International Journal of Information Technology and Business Management

29th September 2015 Vol. 41 No.1

2012-2015 JITBM & ARF. All rights reserved

ISSN 2304-0777 www.jitbm.com

THE IMPACT OF EMPLOYEE LOYALTY AND ORGANIZATIONAL

CITIZENSHIP BEHIVAOR ON ORGANIZATIONAL PERFORMANCE: A
CASE OF TAIWAN-LISTED FAMILY BUSINESS

YU-JE LEE1, I -CHAO LEE2 AND CHIN-LANG LIN3

1
Takming University of Science and Technology, Taiwan
2 &3
Kao Yuan University, Taiwan
Corresponding author: [email protected]

ABSTRACT

The purpose of this study is to certify, using organizational commitment as the Dual Mediator, the effects of
employee loyalty and organizational citizenship behavior on the organizational performance of Taiwan-listed family
businesses. Research subjects and the primary interviewees are the section chiefs and managers of Taiwan-listed
family businesses. The sampling method adopted in this study is the Simple Random Sampling method; while
Structural Equation Modeling (SEM) is used to certify the overall research model and the fitting effect of its
Structural Model and Measurement Model, followed by the use of Sobel Test, Boostrapping, and Mackinnon
PRODCLIN2 methods to certify the Dual Mediating effects. The research findings show that, to the Taiwan-listed
family businesses: (1) employee loyalty has a significant positive effect on organizational commitment; (2) employee
loyalty also has a direct positive, but not significant, effect on organizational performance; (3) organizational
commitment has a significant effect on organizational performance; (4) organizational citizenship behavior has a
significant positive effect on organizational commitment; and (5) organizational citizenship behavior has a
significant effect on organizational performance. The above results show that "organizational commitment" has a
"dual" mediating effect, which also implies that organizational commitment plays an important role in improving
organizational performance. But, improving organizational performance does not solely rely on the accumulation of
organizational commitment; a number of other channels may also contribute to it. Additionally, the results of this
study may serve as a reference to help the management staff of Taiwan-listed family businesses with their strategic
thinking when considering improving employee loyalty, organizational citizenship behavior, and organizational
commitment, and hopefully improving their organizational performance as a result.

Keywords: Employee Loyalty, Organizational Citizenship Behavior, Organizational Commitment,

Organizational Performance

In other words, management of family businesses is a

unique type of corporate governance2. In
BACKGROUNDS AND PURPOSES OF THIS Taiwan, it is a rather typical business management
STUDY pattern among large corporations and small and
medium enterprises.
Whether in developed or developing countries,
family businesses are without doubt the most However, the family business is a family-centric
important and most common type of business business management organization type. It can be
organizations in the era of economic globalization. discovered from the past family business studies that
The same phenomenon also exists in Taiwan and frequent issues in family businesses were employee
family businesses have been one of the major forces equity issues, which will further worsen the effects of
dominating the Taiwanese economic system 1. both organizational trust and commitment in case

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29th September 2015 Vol. 41 No.1
2012-2015 JITBM & ARF. All rights reserved

