Perception of Managerial Trust and the Effect on the Job Attitudes of Employees in the Financial Sector in St. Lucia

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(1)Perception of Managerial Trust and the Effect on the Job Attitudes of Employees in the Financial Sector in St. Lucia. by Cresida Bishop. A Thesis Submitted to the Graduate Faculty in Partial Fulfillment of the Requirements for the Degree of. MASTER OF BUSINESS ADMINISTRATION. Major: International Human Resource Development. Advisor: Cheng-Ping Shih, Ph.D.. National Taiwan Normal University Taipei, Taiwan June, 2012.

(2) Acknowledgement “You will rise by lifting others.” Robert G. Ingersoll I would like to first thank God for making the seemingly impossible things become possible for me; throughout all the challenges and hurdles he has been a very present help for me in my times of need. I would also like to extend my eternal thanks to everyone who in one way or the other encouraged and supported me or in some way assisted in the fulfillment of my degree here in Taiwan. I would like also to thank my mom who was always there to listen to me no matter what news I was sharing; sometimes good and sometimes bad. Her support and encouragement gave me the strength to overcome the many difficulties that are faced in thesis writing. This acknowledgement will not be complete if I do not also mention Patricia who worked really hard in handing out and collecting the questionnaires for me. Big thanks also to Charlery, Eric and Ashanti who were concerned and actively aided in the data collecting process; indeed this was a great challenge that only good friends would undertake. Finally I would like to express my sincere thanks to my thesis advisor Dr. Tony Shih and committee members Dr. Chang and Dr. Pai-Po Lee; it would have been very difficult to successfully complete this thesis without their expert advice and guidance..

(3) ABSTRACT This research paper sort to measure the effect that employees’ perception of managerial trust would have on their job attitudes. The job attitudes mentioned in this paper are namely: Job involvement, affective organizational commitment, and job satisfaction. Harmony, reliability and concern were used as sub-independent variables. A quantitative design was used in this research. 130 questionnaires were distributed to the different banks and insurances in St. Lucia out of which 110 were returned creating a return rate of 84.62%. 10 questionnaires were incomplete hence a sample of 100 participants was used in this research. The results based on Multiple Regression analysis indicates that perceived managerial trust in subordinates have a significant positive effect on employees’ job involvement, affective organizational commitment, and job satisfaction. One of the surprises found in this study is that reliability as a dimension in managerial trust had no significant relationship with any of the job attitudes even though it is one of the most agreed upon dimensions found in trust measurements. This study has contributed to organizational behavior research since most research has focused on employees trust in their leaders than on managerial trust in their subordinates. Keywords: Trust, Harmony, Reliability, Concern, Job Involvement, Affective Organizational Commitment, Job Satisfaction. I.

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(5) TABLE OF CONTENTS Abstract…………………………………………………………………………………………….I Table of Contents………………………………………………………………………………...III List of Tables……………………………………………………………………………………..V List of Figures…………………………………………………………………………………..VII CHAPTER I. INTRODUCTION………………………………………………………………….1 Background of Study………………………………………………………………………......1 Purpose of Study……………………………………………………………………………….4 Research Questions…………………………………………………………………………….5 Significance of Study…………………………………………………………………………..5 Delimitations & Limitations…………………………………………………………………...6 Operational Definition of Terms…………………………………………………………….....7 CHAPTER II. LITERATURE REVIEW…………………………………………………………9 Trust…………………………………………………………………………………………...9 Job Attitudes…………………………………………………………………………………16 The Effect of Trust on Job Attitudes…………………………………………………………20 The Financial Sector in St. Lucia…………………………………………………………….20 CHAPTER III. RESEARCH METHODOLOGY………………………………………………23 Research Framework ………………………………………………………………………..23 Hypothesis of the Study……………………………………………………………………...24 Research Procedure…………………………………………………………………………..25 Research Design……………………………………………………………………………...28 Sampling……………………………………………………..................................................28 Instrumentation………………………………………………………………………………30 Data Analysis………………………………………………………………………………...32 Pilot study……………………………………....................................................................... 33 CHAPTER IV. RESULTS ………………………………………………………………………47 Descriptive Statistics…………………………………………………………………………47 Correlation Analysis…………………………………………………………………………53 Independent and Dependent Variables Correlation………………………………………….53 III.

