Factors of Organizational

Commitment in
Manufacturing Industry
Muhammad Adnan Maroof (20201-28242)
Sonia Rabel Shaikh (20201-28606)
Introduction

 Every organization knows about the significance of employee commitment and its part in
motivating employees (Hassan et. al, (2021).

 A human resource (HR) is needed which is well versed with the factors that affect employee
commitment and is fully capable to be the most significant element in order to reach desired
organizational objectives and targets. (Asbari, 2015, 2019).

 Organizational commitment has been an issue of great importance, since it is directly related to
the firm’s profitability in the market. Organizational commitment directly impacts employee’s
performance (Shore & Martin, 1989; Meyer et al., 1989; Meyer et al., 1993)

 Organization meet their long-term goals and competitive advantage in the marketplace by hiring
right people and keeping high performance of the employees (G. Dessler, 2011).
Problem Statement
There are various factors most often lead to loss of commitment from employees affecting both organizational
growth and profitability. (Ekwochi et al., 2018)

The employees feel more stressed working due to work pressure (Y Alle, D Navvula, 2021), they go through a
lot of stress due to long working hours and relationship strain between managers and its sub-ordinates (Madan
and Bajwa, 2016).

Employees’ commitment exists when employees have a feeling of belonging with the organization and have a
strong desire to be part of the organization for longer period (Bowen, 2011).

Organizational commitment is considered as a major issue among employers in Pakistan, especially with
companies related to manufacturing industries.
Problem Statement

Case Study:

A well-known manufacturing company is considered as a test case, despite that fact that
company is one of the top manufacturing companies in Pakistan, it has been facing sharp
increase in employee turnover (approx. 10% per year) in last few years. There is a lack of
organizational commitment and employees are demotivated which is negatively affecting
business performance both in terms of sales turnover and profitability.
Problem Statement
Investigation of factors that
Pakistan
positively impact
Organizational
commitment through job
satisfaction

Manufacturing Organizational Job

Industry Commitment Satisfaction

Various
Factors
Research Questions

Does Job Satisfaction play Does Job Satisfaction play

a mediating role between a mediating role between
Organizational Justice and Compensation & Benefits
Organizational and Organizational
Commitment? Commitment?

Does Job Satisfaction play Does Job Satisfaction play

a mediating role between a mediating role between
Training & Development Employee Empowerment
and Organizational and Organizational
Commitment? Commitment?
Research Objective

To study the mediating role To study the mediating role

of Job Satisfaction between of Job Satisfaction between
Organizational Justice and Compensation & Benefit
Organizational and Organizational
Commitment. Commitment.

To study the mediating role To study the mediating role

of Job Satisfaction between of Job Satisfaction between
Training & Development Employee Empowerment
and Organizational and Organizational
Commitment. Commitment.
Literature Review

Compensation

Employee
Training
Empowerment

15 papers

Organizational Organizational
Justice Commitment

Job
Satisfaction
 Literature Gaps & Contributions

15 papers reviewed Job

Influencing
Factors Satisfaction

5 papers Shortlisted
Org.
Commitment

Job Satisfaction Contribution

as Mediator
To study
Mediating To test the
Effect of Job available
Satisfaction research in
between context of
various factors Pakistan,
and specially in
Organizational manufacturing
Commitment industry

Research Objective in shortlisted Very Less information in literature

papers
Literature Review

 Every organization knows about the significance of employee commitment and its
part in motivating employees (Hassan et. al, (2021).

 A human resource (HR) is needed which is well versed with the factors that affect
employee commitment and is fully capable to be the most significant element in
order to reach desired organizational objectives and targets. (Asbari, 2015, 2019).

 Organizational commitment has been an issue of great importance, since it is

directly related to the firm’s profitability in the market. Organizational commitment
directly impacts employee’s performance (Shore & Martin, 1989; Meyer et al., 1989;
Meyer et al., 1993)

 Organization meet their long-term goals and competitive advantage in the

marketplace by hiring right people and keeping high performance of the employees
(G. Dessler, 2011).
Literature Review

Organizational Commitment:

 The connection and devotion of employees towards their organization and work responsibilities
is termed as organizational commitment (Mahmoud et al., 2020). Employees work to achieve
organizational objectives, align their values with organization and motivate themselves to
remain in the organization is also organizational commitment (Bani-Melhem et al., 2020).

Job Satisfaction:
 Job satisfaction is referred as the wildly used variable when we talk about organizational
psychology and behavior (Li et al., 2019; Shafique et al., 2018). JS is also described as the
employee attitude towards their responsibilities which can be positive and negative (Novitasari,
D., Asbari, M., Wijaya, M. R., & Yuwono, T. (2020).
Literature Review

Training & Development:

 Training is done for the personal growth of the employee to develop their skills and abilities that
are required for the job and its an on the job method which is employed by the superiors and
trainers (Rivai, Veithzal, and Basri in Andianto and Sugiyanto (2019).

