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IMPACT OF INTERNAL MARKETING ON ORGANIZATIONAL COMMITMENT: A CASE OF LUCKY CEMENT EMPLOYEES.

Byline: USMAN ALI WARRAICH, NIGAH-E-HUSSAIN and SARA RASHID KHURRAM

Abstract

Workforce commitment towards the organization is very important especially for people who are associated with the manufacturing industry. The employees must be motivated to serve the external customers. This research study was conducted to investigate the impact of internal marketing on organizational commitment of employees. The researcher conducted a cross-sectional causal research by distributing 150 questionnaires as a primary data source to employees working in different functional departments of Lucky Cement Limited. Hypothesis statements were tested by using SPSS and AMOS software. A significant positive relationship was found between internal marketing and organizational commitment. The result shows that a change in internal marketing activities causes an effect on organizational commitment of the workforce and positively influence changes to a certain level.

The researcher proposed future investigators to explore other aspects of internal marketing and organizational commitment, which might help to analyze other manufacturing companies. Based on the research results, the organization can retain its employees by improving their internal marketing strategies.

Keywords - Internal marketing, organizational commitment, affective commitment, normative commitment, continuance commitment.

Introduction

Much of research work has been conducted to inspect that between internal marketing programmes and the quality of service, organizational commitment acts as a dominant or intervening variable (Boshoff and Tait, 1996; Caruana and Calleya, 1998; Iverson, McLeod, and Erwin, 1996; Sargeant and Asif, 1998).

Internal marketing places an emphasis on organizations to let their workforce enhance their abilities by providing them adequate training and clarifying the organizational vision (Saad, Ahmed, and Rafiq, 2002). Organizational commitment is defined as a set of feelings and beliefs that people have for their organizations. Meyer and Allen proposed a model for organizational commitment (S. Jaros, 2007) determining the three components that are defined as follows.

i. Affective: this refers to the employee's emotional attachment, identification and involvement in an organization driven by positive work experience

ii. Normative: the determination of an employee to be grateful of serving their company

iii. Continuance: an employee's realization to identify the cost of leaving the company they are currently working in (Slack, Orife, and Anderson, 2010; Tsai and Wu, 2011)

To examine the significantly positive relationship between internal marketing and organizational commitment, data was collected from the employees working in a Cement Industry located in Karachi. The results obtained may help the future researchers generalize the results to different corporate sectors and may help corporate leaders to enhance the commitment by the help of internal marketing tools.

Theoretical Background

Past researches have shown that an organization can enhance the commitment of its people with the help of well-designed internal marketing strategies. This study examines the impact of internal marketing including the vision of organization and its HRM practices that influences the commitment of employees towards their organization including affective, normative and/or continuance organizational commitment.

Scope of the Study

The purpose of this research was to examine the influence of internal marketing i.e. vision of organization and HRM practices of the company on its employees working in head office and their commitment towards the organization.

Significance of Research

The significance of this research study is to understand and identify the impact of internal marketing activities, specifically vision of an organization and the HRM practices over the commitment of its workforce. The workforce commitment in this research work has been analyse on three bases i.e. affective, normative and continuance commitment.

The significance and importance of this study shall help organizations align their internal marketing activities in order to increase the commitment of their employees.

Research Hypothesis

The research question for this research work is; "What is the impact of Internal Marketing on organizational commitment?"

Thus, we have generated the following hypothesis for this study.

h1: Internal marketing has a significant impact on organizational commitment.

h2: Internal marketing has a significant impact on affective organizational commitment.

h3: Internal marketing has a significant impact on normative commitment.

h4: Internal marketing has significant impact on continuance organizational commitment.

h5: Vision has a significant impact on affective organizational commitment.

h6: Vision has a significant impact on normative organizational commitment.

h7: Vision has a significant impact on continuance organizational commitment.

h8: HR practices have a significant impact on affective organizational commitment.

h9: HR practices have a significant impact on normative organizational commitment.

h10: HR practices have a significant impact on continuance organizational commitment.