ISSN 2304-0777 www.jitbm.com

these issues couldnt be effectively solved, or LITERATURE REVIEW

slightly, reducing the employee job satisfaction and
job performance3. In addition, family-oriented The main dimensions of this study include employee
culture as one of the essential characteristics for job satisfaction, employee loyalty, organizational
family businesses, similar to those important commitment and organizational performance. Below
management activities of strategic human resource is a review of relevant literature.
policies and organizational learning, all make crucial
effects on family business organizational citizenship Relevant Literature Concerning Employee
Loyalty
behavior4.
The Definition of Employee Loyalty
Furthermore, large family businesses, particularly the
listed ones, must cultivate the solidarity and even the The foremost source of employee loyalty to an
loyalty between their internal employees to establish organization comes from their emotional attachment
employee organizational citizenship behavior if the to the organization. Numerous studies show that
businesses would like to grasp advantages within organizations with strong emotional attachment from
such a rapidly changing environment; or through the employees have much lower turnover rates and
employee trust on organizational perceptual absenteeism rates, and their employees have a
commitment, have employees make positive stronger motivation to work. There are three key
commitment toward the organization for enhancing principles to heighten employees' emotional
the organizational performance and further increasing attachment to the organization, specifically: (1) to
business values that can achieve an ever growing allow all employees to have a sense of mission; (2) to
business to strength potential sustainable give all employees who stay with the organization a
development of business3, which has been one sense of security; and (3) to allow all employees to
of current key issues worth researching. Hence, this have a sense of fairness5.
study attempts to verify the effects of employee
loyalty and organizational citizenship behavior on The conceptual definition of employee loyalty in this
organizational performance in Taiwan-listed family study refers to that "employees feel good and
businesses, using organizational commitment as a satisfied with the working environment and the work
dual mediator. Therefore, the concrete purpose of this itself, thereby heightening their allegiance to the
study concludes these points as follows: organization, and bringing forth their positive
commitment towards the organization." This
(1) To certify whether employee loyalty has definition is derived from the following research
positive and significant influence on organizational literature.
commitment in Taiwan-listed family businesses;
Chang 6 pointed out that organization should
(2) To certify whether employee loyalty has
improve the communications and the capacity for
significant influence on organizational performance
cooperation between domestic employees and foreign
in Taiwan-listed family businesses;
laborers, thus enhancing job satisfaction, employee
(3) To certify whether organizational loyalty, and organizational commitment. If the
commitment has positive and significant influence on capacity for "cooperation" between domestic
organizational performance in Taiwan-listed family employees and foreign laborers is improved, then
businesses; employee loyalty can be further improved; when
cross-country team work cooperation is enhanced,
(4) To certify t whether organizational then organizational commitment can be further
citizenship behavior has positive and significant improved.
influence on organizational commitment in Taiwan-
listed family businesses; Wu; Yang; and Chen7 suggested that customer
satisfaction will positively affect customer loyalty.
(5) To certify whether organizational citizenship
behavior has significant influence on organizational
performance in Taiwan-listed family businesses.

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2012-2015 JITBM & ARF. All rights reserved

ISSN 2304-0777 www.jitbm.com

Dai8defined employee loyalty as "employees' mentioned literature is summarized in the following

identification with organization's culture and values" description.
(Business Weekly).
Seeking excellence and improved quality has always
The Measurement Dimension of Employee been an organizations ultimate objective.
Loyalty Organizational citizenship behavior is an
organization members behavior that exceeds his/her
The measurement dimension of employee loyalty in role officially laid down in the organizational rules,
this study is divided into (1) employee satisfaction, which is almost always a spontaneous personal
and (2) employee commitment to the organization. expression that suggests something positive for the
The operational definition of these two sub- long-term organizational performance12.
dimensions is described as follows: Likewise, Organ13said organizational
citizenship behavior contributes to the organizational
(1) Employee satisfaction: refers to employee sense effectiveness. Apparently, whether or not an
of satisfaction towards their work environment and organization achieves its goals is closely related to
the work itself, which includes (A) internal organizational citizenship behavior. Non-Taiwanese
satisfaction, and (B) external satisfaction9. researchers focused on organizational citizenship
behavior studies such as Posdakoff and Mackenzie
(2) Employee commitment to the organization: refers
to employee psychological sensibility towards the 14, and Podsakoff, Ahearne and Mackenzie15
organization, and how employee past emotional surveyed U.S. insurers and paper mills and found
attachment affects their acceptance with the target most of the organizational citizenship behavior
given by the organization and their level of effort. constructs positively affected a groups performance.
When the levels of participation and identification of Organizational citizenship behavior studies in Taiwan
employees are high, the levels of commitment to the were conducted by Wang16and Guo17,
organization are also high. both of whom found a positive correlation between
organizational citizenship behavior and
Relevant Literature Concerning Organizational organizational effectiveness.
Citizenship Behavior
While Organ13mentioned the close connection
The Definition of Organizational Citizenship between organizational culture and organizational
Behavior citizenship behavior, Taiwanese studies in this regard
are mostly focused on state- or private-run businesses
The "conceptual definition" of organizational or business units, and few of them address issues in
citizenship behavior in this study is drawn from the the education circles or academic disciplines, which
research of Robbins10that "it is the discretionary makes this studys topic worth further exploration.
behavior that members of an organization have
towards the organization and the resulting allegiance A members behavior in the organization is
to the organization, that impact organizational considered a type of organizational behavior, a notion
performance." Additionally, this study referenced stemming from the Hawthorne studies concluding
theoretical models of various experts and scholars, that the motives behind working and social
and adopted the taxonomy of Hsieh; Lang; and Chen interaction are major determinants of a persons work
11for "organizational citizenship behavior" for performance in an organization18.
this study. As a result, four sub-dimensional
categories: (1) identification with the organization; The concept of organizational citizenship behavior
(2) colleague assistance; (3) absence of the selfish can be traced back to a study conducted by Katz19
pursuit of profits; and (4) dedication to work are that involved an organization members behavior
formed as the "variables for teachers' organizational exceeding his/her presumed role. Based on the Role
citizenship behavior" of this study; while their Theory, organizational citizenship behavior explains
definition for classified dimensions is adopted for how an organization member shapes his/her role and
"operational definition" of this study. Above- behavior as expected by the organization20.

