Journal of International Trade, Logistics and Law, Vol. 7, Num. 1, 2021, 105-112 105 THE EFFECT OF ORGANIZATIONAL COMMITMENT ON FIRM PERFORMANCE: INTERGENERATIONAL DIFFERENCES Muhammed Erdem SALAMCİ Istanbul Commerce University, Turkey Okşan KİBRİTÇİ ARTAR Istanbul Commerce University, Turkey Received: Feb 02, 2021 Accepted: May 30, 2021 Published: June 15, 2021 Abstract: The main purpose of this research is to determine the effects of the sub-dimensions of organizational commitment (affective, continuance, and normative) on the concept of firm performance. Another aim of the study is to determine whether the sub-dimensions of organizational commitment differ in intergenerational. Within the scope of this aim, employees in banking sector were identified as “population”. This survey was applied to 209 employees in the banking sector in April 2021. Survey results were analyzed by the SPSS-20 program. As a result of the analysis, it was determined that affective commitment does not have a significant effect on firm performance. It has been shows that continuance commitment has a negative and significant effect on firm performance. Also, normative commitment has a posit ive and significant effect on firm performance. Finally, it was concluded that there was no difference in the affective commitment, continuance commitment, and normative commitment levels of bank employees belonging to the X and Y generations. Keywords: Organizational Commitment, Firm Performance, Intergenerational Differences 1. Introduction Today's technological development and competitive environment have made the concept of organizational commitment very important in the sustainability of organizations and in the ability to take steps towards the future. Employees need to keep up and adapt to the economic, political and cultural reforms that are taking place rapidly in the banking sector or other sectors. In such an environment, the concept of organizational commitment, which has an effect on the behavior and values of employees, becomes more important. The concept of organizational commitment is one of the concepts that researchers show the most interest and relevance among contemporary managerial concepts. This concept has been the subject of research in many countries, especially in the United States. Nowadays, Turkish researchers have done many studies on this concept. In these studies, the topic of organizational commitment has often been associated with another concept. In this study, firm performance and intergenerational differences concepts were examined along with the concept of organizational commitment. In this context, the effect of the sub-dimensions of organizational commitment (affective, continuance, and normative) on firm performance was examined in the banking sector. It was also determined whether the concept of organizational commitment differed in intergenerational. 2. Basic Concepts Related to Organizational Commitment 2.1. Organizational Commitment Concept Organization is defined as “a union formed by institutions or persons who have come together to achieve a common goal or work” in the dictionary of the Turkish Language Association (TDK Sözlükleri, 2020). According to another definition, organization is expressed as social units established to achieve certain goals (Etzioni, 1964). Commitment means “to feel affection, respect, closeness, and loyalty towards someone” in the dictionary of the Turkish Language Association (TDK Sözlükleri, 2020). It is also defined as an obligation to show commitment to a Muhammed Erdem SALAMCİ & Okşan KİBRİTÇİ ARTAR 106 person, a thought, an institution, something that we see as greater than ourselves (Ardıç and Çöl, 2008). According to Salancik (1977), commitment is the identification of one's own behavior with another person. Organizational commitment is expressed as an individual's approach to an organization based on their psychological state (Allen and Meyer, 1990). According to another statement, organizational commitment is expressed as the attitude of the employee towards his / her organization. Also, it is said as the integration of the organization and the employee (Sheldon, 1971; Hall et al., 1970). 3. Basic Concepts Related to Firm Performance 3.1. Firm Performance Concept The concept of firm performance is often encountered in studies related to management. This concept is mostly preferred as the dependent variable in the models of theses. Although it is a concept that has been emphasized too much in the literature, there is no consensus on its definition and measurement (Taouab and Issor, 2019). Firm performance is defined as the achievement of the economic targets of the enterprises (Venkatraman and Ramanujam, 1986). According to another definition, firm performance is the ability to achieve goals determined as a result of the effective and efficient use of inputs (Tül and Çemberci, 2019). Firm performance measurements help to show the degree to which predetermined goals are being approached. It also reveals what businesses need to be sustainable and competitive (Griffin, 2003). 