Organization Citizenship Behaviour

RELATIONSHIPS BETWEEN ORGANIZATIONAL CITIZENSHIP BEHAVIORS, EFFICIENCY, AND CUSTOMER SERVICE PERCEPTIONS IN TAIWANESE BANKS

HsiuJu Rebecca Yen
Department of Business Administration
College of Management
Yuan Ze University
135 Far East Rd.
Chung Li, Taiwan
Email: hjyen@saturn.yzu.edu.tw

&

Brian P. Niehoff
Department of Management
101 Calvin Hall
Kansas State University
Manhattan, KS 66506
Phone: (785) 532-4359
FAX: (785) 532-7024 e-mail: niehoff@ksu.edu

Running Head: OCB and Effectiveness

MIDWEST ACADEMY of MGMT
OB/OT Track

RELATIONSHIPS BETWEEN ORGANIZATIONAL CITIZENSHIP BEHAVIORS, EFFICIENCY, AND CUSTOMER SERVICE PERCEPTIONS IN TAIWANESE BANKS

ABSTRACT

Organizational citizenship behaviors (OCB) describe actions in which employees are willing to go above and beyond their prescribed role requirements. Prior theory suggests and some research supports the belief that these behaviors are correlated with indicators of organizational effectiveness. Studies have yet to explore whether relationships between OCB and organizational effectiveness are generalizable to non-U.S. samples. The present study examined relationships between OCB and two indicators of organizational effectiveness -- the efficient use of human resources and perceived service quality – for bank branches in Taiwan. The results supported a relationship between the OCB dimension of altruism and the efficient use of human resources. Implications of these results are discussed.

Key Words: citizenship behaviors, organizational effectiveness, service quality
The effective functioning of an organization depends on employee efforts that extend beyond formal role requirements (Barnard, 1938; Katz & Kahn, 1966; Organ, 1988). Organ (1988) termed these extra efforts “organizational citizenship behaviors” (OCB), and defined them to include activities that target other individuals in the workplace (e.g., helping coworkers or communicating changes that affect others) and the organization itself (e.g., actively participating in group meetings or representing the organization positively to outsiders). A few studies have shown that OCB are positively related to indicators of individual, unit, and organizational performance (George & Bettenhausen, 1990; Karambayya, 1990; MacKenzie, Podsakoff, & Fetter, 1991, 1993; Podsakoff, Ahearne, & MacKenzie, 1997; Podsakoff & MacKenzie, 1994; Walz & Niehoff, 2000; Werner, 1994). These findings, however, have not yet been replicated with samples outside of the U.S. While there have been a number of studies applying the construct of OCB to Eastern cultures (e.g., Farh, Early, & Lin, 1997; Farh, Podsakoff, & Organ, 1990), none have examined whether OCB in such cultures show similar relationships with indicators of organizational performance. If these behaviors are significant antecedents to real firm performance, then managers will need to pay close attention to them and learn to reinforce them appropriately. If their effect is generalizable to other cultures outside the U.S., then appropriate managerial actions that increase OCB should be brought to such cultures. With the globalization of business opportunities, it is critical that U.S. researchers seek to understand the international generalizability of relationships found in U.S. samples.

In addition to the lack of cross-cultural replications, researchers have not determined which indicators of organizational effectiveness should be influenced by employee extra efforts. Organ’s initial assertion simply noted that OCB should impact the effective functioning of the organization. Theorists have noted that “organizational effectiveness” may be assessed using internal or external measures, and that these indicators often do not correlate with each other (Quinn & Rohrbaugh, 1983). For example, an internal measure such as efficiency, or outputs produced relative to inputs utilized, may have little relationship with customer satisfaction, an external assessment of effectiveness.

In his later work, Organ (1988) suggested that high levels of OCB should lead to a more efficient organization and help bring new resources into the organization. In Organ’s explanation, securing needed resources refers not only to the attraction of new members or raw materials, but also to such intangible factors as company good will, or the external image and reputation of the organization. Thus, customer perceptions of the organization’s products or services could be an external assessment of effectiveness that is influenced by OCB. Walz and Niehoff (2000) tested this interpretation and found that dimensions of OCB were indeed significantly related to measures of restaurant efficiency and customer satisfaction in a study of fast food restaurant workers. These findings concerning efficiency and customer satisfaction are compelling, suggesting that as employees help each other and go beyond their prescribed roles for the organization, the organization experiences both internal and external gains. Operations will be smoother and customers will perceive enhanced service.

