FOSTERING COMMITMENT IN SMES IN BOSNIA AND HERZEGOVINA: FACTORS INFLUENCING AFFECTIVE CONTINUANCE AND NORMATIVE COMMITMENT

Abstract

Rewards play a crucial role within the framework of exchange theory, serving as a vital component. By acknowledging and rewarding employees, organizations convey appreciation, fostering an environment conducive to teamwork, heightened productivity, and the attraction of talented professionals. This study delves into the intricate interplay between employees' perceptions of rewards and their impact on the three fundamental components of organizational commitment. Conducted through a survey of small and medium enterprises in the Federation of Bosnia and Herzegovina, this research aims to scrutinize the influence of extrinsic rewards on organizational commitment among employees in this region. The study's core objective is to analyze whether extrinsic rewards play a substantial role in shaping affective, normative, and continuance commitment among employees within Bosnia and Herzegovina's small and medium-sized enterprises (SMEs). The empirical evidence derived from this research substantiates the proposed hypothesis, underscoring the pivotal role of extrinsic rewards in nurturing and sustaining affective, normative, and continuance commitment within SMEs in Bosnia and Herzegovina. Additionally, this investigation sheds light on the precursors contributing to the development of each commitment component. By advancing our understanding of the intricate dynamics between rewards and commitment, this research makes significant contributions to the realms of human resource management (HRM), as well as the interconnected domains of rewards and commitment. Furthermore, the practical implications of these findings are noteworthy, offering valuable insights for practitioners and serving as a practical guide for small and medium-sized enterprises in cultivating a workforce characterized by sustained commitment.