4. Basic Concepts Related to Intergenerational Differences 4.1. Generation Concept The generation is defined as “the community of people who were born in approximately the same years and who shared the conditions of the same age, thus similar troubles and destinies” in the Philosophical Sciences Dictionary of the Turkish Language Association (TDK Sözlükleri, 2020). This concept also is expressed as “individuals who form approximately 25–30 years age groups: cluster, belly, generation and abdomen” in the social science dictionary of the Turkish Language Association (TDK Sözlükleri, 2020). Nowadays, it is accepted that there are five generations with different characteristics. These generations in the literature; It has been named the Silent Generation, Baby Boomers, Generation X, Generation Y, and Generation Z. It is stated that these generations work together in organizational environments in literature. However, it is said that many of the representatives of the Silent Generation and Baby Boomers retire due to their aging. Also, it is stated that members belonging to Generation z are not present in organizations due to their young age. 5. Methodology 5.1. Population and Sampling The population of the research is those working in the banking sector in Turkey. According to the data announced by the Banks Association of Turkey in September 2020, the number of people working in the banking sector in Turkey is 186.654. In this context, the population of the research is 186.654 workers. The sample of the study was determined to be at least 196 people with a 95% confidence interval and 7% margin of error, based on 186 thousand 654 employees, which are considered as the population. 213 people participated in the survey. But the survey of 4 participants was deemed invalid. The participation of 209 people in the sample, which was determined as at least 196 people, makes the sample reliable. 5.2. Model and Hypothesis The model of the research consists of three independent and one dependent variable. Affective commitment, continuance commitment, and normative commitment are the independent variables, while firm performance is the dependent variable. The model of the research is shown in Figure 1 below. The Effect of Organizational Commitment on Firm Performance: Intergenerational Differences 107 Figure 1 Model of Research The research is based on three main hypotheses: H1: Affective commitment has a negative effect on firm performance. H2: Continuance commitment has a negative effect on firm performance. H3: Normative commitment has a positive effect on firm performance. 5.3. Data Analysis Techniques The demographic information of the employees was determined by frequency analysis. Factor analysis was conducted to determine the factors of the scale. Cronbach's alpha method was used to determine the reliability levels of the factors. The arithmetic mean and standard deviation of each factor were taken to determine the participants' approach to the questions. Independent sample T-test tests were conducted to test whether affective commitment, continuance commitment, and normative commitment levels differ on the X and Y generations. Multiple regression method was used to determine the effect of organizational commitment on firm performance. (Note: Analyzes were made in the SPSS-20 program.) 6. Results of Statistical Analysis In this section, the statistical analysis of the data obtained from the survey has been made. While doing the analysis, it was made in line with the references in the literature. Frequencies analysis, factor analysis, reliability analysis, descriptive statistics, independent-sample t-test, and multiple regression were applied, respectively. They are explained below: 6.1. Frequencies Analysis Frequency analysis is a statistical analysis technique that shows the observation frequency and percentage distribution of data. Demographic characteristics and survey items can be evaluated by frequency analysis (Bayrak, 2019). Accordingly, Frequency analysis was performed that the demographic characteristics of the participants such as gender, year of birth, education, experience in the industry, and length of service at his current organization. The results are in Table 1 below: Affective Commitment Continuance Commitment Normative Commitment Firm Performance H2 Organizational Commitment Muhammed Erdem SALAMCİ & Okşan KİBRİTÇİ ARTAR 108 Table 1 Demographic Characteristics of the Participants Frequency (N) Percent (%) Gender Female 40 19,1 Male 169 80,9 Total 209 100,0 Year of Birth 1965-1980 (Gen X) 31 14,8 1981-1999 (Gen Y) 178 85,2 Total 209 100,0 Education High