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29th September 2015 Vol. 41 No.1
2012-2015 JITBM & ARF. All rights reserved

ISSN 2304-0777 www.jitbm.com

Robbins10defined organizational citizenship context of organizational operation, it is the pursuit of

behavior as an employees spontaneous, an overall performance goal consisting of efficiency
unconditional behavior that is excluded from the and effectiveness. As explained by the Incentive
official job description and contributes to Theory of the science of management, it is "an
organizational effectiveness. employee completes a task". Whereas, from the
perspective of organizational behavior, performance
Hsieh et al11 divided organizational citizenship is measured as the overall performance of three
behavior into four sub-dimensions: (1) Identification aspects: efficiency, effectiveness, and efficacy.
with the organization; (2) colleague assistance; (3)
absence of selfish pursuit of profits; and (4) There is extensive literature elaborating on the
dedication to work. measurement dimensions of organizational
performance but the ultimate benefits are eventually
Relevant Literature Concerning Organizational reflected on financials. Therefore, most scholars refer
Performance to financials as one of the indicators. In addition,
Ling and Hung22suggest that organizational
Concerning the measurements for "organizational performance is the result accomplished by relevant
performance", this study referenced the financial divisions and departments before deadlines to
dimensions that are used in measuring organizational achieve stage or overall goals of an organization.
performance proposed by Huang21, Ling and
Hung22, and adopted "EPS" and "ROE" as the Huang21 uses financial growth and profitability
dimensional indicators for measuring organizational indicator for the evaluation of organizational
performance. Above-mentioned literature is performance. Such indicators include above-industry
summarized in the following description. EPS, ROE or ROA22.

Szilagyi and Wallar23indicated that Relevant Literature Concerning Organizational

performance is a tool for evaluating the efficiency or Commitment
efficacy of an organization's resource utilization, and
that performance can reflect the adopted behavior of The definition and sub-constructs of
an individual for reaching organizational goals that organizational commitment are described in the
can lead to the future resource allocation in the following:
organization24. Venkatraman and Ramanujam
The Definition of Organizational Commitment
25deemed that the measurement of the
organizational performance can be categorized to The conceptual definition concerning organizational
these dimensions: Financial performance, business commitment in this study is: a "teachers' behavioral
performance and organizational effectiveness. tendency for not wanting to leave school because of
salary, job position, freedom of professional
According to Ramaswamy, Kroeck and Renforth creativity, and friendship with colleagues." Above-
26, there are multiple standards for performance mentioned literature is summarized in the following
evaluations enabled by financial indicators. That is, description.
single constructs such as Return on Assets (ROA),
Return on Sales (ROS), ROE and sales growth could Because the subject of commitment varies,
be adopted as performance measures, depending on postulation of each theory is also different. A few
the target and scope of research. definitions adopted by some scholars are hereby
described in the following:
Zheng; Wang; and Zeng27pointed out that the
original meaning of Performance refers to the level of Sheldon29argued that organizational
achievement, the concept of which consists two commitment is the attitude or inclination that links an
aspects: Efficiency and effectiveness. Efficiency is individual to the organization.
measured by the output and input ratio; while
effectiveness, as indicated by Hsieh28, is the Hrebiniak and Alutto30believed that
achievement level of an organizational goal. In the organizational commitment is a behavioral tendency

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of organization members for not wanting to leave the Relevant Literature Concerning Employee Loyalty
organization because of salary benefit, job position, and Organizational Commitment
freedom of professional creativity, and friendship
with colleagues. Chang6pointed out that, organizations should
improve the communications and the capacity for
Chen31believed that organizational commitment cooperation between domestic employees and foreign
includes (1) an individual's strong believe and laborers, thus enhancing job satisfaction, employee
acceptance of the organization's goals and values; (2) loyalty, and organizational commitment. If the
an individual's willingness to give more effort; and capacity for "cooperation" between domestic
(3) an individual's wish to be a continuous part of the employees and foreign laborers is improved, then
organization. employee loyalty can be further improved; when
cross-country teamwork cooperation is enhanced,
Liang32proposed that organizational then organizational commitment can be further
commitment refers to an individual that has a strong improved.
identification with the goals and values of the
organization, cares about the organization, and is Wu et al 7 suggested that customer satisfaction
willing to make an effort for the organization and to will positively affect customer loyalty.
continue to be part of the organization.
Summarizing the above; although the subjects of
The sub-constructs of Organizational discussion belong to various industries and/or scales,
Commitment there are sufficient similarities that allow this study to
derive the following hypotheses:
The sub-constructs of organizational commitment of
this study are adopted from the three dimensions H1: Employee loyalty of Taiwan-listed family
proposed by Zhang33that includes: (1) businesses has a significant positive effect on
Organizational identification; (2) willingness for organizational commitment.
efforts; and (3) job-staying tendency. Relevant
literature referenced concerning these dimensions is Relevant Literature Concerning Employee
summarized in the following description. Loyalty and Organizational Performance