The present study had two goals. First, the study specifically targeted measures of operational efficiency and customer perceptions of service quality. Walz and Niehoff (2000) examined a broad array of performance measures, and their most significant findings surrounded indicators of efficiency and service quality. The present study will provide some theory base for these effects and test them. Second, the study examined relationships between OCB and indicators of organizational performance in a different cultural setting, namely Taiwan. This replication was needed so that previous findings could be generalized beyond the U.S. Taiwan serves as an excellent starting point for such work since researchers have already developed an indigenous measure of OCB for the Chinese culture.

A Model of OCB and Organizational Effectiveness

Organ (1988) defined OCB as behaviors that are “discretionary, not directly or explicitly recognized by the formal reward system, and that in the aggregate promote the effective functioning of the organization” (p. 4). He identified five categories of OCB: (1) altruism -- the helping of an individual coworker on a task, (2) courtesy -- alerting others in the organization about changes that may affect their work, (3) conscientiousness -- carrying out one’s duties beyond the minimum requirements, (4) sportsmanship -- refraining from complaining about trivial matters, and (5) civic virtue -- participating in the governance of the organization. More recent conceptualizations of OCB offer slightly different categorizations. For example, Podsakoff and MacKenzie (1994) combined aspects of altruism and courtesy and termed it “helping.”

Research on the relationship between OCB and organizational effectiveness has progressed through a variety of interpretations of effectiveness beyond Organ’s (1988) notions of efficiency and the ability to secure needed resources. These studies have generally supported relationships between OCB and individual employee-level performance (MacKenzie et al., 1991, 1993; Werner, 1994), aggregated individual performance (George & Bettenhausen, 1990; Podsakoff & MacKenzie, 1994), and group-level measures of performance (Karambayya, 1990; Podsakoff et al., 1997). Walz and Niehoff (2000) studied the relationship between aggregated levels of OCB and a number of store-level performance measures -- including profitability, operating efficiency, revenue-to-full-time-equivalent, and customer assessments of service quality -- in a chain of 30 fast food restaurants. They found the OCB dimension of helping to be positively related to operating efficiency, revenue-per-employee, quality performance, and customer satisfaction. They also found that all three measured dimensions of OCB (helping, sportsmanship, and civic virtue) were negatively related to customer complaints, while helping and sportsmanship were negatively associated with a measure of food waste. These findings thus supported Organ’s assertion that OCB should be related to some general categories of organizational effectiveness.

Why should OCB influence operational efficiency? Each dimension of OCB offers a different rationale for this relationship. Altruism or helping coworkers makes the work system more productive because one worker can utilize his or her slack time to assist another on a more urgent task. Acts of civic virtue may include offering suggestions for cost improvement or other resource saving ideas, which may directly influencing efficiency. To a lesser extent, conscientiousness employees, as well as those who avoid personal gain or other negative behaviors, demonstrate compliance with company policies and maintain predictable, consistent work schedules, increasing the reliability of the service. As reliability increases, the costs of rework are reduced, making the unit more efficient (Berry & Parasuraman, 1991).