School 10 4,8 Associate degree 1 0,5 Bachelor's degree 149 71,3 Master's/Doctor’s degree 49 23,4 Total 209 100,0 Experience in the Industry Less than 1 year 7 3,3 1-5 years 44 21,1 6-10 years 62 29,7 11-15 years 79 37,8 More than 16 years 17 8,1 Total 209 100,0 Length of Service at His Current Organization Less than 1 year 12 5,7 1-5 years 50 23,9 6-10 years 66 31,6 11-15 years 66 31,6 More than 16 years 15 7,2 Total 209 100,0 6.2. Factor Analysis KMO and Bartlett's test was used to test whether the variables in the survey are suitable for factor analysis. As KMO coefficient approaches 1, it means that the data obtained are suitable for factor analysis. Besides, when KMO coefficient is 1, it means that the survey is quite suitable for factor analysis. According to Erkasap (2020) if the KMO coefficient is greater than 0,60 and the significance level of Bartlett complies with the p <0,05 rule, it means that the data in the survey are suitable for factor analysis. As a result of the analysis, the KMO value was found to be 0,866 and the significance level of Bartlett to be 0,000. The KMO coefficient was higher than the given reference value and Bartlett's level of significance was lower than p <0,05. In this context, the scale of this research is accepted to be suitable for factor analysis. After determining the suitability of the data for factor analysis, Varimax with Kaiser Normalization factor analysis was performed. While The Effect of Organizational Commitment on Firm Performance: Intergenerational Differences 109 obtaining the result of factor analysis, principal component analysis was used as extraction method and Varimax with Kaiser Normalization was used as rotation method. The fact that the value of each item obtained from factor analysis is above 0,50 indicates that the scale is a reliable scale (Erkasap, 2020). However, as a result of the analysis, the value of 5 items in the scale was less than 0,50, so these five questions were removed from the survey and after that factor analysis has been done again. As a result of the factor analysis, it was observed that there were 4 factors. These factors are firm performance, normative commitment, continuance commitment, and affective commitment respectively. In addition, as a result of the factor analysis, firm performance, normative commitment, continuance commitment and affective commitment factors explain 66,896% of the total variance. 6.3. Reliability Analysis Cronbach's Alpha coefficient is accepted as a measure of the internal consistency of the items in the scale and is used to question or interpret the homogeneity of the items in the scale (Yıldız and Uzunsakal, 2018). The results of Cronbach's Alpha test are given in Table 2 below: Table 2 Results of Cronbach’s Alpha test Factor Cronbach’s Alpha N of Items Firm Performance 0,951 13 Normative Commitment 0,791 4 Continuance Commitment 0,799 5 Affective Commitment 0,893 3 As seen in Table 2, Cronbach's Alpha Coefficient was found to be 0,951 for firm performance, 0,791 for normative commitment, 0,799 for continuance commitment, and 0,893 for affective commitment. In this context, firm performance and affective commitment factors were accepted as “highly reliable”. Normative commitment and continuance commitment factors were accepted as “reliable”. 6.4. Descriptive Statistics In this section, the mean and standard deviation of each sub-dimension were calculated to determine the levels of the factors. The mean and standard deviation of firm performance, normative commitment, continuance commitment and affective commitment factors are given in Table 3 below: Table 3 Mean and standard deviations of the factors Factor Mean Standard deviation N of Items Firm Performance 2,97 0,91 13 Normative Commitment 3,39 0,94 4 Continuance Commitment 3,24 0,98 5 Affective Commitment 3,65 1,27 3 6.5. Independent Sample T- Test In this part of the study, the independent sample T-test was used to examine whether the factors of normative commitment, continuance commitment, and affective commitment differ on generations X and Y. Levene’s test is used to test the homogeneity of variances in the independent sample t-test. H0 hypothesis means there is no difference between variances, and Ha hypothesis means that there are differences between variances. If p <0,05, the H0 hypothesis is rejected. But if p> 0,05, the H0 hypothesis is accepted, so we can conclude that the variances are homogeneous (Tirendaz Akademi, 2019). Muhammed Erdem SALAMCİ & Okşan KİBRİTÇİ ARTAR 110 When you do the independent sample t-test, you should look at the significance (2-tailed) part to learn the result of the analysis. If the significance (2-tailed)> 0,05, the averages obtained in the sample groups are considered to be equal to each other. However, if the significance (2-tailed) <0,05, it is accepted that the averages obtained in the