Organizational commitment refers to where members In addition to the research perspective proposed by
of the organization identify with the organization's Chang 6, the research of Chao34also
goals and philosophy, and are willing to make efforts pointed out that organizational communications can
for and have a desire to continuously stay with the enhance employee understanding of organizational
organization. It is divided into three sub-dimensions reform, promote employee commitment to the
as follows: (1) organizational identification: identify organization, thereby improving work performance.
with the goals and values of the school where While Mowday, Porter, and Steers 35also
currently employed; (2) willingness for efforts: suggested that an organizational structure may affect
willing to make more effort in actions, and to fully job performance because of organizational
cooperate with school measures; and (3) job-staying commitment.
tendency: wish to remain at the school where
currently employed33. Furthermore, Huang61 Summarizing aforementioned literature, the
also believed that organizational commitment with following hypotheses are deduced in this study:
respect to teachers includes: (1) Positive evaluation
H2: Employee loyalty of Taiwan-listed family
of the school; (2) willingness to make an effort for
businesses has a significant positive and significant
the school and to continue receiving training; (3)
effect on organizational performance.
solidarity with the school; and (4) willingness to
continue working for the school. Relevant Literature Concerning Organizational
Commitment and Organizational Performance

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Steers36is the first scholar that develops a model To some degree, OC refers to attitude whereas OCB
on the effects of organizational commitment on work refers to behavior. There is substantial evidence
performances. Mowday et al35believed that supporting the notion that certain individual-level
organizational structures can influence work variables (e.g., job satisfaction and OC) correlate
performances via organizational commitment. with individuals OCB4041. Most
Finally, Mathieu and Zajac37came up with a empirical results indicate that OC is the determinant
complete model that describes the mediating effects factor of OCB42. On the other hand, cognitive
of organizational characteristics and job satisfaction variables in previous literature such as job
on work performances with organizational satisfaction, OC, perception of appropriateness and
commitment as a mediator. In fact, organizational disinterest in reward, are positively related to OCB
structures are one of the organizational 43. On the basis of a sample from the public and
characteristics. private sectors, Kuehn & Al-Busaidi 44 found
that an employee with higher job satisfaction and
Fun 38 indicated that attitudinal and normative commitment would have better OCB.
exchangeable organizational commitment from Investigating the effects of profit sharing on OCB,
teachers contributes to solid organizational Chiu & Tsai45supported the mediating role of
performance of schools.
OC between profit sharing and OCB; Besides, Lo
Chou39also pointed out a positive and 46also proposed that organizational commitment
significant relationship among organizational affects organizational citizenship behavior due to the
commitment, organizational learning and mediating variable of knowledge sharing.
organizational performance.
Whilst the abovementioned literature examines
different industries, scales or scopes, there is a degree
In addition, Chao34suggested that employees
of consensus. Therefore, this study develops the
can enhance the awareness of organizational changes
following hypothesis:
via organizational commitment. This strengthens
employee commitment toward their organization and H4: Organizational citizenship behavior has positive
hence boosts their work performances. and significant influence on organizational
commitment in Taiwan-listed family businesses.
On the basis of the above literature review, this study
develops the following hypothesis:

H3: Organizational commitment has positive and Relevant Literature Concerning Organizational
significant influence on organizational performance Citizenship Behavior and Organizational
in Taiwan-listed family businesses. Performance
On the basis of the above literature review, this study The relevance between organizational citizenship
develops the following hypothesis: behavior and organizational performance can be
known from the following literature.
H3: Organizational commitment has positive and
significant influence on organizational performance
Wu and Huang47deemed there is the relevance
in Taiwan-listed family businesses.
between organizational citizenship behavior and
organizational performance;

Relevant Literature Concerning Organizational Chang48also pointed out organizational

Citizenship Behavior and Organizational citizenship behavior will influence the organizational
Commitment performance;

Numerous researches haves proven that there is a Besides, Huang21believed service-oriented

high level of correlation between organizational organizational citizenship behavior has a partial
commitment and organizational citizenship behavior.

