. To measure the correlation between the variables; Pearson correlation

was used. To check the impact of independent variables (Transformational leadership,

Organizational commitment) on the dependent variables (Organizational reputation) regression

analysis was used.

3.4 Measures

Organizational reputation was measured by using seven-item scale that was sourced from

Fombrun et al. (2000). The internal reliability of the items was 0.9.Transformational leadership was

measured using a scale consisting of nine-items. The internal reliability of the items was 0.8.

Employee commitment items were adapted from Porter et al. (1974). Organizational commitment

was measured using seven-items having internal reliability of 0.7. Demographic Variables include

gender, education, experience and position that were included in all analysis. The demographic

profile is summarized in the table 1.

4. Results

Demographic summary of the respondents is represented in the Table 1. Out of 142

respondents there were 56 percent male and 45 percent female. Respondents were the employees

that belong to academic and non-academic staff. Mostly the respondents were those who had an

experience of 1-2 years (34%), 3-4 years (26%) and there were 24% were those who had an

experience of less than 1 year and 16% having an experience of 5 years or more.

Table 1: Demographic Profile of Respondents

Demographic variables Frequency

%

Gender

Female 64 45

Male 78 56

Education

Metric/Intermediate 0 0.0

Bachelors 38 26.8

Masters 74 54.9

PhD 18 12.7

Other 12 8.5


49

Position

Academic 102 71.8

Non-academics 39 27.8

Other 1 0.7

Experience with this organization

Less than 1 year 34 24

1-2 years 48 34

3-4 years 37 26

5 years and above 23 16

Note: Sample size = 142

4.1 Reliability Analysis

The internal consistency of the scale was measured by doing reliability analysis. According

to Hair et al. (2010), if value of Cronbach’s alpha exceeds 0.7 that shows no problem with the

reliability of the construct. Table 2 shows the value of Cronbach’s alpha of all the variables. 1 item

is dropped from the employee commitment that is ‘’ I feel very little loyalty to this organization ’’.

After dropping 1 item, the value of Cronbach’s alpha exceeds the cut-off point that is > 0.70.

Table 2: Cronbach’s Alpha

Variables No. of

items

Cronbach’s

alpha

Transformational Leadership 7 0.88

EmployeeCommitment 7 0.71

Organizational Reputation 10 0.91

4.2 Correlation analysis

To test the correlation between the variables (i.e., transformational leadership, employee

commitment and organizational reputation) Pearson correlation is being used. Correlation is

considered to be strong when the values are r= 0.5 to 1.0 or –0.5 to -0.1. Table 3 shows that the

inter-correlation between transformational leadership and employee commitment with

organizational reputation are significant at p < 0.01 and are positively correlated. Correlation

between employee commitment and organizational reputation is (r = 0.498, p < 0.01) showing the

relation is significant and positively correlates with each other. Also, correlation between

transformational leadership and organizational reputation is positive and significant (r = 0. 431, p <

0.01).


50

Table 3: Correlations

Constructs 1 2 3 Mean SD

Transformational Leadership 1 3.84 0.721

Employee Commitment 0.527** 1 3.57 0.643

Organizational Reputation 0.431** 0.498** 1 3.81 0.757

Note: **correlations is significant at the 0.01 level (two-tailed)

4.3 Test of Hypothesis

Regression analysis was used in this research to test the three proposed hypotheses. Two

separate models run for this purpose. In the first model the dependent variable is regressed against

two independent variables. Table 4 demonstrates the output of regression analysis. Multiple

regressions were performed on organizational reputation as dependent variable with the

transformational leadership and employee commitment as independent variables. Value of R² is 0.29

indicating that 29% variance in the dependent variable (Organizational Reputation) is being

explained by two independent variables (Transformational Leadership and Employee

Commitment). The collinearity statistics shows the tolerance value greater than 0.1 and VIF value

less 10 indicating that there is no multi-collinearity problem existing in the independent variables.

Second model ran to check the relation between independent variables. So, here the employee

commitment is taken as dependent variable and is regressed against the transformational leadership

as the independent variable. Table 4 shows the output according to which value of R² is 0.27

indicating that 27% variation in the dependent variable is being explained by independent variable.

The value of unstandardized b coefficients of the regression analysis shows that; the entire

posited hypotheses in this research were supported at value p < 0.05. The hypothesis H1 posited that

‘there is a relationship between transformational leadership and organization reputation’. The Table

4 shows that the results are significant (βı=0.237, sig.= 0.01 < 0.05). Thus, H1 is accepted. H2

posited that ‘transformational Leadership is associated with employee’s commitment to the

organization’. Results are significant here and support the hypothesis (β2 = 0.470, sig. = 0.000 <

0.05), thus accepting it. H3 posited that ‘there is a relationship between employee commitment and

organizational reputation’, results in table 4 shows that the results are significant here also (β2 =

0.446, sig. = 0.000 < 0.05) so, H3 is also accepted.


51

Table 4: Results

Unstandardized b

coefficients

T Sig. Tolerance VIF

TL OC 0.237* 2.61 0.010 0.700 1.429

EC OC 0.446* 4.38 0.000 0.704 1.420

R square 0.29

TL EC 0.470* 7.345 0.000 1.0 1.0

R square 0.27

Note: VIF: Variance Inflation Factor, *p < 0.05.

5. Discussion and Conclusion

The statistical results suggested that there is a positive relationship between

transformational leadership and organizational reputation. This study has shown that

transformational leadership is directly influencing organizational reputation. Because by using

transformational leadership style, leaders are able to achieve success through their subordinates by

empowering them; that results in increased reputation (Jyoti & Bhau, 2016). First, as leaders

preferred to use transformational leadership style it cause to increase organizational reputation and

secondly if they tend to lose this style of leadership then organizational reputation can reduce to the

extent at which they could lack in empowering subordinates and dealing with them for high

motivational activities. As study revealed and through the authentication of the proposed hypothesis

that there is an association between transformational leadership and organizational reputation it is

examined that there exists a positive relationship among these two variables (Yahaya & Ebrahim,

2016).

Further investigating the relationship between the independent variables it is revealed that

there also exist a strong positive relationship among the independent variables and the study

empirically accepted our second hypothesis H2 that there is an association among transformational

leadership and employee commitment. Based on positive relationship it is further explored that

transformational leadership plays its role in achieving employees commitment by empowering them

by matching their self-esteem with the organizational vision and mission and motivate them to work

purely for the betterment of the organization. So there exists a direct positive relationship among

employee commitment and transformational leadership.

Next the hypothesis three postulates that there is a relationship between employee

commitment and organizational reputation. The above results show that there exist a direct positive

relationship between employee commitment and organizational reputation. As the commitment of

employee with the organization increases the organizational reputation may also increase

(Knippenberg & Sitkin, 2013). One of the factors to increase organizational reputation is positive


52

word of mouth that is spread across the outside environment by a positively committed employee.

Secondly if an employee is committed with the organization he/she work for the betterment of the

organization that at the end will result in increased organization reputation. So by empirically testing

it is revealed that all of the three hypotheses are accepted and shows significant results in the body

of literature.

This study concludes that transformational leadership and employee commitment do have

an impact on the organizational reputation. Also, it shed light on the association between the

independent variables; that transformational leadership is associated with the employee

commitment.

5.1 Implications for Practitioners

The present study provide many useful implications for the indutry people like human

resource (HR) manager and also the higher management. HR practitioner can focus on attracting

the qualified employees by increasing the reputation of the organization through the leadership style

(Wiza & Hanganipai, 2014). According to the findings there is association between the employee

commitment and the organizational reputation. The employees feel more committed towards an

organization with higher reputation as compared to the organization with less reputation.

Consequently, management can use this study to increase the commitment of the employees by

studying the underlying factors discussed.

5.2 Limitations

Regardless of the explorations of the present study there are some limitations. The first

possible limitation is that sample size is not much large that restricts the generalizability and the half

of the data was collected through online survey using snowball sampling technique. This could cause

some biasness by the respondents. Second, the results are not much generalizable because the data

was collected from only three private academic organizations situated in one city; Lahore, excluding

the corporate sector. Thirdly, the data was collected only from the employee’s perspective but to

understand the impact on the reputation of the organization the insights from the leadership style

must also be incorporated.