(6) Control Variables Correlation………………………………………………………………..54 Multiple Regression Analysis………………………………………………………………..54 Hypothesis One and Two…………………………………………………………………….54 Hypothesis Three to Five…………………………………………………………………….56 CHAPTER V. DISCUSSIONS…………………………………………………………………..63 Research Review…………………………………………………………………………….63 Discussions for Descriptive Statistics……………………………………………………….64 Discussions for Multiple Regression Analysis……………………………………………...67 CHAPTER VI. CONCLUSIONS AND RECOMMENDATIONS……………………………...73 Conclusions…………………………………………………………………………………73 Recommendations for Future Studies………………………………………………………74 Recommendations for Financial Sector…………………………………………………….76 REFERENCES…………………………………………………………………………………..79 APPENDIX A. DESCRIPTIVE STATISTICS DEMOGRAPHIC VARIABLES……………...85 APPENDIX B. CORRELATION TABLE FOR ALL VARIABLES…………………………...89 APPENDIX C. RESEARCH QUESTIONNAIRE………………………………………………91. IV.

(7) LIST OF TABLES Table 2.1 Definitions of Trust……………………………………………………………………12 Table 2.2 Trust Measurement……………………………………………………………………15 Table 3.1 Descriptive Statistics Significantly Skewed Items Removed…………………………36 Table 3.2 Correlation Trust Items………………………………………………………………..37 Table 3.3 Correlations Job Involvement Items…………………………………………………..38 Table 3.4 Correlations Affective Organizational Commitment Items…………………………...38 Table 3.5 Correlations Job Satisfaction Items…………………………………………………...38 Table 3.6 KMO and Barlett’s Test Results………………………………………………………39 Table 3.7 Communalities Managerial Trust Item Retained……………………………………...40 Table 3.8 Low Communalities Job Involvement ………………………………………………..41 Table 3.9 Complex Structure Items Job Involvement…………………………………………...41 Table 3.10 Low Communalities Item Removed Job Involvement……………………………....42 Table 3.11 Communalities Over 0.5 items Retained Job Involvement ………………………....42 Table 3.12 Communalities Over 0.5 Items Retained Affective Organizational Commitment…..43 Table 3.13 Low Communalities Items Removed Job Satisfaction ……………………………...44 Table 3.14 Communalities Over 0.5 Items Retained Job Satisfaction…………………………..44 Table 3.15 Reliability Testing of Instrument Cronbach’s Alpha………………………………...45 Table 4.1 Descriptive Statistics Managerial Trust in Subordinates Items……………………….48 Table 4.2 Descriptive Statistics Job Involvement Items ………………………………………...49 Table 4.3 Descriptive Statistics Affective Organizational Commitment Items………………….50 Table 4.4 Descriptive Statistics Job Satisfaction Items………………………………………….51 Table 4.5 Descriptive Statistics Positive Affect Items…………………………………………...52 Table 4.6 Descriptive Statistics Negative Affect Items………………………………………….53 Table 4.7 Pearson’s Correlation of Variables……………………………………………………53 Table 4.8 Regression Analysis the Effect of Tenure on AOC…………………………………...55 Table 4.9 Multiple Regression Analysis the Effect of PA and NA on Job Satisfaction……........56 Table 4.10 Standard Multiple Regression Effect of Managerial Trust on Job Involvement…….57 Table 4.11 Hierarchical Regression Effect of Managerial Trust on AOC……………………….58 Table 4.12 Hierarchical Regression Effect of Managerial Trust on Job Satisfaction…………....59 V.

(8) Table 4.13 Summary of Multiple Regression………………………………………………..…..61 Table 4.14 Summary of Hypothesis Results……………………………………………………..61 Table A1 Coding System used in SPSS………………………………………………………….85 Table A2 Descriptive Analysis Job Positions……………………………………………………86 Table A3 Descriptive Statistics Demographic Variables………………………………………...87 Table B1 Correlation of All Variables…………………………………………………………...89. VI.

(9) LIST OF FIGURES Figure 3.1 Research Framework…………………………………………………………………24 Figure 3.2 Research Procedure…………………………………………………………………..27. VII.