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mediation effect on high-performance human Whilst the abovementioned literature examines

resource management, productivity and turnover rate; different industries, scales or scopes, there is a degree
of consensus. Therefore, this study develops the
Hsieh49also indicated the service-oriented following hypothesis:
organizational citizenship behavior has a partial
mediation effect on high-performance human H5: Organizational citizenship behavior has positive
resource management and the productivity of and significant influence on organizational
organizational performance; performance in Taiwan-listed family businesses.

Li50believed service-oriented organizational RESEARCH METHODS

citizenship behavior has a partial mediation effect on
high-performance human resource management and Based on the above research purposes, hypotheses
turnover rate; and literature review, this study comes up with the
following research structure (Figure 1):
Hsiao51agreed organizational citizenship
behavior has a positive and significant effect on the
organizational performance.
Research Structure

Employee Loyalty

H1 H2

Organizational H3 Organizational
commitment performance

H4
H5
Organizational
citizenship behavior

Figure 1 Research Structure

Questionnaire Design and CMV Test post test. The questionnaires are issued to the section
chiefs and managers working in Taiwan-listed family
Questionnaire design businesses. A total of 600 questionnaires are posted,
and 210 effective questionnaires, or at 35% effective
This study uses simple random sampling for the recovery rate, are collected after the elimination of
questionnaire survey. To enhance the content validity incomplete and invalid questionnaires. All the
and reliability of the questionnaire, this study measurable sub-constructs in the questionnaire are
conducts an expert questionnaire based on the initial evaluated separately in individual section. The
questionnaire design for a pilot test. Inappropriate measurement is based on Likerts scale of 1~7, with 7
questions are either modified or deleted before the indicating extreme agreement and 1 indicating

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extreme disagreement. The stronger the level of Huang21and Ling and Hung22. The
agreement, the higher the score is52. dimension indicators for organizational performance
are EPS and ROE. This study designs and modifies
The questionnaire concerning "employee loyalty", the questionnaire section, which consists of four
which consists of a total of 6 questionnaires, was questions.
designed by this research with reference to the study
of Wu7, where the measurement dimensions of SEM and Measurement System
employee loyalty includes the dimensional scales: (1)
Employee satisfaction; and (2) employee To validate the research structure, this study adopts
commitment to the organization. Structure Equation Modeling (SEM) for
Confirmatory Factor Analysis (CFA). The
The questionnaire design concerning "organizational questionnaire measures four latent variables, i.e.
citizenship behavior" in this study referenced the employee loyalty, organizational citizenship
taxonomy proposed by Hsieh et al11, which behavior, organizational commitment and
includes 4 sub-dimensional scales: (1) Identification organizational performance. Each latent variable can
with the organization; (2) colleague assistance; (3) be divided into secondary variables, for which
absence of the selfish pursuit of profits; and (4) multiple questions are developed. The collated survey
dedication to work. A total of 12 questions are data is processed and the data file for the
designed in this study for this questionnaire. questionnaire responses is established. Whilst the
questionnaire is designed into individual sections for
The design of the questionnaire section on the measurement system of the research model, this
organizational commitment is referenced to the study performs dual measurements in order to
classification by Allen & Meyer53. A total of 9 facilitate software processing 54. Table 1
questions are developed to cover the three sub- summarizes the number of questions and reference
constructs, i.e. affective commitment, continued sources of individual implicit variables and explicit
commitment and normative commitment. variables55.

The measurement of organizational performance is a

reference to the financial dimension elaborated by
Table 1 Questionnaire structure

Implicit construct Explicit dimension No. of questions References

Employee satisfaction 3
Wu et al7
Employee loyalty Employee commitment to the
3
organization
Identification with the organization 3
Organizational citizenship
Colleague assistance 3 Hsieh et al11
behavior
Absence of selfish pursuit of profits 3
Dedication to work) 3
Affective 3
Organizational Continued 3 Allen et al 53
commitments
Normative 3
Organizational EPS 2 Huang21;Ling and
performance ROE 2 Hung22
Source: This study

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Linear Structural Model modeling (SEM) consists of structural modeling and

measurement modeling. It can effectively solve the
Confirmatory Factor Analysis (CFA) is a type of causal relationship between explicit variables. Hence,
analysis in contrast with Exploratory Factor Analysis this study sets out to examine three elements of the
(EFA). This study conducts pairwise CFA on the four model: (1) the compliance of the fit measurement for
dimensions, i.e. employee loyalty, organizational the overall model with the requirement; (2) the fit of
citizenship behavior, organizational commitment and the measurement model and (3) the fit of the
organizational performance. Structural equation structural model 55.