5.3. Future directions

This study can be expanded by including academic organizations (public also) from other

major cities of Pakistan. Future research could be carried out by studying the corporate sector along

with the academic organizations. This is a cross sectional study, but to examine the behavior of the

respondents in future a longitudinal study could be conducted. The present study uses the

quantitative methodology; in future different methodology like qualitative research can be used that


53

includes focus groups and in-depth interviews; with the leaders and employees can give an

explanation of the underlying perspective of the research problem. Further some moderator such as

‘public relations’ can be included in the present study to know that whether it further strengthens

the relationship between the current variables.

References

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1 Mälardalen University, Sweden. Email: [email protected]



Green Consumer Behavior: Effects of Demographic Characteristics on

Consumer’s Choice of Buying Green Products: An Empirical Study of

Swedish Electricity Market 1Mubbasher Hassan Syed

Article History:

Received:

11 Feb, 2019

Revised:

15 Apr, 2019

Accepted:

16 Apr, 2019

ABSTRACT

Purpose: This study provides a better understanding of how demographic

characteristics play a decisive role in consumers’ decision making of buying green

electricity. Purpose of this research is to examine how environmental issues are

important among the consumers of different demographic groups based on (age,

gender, income status, educational level and area of residence) of Swedish consumers

and how they could affect the consumers’ decision making process of buying green

electricity.

Design/Methodology: This research is mainly based on quantitative model for which

the primary data was collected through a self-administrated questioner. The sample

size was 400 Swedish people who buy electricity from different companies.

Findings: The study concludes that demographic characteristics (gender, age, income,

education and area of residence) of Swedish consumers can influence their decision

making to purchase green electricity. The study concludes that Swedish consumers are

willing to pay for environmental sustainable products i.e. green electricity and they

are also aware of the fact that the price of green energy is higher than conventional

energy. To develop awareness in consumers mind; companies should use

advertisement and positioned themselves as a socially responsible and

environmentally with competitive prices.

Implication: The finding of the study have important implication for the users of

green electricity and this information will be useful for environmentalists, researchers

in finding new markets for green electricity, policy makers and energy companies.

Keywords: Consumer behavior, consumer demographics, green marketing, renewable

energy.

1. Introduction:

Over the last two decades climate change has become the major concern for governments,

practitioners and governments as it is becoming a major threat of human existence on this planet


Mubbasher Hassan Syed

57

(Shove et al., 2015). Sweden is paying more attention on environment protection and Stockholm

has won the award of green capital of year 2010. According to a press release of European

commission environment, Sweden is also promoting the production and installation of infrastructure

for green energy. Consumers are getting aware of the importance of green electricity but the choice

of green products varies consumer to consumer (Machhar, 2018; Peattie, 2001). Electricity

consumers in Sweden are becoming more aware of environmental protection with this change in

consumer behavior towards green energy and green electricity products have a great market

potential considering its environmental benefits. If this phenomenon prevails and consumers are

willing to pay for green electricity, the market for sustainable electricity will grow rapidly (Ambec

& Lanoie, 2008; Ozaki, 2011; Wang, 2006). Likewise, Dangelico and Vocalelli (2017) say that the

literature on green marketing is employed to profile green consumers using variety of variables

which includes consumers’ cultural norms, personality traits and the last but not the least the

characteristics of consumers based on demographic. The authors further argue that a limited research

has been conducted so far to study the behavior of environmentally conscious consumers focusing

their demographic characteristics. According to Verain (2012), demographic Characteristics of

green consumers may include gender, age, educational level, residential status, number of persons

living in a house hold, income status and occupation; these characteristics can used as variables to

study the consumers’ behavior willing to buy environmental friendly products e.g. green electricity,

bio fuel etc.

Since early 90s the environmentalists have noted a major change in the climate of earth.

These environmental changes are increasing in result of human activities of industrialization and

energy consumption are growing very fast (Dincer, 1999). Fossil fuels are used as conventional

source of energy, causing lots of greenhouse gas emission in to the environment. Reducing the

greenhouse gas emission by reducing the dependence on conventional fuels i.e. fossil fuel is one of

the biggest challenges of this century (Swedish Petroleum Institute, 2007). In general people are

very concerned and conscious about green energy. But when they have to purchase the green energy

there is a gap between behavior and value-action. According to the study conducted by Young et al.

(2010) there is 30% difference in behavior and action. There are number of studies has been

conducted in the past in context with demographic characteristics of consumers towards adaption of

green energy. Such studies helped the investors and government organizations to understand the

consumers’ behavior on the basis of demographic characteristic i.e. Age, Gender, Location,

education. The previous researches proved that demographic characteristic have influence towards

buying green energy (Cherian & Jacob, 2012; Jansson, 2011; Namkung & Jang, 2017; Prakash &

Pathak, 2017; Robert, 1999).


There is no doubt that sources to produce green electricity are cheaper due to their

Green Consumer Behavior: Effects of Demographic Characteristics on Consumer’s Choice of Buying Green

Products: An Empirical Study of Swedish Electricity Market

58

sustainability, these sources are wind, water, solar etc. which are almost free, but the process of

getting energy from these sources requires the rebuilding of infrastructure to produce electricity,

which eventually increases cost of green electricity for its consumers (Kreutzer et al. 2010). Shifting

to green electricity is not cheap; it is the biggest challenge for energy companies since beginning of

electricity in industrial societies (Hanson, 2010). Although renewable energy produce very little or

no greenhouse gases but the higher cost of green energy makes it unattractive for the domestic

consumers (Timilsina et al., 2012). To cope with this problem huge investments in R&D are required

to create favourable market conditions which could help to make green electricity cost competitive

with conventional energy (National Science Board, 2009). Hence only a small fraction of power is

sold as green electricity in the energy market; it requires comprehensive study of consumer behavior

based on consumers’ demographics, psychographics or other characteristics for purchasing the

green electricity (Bird et al., 2002).

For marketing of green electricity it is also necessary to create awareness in different

demographic target groups, about environmental concerns and target the customers based on their

environmental awareness and knowledge (Fuches & Arentsen, 2002). Several studies in the past are

conducted in the field of green electricity marketing and consumer behavior (Diaz‐Rainey& Ashton,

2011; Nguyen, 2017; Ozaki, 2011; Yadav & Pathak, 2016). Watson et al. (2002) has studied the

consumer behavior towards buying utility products including green electricity. Similarly, Perez-

Plaza & Linares (2009) has studied the strategies for marketing green electricity and concluded that

green tariff programs are effective in development of sustainable energy. They also concluded that

premium should be between zero to 30% and bilateral contracts between green energy providers

and consumers can help to reduce the cost. The objective of the study is to determine how

demographic characteristics (gender, age, educational level, residential status and income status) of

Swedish consumers, influence the choice of green electricity over conventional electricity?


2.1 Green Energy Market in Sweden

The competition in energy market started in 1996 in Sweden. The early customers were

only the large companies as they were required to install hourly meters to charge by their energy

suppliers, which was unaffordable for domestic users. After 1999 the hourly meter requirement was

put an end to normal meters and after that time domestic customers switched to new energy suppliers

rapidly (Bird et al., 2002). There are more than 50 energy suppliers in Sweden providing green

energy to their customers (Routa et al., 2013; Stigka et al., 2014). Most of these suppliers produce

their own green energy but about one third of such companies acquires green energy from other

energy producers and resells it to their customers. Bird et al. (2002) argues that according to a report

of SSCN Swedish Society for the Conservation of Nature (a leading green certifier of suppliers in


59

Sweden) the sales of green energy has increased 32% since 2000, which is 6% of overall energy

sales in Sweden. Commercial and industrial customers contribute a significant share in sales of green

energy. As discussed above that green electricity is not cheap the residential customers in Sweden

would have to pay only 1,5 öre/kwh as premium to buy green electricity, hence a customer living

an apartment consumes 2500 kWh (averagely) has to pay only 38 SEK (1 Swedish Kron = $ 0.15

USD ) extra annually to purchase green electricity and to protect environment. Similarly the

customers living in heated villas have an average annual consumption of 25000 kWh; these

customers have to pay only 380 SEK annually to purchase green electricity. Therefore if the Swedish

consumers choose the environment protection while selecting green electricity supplier, showing

their willingness to pay a slight premium for the green energy, the market of the sustainable

electricity is expected to increase (Ek, 2005).