(10) CHAPTER I. INTRODUCTION This first chapter provides an introduction to the study. The chapter provides an understanding of the background of the study. The research purpose, research questions, significance of the study and the delimitations and limitations were also discussed. Finally, operational definitions of terms were provided that were significant to this research. This chapter is paramount in understanding the focus and direction of this research.. Background of Study Covey (2004) in his best known book entitled 7 Habits of Highly Effective People, which was first published in 1989 suggests that “Trust is the highest form of human motivation. It brings out the very best people.”(p. 178). Trust exists in several different level interpersonal, intergroup, organizational, and societal (Cummings & Bromiley, 1996). We live in an era of change where many traditional views of organizations functions are becoming less desirable. In the past many organizations ruled under the assumption that employees were not to be trusted to do their work unless they were under strict supervision or heavily monitored. This was in an effort to reduce the inevitable risk that business owners or managers face when responsibilities are given to employees who may or may not fulfill their job duties.. If these employees were not monitored then managers would have little control on. whether or not they would fulfill their obligations and create value for the organizations. Three theories were mentioned in this research as important in understanding the role of trust in the organization. The theories are namely: Social exchange theory, agency theory, and theory X and Y. The social exchange theory and the agency theory are mentioned in several studies on trust as foundations for building trust. The first theory worth mentioning is the social exchange which is defined as the following: “Exchange theory is based on the premise that human behavior or social Interaction is an exchange of activity, tangible and intangible” (Homans 1961, p.212-3 as cited in Zafirovski, 2005). Relationship based perspectives on trust is based on philosophies of the social exchange and deals with the employees inclination to return the considerations that they receive from their 1.

(11) leaders (Bachmann & Zaheer, 2006). Based on this theory, it can be deduced that if managers should show some level of trust towards their employees then it would be reciprocated. The second theory which is the agency theory refers to the agent –principal relationship that assumes that agents tend to act in their own interest rather than in the interest of the principal which is usually the person who owns the business (Jensen, 1994). For this reason the agency theory suggest that in other for the principal to reduce this risk and encourage the agents to act in the best interest of the company, the principal can increase monitoring or base the agent’s compensation on task outcome. Trust may be a better alternative in this case because it builds a more positive environment and allows for more risk taking. Trust is based on the expectation that one will find what is expected rather than what is feared (Deutsch, 1973 as cited in McAllister 1995) Post World War II studies investigated management perception of workers attitudes and how these perceived attitudes affected managers’ behavior. The final theory which is the X and Y theory was proposed by Douglas McGregor. He suggested two assumptions on how perceptions of employees work attitude affect managements’ behavior. Theory X and Theory Y are opposing assumptions where the former is described as negative suppositions about employees’ attitude towards work that leads to the idea that these employees need to be closely supervised in an effort to control their behaviors. Theory Y takes the contrasting view that focuses on positive assumptions about workers that leads management to provide a work setting that encourages employees to be committed to organizational goals, and allows them to draw on their own initiative and be more self-directed (Jones & George, 2008). There can be little doubt that Theory Y is a more agreeable approach to management, and that trust in employees lies at the core of this concept (Stewart, 2010). Indeed the importance of trust in any aspect of life cannot be overemphasized. Since individuals are the ones who make up the organizations, then it stands to reason that trust would also play a vital role in its success. Many studies have been conducted on the concept of trust in several different fields including but not limited to sociology, psychology, and management. Since the importance of trust is so widely accepted, the quest of many organizations today is to find avenues to build trust between employees, leaders and their organization. As could be expected different literature has different meanings of trust but vulnerability seem to be commonly associated with trust. Schoorman, Mayer, and Davis (2007) in their article describe 2.

(12) trust as the following: “Trust is the willingness of a party to be vulnerable to the actions of another party based upon the expectations that the other party will perform a particular action important to the trustor” (p. 712). This study utilized the definition of trust provided by Tzfrir and Dolan (2004) who described trust as the following “A willingness to increase one’s resource investment in another party based on positive expectation, resulting from past positive mutual interactions.” The authors provide three dimensions upon which trust is built. They are namely: Reliability, harmony and concern. Whitener, Brodt, Korsgaard, and Werner (1998) described trust as reflecting three facets. First, trust in another party is based on the belief that the other party will act benevolently. Second, one party cannot force the other to carry out the expectation because trust involves the willingness to be vulnerable, which creates the risk that the other party may not fulfill that expectation. Third, some level of dependency is needed; the outcomes of one party are influenced by the actions of another. This attitude of trust can be achieved based on the trustor’s perceptions, beliefs, and acknowledgments about the trustee, and that comes about through the observable behavior of the trustee. In other for one to appreciate the true value of trust in any organization, it is critical for one to understand that trust building in the work environment is a mutual process and that it would prove difficult for one party to trust if it is not reciprocated by the other party (Six, 2005). Furthermore not only should trust be reciprocated, it also should begin with the manager. Management should take the first step in initiating trust through their actions and behaviors (Whitener et al., 1998). Job attitude according to Carpenter, Bauer, and Erdogan (2010) refers to a person’s opinions, beliefs, and feelings about different facets of his/her environment. Attitudes according to Hellriegel and Slocum (2007) consist of three different components: 1) Affective component which refers to ones’ feelings, moods or sentiments. 2) A cognitive component which refers to ones’ thoughts and opinions. 3) A behavioral component which refers to ones’ actions favorable or unfavorable. Based on the findings of Harrison, Newman and Roth (2006), they reasoned that employees who possess a general positive attitude towards their job will contribute positively to work outputs. Lambert and Hogan (2008) states that job satisfaction and organizational commitment is important in determining if employees would leave or stay in the organization. Luthans (2006 as cited in Haldar 2009) states that there are three major job attitudes which are 3.