Limitations of the Study

The study has a basic limitation of research sample; the researcher has taken a sample of 150 respondents for this research work among which 130 valid responses were received. There are limitations in sample size, analysis power, variables' accuracy due to limitation of time and resources.

Pakistan Cement Industry Introduction

With reference to the study report of cement industry significantly plays an important role in the socio-economic development of a nation. In Pakistan there are prominently four types of cement that is being produced.

a. Ordinary Portland cement.

b. Portland Blast Furnace Slag cement.

c. Sulphate resisting cement.

d. White cement.

When Pakistan appeared on world's map, four cement plants were operative. Today, there are 29 cement companies operating in Pakistan. 26 out of 29 companies are listed on stock exchange that includes four foreign owned companies, 3 companies controlled by armed forces and privately owned companies are almost 16 in number. Cement industry is divided into southern and northern regions.

According to 38th Syndicate Reports, north zone contributes 80% to the industry with production capacity of approximately 36.17 million. On the other hand, with a production capacity of 8.89 million south zone's contribution is 20%.

Lucky Cement Limited

One of the largest producer and prominent exporter of cement from Pakistan, Lucky Cement Limited is sponsored by Yunus Brother Group one of the largest conglomerate of Pakistan. The company has an installed production capacity of 7.75 million tons annually.The company has strategically expanded its operations and serves South zone through its Karachi based factory and North zone via its factory located at Pezu Khyber Pakhtunkhwa (Lucky Cement Limited Annual Report 2014). The company has almost about 300 employees working in its head office. While, an overall headcount of employees that are working with Lucky Cement is approximately around 5,000+ individuals.

The corporate vision is aligned with individual employee goals and HR practices are designed to provide adequate training and reward to the most competent employees of the company. The HR policies are designed respective to the department-wise SOPs with an aim for the betterment of its workforce (Lucky Cement Limited Annual Report 2014). The turnover rate of the overall organization is low. Lucky Cement Limited Karachi head office has a number of 300 employees working. However, approximately 5,000+ employees are serving the company.

Literature Review

Organizations use internal marketing as a human resource management tool. Internal marketing is defined as the philosophy of management in which the organization promotes itself and its policies and treats their employees as internal customers ("What Is Internal Marketing? Definition and Meaning").HR activities including the workforce recruitment, their training, developing and motivation are the important mechanism that constitutes internal marketing (Broady-Preston and Steel, 2002). Organizations should treat their employees as their internal customers (Little and Little, 2009).

The two main components of internal marketing that are studied in this research work are:

Vision of the Organization

(Dunmore, 2005) quoted in his book "Inside-Out Marketing" that a company's vision is what a company strives to attain in the forthcoming time. (Dunmore, 2005) states in his book, "Corporate vision, mission and values should indicate 'where we're going', 'why it's important' and 'how we do things around here'.

HR Practices

Human resource management practices help organizations to create a competitive edge over others and the competitive market has become less dependent on economies of scale, technology, patents etc. (Quresh, Akbar, Khan, Sheikh, and Hijazi, 2010). For company's endurance and sustainability, the organizations must combine numerous HR practices (Lamba and Choudhary, 2013). Organizational culture in this respect also plays an important role. One of the most important HR practice is providing competitive compensation and benefits to the workforce.

There are two types of employee compensation. Monetary pay in the form of wages and salaries are termed as basic or primary compensation. However, other incentives and rewards that are based on company's policy and the individual's performance are termed as supplementary compensation (Lamba and Choudhary, 2013).

Organizational Commitment

The assemblage of feelings and beliefs of an individual collectively for their organizations is termed as 'Organizational Commitment' (Solinger, Van Olffen, and Roe, 2008). According to the research, work of (Meyer and Allen, 1991) organizational commitment has three types.

Affective Organizational Commitment

This refers to the emotional attachment, identification and involvement in an organization and is specifically sensitive to the employees working experience for example organizational support (Griffin and Hepburn, 2005). There exists a link between individual's and organization's distinctiveness and complements the organization by continuing their association with the company (Dawley, Stephens, and Stephens, 2005).