2.2. Demographic Characteristics of Green Consumers

There are number of studies made in the past to research on the demographic characteristic

toward buying green energy (Gadenne et al., 2011; Liu et al., 2012). Fuches & Arentsen (2002) have

made a good client analysis based on demographic characteristics of the general customers, the

results show that the segments may have potential to buy green electricity. They have divided their

target groups in to four main groups. The study of consumers’ demographic helps the investors to

understand the market trend and consumer behavior based on age, gender, income and education

which could affect the consumer decision to buy green electricity (Robert, 1999). Jain and Kaur

(2006) studied behavior of the demographic attributes of 206 green customers in India, based on

age, gender, education, type of school studied, occupation and income. Rowlands et al. (2003)

studied demographic characteristics of Canadian green consumers based on age, gender, income

and education, in the scenario of restructured electricity market. Diamantopoulos et al. (2003)

studied the demographic of British consumers to study their green behavior. The demographic

characteristics they used for the study were gender, marital status, age, number of children,

educational level and social class. Mainieri et al. (1997) studied the influence of environmental

concerns on the behavior of American consumers’ by studying their demographic characteristics.

The abovementioned researchers studied the impacts of demographic characteristics in awareness

and knowledge of environment protection, that how this knowledge can influence the purchasing

decisions of green consumers. Table below summarizes the empirical literature of demographic

variables, that whether these variables have impact on the consumers’ knowledge of environmental

consciousness and their purchasing behavior of green products or not.



60

Table1: Demographic characteristics of Green Consumers and does it have effect on

consumers’ choice of green products or services

2.3. Consumer Behavior towards Green Energy

According to Peattie (2005) most of the study results reveal that a large number of

European consumers are interested to adopt green products and especially green electricity. These

consumers are well aware of environment protection programs and hence they are willing to pay

extra for green energy (Ambec & Lanoie, 2008). It is also observed that European consumers are

more active to adopt environmental sustainability programs as 92% of EU consumers are already

taking part in such programs. Green consumers adopt and support the products actively which not

only fulfil their needs but those are also environment friendly. Behavior of every person is developed

in childhood as “Habits are decided in early life” (Ottman, 2006). Previous researches show that

there is a direct and positive influence of the green label of a product on consumers’ behavior if

he/she is educated and well off (Kreidler & Joseph, 2009; Nuttavuthisit & Thøgersen, 2017).

Sweden is full rich natural resources and also have long term policies for renewable energy due to

which Sweden is third biggest country in IEA which in terms of producing of renewable energy.

Sweden has lowered its carbon footprint up to 40.5% in 2010 compared to 1990. Compared by other

IEA member states Swedish economy has very low carbon intensity. These facts shows that Sweden

has an ideal market for renewable energy (International Energy Agency).

Demographic

Variables

Has Impact on Consumers’ Choice of Green Products?

Yes No

Gender

Robert (1999), Jain and Kaur (2006),

Parker et al. (2003), Diamantopoulos et al.

(2003), Mainieri et al. (1997)

Age


Rowlands et al. (2003), Zarnikau (2003)

Diamantopoulos et al. (2003),

Mainieri et al. (1997)

Income


Rowlands et al. (2003), Zarnikau (2003)

Education

Young et al. (2010) Robert (1999),

Jain and Kaur (2006), Mainieri et al.

(1997)

Diamantopoulos et al. (2003),

Type of

Residence

Robert (1999), Mainieri et al. (1997), Kennedy

2009 Berenguer (2005)


61

2.4. Stages of Green Consumer Purchasing Decision Process

A consumer goes through number of several social and psychological stages before taking

the decision to purchase a product or service (Deeds, 2017; Fuller, 1999). Young et al. (2010)

discussed a model for green consumer. To make a decision for purchasing a product or service

consumers go through series of different stages depending on the complexity of product or services

they purchase. There are different variables which could influence the buying decision of a

consumer, the buying process have five different stages, problem recognition, information search,

analysis of different alternatives of purchase, making a decision to purchase and behavior after

purchase (Watson et al., 2002, p.396).

A classical model presented by Fuller (1999) defines that how a person makes a buying

decision before purchasing any product of service available in the market. Firstly a consumer feels

need of a good or service and finds information by analyzing the pros and cons of it. S/he further

searchers if it is available in better quality and at lower price, after this process the consumer decides

to make purchase. If consumer satisfies after purchase s/he recommends his/her friends about that

product showing the post purchase behavior.

Figure 1: Classical consumer decision model (Source: Fuller, 1999)

Young et al. (2010) elaborated the buying behavior of the green consumers that a green

consumer has values and knowledge of environment friendliness which let him/her to make green

criteria of a product or service to be purchased. The green consumer takes purchasing decision

keeping in view this green criterion.

Figure 2: Green Consumer purchasing model (Source: Young et al. 2010)



62

2.5. Process of Purchasing Decision of a Green Consumer

Problem Recognition - Young et al. (2010) has adapted the classic model of Fuller and

rebuild the model of green consumers’ behavior in which during problem recognition phase green

values of a customer influence the customer to recognize his problem in context of searching its

solution in the form of a green product. Information

Search (Green Values and Knowledge) – during this phase purchasing behavior of a green

consumer is dependent on his/her green values and the previous experiences of the purchasing of

green products. The consumer searches for the green properties of a product by talking to friends,

browsing the retailers or searching on the internet (Young et al., 2010). Similarly other authors argue

that; the scope of search depends upon the product or service a consumer is going to buy. The

electricity consumers only seek information if they feel unsatisfied from their current suppliers, to

look for an alternative (Watson et al. 2002, p.397). The consumers have lack of information about

green energy due to low rate of participations, even they have less information about their own

energy supplier, cost and environmental impact of the energy they are consuming (Allcott &

Greenstone, 2012; Fuchs & Arentsen, 2002). Creating awareness about environmental impacts in

consumers may result higher participation rates of consumers in green energy programs (Perez-

Plaza & Linares, 2009). Evaluation of Alternatives (Green Criteria) - Young et al. (2010) argue

that a green consumer always calibrates the green criteria of a product or service before taking any

buying decision. The information searched in later stage helps the consumer to make green portfolio

of a product or service before taking buying decision. Watson et al. (2002, p.397) concluded that

price is the major factor to choose an electricity supplier in most of the consumers’ segments. Perez-

Plaza & Linares (2009, p.13) argues “green electricity is not only about price but also about

providing customers with values or private benefits which will drive them to pay more for it”.

Buying Decision - A green consumer takes buying decision based on green criteria of a

product or service defined at previous stage (Yadav & Pathak, 2017; Young et al. 2010). Post

Purchase Behavior - A green consumer might gain post purchased information or

knowledge about the purchased green product after experiencing the pros and cons of the green

product. This behavior helps the consumer to make purchasing decisions of green products in future

and to recommend this product to others (Aschemann‐Witzel & Zielke, 2017; Young et al. 2010).


63

2.6 Conceptual Model Used for this Research

Figure 3: Process of decision making of a green consumer (model of research by author)

Previously mentioned or above described model provide basis to derive the conceptual

model for this research, the model helps to study the impacts of demographic characteristics on

consumers’ choice of green electricity. This model is derived from the purchasing decision models

defined by Fuller (1999) and Young et al. (2010). The model evaluates that how demographic

characteristics of a green consumer could influence their purchasing keeping environment

friendliness issues in consideration.