RESEARCH ANALYSIS & FINDINGS

CMV Test The questionnaire in this study didnt have the CMV
problems after applying the CFA certify comparison
method, and the results have been shown as Table 2.

Table 2: CMV Test Results

Model 2 DF 2 DF P
Single-Factor 1326.2 97
884.8 99 0.000
Multiple-Factor 441.4 196

Source: This study

Overall Fit Certification Black56, classifies the measurement of the

overall model fit into three categories, i.e. measures
After the literature review and the factor analysis on of absolute fit, increment fit and parsimonious fit.
sampled data, this study constructs the overall model Table 3 shows the results of the overall fit tests57
and, as suggested by Hair, Anderson, Tatham, , and
.
Table 3 Test Results Regarding Fit of the Overall Model

Fit measures Criteria Research results

GFI >0.9 0.913
Absolute fit AGFI >0.8 0.882
RMR <0.05 0.013
NFI >0.9 0.921
Increment fit
CFI >0.9 0.913
PNFI >0.5 0.613
Parsimonious fit
PGFI >0.5 0.611
Source: This study

Measurement System within Model construct variable) can evaluate the main construct.
All the factor loading values of individual dimensions
The factor loading of latent (implicit) variables (i.e. in this study are greater than 0.7, indicating strong
main constructs) and manifest (explicit) variables reliability. Therefore, all the sub-dimensions
(i.e. sub-constructs) measures the strength of linear (manifest variables) in the measurement system can
correlation between individual latent variables and appropriately evaluate the main constructs (latent
manifest variables. The closer the factor loading is to variables). Meanwhile, Average Variance Extracted
1, the better the measurement variable (or sub-

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(AVE) expresses the explanatory power of latent error58. All the factor loading values in this
variables on measured items. The higher the AVE, study are higher than 0.7, Composite Reliability
the better reliability and convergent validity the latent (C.R.) and Cronbachs also greater than 0.7. All the
variables are. Usually, the AVE value must be greater AVE values exceed 0.5, suggesting the latent/implicit
than 0.5, indicating the explained variance of the variables carry high reliability and convergent
construct concerned is greater than measurement validity (Table 3, Table 4 and Figure 2).

Table 4 Criteria for Measurement System in Model

Sub-dimension (or Factor Composite Average Variance

Main dimension Cronbachs
measurement) loading Reliability, C. R. Extracted
.822
Employee satisfaction
Employee Loyalty
Employee .833 .831 .673
(EL)
commitment to the .841
organization
Identification with the
.831
organization
Organizational Colleague assistance) .833
Citizenship Behavior .831 .824 .671
(OCB) Absence of selfish
.832
pursuit of profits
Dedication to work) .834
Affective .854
Organizational
commitments Continued .842 .844 .834 .674
(OC) Normative .844

Organizational EPS .863

performance .871 .863 .671
(OP) ROE .872

Source: This study and Fornell et al58

the dimensions. Table 5 indicates the presence of

discriminant validity between the dimensions such as
In addition, this study refers to AVE to determine employee satisfaction, leadership styles,
discriminant validity of individual dimensions. organizational commitment and organizational
Fornell et al58believed that the AVE of each performance
dimension should be greater than the squared value
of the coefficient of the dimension in question in
order to validate the discriminant validity between

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Table 5 Estimates of confidence interval for discriminant validity

Percentile
2 Bias-corrected
Parameter Estimate method
Lower Upper Lower Upper Lower Upper
EL OC .573 .291 .855 .302 .857 .303 .852
EL OP .162 .131 .194 .134 .202 .193 .211
OC OP .473 .393 .553 .401 .582 .409 .591
OCB OC .531 .407 .655 .411 .662 .413 .663
OCB OP .442 .364 .520 .372 .532 .373 .534
Source: This study

Coefficient of Determination explanatory power of independent variables to

dependent variables. Table 6 shows that the
Coefficient of determination, also known as Squared independent variables in this study exhibit medium
Multiple Correlation (SMC), represents the levels of explanatory power on dependent variables.
Table 6 Path Coefficient of Determination

Coefficients of Determination R2
Employee Loyalty (EL) Organizational Commitment (OC) .441
Employee Loyalty (EL) Organizational Performance (OP) .133
Organizational Commitment (OC) Organizational Performance (OP) .281
Organizational Citizenship Behavior (OCB) Organizational Commitment (OC) .451
Organizational Citizenship Behavior (OCB) Organizational Performance (OP) .283
Source: This study

Path Coefficients of Latent variables coefficients and C.R. values of individual latent
(implicit) variables in Table 7 and Table 8 according
After the validation of the model with internal fit the path analysis results. Figure 2 illustrates the path
tests, this study summarizes the standardized analysis.
Table 7 Results of path analysis on structural model (un-standardized)