Organizational Justice:

 Organizational justice described as the employee view of equality/ justice in their organization
and their attitude towards it (Dong, L. N. T., & Phuong, N. N. D. (2018). More precisely, It refers to
employee assessments of supervisory behavior in terms of morality and ethically (Imamoglu, S.
Z., Ince, H., Turkcan, H., & Atakay, B. (201
Literature Review

Compensation & Benefits:

 Compensation is the reward obtained by employees for the work/efforts that they put in the
company to achieve its goals. The compensation can be salary, enticements, allowances, or
other facilities which can be anything other than money ( Nasution, M. I., Prayogi, M. A.,
Jufrizen, D. R. P., & Juliandi, A. (2019).

Employee Empowerment:

 The idea of employee empowerment is very common now (Ivanova & Scheve, 2019) as its
associated with so many critical problems which are: team work, training, reorganization,
quality management and all other areas which are related to the success of the company in
the market (Lassoued et al., 2020).
Literature Review

Social Exchange Theory:

 Horsmans coined the Social Exchange Theory (SET) in 1958 to better comprehend social
human behavior in financial endeavors. This idea demonstrates that when corporations treat
their employees well, they act more productively toward them (Zhao et al., 2020).
 Literature Review
Organization
Compensation
& Benefit
Employee Commitment
Empowerment

Employee
Passionate to
Factors Job attachment
Work for a
Satisfaction with
longer period
organization

Organizational Training &

Justice Development
Hypothesis

H1- Job satisfaction mediates the relationship between training &

development and organizational commitment:

H2- Job satisfaction mediates the relationship between

organizational justice and organizational commitment

H3- Job satisfaction mediates the relationship between

compensation & benefits and organizational commitment.

H4- Job satisfaction mediates the relationship between employee

empowerment and organizational commitment.
Conceptual Framework
Methodology
Adopted from Tariq Jalees Dissertation, 2013
Methodology:
Philosophical Approach:

Positivism methodology is used with assumption that the information provided by the respondents
will reflect the actual characteristics of the population. (Merriam, 2009; Mullen, 1998).

Inductive vs Deductive Approach:

In this study, a deductive approach was used as in the deductive approach, a model is developed
based on past literature which is already empirically tested through collected data (Saunders et al.,
2003)

Social Exchange Theory:

This research has developed a research model based on Social Exchange Theory (SET)
(Horsmans 1958), which explains that when organizations treat their employees well, they give
their best to the organization and productivity increases many fold (Zhao et al., 2020).
Methodology:
Research Design:
 This study is based on quantitative research design. It provides conclusion based on statistics,
by studying the sample of the population(Creswell, J.W.,2003). 1
 If the sample is chosen carefully, then the sample can be inferred to the population statistically
(Zikmund, W.G.,2001).
 The research is experimental type of quantitative research. Experimental research determines
if the independent variable causes an effect on dependent variable. The accuracy of the test is
established through survey’s, correlation studies or measures (Zikmund, W.G., 2001).3

Sampling Technique:
 This research is based on non probability sampling technique. In this technique, researcher
can subjectively select any unit that represents the population on bases of their accessibility.
This method is used where random sampling is not possible (Etikan I, Alkassim R, Abubakar S,
2015). 1
 To achieve the purpose of objectives, judgmental sampling technique has been used in this
study. Questionnaires have been distributed among the employees of manufacturing
companies and data has been collected on the basis of that (Mathur & Jain, 2015).
Methodology:
Population & Sample Size:
 The population selected for this study involves all the employees of manufacturing companies
in Pakistan.
 In order to collect data, a representative sample of the population is required, as it is
impossible to get responses from a large group that typically constitutes of the targeted
population of the study (Bechwati & Baalbaki, 2011).

 Total labor force in Pakistan is estimated around 71,809,320 (World Bank, 2020, Pakistan
Labor Force Survey, 2018-19), among total labor force, those working in manufacturing
companies are approximately 16.1%, hence estimated labor force in manufacturing industry is
around 11,561,300 (Pakistan Economic Survey 2020-21, Pakistan Ministry of Finance).

 Cattell (1978) recommends the minimum desirable sample size to 250. Hence the data
gathered from 300 responses is desirable.
Methodology:

Scale & Measures:

 In this study, close-ended questionnaire is used for collecting the opinion of respondents on
research problems
 The questionnaire used in this research has two sections, first sections relates with the
demography of the respondents, second section relates with the main objective of the study.
 In this research Likert scale was used in the questionnaire to determine the attitude of
respondents in a scientifically accepted manner (Edmondson DR., 2005).
 The questionnaire used in this research has two sections, first sections relates with the
demography of the respondents, second section relates with the main objective of the study.
This section has 5 latent variables and 38 indicator variables.
Result: (Respondents’ Profile)
(Sample Size 304)
Demography - Gender Demography - Education Level
1% 2%
29%

26%

71%
71%

Masters Bachelors
Male Female Matriculation / O-Level Phd

Demography - Age Demography - Income

4% 3% 0% 13%

15% 3% 16%

22% 33%
79%

15,000-40,000 13%
40,001-65,000 65,001-90,000
90,001-115,000 115,001-140,000 >140,000
<20 21-30 31-40 41-50 <50
Normality Analysis