Fuller (1999) and Tansel (2017) defines problem recognition as when a consumer requires

a product or service, then consumer finds for the information about the product. The consumer

investigates the attributes of the product, compares prices by browsing the internet or asking the

friends. Fuches and Arentsen (2002) elaborates that demographic characteristics play a vital role in

consumer choice of a good or service. In case of a selecting a green product different demographic

groups of the consumers behave differently as studied by the Fuches and Arentsen (2002). The

authors has used their concept that how different demographic groups of consumer will respond

differently, to an environment friendly good or service. According to Young et al. (2010)

demographic characteristics would also be helpful to study green values of a consumer and to make

green criteria of the product or service to be purchased. This criterion may vary in different

demographic groups as each demographic group of consumers may have different preferences and

priorities. Green criteria is the key to make purchasing decision and to look for alternatives, it also

gives following detail of a green product service:

Is it environment friendly?

Does it fulfil all the customer’s requirements?



64

How much a customer has to pay extra (premium) for the “green” label?

Is supplier reliable and is the product really green?

Are there any other suppliers in the market offering same product at lower price?

According to Fuches and Arentsen (2002), Jain and Kaur (2006), Rowlands et al. (2003),

Diamantopoulos et al. (2003) different demographic groups of the consumers will analyze the a

green product or service differently. Hence female responds differently than male, people living in

urban areas may have different opinion than people living in countryside and so on to other

demographic characteristics. Hence, a green consumer takes purchasing decision, after keeping the

above considerations of a green product or service in mind (Young et al. 2010).

3. Methodology

This research is mainly based on quantitative pattern; hence the data have collected using

primary sources; the survey questioners. The questionnaires were distributed among the respondents

having different demographic characteristics i.e. age, monthly, number of persons living in a

household, residential area (urban/rural) etc. The aim of this survey was to target the audiences from

whole Sweden, but due to limited time the data has collected only from the inhabitants of mainly

from residents of Eskilstuna, Västerås, Kvicksund, Södertälje, Köping, Arboga and Stockholm.

Convenience sampling technique is used for this study. The sample selected for this study is 400

Swedish consumers living in cities having different age, gender, educational level, residential status,

income status and occupation. Roughly about 600 questionnaires were distributed in printed form

and it was expected that at least 450 questioners would return but about 397 questionnaires were

received. Some of them were incomplete and some questionnaires were not filled by paying much

interest so 78 of them were discarded and 319 were selected for this research. On the basis of data

collected through those questionnaires the author tried to analyze the behavior of different

demographic groups of our sampled population that how environmental concerns play a vital role

in consumers’ choice of green electricity and which determinants they consider most important for

choosing the energy provider.

4. Empirical Findings

Detailed overview of this research in the light of facts and figures gathered during research

will be analyzed below by comparing the results with secondary data.

Out of 319 respondents, 303 people were informed about green electricity production in

their area, and 16 responded that they were unaware about green electricity production in their area.

Most of the respondent were aware of green production in Sweden. Out of 319 respondents, 83

respondents answered that they have no information about their electricity supplier and/or

companies which provide green electricity. 108 responded that they are not sure about the supplier

and green electricity companies in their area. 128 respondents replied that they have information


65

about electricity suppliers and companies which provide green electricity in their area. Most of the

respondents had information about green electricity supplying companies in their area. Out of 319

respondents 41 responded that the reason to choose their current electricity supplier was due to good

services, 61 chose due to low price, 55 chose due to the reason that the company was environment

friendly , 57 choose because no other supplier was available. Most respondents 103 reply there were

some other reasons for to choose their current supplier.

It was found that the main reason for choosing the electricity supplier was lack of

information which will be discussed in detail in analysis. In response to why they did not choose

green electricity? Out of 319 respondents, 56 gave the reason due to high price, 182 gave the reason

due to lack of information. 13 gave the reason that its time taking, 25 were satisfied with their

supplier, 34 replied that they had other reasons for not choosing green electricity. Most of the

respondents i.e. 182 replied that lack of information was the main reason not to choose the green

electricity. Consumer Preference - Is price more important than environment? Out of 319

respondents, 89 disagreed that price is important, whereas 86 were partially disagreed, 122

respondents were partially agreed that price is important than conserving the environment. Only 22

respondent agreed that price is important which is a good sign that only 7% Swedish electricity

consumers prefer price over conserving the environment. In response to the question that “will you

pay little extra for green electricity?” 137 respondents agreed to pay extra amount between 40-60

SEK per month, 72 agreed to pay between 61-80 SEK per month, 76 agreed to pay between 81-100

SEK per month, 24 agreed to pay more than 100 SEK per month, only 10 respondents were not

willing to pay extra for green energy. To measure the respondents’ willingness to take practical

steps to conserve environment in response to the question “should I take steps for environmental

protection”, 251 replied positively that they should take steps for environmental protection, 26

replied that they should not take steps for environmental friendly. 42 respondents did not reply the

question. Most respondent 251 are willing to take steps for environmental friendly.

4.1 Analysis of demographic characteristics of sample population

All the findings of the research sorted demographic used in analysis, are given in Appendix

at the end. Detailed analysis of demographic characteristics of consumers are given below:

4.2 Does gender influence the consumer’s decision to buy green electricity?

Out of 319 respondents 149 were males and 170 were females, which means 47% of total

respondents were male and 53% were female. Looking at findings shows that in most of the cases

male respondents showed more positive attitude towards green electricity than female. The findings

show that both male and female respondents have sufficient knowledge of green electricity and

majority of them replied positively that they know about what is green electricity. On the other hand

in the response of question about receiving information of green electricity 70 male and 58 female



66

replied that they receive information about green electricity suppliers in their area rest of 79 male

and 112 female respondents claimed that they do not receive any information about green electricity

by the electricity suppliers in their area. In response “why they chose their current electricity

supplier”; 46 male as compared with only nine female respondents chose their current electricity

company due to the reason the company was environment friendly and in most of the cases their

electricity supplier also provides green energy. Whereas 32 males and 29 female respondents

selected the reason “low price”. In response to the having awareness of environmental hazards of

using conventional electricity 120 males (out of 149 male respondents) and 102 females out of (170

female respondents) replied positively. This gives an idea that Swedish male are more aware of

environmental hazards than women. Whereas 47 male and 64 female think that prices of green

electricity are high and in reply to the question determinant is price or environmental protection

important for consumers to buy green electricity 49 males and 95 females agreed that price is more

important than environmental protection, whereas 100 males and 75 females disagreed with the

statement. The answer of this question contradicts with the results of Jain and Kaur (2006) that

female are more conscious about environment than male consumers.

The detailed findings of male and female demographic groups testifies the statements of

Jain and Kaur (2006), Rowlands et al. (2003), Diamantopoulos et al. (2003), Mainieri et al. (1997),

that gender has a direct impact on consumers’ choice of green products and this can be used as a

variable to target consumers for the marketing of green products. Detailed findings of the survey of

male and female are given in Appendix at the end.

4.3 Does age difference of Consumer’s age has impact on buying decision of green electricity?

The 319 respondents are subdivided into four age groups whereas the age group under 18

years is invalid for our research. These groups are 18 to 35 years, 36 to 45 years, 46 to 55 years and

56 years and above. We got 146 responses from the first age group, 111 responses from the second

age group, 58 responses from the third age group and no response from the last group. The findings

of the different age groups reveal the fact that age difference plays a vital role in consumer’s choice

of green products, hence different strategies are required for marketing of green electricity in

different age groups of the consumers. The findings of different age groups show a close relationship

between age and choice of green electricity. The respondents of younger ages belong first age group,

are willing to pay more for green electricity as premium than all other age groups, even almost all

of them (except 10) are willing to pay minimum premium for green electricity. This supports the

statement of Zarnikau (2003) that younger people are show deep concerns for the environmental

protection. These findings also testify the statement of Jain and Kaur (2006) that the consumers

belong to age group of 18 to 35 are more enthusiastic for environmental protection. On the other

hand this group also considers that price of green electricity should be lower and they consider price

as a major determinant for purchase of green electricity. Similarly all the respondents of other two


67

groups are willing to pay premium for green electricity. The respondents of second age group 36 to

45 years consider environmental friendliness over the price as a major factor of choice of their

electricity supplier. Whereas 50% of the respondents from third age group 46 to 55 years, consider

environmental friendliness as a major factor while rest of them consider price as a major factor for

choice of electricity supplier. In response to pay extra for green electricity 100% consumers of

second and third age groups wanted to pay an extra amount of 40 SEK to more than 100 SEK per

month. This testifies the statement of Fuchs and Arentsen (2002) that people of age 36 and above

have good financial position and willing to pay more for the sake of environmental protection.