Estimate S.E. C.R. P

Employee Loyalty (EL) Organizational Commitment (OC) .573 .129 4.442 ***
Employee Loyalty (EL) Organizational Performance (OP) .162 .102 1.588
Organizational Commitment (OC) Organizational
.473 .112 4.223 ***
Performance (OP)
Organizational Citizenship Behavior (OCB) Organizational
.531 .123 4.317 ***
Commitment (OC)
Organizational Citizenship Behavior (OCB) Organizational
.442 .121 3.653 ***
Performance (OP)
Remarks: *denotes P<0.05; **denotes P<0.01; ***denotes P<0.001.
Source: This study

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Table 8 Standardized Regression Weights: (Group number 1Default model)

Estimate
Employee Loyalty (EL)
Organizational Commitment (OC) .573
Employee Loyalty (EL)
Organizational Performance (OP) .162
Organizational Commitment (OC)
Organizational Performance (OP) .473
Organizational Citizenship Behavior (OCB)
Organizational Commitment
.531
(OC)
Organizational Citizenship Behavior (OCB) Organizational Performance (OP) .442
Remark: *denotes P<0.05; ** denotes P<0.01; ***denotes P<0.001.
Source: This study

e1 e2

e5 e6
EL1 EL2

.84 .82 OC1 OC2

e7 e8
Employee .16
loyalty
OP1 OP2
.57
e3 e4 .84 .85 .86 .87
.33 .47
Organizational Organizational
commitment performance
OCB1 OCB2
.53
.83 .83
E
Organizational .44
citizenship
behavior

Figure 2 Standardized SEM analysis results

Path Effect Analysis & Tests on Structural Model path effect analysis on the path effects in the
structural model. The organizational commitment
This study performs Sobel tests, Bootstrapping and (OC) serves as a dual mediator. Test results are
Mackinnon PRODCLIN2 on the path coefficients of shown in Tables 9 and 105960.
latent variables (or non-observable variables) as the

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Table 9 Intervening variables (un-standardized)

Bootstrapping MacKinnon
Point of Product of
Bias-Corrected Percentile PRODCLIN2
Estimates Coefficients
Variable 95% CI 95% C 95%CI

(Est.) SE Z Lower Upper Lower Upper Lower Upper

Total Effects

ELOC .573 .129 4.442 .731 .911 .521 .822

Indirect Effects
OCOP .473 .112 4.039 .412 .511 .302 .411 . 361 .481
Direct Effects
ELOP .162 .102 1.588 .322 .401 .221 .412
Source: This study

Table 10 Intervening variables (un-standardized)

Bootstrapping
MacKinnon
Point of Product of Bias-Corrected Percentile PRODCLIN2
Variable Estimates Coefficients 95% CI 95% C 95%CI

(Est.) SE Z Lower Upper Lower Upper Lower Upper

Total Effects
OCBOC .531 .123 4.317 .731 .931 .601 .801
Indirect Effects
OCOP .473 .112 4.039 .412 .511 .302 .411 .361 .482
Direct Effects
OCBOP .442 .121 3.653 .321 .421 .302 .392
Source: This study

Based on Figure 2, this study derives the following in Taiwan-listed family businesses. Standardized
conclusions: coefficient is estimated to be 0.47. Therefore, H3 is
substantiated.
(1) Employee loyalty has positive and significant
influence on organizational commitment for (4) Organizational citizenship behavior has positive
employees of Taiwan-listed family businesses. and significant influence on organizational
Standardized coefficient is estimated to be 0.57. commitment in Taiwan-listed family businesses.
Therefore, H1 is substantiated. Standardized coefficient is estimated to be 0.53.
Therefore, H4 is substantiated.
(2) Employee loyalty has positive, but not
significant, influence on organizational performance (5) Organizational citizenship behavior has
for employees of Taiwan-listed family businesses. significant influence on organizational performance
Standardized coefficient is estimated to be 0.16. in Taiwan-listed family businesses. Standardized
Therefore, H2 is substantiated. coefficient is estimated to be 0.44. Therefore, H5 is
substantiated.
(3) Organizational commitment has positive and
significant influence on organizational performance