Why should the dimensions of OCB impact customer perceptions of service quality? Altruism encourages teamwork and cooperation, allowing employees to increase the pool of available knowledge. Such teamwork should facilitate the more complex customer service tasks to be accomplished more quickly. Altruism promotes teamwork and cooperation among the employees. Fast service is a valued component in the minds of customers (Stuart, 1994). Case studies in retail and service organizations have found customer satisfaction to be directly affected by employee cooperation behaviors (Davis, 1994; Ferrero, 1994). Excellent customer service also depends on employees being informed with up-to-date knowledge about changes in products or services offered. When employees act on out-dated information, or provide customers with the wrong information, the image of the organization is tarnished. In order to keep all employees knowledgeable and current on products and services, formal training may be necessary (Berry & Parasuraman, 1991), but in addition, all employees must be willing to share, on a timely basis, any information regarding changes in procedures, services, or products. Employees who strongly identify with the company should be interested in maintaining their own and others’ base of knowledge. As stated earlier, conscientious employees who maintain predictable work schedules increase the reliability of the service. Such reliability will help retain customers and increase word-of-mouth marketing (Berry & Parasuraman, 1991). Finally, taking part in unit meetings or providing ideas that enhance customer service would qualify as acts of civic virtue, as long as they are not part of employees' official duties. The quality literature is filled with case examples of employee involvement enhancing customer perceptions of service (e.g., Banas, 1988; Ciampa, 1992; Hammer & Champy, 1993). Thus the linkage between OCB and customer service seems reasonable.
OCB and the Taiwanese Culture The study of OCB in Eastern cultures focused initially on leadership and task antecedents (Farh et al., 1990). This study found that leader fairness was associated with employee exhibition of OCB. Other studies in the U.S. supported OCB as being strongly related to perceptions of procedural and distributive justice (Folger & Konovksy, 1989; Moorman, 1991), suggesting that OCB was a response to a fair exchange between the employee and the supervisor or organization. Farh, Earley, and Lin (1997) commented that concepts of justice vary by people’s cultural values. They hypothesized that, for employees who held traditional Chinese collectivistic values, employees’ perceptions of justice would not be associated with OCB. In this tradition, a person’s feelings of justice or injustice do not enter into their choice to perform citizenship behaviors. Such employees would perform OCB as a matter of culture. Their study supported their hypothesis that traditional values would moderate the relationship between justice perceptions and OCB. To test their hypotheses, they developed a Chinese version of the OCB measure. The Chinese version included the dimensions of altruism, conscientiousness, and civic virtue, but replaced sportsmanship and courtesy with two factors more closely related to the Chinese culture. Interpersonal harmony was one of the new factors, and was described as the avoidance of pursuing personal power and gain in the organization. The second new factor was termed protecting company resources, defined as the avoidance of negative behaviors that abuse company policies and resources for personal use. This five-factor model of OCB was supported and reliabilities for the factors were all strong. Given this model of Chinese OCB, it is necessary to revisit the hypothesized relationships to determine whether they would still obtain in the Taiwanese work environment. It seems evident that OCB and efficiency would be even more closely linked in Taiwan. The collectivistic nature of the Taiwanese culture (Hofstede, 1980) suggests that workers will seek ways to help each other. One’s coworkers are part of the organizational family, and traditional values place great emphasis on such relationships. Similarly, employees who strongly identify with the organization (i.e., high civic virtue) and seek to protect company resources from abuse will do what it takes to improve efficiency. The relationship between OCB and customer service quality in Taiwan is not as clearly predictable as that with efficiency. There are no evident cultural characteristics suggesting that Taiwanese employees who engage in OCB would not be able to impact customer’s perceptions of quality in the same manner as U.S. employees. Many of the OCB activities across the five dimensions are “behind the scenes” activities. They may not be visible to the customer, and their influence on customer service quality is likely to be rather indirect. Thus, there is no clear reason to predict relationships between OCB and customer service quality would differ in a Taiwanese organization compared to those in a U.S. organization. Overall, it is predicted that findings in U.S. organizations concerning the relationships between OCB and organizational effectiveness will be replicated in Taiwan. In addition, the inclusion of COCB in the study of the relationship between OCB and organizational effectiveness represents a new overall direction. It is believed that this more complete model will help sort out the differential effects of OCB and COCB on indicators of effectiveness. The following hypotheses summarize the predictions of the present study:

Hypothesis 1: In a Taiwanese organization, dimensions of OCB will be positively associated with measures of the efficient use of human resources (or negatively associated with the cost of human resources).