4.4 Does consumer’s income levels have impact on buying decision of green electricity?

Most of the researchers are agreed that income has a direct influence on consumer behavior

while making purchasing decisions. In this research the respondents are divided into five income

groups based on their monthly income in Swedish Crowns (SEK), these groups are: under 10.000

SEK, (152 respondents) 10.001-20.000 SEK (57 respondents), 20.001to 30000 SEK (46

respondents), 30001 to 40000 SEK (34 respondents) and 40001 to 50000 SEK (30 respondents).

Almost half of the respondents belong to a first income group and rest belong to average to higher

income groups. This variety of income grades of respondents are quite helpful to study the

purchasing behavior of the several income groups. Taking a close look on the detailed findings

shows that almost 95% respondents of all income groups have the knowledge of green electricity,

but most of them did not receive information about the green electricity suppliers in their area. In

the response to reason to choose their current electricity supplier very little number of respondents

from all the income groups chosen their electricity supplier due to lower price. About 83%

respondents having monthly income above 41000 SEK selected their electricity supplier due to the

reason that their electricity companies were environment friendly, which shows a direct connection

between income and green behavior of a consumer. These findings validates the statement of

Zarnikau (2002), that consumer with higher salaries are more willing to adopt green electricity. In

response to the how much premium a consumer can pay per month for green electricity all the

respondents having monthly income higher than 21 thousand SEK per month agreed to pay extra

premium for green electricity. The result of this finding validates the statement of Rowlands et al.

(2003) and Jain and Kaur (2006) that higher income groups have more positive response towards

green energy and higher income groups also willing to pay more for green energy.

4.5 Does education has impact on purchasing behavior of consumers, buying green electricity?

Education also plays a vital role to define consumer behavior. Education is also a major

characteristic of an individual which portrays the individual’s concerns towards. The respondents

were divided into four groups based on their education i.e. School / High School, 121 respondents,

Some University, 90 respondents, College Graduate, 50 respondents, Postgrad 58 respondents



68

Almost all of the respondents have basic knowledge of green electricity and aware of its benefits to

the environment. About more than half of the respondents who has finished college education;

selected their energy supplier due to the company is environment friendly.

The question about reason not to use green electricity a large number of respondents from

each subgroup replied it is due to lack of information. Which is stated by Young et al. (2010) argued

that consumer’s knowledge regarding green production and environmental issue effects the decision

making for green energy adoption. In response to the premium to pay monthly in lieu of green

electricity, about 99 to 100% respondents belong to higher education groups were willing to pay

different amounts as premium ranging 40 to 100 SEK and above monthly, this behavior shows a

direct connection between education and choice of green electricity in Swedish consumers. These

finding supports the statements of Rowlands et al. (2003) and Diamantopoulos et al. (2003) that

highly educated group of people are more concerned towards environmental issues and more willing

to adopt green energy programs which support the survey results of this research which confirms

the research of Robert (1999) that people having higher level of education are more willing to pay

for green energy as compare to lower level of education.

4.6 Does Area of Residence Have Impact on Consumer Decision for Purchasing Green

Electricity?

Previous studies conducted by Mainieri et al. (1997), Berenguer et al. (2005) show that

people living in urban areas has more environment friendly behavior than people living in

countryside. To conduct this research the questionnaires were distributed mainly in seven different

cities and towns of Sweden wich are situated in about 150 kilormerets circle from Swedish capital

Stockholm. It included mainly from Eskilstuna, Västerås, Kvicksund, Södertälje, Stockholm,

Köping and Örebro. Finally we got 217 respondents from urban areas and 102 respondents from

rural area or countryside. Taking a quick glance on our findings reveals that almost 95% residents

of both urban and rural areas have sufficient knowledge about green electricity. But on the other

hand a large majority of these respondents; about 71% of urban residents and 55% of rural residents

are unaware of the fact, whether their electricity supplier provides green electricity or not? This

negates the research of Mainieri et al. (1997) for swedish consumers, as Mainieri et al. (1997) argued

that urban residents are more informed about production of green electricity than rural consumers.

Whereas 70% of both urban and rural respondents showed that they were aware of environmental

hazards due to usage of conventional electricity. Which supports the study results of Berenguer et

al. (2005) who believed that residence has no impact on consumer choice of green energy. The

findings show interesting outcomes regarding respondents consider price or environment

friendliness as important factor to choose their supplier, 54% urban and 52% of rural respondents

consider environment friendliness as a more important factor to purchase electricity. This result

again supports the Berenguer et al. (2005) research that residence has no impacts towards adoption


69

of green products/services.

5. Conclusion

The data gathered in the survey during this research is analyzed in 5 different contexts

according to the demographic characteristics (gender, age, income, education and area of residence)

of the respondents, which were used as variables for the research. The results show that every

demographic group and also the subgroups within a demographic group have different preferences.

Most of the people belong to all groups showed their interest in green energy programs and a large

number of our respondents is also willing to pay a minimum amount of 40 to 60 SEK in lieu of

environmental protection but electricity companies are required to inform people that why should

they pay extra per month and what will be the benefits of using green electricity over conventional

electricity on the climate of earth. Young people especially students have shown deep concerns to

save the environment and most of them have selected to pay extra for green electricity which means

that the young people can easily spend up to 60 SEK per month for the green electricity. According

to the difference in opinion based on gender, the research concludes that Swedish male are more

socially responsible and aware of environmental hazards than female. About 98% of the people

belong to the group have university education at Maters or PhD level are willing to pay extra for

green electricity. But most of the people belong to all levels of education in our sample population

have lack of information about green electricity programs and green electricity providers in the area,

it requires proper campaign to provide information to the people of different walks of life about

green electricity. The research also reveals the fact that people belong to higher income groups are

more socially responsible than the people from lower income groups.

Hence we can say that demographic characteristics have a major impact on consumers’

purchasing decision. The preferences of different demographic groups are different but almost all

of them willing to take practical steps to save the environment. In case of purchasing the green

electricity, problem recognition depends on the needs and green values of the consumer on the basis

of these values the consumer make a green criteria in his/her mind and searches for appropriate

electricity supplier like if it is environment friendly or not how much the consumer has to pay extra

for green electricity. Finally, the consumer takes decision of purchase. So, results of this research

depicts that demographic characteristics can play a vital role in marketing of green electricity in

Sweden. Although price is the main priority of 46% of our population but on the other hand almost

all of them were willing to pay extra if they were well informed about the fact that green electricity

is not that much expensive as they think of it. They could be motivated that by paying a premium

of less than 100 SEK per month they can save the environment for purchasing the green electricity,

which solves seems the solution of the problem.



70

5.1 Recommendations

The facts brought forward in above research, reveal the truth that more than half of the

Swedish people do consider environment as main factor to choose electricity supplier over price.

But it requires to create proper awareness among electricity consumers about green electricity; that

it is not very expensive as people thinks. Moreover the consumers have to pay little amount per

month for green electricity. The green energy companies should target their customers based on

their demographic characteristics. The companies should advertise green energy in context with

environment friendliness and should create awareness in the Swedish consumers that how paying

only a small amount per month as a premium, they can save the environment of planet earth for

their future generations.

Local governments in Sweden should also invest in the green electricity programs to

encourage electricity companies to produce more green electricity at affordable cost. The central

government should also provide subsidy on green electricity to lower the prices and to secure the

environment. Saving the environment is not only the responsibility of government or energy

companies, consumer participations are must in these programs. It is recommended that companies

should create more awareness in people about carbon foot prints and involve people that how can

they participate in environmental conservative programs to save the climate of the earth by

minimizing the emission of green gases and carbon footprint. Advertising should be in an effective

way that creating awareness in people that by paying only 40 to 100 SEK per month in lieu of safe

environment is not a big deal for the people of a rich country like Sweden.

