Antecedents and Consequences of Employee Loyalty towards the Organization: Empirical Evidence from Indian Software Industry

Sreejesh S,Tavleen Nagra

doi:10.32890/ijms.18.2.2011.10344

Abstract

Although substantial differences exists between employee commitment and loyalty, none of the studies made an attempt to understand these constructs separately and analyse the causes and consequences of employee loyalty. In this context, the present study attempts to investigate the antecedents and consequences of employee loyalty in the software industry context. The findings of this paper indicate that employee engagement, satisfaction and commitment have positive and significant impacts on employee loyalty and are considered to be the significant causes for predicting employee loyalty; at the same time the consequences of employee loyalty such as absenteeism and intention to quit do not have any significant effect. However, the study finds that employee satisfaction has a significant effect on the intention to quit via employee absenteeism. The paper shows that, from the managerial perspective, it is necessary for employers and policy-makers to know the causes and consequences of employee loyalty to retain the employees in the long run. The findings of the study suggest that, in order to develop commitment and thereby loyalty, the employer should create a congenial atmosphere for employee engagement and should create satisfied employees. At the same time, this created satisfaction will reduce employee absenteeism and the intention quit. Thus, the attention of the software-employee management should fruitfully focus on the development of employee engagement, satisfaction and commitment, which will ultimately lead to employee loyalty. Keywords: Customer engagement, job satisfaction, commitment, loyalty, absenteeism, intention to quit.

Highlights

There has been a great deal of enthusiasm for building employee loyalty among employers because of its ability to predict behaviours such as attendance, turnover, and organizational citizenship (Schalk & Freese, 1997)
In those companies the knowledge base is important to produce products or services, most work can be said to be intellectual in nature and well-educated; qualified employees form the major part of the work force (Alvesson, 1995; Morris & Empson, 1998; Starbuck, 1992)
Many of the extant literatures suggested PLS (Wold, 1975) as the suitable method for estimating complex models. This suggestion was based on the grounded argument that other widely acceptable techniques that are used to estimate the relationship among the latent variables; especially the co-variance-based structural equation modelling (SEM) introduced by Joreskog (1973) exemplified by many available software programmes, including LISREAL (Joreskog & Sorbom, 1993), AMOS (Arbuckle, 1994), EQS (Bentler, 1995) and Mplus (Muthen & Muthen, 1994) make more strict assumptions on the data

Summary

Introduction

There has been a great deal of enthusiasm for building employee loyalty among employers because of its ability to predict behaviours such as attendance, turnover, and organizational citizenship (Schalk & Freese, 1997). The concept becomes a central concern as the employers seek assurance that empowered or loyal employees will exercise their discretion in the organization’s interests (Tsui, Ashford, Clair & Xin, 1995; Roehling, Roehling & Moen, 2001) especially in knowledge-intensive companies. In those companies the knowledge base is important to produce products or services, most work can be said to be intellectual in nature and well-educated; qualified employees form the major part of the work force (Alvesson, 1995; Morris & Empson, 1998; Starbuck, 1992). Such an employee has the employer’s or the organization’s best interest at heart, and strives to promote that interest (Michalos, 1981)

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Results