International Journal of Commerce and Finance, Vol. 2, Issue 1, 2016, 113-123 THE EFFECT OF CORPORATION REPUTATION ON ORGANIZATIONAL CITIZENSHIP BEHAVIOUR Abdülkadir Akturan, (Ph.D.), Turkish Land Forces Command Neslihan Sevik, (Res Asst.) Kocaeli University Abstract: There is a growing interest of academicians and practitioners for corporate reputation since it is an important factor, which creates beneficial outcomes for the firms. In the literature, corporate reputation is studied on the ground of external stakeholders. However, employees as internal stakeholders are also as important as the external ones, and we know little about how corporate reputation affects employees’ organizational behaviors. This study purposes to fulfill that gap and aims to identify the effect of corporate reputation an organizational citizenship behavior (OCB). As a result of the study, it was found that corporation reputation positively affects altruism, courtesy, civic virtue and consciousness while does not have any influence on sportsmanship Keywords: Corporate Reputation, Organizational Citizenship Behavior, SEM 1. Introduction There are various definitions and core concepts identified as basis of corporation reputation. Whetten and Mackey (2002) discuss that corporation reputation is a particular type of feedback, received by an organization from its stakeholders, concerning the credibility of the organization’s identity claims (p. 401). Fombrun (1996) emphasizes that corporate reputation represents the net affective or emotional reaction. On that ground, it is an overall estimation derived from the extent to which the firm is well known; such as good or bad, reliable, trustworthy, reputable and believable (Brown, 1995; Levitt, 1965). Weigelt and Camerer (1988) group these attributes as economic and non-economic variables and besides that define a third attribute as firms’ past actions. There are differing approaches for corporation reputation. Economists look at reputation as either traits or signals. According to game theorists, reputation is a character trait, which helps firms to distinguish themselves form other firms. For signaling theorists, reputation has an informational content. On that ground both, game theorists and signaling theorists, acknowledge that reputations are actually perceptions held by external stakeholders (Fombrun and van Riel, 1997). Corporation reputation is a multidimensional concept. Firm size positively affects corporation reputation such as bigger firms possess higher reputation (Fombrun and Shanley, 1990). Accounting performance and the firms’s risk profile positively influence reputation (Roberts and Dowling, 2002). Besides media exposure, advertising, corporate social responsibility and community involvement are found to affect reputation (Bromley, 1993; Fombrun and Shanley, 1990; Garbett, 1988; (Sabate and Puente, 2003). Corporation reputation creates several consequences for firms. If it is a positive perception then it yields to beneficial outcomes (Caruana and Chipcop, 2000). Corporation reputation positively influences the attitude of buyers (Brown, 1995), and the intention to purchase a service (Yoon et al., 1993). Firms with positive reputation attract investors, have a low cost of capital and a strong competitive ability (Fombrun and Shanley, 1990). Moreover, it positively affects perceived product quality and creates a barrier in the industry for competitor entry (Weigelt and Camerer, In te rn a ti o n a l Jo u rn a l o f C o m m e rc e a n d F in a n c e 114 Abdülkadir AKTURAN, Neslihan ŞEVİK http://ijcf.ticaret.edu.tr 1988). It has also been related to organization identification of employees. Since it provides a structure for attracting quality personnel, it is also linked to the inter-organizational co-operation or OCB (Dutton et al., 1994). 2. Theoretical Framework 2.1. Corporation Reputation There are various definitions and core concepts identified as basis of corporation reputation. Whetten and Mackey (2002) discuss that corporation reputation is a particular type of feedback, received by an organization from its stakeholders, concerning the credibility of the organization’s identity claims (p. 401). Fombrun (1996) emphasizes that corporate reputation represents the net affective or emotional reaction. On that ground, it is an overall estimation derived from the extent to which the firm is well known; such as good or bad, reliable, trustworthy, reputable and believable (Brown, 1995; Levitt, 1965). Weigelt and Camerer (1988) group these attributes as economic and non-economic variables and besides that define a third attribute as firms’ past actions. There are differing approaches for corporation reputation. Economists look at reputation as either traits or signals. According to game theorists, reputation is a character trait, which helps firms to distinguish themselves form other firms. For signaling theorists, reputation has an informational content. On that ground both, game theorists and signaling theorists, acknowledge that reputations are actually perceptions held by external stakeholders (Fombrun and van Riel, 1997). Corporation reputation is a multidimensional concept. Firm size positively affects corporation reputation such as bigger firms possess higher reputation (Fombrun and Shanley, 1990). Accounting performance and the firms’s risk profile positively influence reputation (Roberts and Dowling, 2002). Besides media exposure, advertising, corporate social responsibility and community involvement are found to affect reputation (Bromley, 1993; Fombrun and Shanley, 1990; Garbett, 1988; (Sabate and Puente, 2003). 