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1,2 Abdul Wali Khan University Mardan, Pakistan. Email: [email protected], [email protected]



The Impact of Organizational Justice on Organizational Citizenship Behavior

Using Organizational Politics as Moderator (A Case of Public Sector

Universities in Khyber Pakhtunkhwa) 1Muhammad Nawaz Khan, 2Muhammad Tahir Khan

Article History:

Received:

4 Feb, 2019

Revised:

6 Apr, 2019

Accepted:

17 Apr, 2019

ABSTRACT

Purpose: This study was conducted to explore the impact of organizational justice

(distributive justice (DSJ), procedural justice (POJ) and interactional justice (INTJ))

on organizational citizenship behavior with moderating effect of organizational

politics (ORP) on the relationship between organizational justice (ORJ) and

organizational citizenship behavior (ORCB).

Design/ Methodology: The data was collected from 200 employees working in

different capacities at public sector universities of Khyber Pakhtunkhwa through

self-administrated questionnaires using random sampling technique. The statistical

tools (i.e. reliability, correlation and regression) were used to test the hypothesis.

Findings: The result of the regression analysis showed that ORP has a negative

moderating impact on the relationship between ORJ (distributive justice(DSJ),

procedural justice (POJ) and interactional justice (INTJ)) and ORCB. This study

analyzed that in a political situation only prevailing group can relish the rewards and

rest of the employees suffer which causes disassociation and low levels of citizenship

behavior.

Implications: This research study contributes to the literature of management

sciences by identifying and applying theoretical concepts unto a different sample and

in organizational settings.

Keywords: Organizational Justice, Organizational Citizenship Behavior,

Organizational Politics

1. Introduction

The perception of ORJ refers to the employee’s sensitivities of equality and has developed

a general thought in consideration of workplace insolences and behaviour (Ambrose, 2007).

According to Cropanzano et al. (2003), the ORJ is studied generally in relation to employee’s

observations about equality in issues pertaining to human resource management such as selection,

rewards and working environment (Folger & Cropanzano, 1998). Similarly Roberson and Stevens



Muhammad Nawaz Khan and Muhammad Tahir Khan

75

(2006) studies the relationship of ORJ and organizational citizenship behaviour. Literature

regarding ORJ enlists three of its primary types, specifically, DSJ was investigated by Adams,

(1965) and Homans, (1961), POJ were examined by Leventhal et al. (1980), Thilbaut and Walker

(1975), and INTJ was studied by (Adams, 1965; Bies & Moag, 1986; Homans, 1961).

The DSJ signify the perception of employees about fairness in the distribution and

allocation of resources in the organization. The resources can be financial (tangible, such as salary)

as well as non-financial (intangible, such as praise). DSJ also relates Human resource issues

pertaining to gender equality by giving equal rights to men and women in the work setting

(Roberson and Stevens, 2006).

POJ refers to the perception of employee about the procedure or process through which

the resources are allocated among the employees of the organization (Leventhal, 1980). These

procedures include the methods, mechanisms or the policies that ensures the fair distribution of

resources among the employees (Thibaut and Walker, 1975). The procedural fairness shall be

achieved if the procedure adopted for distribution of resources is unbiased, based on accurate

information, true representations of all the concerns of all the recipients and are based on the moral

and ethical standards.

INTJ refers to the perception of employee about treatment they receive through the

managerial decisions (Colquitt, 2001). This can be achieved if the management explains the logic

and rational of the decision the management has made. According to Colquitt (2001), INTJ includes

has two elements i.e. interpersonal justice and informational justice. Interpersonal justice means the

employee’s perception about the level of respect and courtesy they receive during interaction with

the management of the organization. While informational justice refers to the perception of

employees about the timely, accurate and adequate provision of information and explanation by the

management.

Similarly, some organizations face ORP, which may have adverse effects on employees

and by extension on the organization itself. It is one of the sources of stress and has a negative

impact on job outcomes (Ferris et al., 1991). Previous studies have reported that ORP decreases

employee’s commitment, ORJ, employee’s performance, ORCB (Aryee et al., 2002). Theoretical

discussion suggests that ORP interrupts the organizational process and decreases citizenship

behavior and productivity on both organizational and individual level. Most of the employees

perceive ORP in a negative light as it is perceived in helping in the enhancement and protection of

self-interest of individuals. The significance of ORP lies in its consequences and its effect on Job

attitudes (Ferris et al., 1991).

In Asian context, the study of ORP as a moderator with association among ORJ and ORCB

is a novel concept. It is because most of the research on ORP and ORCB has been carried in Western

countries (Indartono, 2009). Moreover, Bangun et al. (2011) described that study on ORP is need

to be carried out in Asian countries with different variables. Therefore, the objective of this research

study is to investigate the impact of ORJ on ORCB of employees working in the public sector

The Impact of Organizational Justice on Organizational Citizenship Behavior Using Organizational Politics

as Moderator (A Case of Public Sector Universities in Khyber Pakhtunkhwa)

76

universities of Khyber Pakhtunkhwa, also to determine the moderating effect of ORP on the

relationship between ORJ and ORCB.


2.1 Organizational Justice (ORJ)

ORJ concerns employee’s perceptions of fairness in workplaces and has become a general

theory in consideration of workplace attitudes and behaviour (Ambrose, 2007). Cropanzano and

Rupp (2003) argued that it has been studied generally in relation to employee’s justice opinions of

human resource management issues such as downsizing which is from the study of Paterson and

Cary (2002), recruitment and selection examined by Folger and Cropanzano (1998). While,

employee’s voice were discussed by Brockner et al. (2001). Similarly, layoffs were from Brockner,

(1990), and stress was eliminated by Judge and Colquitt (2004). However, some of the social

science researcher has examined ORJ in relatively working with organizational citizenship

behaviour (Roberson and Stevens, 2006).

Similarly, justice in organizations indicates those employees who usually collect details

regarding the righteousness of ability and the evenhandedness of previous activities by

interchanging opinions and collecting information amongst co-workers who are nearby to them and

those having equal justice opinions about previously performed activities (Brass et al., 2004).

That’s why ORJ also indicates that employee’ opinions of step-by-step justice produce

more package referent to organizational outcomes, such as larger business loyalty and citizenship

movements valued to the organization (Lind and Tyler, 1988).They also suggest that people use

their observations of the equity of strategies to figure out the equality of the organizations that

produce persons strategies. These optimal, in short, point out whether employees will want to

connect with other employee’s later on (Cropanzano et al., 2003).The ORJ literature defines three

main types of justice specifically, DSJ as examine by Adams (1965) and Homans (1961), while,

POJ was investigated by Thibant and Walker (1975) in their research study. Similarly, Leventhal et

al. (1980) also examine POJ in their studies, and Bies and Moag (1986) introduce INTJ in their

studies.

2.2 Distributive Justice (DSJ)

According to Adams (1965) and Homans (1961) DSJ represents staff's recognized equity

about perform results (e.g. pay, efficiency ranking, marketing and termination). results and elegance

statements continuously represented that, compare to associates of common groups, community

group associates bear more elegance by companies in regards to reasonable perform results such as

choosing and marketing, Equal Opportunity Commission and Human Rights, women and national


77

lowly lean to earn less than the main flow of employees at all stages, even when having similar job

credentials.

In context of ORCB is distributive activities that integrate distributive rights requirements

will lead to higher stages of variety referent results with regards to fulfillment in job efficiency,

knowledge and problem-solving skills than diversity-oriented distributive activities that do not

integrate DSJ requirements.

2.3 Procedural Justice (POJ)

According to Leventhal (1980) and Thibant and Walker (1975) POJ represents staff's

recognized equally about the influenced decisions making procedures, and human resource

guidelines/ methods that consequently affect employees work environment and performance results,

such as pay, support marking and performance evaluation scores (Lind and Tyler, 1988).