The most relevant problems an organization faces are due to the employee turnover rate that is a result of financial constraints and dissatisfaction (Mercurio, 2015). (Porter, Crampon, and Smith, 1976) investigated that how commitment affects turnover. It was found out by (Meyer and Allen, 1984) that higher affective commitment is interrelated with the time an employee spend in an organization resulting in longer working tenure of people in the same organization.

(Mercurio, 2015) found that affective commitment serves as the basis for organizational commitment and influences the work behaviours of employees. Affective commitment is considered as the core essence of organizational commitment.

Continuance Organizational Commitment

The employee's realization to identify the cost of leaving the company they are currently working in. However, according to (Dawley et al., 2005) the degree to which an individual sacrifices personally in alliance with saying good-bye to the organization is one construct of continuance organizational commitment.

Normative Organizational Commitment

The determination of an employee to be grateful of serving their company and their willingness to endure in the company. This refers to the employee's feeling and belief of staying with the organization and enriches their experience. Enrich communication within the organization and enduring loyalty towards the employer (Griffin and Hepburn, 2005).

Organization commitment become strong if it acts as a mediating variable in obtaining organizational outcomes in accordance with internal marketing programs (Morgan and Hunt, 1994).

The rewards offered to employees in advance including paying college tuition, or recruitment or training, normative commitment takes place (McMahon, 2007). Normative organizational commitment best describes the degree of alignment between organizational and individual goals (S. J. Jaros, Jermier, Koehler, and Sincich, 1993). (Iverson and Buttigieg, 1999) demonstrated that there is a negative correlation of normative commitment with years of education, hovering the likelihood of high level of commitment and loyalty of less educated people the previous times. However, normative commitment has a positive relationship with the overall job satisfaction and involvement (Meyer and Allen, 1984).

Influence of Corporate Vision on Organizational Commitment

The corporate vision and mission statements are considered as significant part of the strategic management procedure of almost all types of organizations including public, private, profit or not-for-profit, small, medium or large enterprises etc. (Darbi, 2012). Vision and mission statements have a wide spread influence on the company's overall performance (Darbi, 2012).

The above statements are supported by many different researches like of (Bart, Bontis, and Taggar, 2001) who investigated in support of that designing a mission statement is a top-rated management tool that is arrayed by managers at senior level. (Mullane, 2002) debated that empirically mission and vision statements are beneficial for daily operations, however opposing view proclaims it as an out dated document hanged on walls. Numerous research works of have described that in what way vision and mission statement helps to build a shared sense of (Mullane, 2002) purpose and acts as a channel to shape employees focus. There are other viewpoints that believe mission and vision statements lean to provide motivation, and affect the behaviour of employees.

It also promotes commitment and eventually enhances employees' overall performance (Mullane, 2002). An organization's vision statement provides unanimity of purpose and acts as a pivotal point for employee direction (Slack et al., 2010).

Influence of HR Practices on Organizational Commitment

HR practices influences the company performance on a larger (Yeung and Berman, 1997). The impact of HR practices on organizational commitment was highly stressed by researchers (Whitener, 2001).HR practices must be well organized which will lead to higher organizational commitment and lower the chances of leaving job (Juhdi, Pa'wan, Hansaram, Kaur, and Othman, 2011).

Conceptual and Theoretical Relationship Between Internal Marketing and Organizational Commitment

In order to attain employee's commitment, application of internal marketing strategies is considered significant (Farzad, Nahavandi, and Caruana, 2008). (Souchon and Lings, 2001) did a research in which they recommended that in order to improve the employee commitment, an internal marketing approach must be adopted. It was also advised by (Hogg, 1996) that IM is considered as a tool to enhance organizational commitment in employees and organizations can use it as a means to communicate their vision and goals. (Tsai and Wu, 2011) emphasized that in order to attain employee commitment; the HR management system must be effectively designed on the approach of internal marketing. There is a positive relationship between IM and organization commitment. Which results in an emotional attachment of individuals with their companies (Awwad and Agti, 2011).

It was researched by (Chang and Chang, 2009) that internal marketing strategies has positive effects and are used to establish organizational commitment. (Sadeghloo, Nodeh, and Rajabloo, n.d.). provides below submissions in their research work.

