Trust and organisational commitment: a study in the Indian pharmaceutical sector

Abstract

Organizational commitment (OC) is among the most widely researched topics in organizational behavior literature. Organizational commitment typifies the employees’ relationship with their organization and is believed to influence their decision to retain organizational membership as well as their effort. Research has established several organizationally beneficial outcomes of organizational commitment like higher job performance and satisfaction, and lower turnover, turnover intention and absenteeism. Organizational commitment has been expressed as a three-factor structure comprising affective commitment (AC), normative commitment (NC) and continuance commitment (CC). Affective commitment refers to employees’ identification with and involvement in organizational activities. Normative commitment signifies employees’ obligations towards the organization. Continuance commitment indicates employees’ desire to retain organizational membership and has been conceptualized as a two factor structure comprising Lo Alt, meaning lack of alternatives and Hi Sac referring to investments in the organization or side-bets.

Extant literature has identified several antecedents of organizational commitment and it is now well accepted that experiences at the workplace are among the strongest predictors of organizational commitment. Commitment has been viewed as an outcome variable through theoretical lenses of social exchange and social capital. Social exchange theory posits that the norm of reciprocity obliges employees’ to respond to positive organizational action with greater commitment at the workplace. The social capital literature suggests that commitment is fostered by the presence of normative structures within a collective.

Trust signifies a willingness to be vulnerable to actions of another party and is a key variable in the theories of social exchange and social capital. Trust is an integral element in the social exchange process and it is proposed that the party initiating an exchange does so based on trust. Trust also occupies a primary position in the social capital literature even though opinions are divided over whether trust is an outcome or predictor of social capital. Existing literature on trust has been confounded owing to issues of unit of analysis, multiple referents of trust, and dimensions. In this study trust has been conceptualized as an individual level, perceptual variable understood through perceptions of ability, benevolence and integrity of the trustee.

Though commitment and trust are linked through common theoretical bases of social exchange and social capital there is limited literature that has examined the relationship of trust with organizational commitment. Specifically, there is no study that has examined the effect of trust in the organization, supervisor and peers, separately on the three factors of organizational commitment.

We examine the relationship between trust and organizational commitment and develop a model that considers trust as a potential antecedent of organizational commitment. In this study, we propose that the three forms of trust correlate positively with the three factors of organizational commitment, i.e., affective commitment, normative commitment and continuance commitment (Hi Sac). We also examine the role of propensity to trust, a trait variable, and hypothesize that propensity to trust will correlate positively with all three forms of trust.

Organizational commitment has a significant influence on turnover intent. Hence, the Indian pharmaceutical industry which is currently facing attrition of 20-22% provided a fertile research setting for this study. We adopted a multi-method approach using both survey research and qualitative methods. In the first stage, we collected survey data from 364 employees working in four medium to large pharmaceutical organizations. Sampling was done from supervisory level to top management level employees. Standardized measures of trust foci and organizational commitment were administered after creating temporal separation in data collection to limit common source variance. Results supported most hypotheses. Trust foci were found to correlate significantly with affective and normative commitment but the relationship of trust foci with continuance commitment (Hi Sac) was not significant. A similar pattern of relationships emerged when the data was analyzed at an organizational and functional level.

In the second stage, we conducted qualitative research through semi-structured interviews with 23 randomly selected respondents from the earlier sample. This qualitative segment aimed to identify underlying reasons governing the relationship between trust foci and organizational commitment. We aimed to identify factors that built trust and influenced commitment. We found that organizational systems, organizational culture, organizational support, and quality of relationships influenced perceptions of trustworthiness and consequently, enhanced commitment levels among employees. Organizational systems that are transparent and benevolent built trust in the organization and influenced commitment of employees. Organizational culture, referring to actions of the promoter or top management, organizational philosophy towards risk, organizational image, and internal politics also influenced trust perceptions and commitment levels within the organization. We found that quality of relationships at the workplace deter people from actively seeking other jobs. However, in rapidly growing market conditions high-quality relationships are not enough to keep people back in a job. This finding provides partial solution to the lack of correlation between continuance commitment (Hi Sac) and trust foci. We suggest that this is an area which future researchers can take up and explore further.

Our findings suggest that organizations can ‘manage’ commitment through trust created by organizational practices and systems. Organizations need to foster trust among employees by way of transparent and clearly communicated policies. Organizations that are perceived as being trustworthy are likely to have employees with higher level of involvement in organizational activities.