As oriented in ORCB it is step by step activities that integrate POJ requirements that

motivate to direct advanced levels of assortment which referent outcomes relating to employee’s

commitment, trust and ORCB actions than multiplicity slanting procedural activities that did not

integrate the requirements of POJ.

2.4 Interactional Justice (INTJ)

According to Bies and Moag, (1986), INTJ represents staff's recognized equality in regards

to the high company's social interaction with which workers are handled by power. Such as, Colquitt

(2001) argued that INTJ is often further divided into social and informative rights. Tyler and Lind

(1992) examine interaction nal justice represents staff's recognized equity about the high top quality

of social treatment that workers receive from power INTJ is further divided into social rights and

informative rights. Furthermore, Colquitt (2001) argued that INTJ is the degree to which individuals

are handled with respect, pride and deference by powers that be (managers or supervisors) or third

party like human resources managers are involved in performing techniques or determining results,

and informative rights represents the details provided to individuals that convey information about

why certain techniques were used or why results were distributed in a certain way.

ORCB is oriented interactional activities that integrate requirements of ORJ will lead to

advanced levels of multiplicity referent results relating to commitment to the manager and more

business citizenship actions than diversity-oriented interactional activities that do not integrate the

requirements of INTJ.

2.5 Organizational Politics (ORP)

Organizations face personal conflicts and many influences exerted by individuals and

teams to achieve their goals and to obtain benefits. ORP is considered as a negative process which



78

lowers the level of fairness, equity and justice in the organization (Ferris et al., 1991). This negative

process may affect job attitudes, i.e., organizational commitment, intention to leave and ORCB of

employees. When political behavior arises in the organization employee feel that they will be treated

unfairly that reduces their employee’s commitment with the organization and their ORCB

(Indartono, 2009). Which, ultimately forces employees to leave the organization. High level of ORP

represents a high level of injustice within the organization and high level of inequality in the

distribution of resources among employees (Ingraham & Thompson, 1996).

2.6 Organizational Citizenship Behavior (ORCB)

Organ (1997) indicates that reasonable understanding performs a gigantic position in

developing citizenship behavior in an organization. The theories about this idea is that if workers

understand that they are being handled very well, they will give the fire treatment that what

organization basic need. Equality is one of the most main thing for developing ORCB. If workers

are handled as well they will show positive attitude at perform and their inspiration to keep working

more complicated and handling greater than when workers are handled poorly.

According to Wang et al. (2005) argued that the transformational leadership in ORCB is

describes there changing management as: “Articulating a powerful perspective of the future of an

organization; providing a reliable model with that vision; promoting the approval of group goals;

and providing personalized support, perceptive activation, and expectations of good performance

in their organization as well (Wang et al., 2005). In the ORCB the chin was define a beneficial

relationship between transformational systems which is called transformational leadership.

Motivates of the organizational workers is to achieve the collective long term goal of the

organization. They would also encourage them to try to accomplish those objectives by going above

what is predicted of them. This shows that since life changing management highlight the

significance of unify the perspective (vision) for the organization and to connect the followers’ self-

concept to this perspective (vision), the workers are good demonstrate. Which are high-quality

performed in example of ORCB.

The employees are too much motivated whenever we using the transformational leadership

and their good supervision it could be improve performance for the organization by the helping

inspire the top class management as well as which are creates good impact to developing ORCB

within an organization and fairly work together, avoiding their organizational conflict as well for

the success of organization. Therefore, we recommend that recognized step-by-step justice mediates

the connection between community staff's variety focused step-by-step activities and referent

system of organizational results, same like organizational commitment and citizenship behavior

(Masterson et al., 2000). The query of ORJ in handling varieties of particular important as variety

control in organizations is most effective if managers can deal with the resources of unfairness

amongst diverse employees (DiTomaso et al., 2007). Similarly, Linnehan and Konrad (1999)


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argued that ORJ in conduct variety of important activities as assortment control in organizations it

is most efficient if managers may covenant with the assets of injustice amongst different employees.

In order to evaluate the potency of handling variety for “actual” ORJ, we categorize variety

focused perform activities into diversity-oriented distributive activities, diversity-oriented step-by-

step activities, and diversity-oriented interactional activities. These activities make reference to

staff's heuristic encounters of diversity-oriented perform occurrences, which usually set up their

equity verdict about their companies and the standing of their managers and managers (Lind, 2001).

Organization justice have indicated that people's views of step-by-step justice generate

more program referent (organizational) results such as greater business dedication and citizenship

actions valuable to the business (Lind and Tyler, 1988) suggest that people use their views of the

equity of guidelines to figure out the fairness of the companies that generate those guidelines. These

choice, in turn, figure out whether employees want to communicate with a company later on

(Cropanzano et al., 2003). Such as, the proof is stuffed with undecided human resource management

and multiplicity guidelines, methods and programs in companies, possibly leading to staff's

recognized disfavor in the direction of the organization which use those strategies (Roberson and

Stevens, 2006). While Cropanzano and Wright (2003) argued that the recent research has

investigated that proper definition of citizenship behavior is the committed work environment as

the context of strategy implementation and fair strategies for human resource management and

specific social mergers employees.

Similarly, a general inquiry is which is usually studied that what does contradictory level

of ORCB and work environment in an organization is seems to be adopted (Hyde and Hopkins,

2004). According to Wise and Tschirhart (2000) the ORCB is important aspect of working

environment which is integrated as overall organization from top to lower level management.

ORCB is referring as psychological and social psychological consideration and their impact of

unusual category of dissimilarity in performance.

2.6 Theoretical Framework




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The methodology of a study is a systematic way to recommend and propose the

methodological design which helps the researcher to investigate different solutions for the research

questions (Mason, 2017). Similarly, Armenakis & Bedeian (1999) argued that research

methodology is an efficient and organized way to use for data collection.

The study relied on the data collected through questionnaires which have been adopted

from previous researchers. Different statistical techniques have been used like reliability analysis,

factor analysis, descriptive statistics, and correlation and regression analysis. The data has been

collected from respondents working in public sector universities of KP. In this study the items were

measured on 5 point Likert scale arrange as strongly disagree (1) to strongly agreed (5).

Sample Size: The study was conducted in public Sector Universities of Khyber

Pakhtunkhwa. The data was collected through self-administrated questioner distributed among 200

employees having at least 3years working experience in a public sector university. Random

sampling technique was used for sample selection. All the questionnaires were collected and no

missing items were recorded.

Measurements: The study included five variables. ORJ with three basic types’ POJ, DSJ

and INTJ are used as independent variables in this study while ORCB is used as dependent variable

while ORP is used as a moderating variable. ORJ was distributed in three major types. The

perception of DSJ was measured with a 5-item scale introduced by NiehoV and Moorman (1993).

While the perception of POJ was measured by a 6-item scale evaluated by NiehoV and Moorman

(1993). Furthermore perception of interactional was measured with 11-items scale prepared by

NiehoV and Moorman (1993). Organizational citizenship behaviour was measured by the scale used

by Lee and Allen, (2002). While ORP was measured by 12 items scale developed by Ferris et al.

(1991).

4. Data Analysis

The Cronbach’s alpha was intended to check the reliability of the data. Multiple regression

was used to check the goodness of fit and test hypothesis. The Person correlation between variable

was generated to check the relationship between variables.

4.1 Statistical Analysis

The data analysis was conducted through SPSS 20.


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4.1.1 Demographics

Table 1.1: Demographics-Gender, Marital Status

Gender Marital Status

Items Frequency Percentage Items Frequency Percentage

Male 147 73.50 Married 136 68.00

Female 53 26.50 Single 64 32.00

Total 200 100 Total 200 100

Table 1.2: Demographics-Age, Experience

Age Experience

Items Frequency Percentage Items Frequency Percentage

below 30 years 18 09.00 At least 3 years 73 36.50

31-40 years 98 49.00 3-6 years 106 53.00

41-50 53 26.50 6-10 years 13 06.50

50+ years 31 15.50 10+ years 8 04.00

Total 200 100 Total 200 100

Table 1.1 shows the demographic result. The majority respondents were male at 147 which

is 73.50% of the total respondent along with 53 females which is 26.50% of the sample. 136 of the

200 respondents are married which is 68.00% of the total sample while 64 respondents were single

which shows 32.00% contribution in the total respondents. Table 1.2 shows that majority of the

respondent fall in the age bracket of 31-40 years compressing 98 respondents which is 49.00% of

the total number of respondents. Lastly, 106 respondent have an experience of 3-6 years which is

53.00% of the total respondents.