Employee commitment can be increased by making them aware about the goals of organization.

Growth and Development of the Workforce is a Responsibility of the Managers.

The activities of internal marketing must be designed in accordance with the employee needs and departmental requirements.

Theoretical/Conceptual Framework

Theoretical framework for this research work identifies the relationship between independent variable i.e. internal marketing and dependant variable i.e. organizational commitment. Figure 1 illustrates the theoretical framework of this research work.

Research Methodology

It is important to formulate a structured design to gather and analyse the essential data; this phenomenon is termed as Research Design (Sekaran and Bougie, 2011). This research work is a type of applied research. This is an empirical research work that is explanatory in nature therefore conclusions can be verified by observations and experiments (Kothari, 2004). The data obtained from such type of research is the most powerful support to test given hypothesis (Kothari, 2004). This research study possesses causal investigation to analyze the research problem. Causal research is opted by the researcher of this study to examine the impact of internal marketing on organizational commitment (Sekaran and Bougie, 2011). The data was collected to conduct the study was gathered over a period of weeks due to time constraint, thus the researcher had to recourse to short-term and cross sectional study.

The research approach is selected depending on the research problem, population and experience of the researcher (Creswell, 2013). This study has a quantitative research approach in which a survey was conducted and a sample of population is studied. The data collected to test the research problem is explained under this heading. There are two sources of collecting data (Sekaran and Bougie, 2011). Data for this research work has been collected through both primary and secondary source. Primary Data Source The structured survey questionnaire acted as a primary source of data collection for this research work for the specific purpose of this study. Secondary Data Source. Secondary data was obtained from the research work carried out by different researchers cited in the second chapter of literature review that was accessed through the internet. A structured survey questionnaire was designed to collect data.

The questionnaire survey was based on the previous researches but to some extent was modified according to the researcher 's requirement. It comprises of the following sections. General demographic information. The independent variable 'Internal Marketing' was measured with the help of two constructs. The construct of 'Vision' includes eight items and construct of 'HRM' practices includes six items, based on the research work of (Tsai and Wu, 2011) The dependent variable 'Organizational Commitment' was measured with the help of three constructs. First construct was of 'Affective Commitment' which has five items, second was 'Normative Commitment' construct that has four items and the third construct 'Continuance Commitment' had three items. These construct were based on the study of 46. All of the five constructs were measure with a total number of 26 items using Likert scale having five-points which ranges from strongly disagree = 1 and strongly agree = 5.

Validity and Reliability of The Instrument

Validity: The construct validity of the questionnaire was checked with the help of using SPSS Software. The software result is shown in Table 2. It represents each item in a construct. The 25 items construct validity and percentage variance is measured. The factor loading is >0.40 that make sure the constructs are valid. The percentage variance explained for each construct is >50%, thus ensuring validity. Reliability: To ensure the reliability of the instrument, Cronbach's coefficient alpha value was calculated. Table2 shows that the Cronbach's alpha coefficient for the variables is >0.60, thus ensuring reliability. It is to be noted here that one item from continuance commitment construct was removed in order to increase the overall validity and reliability of the questionnaire.

Table 1 Validity and Reliability Test

###Factor###% Variance###cronbach's

construct

###Loading###Explained###alpha

Vision

Our organization offers employees a vision that

###.810###62.911###0.915

they can believe in.

The vision of our organization is well

###.704

communicated to all employees.

Our organization views the development of

knowledge and skills in employees as an###.812

investment rather than a cost.

Our organization makes preparations for

###.837

employees to perform well.

Our organization teaches employees "why they should

###.760

do things" and not just "how they should do things."

The development of employee skills and knowledge

###.807

is an ongoing process in our organization.

Our organization goes beyond simple training

###.668

and educates employees to work together.

Our organization measures and rewards employee

performance that contributes to achieving the###.660

organizational vision.

human resource Management###59.662###0.862

In our organization, employees are properly

###.674

trained to perform their service roles.

Data gathered from employees are used to improve

###.734

jobs and develop organizational strategies.

In our organization, employees who provide

###.720

excellent service are rewarded for their efforts.