2.2. Organizational Citizenship Behaviour (OCB) OCB is defined as “individual behavior that is discretionary, not directly or explicitly recognized by the formal reward system, and that in the aggregate promotes the effective functioning of the organization” (Organ 1988, p4). In the case of OCB, it is important that the employees believe their manager will fairly reward and recognize OCBs. The employees display and sustain OCBs (Allen and Rush 1998; Haworth and Levy 2001). OCB is a multidimensional concept including five dimensions (Organ 1988). These are altruism, courtesy, conscientiousness, sportsmanship, and civic virtue. Alturism means voluntarily helping other members of the organization to accomplish relevant tasks and solve problems in the organization. Conscientiousness involves the least amount of duties required by the contracted role such as not wasting time or organizational resources, staying late to help with a project, or volunteering to coordinate activities. Civic virtue is the willingness of employees to engage with the organization and show an interest in improving organizational processes and efficiency. Sportsmanship is demonstrating tolerance and abstaining from complaining or creating injustice in the organizational working environment. Finally, courtesy includes preventing work-related problems with other members by taking action. In that sense employees try to avoid conflicts among decisions and employees. OCB is a personal choice (Chiu and Chen, 2005), but is is important since it have a positive effect on organizations. There are three main motives underlining OCB (Rioux and Penner 2001). These are (1) pro-social values, (2) organizational concern, and (3) impression management. Pro-social values constitute desire to help other and gain acceptance. Organizational concern is the pride in and care for the organization. And finally impression management is the desire to create and maintain a positive image. Employees who have a positive corporate reputation perception are positively motivated to display pro-social behaviors (Çekmecelioğlu ve Dinçel, 2014: 83). Corporation reputation provides organizational commitment The Effect Of Corporation Reputation On Organizational Citizenship Behaviour 115 http://ijcf.ticaret.edu.tr especially for the employees and thus the employees adopt organizational identity while becoming integrated with the firm (Romenti, 2010). The reputation that the corporation has in the society is also projected to the employees as a positive outcome (Çekmecelioğlu ve Dinçel, 2014). When employees recognize a favorable reputation to their organization, they are more prone to generate belief-consistent feelings of identification, such as continuing to work at the company and support various voluntary, extra-role behaviors to improve service delivery or provide valuable suggestions to the firm (Morhart et al., 2009). On that ground the research model is as seen in Figure 1. Figure 1: Research Model And the research hypothesis are formulated as follows H1: Corporate reputation positively affects civic virtue. H2: Corporate reputation positively affects altruism. H3: Corporate reputation positively affects consciousness. H4: Corporate reputation positively affects sportsmanship. H5: Corporate reputation positively affects courtesy. 3. Research Methodology Sampling and Measurement The data was collected from Kocaeli University students via face-to-face survey. A total of 458 valid and complete responses were included in the final analysis. The demographic and socio-economic variables of the respondents indicate that they are from both gender (with 38.7 % being female while 61.3 % being male), and they have an age range of 19-33. The constructs were measured by using established scales. Corporate reputation was measured by Walker’s (2010) scale, and OCB was measured by Padsakoff et al. (1990) scale. Corporate reputation was measured via eigth items while OCB was measured via 24 items. The research hypothesis was tested via Structural Equation Modeling by using SPSS 13.0 ve AMOS 6.0. Structural equation modelling combines the casual relationship among the variables in regression model with the factor structures obtained from the factor analysis (Babin et al., 1999). Yet all, SEM techniques are distinguished by two characteristics: (1) estimation of multiple and interrelated dependence Organizational Repuation Organizational Citizenship Behaviour Altruism Courtesy Sportsmanship Civic virtue Consciousness 116 Abdülkadir AKTURAN, Neslihan ŞEVİK http://ijcf.ticaret.edu.tr relationships and (2) the ability to represent unobserved concepts in these relationships and account for measurement error in the estimation process (Hair et al., 1998). 4. Research Findings In the study, before testing the hypothesized relationships, the reliability of the scales was evaluated by Cronbach’s alpha coeffficient. In Table 1 the results of the reliability analysis were given and as it is seen that Cronbach’s alpha coefficient is 0.901 for corporate reputation and 0,843 for OCB. Both value are found as above the minimum required level of 0.70. Table 1: Reliability Analysis Ölçekler Değişken Sayısı Alfa Katsayısı (Güvenilirlik Analizi) Corporation Reputation 8 0,901 OCB 24 0,843 After determining the internal consistency of the scales used in the research, the OCB is tested via confirmatory factor analysis. As a result of the confirmatory factor analysis, seven items were deleted from OCB scale. The final measurement model is presented in Figure 2. Figure 2: Model for Confirmatory Factor Analysis of OCB In Table 2, the variables used in the confirmatory factor analysis were given. As it is seen in Table 2, in total 39 variables were used in the study. 17 of these variables are observed variables, while 22 of them are unobserved variables. The exogenous variables are 22 and consist observed variable and hidden. The endogenous variables are 17 and consist of error terms. The Effect Of Corporation Reputation On Organizational Citizenship Behaviour 117 http://ijcf.ticaret.edu.tr Table 2: The Variables Included in The Confirmatory Factor Analysis Total variables 39 Observed variables 17 Unobserved variables 22 Exogenous variables 22 Endogenous variables 17 The goodness of fit measures found in the confirmatory factor analysis was presented in Table 3. Table 3: Goodness of Fit Measures for Confirmatory Factor Analysis Fit Measures Measurement Model Ideal Model 2) 198,207 0.000 CMIN Degrees of freedom 153 0 DF P 0,000 P 2/sd) 1,888 CMINDF Goodness of Fit 0,923 GFI Adjusted Goodness of Fit 0,887 AGFI Normed fit index 0,910 1.000 NFI Relative fit index 0,983 RFI Incremental fit index 0,988 1.000 IFI Tucker-Lewis index 0,941 TLI Comparative fit index 0,955 1.000 CFI RMSEA 0,055 0,05