Hypothesis 2: In a Taiwanese organization, dimensions of OCB will be positively associated with customer’s perceptions of service quality.
Method

Sample and Data Collection Procedures

Data were gathered from supervisors, customers, and performance records of 26 branches of a retail bank in Taiwan. At each branch, approximately 10 employees were randomly selected from an employee list provided by the human resource department. A total of 251 employees were selected as participants in the study. The sample of employees were equally split between males (49%) and females (51%), 85% of the employees were between the ages of 25 and 39, 61% were single, and 49% had been with the bank for 1 to 3 years. For the present study, no data were gathered directly from the employees. The supervisor of each selected employee completed the measures of OCB for that employee. A total of 92 supervisors participated in the study (many supervisors completed surveys on more than one employee). Also at each branch, approximately 20 customers were randomly selected to complete the measures of customer service quality. A total of 530 customers completed information on service quality, but missing data resulted in a total of 515 valid customer surveys completed. Branch managers provided information on the cost of human resource usage and profitability for each branch.

Measures

Organizational Citizenship Behavior. The measure was comprised of the 22-item scale from Farh et al. (1997). This measure assesses 5 dimensions of OCB including altruism, conscientiousness, civic virtue (identification with the company), interpersonal harmony, and protecting company resources. This measure was specifically developed for use in Eastern cultures. Responses to all items were on a 5-point scale ranging from (1) strongly disagree to (7) strongly agree. Customer Perceptions of Service Quality. Three measures were used to assess different aspects of customer perceptions of service quality. First, the reliability of service was measured using the Parasuraman, Zeithaml, & Berry (1988) 4-item dimension of reliability. Second, perceived support for customers, which reflects customers’ perceptions of the support they receive from employees, was measured using the 14 items adapted by Bettencourt (1997) from the measure of perceived organizational support developed by Eisenberger, Fasolo, & Davis-LaMastro (1990). Third, customers’ trust in the company was measured using a 9-item scale developed by Crosby, Evans, and Cowels (1990). All three scales were measured with 5-point scales. Efficient Use of Human Resources. Branch efficiency was assessed using the cost of human resources. This measure included the cost of employee salaries and additional pay for overtime. Since bank size could affect efficiency figures, calculations were made to obtain efficiency per employee.

Results

Aggregation of OCB Measures Since Organ’s (1988) prediction of the impact of OCB on consequences implies that it is aggregated OCB that influences performance, and that the efficiency indicator was calculated at the branch level, it was decided that the branch level was the appropriate level for assessing hypothesized relationships. Thus it was necessary to aggregate the OCB data, as well as the customer perceptions of service quality in order to obtain one score for each variable per branch (cf. Podsakoff et al., 1997; Podsakoff & MacKenzie, 1994). Rousseau (1985) suggested that data aggregation is appropriate when: (a) aggregation adds meaning to the individual-level data, (b) within-group variance is less than between group variance, and (c) the theory of interest supports aggregating the individual scores on the variable of interest. In response to the first criteria, there is empirical support for validity of the OCB construct at the individual-level of analysis (cf. MacKenzie et al., 1991; Podsakoff, MacKenzie, Moorman, & Fetter, 1990). Also, Organ (1988) clearly proposes that it is the aggregate actions of individuals exhibiting OCB that improve organizational functioning. Therefore, aggregation adds meaning to individual-level data, particularly for the relationships being investigated. Second, ANOVAs were calculated comparing the variance within the branches to the variance between the branches. For each of the aggregated variables (i.e., 5 dimension of OCB and the 3 service quality measures), there was significantly greater variance between branches than within branches (all F-values significant at p < .05). Empirically, it appears that aggregating the data at the branch level would be appropriate. Finally, as Organ has noted, one employee engaging in OCB will not likely make a dent in organizational effectiveness; it is only the actions of many employees that result in improvements. Thus, the theory suggests that it is the combined behaviors of the group of employees, rather than the individual behaviors, which are likely to influence the organizational effectiveness concepts of efficiency and customer perceptions. Based on these empirical and conceptual reasons, it was determined that data aggregation by branch was appropriate.

Hypothesis Testing

Table 1 shows the correlations among all measured variables, and reliability coefficients of those variables for which coefficient alpha could be computed. As shown, all reliabilities for measured variables are above the .70 level, with most above the .80 level.
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Insert Table 1 about here
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The two hypotheses were designed to test the OCB - efficiency and OCB - customer service quality linkages found in the U.S. would be replicable in a Taiwanese organization. Specifically, Hypothesis 1 predicted that OCB dimensions would be correlated negatively with the cost of human resources. As shown, altruism was significantly correlated with the cost of human resources (r = -.47, p