Our organization communicates to employees

###.834

the importance of their service roles.

Our organization places significant emphasis on

###.663

communication with employees.

Our organization has the flexibility to

###.682

accommodate different employee needs.

affective commitment###56.738###0.804

I find that my values and the organization's

###.641

values are very similar.

I am willing to put in a great deal of effort

beyond that normally expected to help this###.615

organization become successful.

I would accept almost any type of job assignment

###.534

to keep working for this organization.

I talk about this organization with my friends and

###.817

tell them it is a great organization to work for.

I am proud to tell others that I am part of this

###.768

organization.

normative commitment###70.072###0.786

I really care about the fate of this organization.###.715

For me, this is the best of all possible organizations.###.743

I am extremely glad that I chose this

organization to work for over others I was###.770

considering at the time I joined.

continuance commitment###60.259###0.664

It would take very little change in my present

###.491

circumstances to cause me to leave this organization.

I do not believe that I will have a future if I keep

###.995

working in this organization.

Often, I find it difficult to agree with this

organization's policies on important matters###.476

related to its employees.

Population and Sample

Population of this research study consist of the employees irrespective of the functional departments that are working at head office of Lucky Cement Limited located at Karachi, Pakistan. The population comprises of 300 employees that are working in the head office of Lucky Cement. The employees were chosen as a population of this study mainly because the employees working at head office of any company are directly exposed to the company's values, culture, HR practices etc. and are the best choice to provide relevant information on the variables being examined. The population comprises of 300 employees that are working in the head office of Lucky Cement. A sample of 150 employees from different departments is drawn from the total population of 300 (ranging from DGMs to officer 's level staff). The sample studied assists an investigator to generalize the research results to the total population (Sekaran and Bougie, 2011). Simple random sampling design is used to obtain the results from the sample.

Such type of sampling design helped the researcher to get least biased responses and assesses to generalize the result to the population. The theory behind simple random sampling is well established as it is easy to apply simple random sampling to small populations, it can be expensive and unfeasible for large populations because all elements must be identified and labelled prior to sampling. The sample size through which data was examined for this research work was 150 respondents among which 130 responses were received, the questionnaire was provided by hand and also through online link. Thus, the response rate received was 86.67% from the employees who filled the questionnaire and returned in the prescribed time-period.

Data Integration and Analysis

The research work demonstrates results in Model 1,2 and 3 respectively which shows the impact of internal marketing (IM) on organizational commitment. AMOS software used enables us to draw results through path diagram. It shows liner dependencies between Internal Marketing variable and Organizational Commitment variable. The errors shown in a circle describes that the variables are not observed directly (Bian, 2011).

Model 1

In Model 1, the IM variable has a significant and positive impact on organizational commitment. The table 2 below shows an estimate value of 0.852, this explains that at one-point increase in internal marketing activities can change and increase the organizational commitment by a significant estimation of 0.852 points. Thus, we accept H1 that "Internal marketing has a significant impact on organizational commitment". The squared multiple correlation (table 3), explain that 64.2% variation is seen in commitment variable by internal marketing variable.

Table 2 Regression Weights: (Group number 1 - Default model)

###Estimate###S.E. C.R.###P Label

Commitment###<--- IM###.852###.082 10.436###***

HRM###<--- IM###1.000

Vision###<--- IM###1.032###.079 13.081###***

Affective Commitment###<--- Commitment###1.000

Normative Commitment###<--- Commitment###.821###.086 9.535###***

Continuous Commitment###<--- Commitment###-.223###.099 -2.266 .023

Table 3 Squared Multiple Correlations: (Group number 1 - Default model)

###Estimate

Commitment###.642

Continuous Commitment###.043

Normative Commitment###.584

Affective Commitment###.888

Vision###.826

HRM###.816

Model 2

This model shows the impact of internal marketing activities on affective commitment, normative commitment and continuance commitment. The results show that internal marketing have a significant impact on affective and normative organizational commitment. However, no significant impact can be seen on continuance organizational commitment.

However, the overall influence of internal marketing is reported on organization commitment but when tested each construct of organizational commitment individually, we have witnessed that only one variable, i.e. continuance variable has a negative impact of internal marketing activities.