4.1.2 Reliability Analysis

The reliability of the variables was checked through Cronbach’s alpha.

Table 2: Reliability of Scales

Variable No of Items Reliability

Distributive Justice 05 .802

Procedural Justice 06 .780

Interactional Justice 11 .810

Organizational Citizenship Behavior 15 .770

Organizational Politics 12 .790



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The above table 2 shows the reliability analysis of the data. The result shows the values of

Cronbach’s alpha being more than 0.70 deeming the variables reliable enough to proceed for further

analysis.

4.1.3 Correlation Analysis

The strength of association between two variables are dignified with the statistical measure

of Person correlation. The value of correlation ranges from -1 to +1. The table 3 shows that there is

moderate positive correlation among DSJ and organizational citizenship behavior. The result show

that (r = .360, p < 0..01) which submitted that there is moderate positive significant correlation

between DJ and OCB. Likewise, it is shown that there is positive correlation among POJ and ORCB.

The result show that (r = .311, p < 0..01) which denoted that there is positive significant correlation

between PJ and OCB.

There is a frail positive correlation among INTJ and ORCB. The result described that (r =

.231, p < 0..01) which prompts that there is positive significant correlation between IJ and OCB.

While it is shown that there is a negative relationship between ORP and DSJ, POJ and INTJ. It is

also reported that ORP has negative relationship with ORCB.

The value reported between job DSJ and ORP (r = -.320, p < 0.01), POJ and ORP (r = -

.632, p < 0.01), INTJ and ORP (r = -.213, p < 0.01), and ORCB and ORP (r = -.721, p < 0.01).These

results show that there is moderate negative significant correlation between DSJ and ORP. While it

is noted that ORP is strongly negative significant correlated with POJ and ORCB. Similarly ORP

and INTJ are weakly correlated.

Table 3: Correlation Analysis

DJ PJ IJ OCB OP

DJ 1

PJ .190** 1

IJ .293** .198** 1

OCB .360** .311** .231** 1

OP -.320 -.632 -.213** -.721* 1 **. Correlation is significant at the 0.01 level. *. Correlation is significant at the 0.05 level (2-tailed).

4.1.4 Regression Analysis

Regression analysis is a statistical measure which is used to find the change which occurs

in one variable due to the other variable. The table 4 shows the result of regression analysis model

1. The value of R2 (.231) suggest that the model is fit and able to explain that 23% change incurred

in ORCB dependent variable due to ORJ (Distributive Justice, Procedural Justice and INTJ)

independent variable. The result of F statistics (19.594) significant at p < .000 ( < 0.05) examine

that model is good predictor of the correlation between dependent and independent variables as


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DSJ, POJ, INTJ and ORCB. The T value reported against DJ as 3.861 is significant at p < 0.000

POJ as 3.419 significant at p < .001 and INTJ as 3.199 significant at p < .002 the t value is higher

than 2.00 and p value show the significance. The value of β (Beta) indicates that ORCB will cause

about 0.524 unit change in 1 unit change incurred in DSJ. While the value of β (Beta) show that

ORCB will cause about 0.382 unit change in 1 unit change incurred in POJ. Similarly, the value of

β (Beta) specifies that ORCB will cause about 0.228 unit change in 1 unit change incurred in INTJ.

The overall model show the goodness and fit of variable and also show that ORJ (distributive justice,

POJ and INTJ) inclines to change ORCB in positive direction.

Regression Model 1: Organizational Citizenship Behavior = α + β1 (Distributive Justice) + β2

(Procedural Justice) + β3 (Interactional Justice) + µ

Table 4: Regression Analysis Model

R R2 Adjusted R

Square

Std. Error of

the Estimate

Change Statistics

R Square Change F Change Sig.(P)

.480a .231 .219 5.99218 .231 19.594 .000

Coefficients

B Std. Error t Sig.

(Constant) 1.900 2.648 .718 .474

DJ .524 .136 3.861 .000

PJ .382 .112 3.419 .001

IJ .228 .071 3.199 .002

a. Predictors: (Constant), IJ, PJ, DJ b. Dependent Variable: OCB

4.1.5 Moderation Analysis

The results of moderation analysis indicate that the ORP moderate the relationship of ORJ

and ORCB negatively. It is suggested that the involvement of ORP contrariwise effect the ORCB

and similarly reduce the ORJ. The result showing that ORP has negative moderating effect on the

relationship between ORCB and ORJ (POJ, DSJ and INTJ) (i.e. B= -0.053while t = -2.901)

significant at the level of p <0.010). While the value of R-square and beta after the moderation of

ORP are documented that ORP negatively moderate effect the relationship of ORJ and ORCB. The

overall model show that the existence of ORP is negatively affect the ORJ and reduce ORCB.

Moderation Model-1: Organizational citizenship behavior = α + β1 {Organizational Justice

(Distributive Justice + Procedural Justice + Interactional Justice)} + β2 (Organizational Politics) +

β3 (Distributive Justice X Organizational Politics) + µ



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Table 5.1: Moderation Analysis Model 1 Summary

R R

Square

Adjusted

R Square

Std. Error of

the Estimate

Change Statistics

R Square Change F Change Sig. F Change

.488a .236 .180 .75707 -.186 30.398 .000

Table 5.2: Coefficients

B Std. Error T Sig.

(Constant) 4.722 2.356 2.005 .046

ORJ (DJ+PJ+IJ) .452 .130 3.469 .021

OP -.243 .372 -3.717 .034

ORJxOP -.053 .203 -2.901 .010

Dependent Variable: Organizational Citizenship Behavior, Predictor: (a) Organizational Justice (b)

Organizational Politics, Interaction point: Organizational Justice x Organizational Politics

5. Conclusion

This study supports the earlier studies worked on the relationship among ORCB, ORJ

(POJ, DSJ and INTJ) and ORP (Vigoda, 2000). Similarly, this study contributes to the literature

by showing the results of changing negative moderated impact of ORP on the association among

ORCB and ORJ (distributive justice, procedural justice and INTJ).

This study has been conducted using random sampling technique for data collection. The

statistical techniques such as reliability, correlation and regression were used to test the hypothesis

of the study. The result of the tests documented that there is positive significant association among

ORCB and ORJ (distributive justice, procedural justice and INTJ) while ORP has negative

moderating impact on the association of ORJ and ORCB. Humborstad and Perry (2011)

investigated in their study that the perception of ORJ (POJ, DSJ and INTJ) has positively

correlated with ORCB. Ferris et al., (1999) argued that ORP has negative impact on the association

between ORJ (distributive justice, POJ and INTJ) and ORCB. Similarly, Mintzberg (1983)

examine that ORP has negative moderating impact on the relationship of ORCB and ORJ as their

dimensions distributive justice, POJ and INTJ.

This study also supports those researchers who view that ORP can negatively affect the

perception of ORJ and ORCB. Furthermore, on the basis of the results of this study it is

recommended that such kind of political activities in organization should be avoided to get

maximum satisfaction of employees through creating best ORCB and avoided injustice in

organization.

5.1 Limitations

This study has its own limitations such as;

The sample of the study was small more data is required to generalize the results.


85

The data collected was only of the employees of public sector universities, other

organizations have different working practices.

The self-reported questionnaire used in this study my cause biases in data collection.

The stereotype attitude of the respondent also effects the result of this study.

5.2 Future Directions

The similar study can be conducted in other business sectors of Pakistan instead of

Education having political environment. Job loyalty, task orientation, self-efficiency and working

environment can also be test instead of ORCB and ORJ. The future researcher can include other

variables as mediator i.e. organizational commitment, supervisor trust, control management,

employees turnover etc. instead of ORP.

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