sample groups are not equal to each other (Arslan, 2020). In this context, the results of the independent sample t-test are given in the table 4 below: Table 4 Results of Independent Sample T-Test Factor Levene’s Test for Equality of Variances T-test for Equality of Means Sig. Sig. (2- tailed) Normative Commitment ,125 ,058 Continuance Commitment ,232 ,644 Affective Commitment ,237 ,649 According to results of Levene in Table 4, It was accepted that variances were homogeneously distributed in the levels of normative commitment, continuance commitment and affective commitment. According to results of T-Test in Table 4, It has been concluded that there is no difference in normative commitment, continuance commitment and affective commitment levels among bank employees belonging to the X and Y generations. 6.6. Multiple Regression and Hypothesis Tests Multiple regression analysis was conducted to test the hypotheses of the research. Effects of the independent variables on the dependent variable were examined in the regression analysis. Affective commitment, continuance commitment, and normative commitment are the independent variables, while firm performance is the dependent variable. The results of the regression analysis are given in Table 5 below: Table 5 Results of Regression Analysis Independent variables β Sig. Affective Commitment -,047 ,333 Continuance Commitment -,127 ,050 Normative Commitment ,341 ,000 Dependent variable: Firm performance, F= 8,704 Sig= ,000 R2 = 0,113 According to the regression results in Table 5, it is accepted that the model is significant as a whole (F = 8,704, sig <0,05). The firm performance variable of affective commitment, continuance commitment, and normative commitment variables explain 11,3% (R2= 0,113). As a result of the analysis, it was determined that affective commitment does not have a significant effect on firm performance (β= -,047, sig.=,333). It has been determined that continuance commitment has a negative and significant effect on firm performance (β= -,127, sig.=,050). Normative commitment has a positive and significant effect on firm performance (β= ,341 sig.=,000). In this context, while H2 and H3 are supporting, there is no evidence for the accuracy of H1. The Effect of Organizational Commitment on Firm Performance: Intergenerational Differences 111 Table 6 Results of Hypotheses Hypotheses Results H1: Affective commitment has a negative effect on firm performance. Not Accepted H2: Continuance commitment has a negative effect on firm performance. Accepted H3: Normative commitment has a positive effect on firm performance. Accepted 7. Conclusions The aim of the research is to examine the effect of organizational commitment on firm performance in the banking sector. Another aim of the research is to determine whether organizational commitment differs generations. Also, it is to examine demographic variables such as gender, education level, experience in the industry and length of service. The independent sample T-test was used to examine whether the factors of normative commitment, continuance commitment, and affective commitment differ on generations X and Y. As a result of the independent sample T test, it was concluded that there is no difference in the levels of normative commitment, continuance commitment and affective commitment among bank employees belonging to the X and Y generations. Multiple regression method was used to determine the effect of organizational commitment on firm performance. As a result of the analysis, it was determined that affective commitment does not have a significant effect on firm performance, and it shows that continuance commitment has a negative and significant effect on firm performance. Finally, normative commitment has a positive and significant effect on firm performance. There are many studies on the concepts of organizational commitment, firm performance and intergenerational differences in the literature, but there was no study that examined all these concepts in the banking sector. Therefore, it is believed that the results obtained in this study will shed light on future studies on the concept of organizatio nal commitment, firm performance and intergenerational differences. In addition, the generation Z will begin business life in the near future, and the researchers will conduct research on the organizational life of the Z generation. It is thought that comparing the results obtained from future research with the findings obtained from this research will help us see to what extent generations have changed. References References Allen, N. J. & Meyer, J. P., 1990. The Measurement and Antecedents of Affective, Continuance and Normative Commitment to the Organization. Journal of Occupational Psychology, Cilt 63, pp. 1-18. Ardıç, K. & Çöl, G., 2008. 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