Variable N Mean Std. Deviation Skewness Kurtosis

M_OJ 304 3.89 0.660 -0.980 0.323

M_CB 304 3.68 0.907 -0.955 0.200
M_TD 304 3.71 0.846 -0.717 -0.166
M_EE 304 3.84 0.718 -0.988 0.973
M_JS 304 3.86 0.712 -0.878 0.942
M_OC 304 3.69 0.767 -0.996 1.265

• To ascertain the normality of data

• Skewness and Kurtosis : ±3 (Kline, 2011); data has a normal tendency (Hair Jr. et al,
2010).  7-pt likert scale
Reliability Analysis

Variable Cronbach’s Alpha Items

Training & Development (TD) 0.868 6

Organizational Justice (OJ) 0.873 9

Compensation & Benefits (CB) 0.865 5

Employee Empowerment (EE) 0.842 6

Job Satisfaction (JS) 0.821 5

Organizational Commitment (OC) 0.867 7

• To check the internal consistency of data

• Cronbach Alpha > 0.7 (Leech ,2005 & Lim et al., 2013)
Validity Analysis

Variable KMO Bartlett’s Test AVE Items

Training & Development (TD) 0.871 850.373 0.530 6

Organizational Justice (OJ) 0.799 372.460 0.501 9

Compensation & Benefits (CB) 0.848 731.119 0.570 5

Employee Empowerment (EE) 0.799 354.715 0.504 6

Job Satisfaction (JS) 0.783 405.864 0.502 5

Organizational Commitment (OC) 0.853 797.998 0.521 7

Validity analysis is conduction to determine the relationship between construct and indicator
variables (Ansari et al., 2017).

KMO > 0.5, AVE > 0.5, BTOS Sig Value < 0.05 (Hair et al., 2006; Vinzi et al., 2010; Hair et al
(2010)
 Correlation Analysis

  TD OJ CB EE JS OC

Training & Development (TD) 1          

Organizational Justice (OJ) 0.710 1        

Compensation & Benefits (CB) 0.700 0.735 1      

Employee Empowerment (EE) 0.663 0.686 0.610 1    

Job Satisfaction (JS) 0.691 0.722 0.676 0.750 1  

Organizational Commitment
0.712 0.696 0.664 0.642 0.738 1
(OC)

Correlation analysis evaluates the relationship between each construct and find if there is multi
collinearity or not (Ahmed et al., 2019). 0.2 to 0.5 = weak relation, 0.5 to 0.7 = strong relation,
0.7 to 0.90 = very strong relation and 0.9 to 0.99 = multi collinearity.
Regression Result
Overall Model Results
 Results of overall model:
 Adjusted R2 = 0.691, F = 27.263, P < 0.05.
 Model is strong
 All the hypothesis are accepted

The result shows that the combine mediating impact of job satisfaction between all
the variables and employee commitment is 69% that means R square = 0.691 and p<
0.05. This demonstrates that the model fulfills all the condition. Regression result
shows that sig-value of the variable in all direct and indirect effects are p<0.05. Hence,
entire model is strong in this research
Bootstrapping Results
Path Coefficient & Direct Effects
Original Standard
Sample T Statistics
  Sample Deviation P Values
Mean (M) (|O/STDEV|)
(O) (STDEV)
TD -> JS 0.191 0.191 0.056 3.434 0.001
OJ -> JS 0.225 0.226 0.057 3.948 0.000
CB -> JS 0.191 0.193 0.052 3.675 0.000
EE -> JS 0.351 0.348 0.053 6.605 0.000
JS -> OC 0.758 0.760 0.028 27.263 0.000

Table 8: Specific Indirect Effects

Standard P
Original Sample T Statistics
  Deviation Value
Sample (O) Mean (M) (|O/STDEV|)
(STDEV) s
TD -> JS -> OC 0.145 0.145 0.044 3.283 0.001
OJ -> JS -> OC 0.171 0.172 0.044 3.846 0.000
CB -> JS -> OC 0.145 0.146 0.039 3.755 0.000
EE -> JS -> OC 0.266 0.264 0.041 6.533 0.000
Research Model
Conclusion
 All hypotheses were accepted.

 All the findings relate to objectives

 Findings are consistent available literature

Implications for managers
This study endorses the theory of Social Exchange (SET) by considering the independent variables
(training and development, organizational justice, compensation & benefits and employee
empowerment) as favor from the organization whereas the job satisfaction and organizational
commitment are the return from the employee as exchange

Some recommendations are given in the report which can help managers in addressing organizational
commitment and job satisfaction related issue in their organizations
Limitation and future research
 Study limited to a city, other cities can be considered in future research

 Study is related to a specific sector, in future researches more sectors can be considered

 This study is limited to only few of the factors which can affect the organization
commitment of any employee, more factors (independent variables) can be
incorporated in future researches on this topic
Thank you