We, therefore, accept H2 and conclude that a unit change in internal marketing will drive 0.080 changes on affective commitment. It can also be seen in table 4 that, H3is accepted and explains that a 0.088 points change will be caused by a single point increase in internal marketing. Conversely, the results explain that no change in continuance commitment can be seen if internal marketing is increased or decreased urging us to reject H4.

The value for continuance commitment is insignificant at 95% confidence level but can be significant at 90% confidence level.

Table 4 Regression Weights: (Group number 1 - Default model)

###Estimate###S.E.###C.R.###P Label

HRM###<--- IM###1.000

Vision###<--- IM###1.022###.076 13.398###***

Affective Commitment###<--- IM###.910###.080 11.333###***

Normative Commitment###<--- IM###.790###.088###8.944###***

Continuous Commitment###<--- IM###-.207###.106 -1.946 .052

Table 5 Squared Multiple Correlations: (Group number 1 - Default model)

###Estimate

Continuous Commitment###.032

Normative Commitment###.467

Affective Commitment###.634

Vision###.790

HRM###.796

Model 3

Model 3 examines the effect of each construct of variables 'internal marketing and organizational commitment'. It can be seen in this model that vision has a positive impact on affective commitment thus enabling us to accept H5. The regression weights table also shows that if the organization increases to communicate its vision to its employees by a point, it will change the affective commitment of its people by 0.107 points.

Vision shows a positive but insignificant impact on normative commitment hence we reject H6. The model shows that vision has a negative influence on continuance commitment sowe reject H7. HRM practices shows a significantly positive impact on affective organizational commitment and normative commitment enabling us to accept H8 and H9 interpreting that HRM practices will cause 0.110 and 0.128 points change on affective and normative commitment respectively.

Results have shown a negative, insignificant impact on continuance commitment thus we reject H10. The squared multiple correlation tables further elaborate that at 95% confidence level, the affective and normative commitment are significant with 51.1% and 35.3% respectively. However, continuance commitment is insignificant at 95% level with a minor of 2.4%, which can be significant if the researcher places confidence level at 90%.

Table 6 Regression Weights: (Group number 1 - Default model)

###Estimate###S.E.###C.R.###P Label

Affective Commitment###<--- Vision###.403###.107###3.764###***

Normative Commitment###<--- Vision###.228###.125###1.828###.068

Continuous Commitment###<--- Vision###-.113###.154###-.729###.466

Affective Commitment###<--- HRM###.350###.110###3.183###.001

Normative Commitment###<--- HRM###.407###.128###3.183###.001

Continuous Commitment###0.7 on the latent variables or unobserved variables (Bian, 2011). The value of critical ratio (C.R) for regression weight that is >1.96, the path representing the relation is considered.

This research work shows results in Model 1, 2 and 3 respectively that the impact of internal marketing (IM) on organizational commitment is positive. However only continuance commitment has no affect by the constructs of internal marketing at 95% confidence level but can be accepted if the researcher determines the confidence level at 90%. The path drawn from internal marketing variable towards organizational commitment variable shows linear dependencies on each other. The errors showing in a circle describes that the variables are not observed directly (Bian, 2011).

Research Study Limitation

The sample size of this research work is not very large. In addition, only two aspects of internal marketing have been covered while structuring the questionnaire. Hence, there lies room for adding more aspects of internal marketing to evaluate its impact on the employees' commitment towards their organization. Since this research study is particular for a cement manufacturing organization's head office, which is located at Karachi, so the research results cannot be generalize to any firm that belongs to the any other manufacturing industry of Pakistan and neither on employees working in any other cement- manufacturing firm.

Future Recommendation

While concluding this research study, the researcher buoys up future researchers to advance their knowledge and understanding about internal marketing in different corporate settings. This research work was specific to one organization representing a particular sector. However, further researches can be conducted to generalize the results on the firms signifying the same sector.

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Publication:Journal of Business Strategies (Karachi)
Article Type:Report
Geographic Code:9PAKI
Date:Dec 31, 2016
Words:6354
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