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These above results suggest that organizational

commitment serves partly as a dual mediator. This
also implies that organizational commitment plays a (4) Effects of organizational citizenship behavior on
pivotal role in the promotion of organizational organizational commitment in Taiwan-listed family
performance. However, the improvement of businesses
organizational performance takes more than just
organizational commitment. It is necessary to push The research findings support H4 that organizational
for performance improvements via other means. citizenship behavior has positive and significant
effects on organizational commitment in Taiwan-
CONCLUSIONS AND SUGGESTIONS listed family businesses. This is in line with Lo46
.
This section reaches conclusions on the basis of the
above analysis and findings, and elaborates on the (5) Effects of organizational citizenship behavior on
contribution of this study. Finally, the research organizational performance in Taiwan-listed family
limitations are summarized and the suggestions to businesses
follow-up studies are made.
The research findings support H5 that organizational
Conclusions citizenship behavior has positive and significant
effects on organizational performance in Taiwan-
In sum, this study interviews the section chiefs and listed family businesses. This is consistent with Wu
managers working in Taiwan-listed family businesses et al47, Chang 48, Huang21, Hsieh
in order to develop an SEM model to validate the 49, Li 50 and Hsiao51.
research hypotheses. The following is the research
conclusions: Research Contributions
(1) Effects of employee loyalty on organizational (1) This study constructs a model with two causes,
commitment in Taiwan-listed family businesses one effect and one mediator. The model is based on
relevant studies and validated for the goodness-of-fit
The research findings support H1 that employee effects. Hence, it adopts a CFA (Confirmatory Factor
loyalty has positive and significant effects on Analysis) approach on an important real-life issue
organizational commitment in Taiwan-listed family with an innovative approach. It is suggested that
businesses. This is in line with Wu et al7. follow-up studies continue to explore relevant topics
and further examinations.
(2) Effects of employee loyalty on organizational
performance in Taiwan-listed family businesses (2) This study completes a series of tests on the
reliability and the validity on the model dimensions
The research findings support H2 that employee for the questionnaire and conducts CMV analysis and
loyalty has positive but not significant effects on tests. The statistical approach and the research
organizational performance in Taiwan-listed family methodology are pragmatic and creative.
businesses. This is consistent with Chao34and
Mowday et al35. (3) The results of this study may serve as a reference
to help the management staff of Taiwan-listed family
(3) Effects of organizational commitment on businesses with their strategic thinking when
organizational performance in Taiwan-listed family considering improving employee loyalty,
businesses organizational citizenship behavior, and
organizational commitment, while hopefully
The research findings support H3 that organizational improving their organizational performance as a
commitment has positive and significant effects on result of these improvements.
organizational performance in Taiwan-listed family
businesses. This is in agreement with Steers36,
Mowday et al35, Mathieu et al 37, Chou
39and Chao34.

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Research Limitations Administration, National Chung Hsing

University.
This study suffers from limited resources, although it 4. Zhang, L. (2008). A Study on the
seeks to complete all the stages of research tasks in a Relationship between Family Businesses'
manner as robust as possible. Below is a list of Human Resource Strategies, Organizational
research limitations: Learning and Organizational Citizenship
Behavior. China: Masters degree thesis,
(1) There are limited studies in Taiwan and overseas Zhejiang University.
on the research dimensions developed in this study 5. 1111 Job Bank (2013),
and very few papers address the pairwise dimensions http://hr.1111.com.tw/knowledgeDetail.asp?
as in this study. This is why the supporting data kind=22&lno=1749
seems inadequate for hypothesis development. 6. Chang, Y. C. (2012). A Research of the
Moderating Effect of Global Teamwork in
(2) This study uses simple random sampling and Terms of Salary Incentive, Job Satisfaction,
issues the questionnaires via post. As a result, the Employee Loyalty and Organizational
effective recovery rate is low and the sample may not Commitment. Taiwan: Masters degree
be representative of the population. thesis of International Business
Management, Department of Business
(3) Due to research resource limitations, this study
Administration, National Changhua
only samples the Taiwan-listed family businesses.
University of Education.
The research scope does not cover all the small-and-
7. Wu, J .D., Yang, Z. K., and Chen, Y. J.
medium size family businesses in Taiwan.
(October 2014). Business Management and
Suggestions to Follow-up Studies Marketing Innovation Symposium. Taiwan:
Organized by the Marketing Management
This study only interviews the section chiefs and Department of Shu-Te University (October
managers working in the Taiwan-listed family 24, 2014).
businesses. To broaden the scope of data or seek 8. Dai, S. Y. (2014). Published on Business
innovative approaches, follow-up studies may Weekly,
examine the players of different sizes in the same http://www.businessweekly.com.tw/default.
industry such as the small-and-medium sized family htm?20141027205305.
businesses or investigate other industries for 9. Dai, K. H. (2002). Relationships between
comparisons and analyses. Transformational Leadership, Transactional
Leadership, Employee Trust, Job
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