(13) Job involvement, affective organizational commitment, and job satisfaction. This research used the three dimensions in measuring employees’ perception of managerial trust suggested by Tzafrir and Dolan (2004) and looked at its effect on their job attitudes which are job involvement, affective organizational commitment, and job satisfaction.. Purpose of Study One of the essential assumptions of trust that many researchers have discovered, is that it has a significant positive relationship with many measures of organizational outcome (Kramer, 1999; Shockley-Zalabak, Ellis, & Cesaria, 2000). Therefore the concept of trust should not be ignored or underestimated in the success of any organization. Many studies conducted in the past, focused solely on employees trust in leadership (Hassan & Ahmed, 2011) rather than on managers’ trust in their employees. The researcher aimed to flip the coin and focused the research on managers’ trust in their subordinates and how it affected employee job attitudes. This study focused on trust on the interpersonal level particularly managerial trust in subordinates and further focused on how employees’ perception of managerial trust affected their job satisfaction, affective organization commitment and job involvement. The purpose of this research then was to establish the extent to which perceived managerial trust of subordinates contributes to three major job attitudes as described below. 1. To examine the degree to which perceived managerial trust of subordinates contributes to employees’ job involvement. 2. To examine the degree to which perceived managerial trust of subordinates contributes to employees’ affective organizational commitment. 3. To examine the degree to which perceived managerial trust of subordinates contributes to employees’ job satisfaction.. 4.

(14) Research Questions The following questions were formulated based on the researcher’s intention to explore and analyze how managerial trusts in their subordinates affected employee job attitudes.. 1. How does perceived managerial trust in their subordinates affect employee job involvement? 2. How does perceived managerial trust in their subordinates affect employees’ affective organizational commitment? 3. How does perceived managerial trust in their subordinates affect employees’ job satisfaction?. Significance of Study Trust is said to be a key factor in organizational relationships hence management attitude to the issue of trust is of academic and practical significance (Tzafrir, 2005). To date, it must be noted also that majority of the studies conducted in relation to trust in the organization has been predominantly focused on employees trust in their leaders. Literature stress on the mutual significance of trust, for example Six (2005) states that trust building within the work setting is a joint process and that it would be difficult to build trust if its only one-sided. Furthermore not only should trust be reciprocated, it also should begin with the manager. Management should take the first step in initiating trust through their actions and behaviors (Whitener et al., 1998). Although it is agreed upon that managers should be the initiators of trust, few studies have actually focused on managerial trust in their subordinates (Hassan & Ahmed, 2011; Leonard 2008; Tzafrir, 2005). Due to the limited number of research which actually focused on this aspect of trust, this study provided valuable insight on the value of managerial trust. This study provided valuable contribution to the research that has already been done on the concept of trust. Furthermore there are number of research which probes into employees trust in leadership and its effect on employee job attitudes, but little research on how managerial trust in their subordinates would affect employees’ job attitudes. This research shared some light on how. 5.

(15) the subordinates’ perception of managerial trust affects the employees’ job attitude namely: Job satisfaction, job involvement and affective organizational commitment.. Delimitations and Limitations Delimitations Firstly, this study was delimited to St. Lucia which is a small island country located in the Caribbean basin. Secondly, the study was also delimited to the Financial Sector including banks, credit unions and insurance. Finally, this study was delimited to focus solely on interpersonal trust in particular managerial trust of subordinates and did not look at organizational trust on the whole.. Limitations Firstly, this research used purposive sampling which is a non-probability sampling, for this reason a limitation to the study was that this method gave no assurance that the sample was representative of the entire population (Babbie 2011). This was so because it would have been very difficult otherwise to get participants for this research especially due to time constraint. Secondly, this study was further limited to employees’ perception of managerial trust which may not reflect the actual situation at work however, Wagner and Hollenbeck (2005) mentions that while perceptions may not accurately represent what is in actuality, “We must look at the individual’s perception of the situation-not the actual situation to understand his or her personal reaction.” (pp.106-7). For this reason, because the aim of this research was to understand how managerial trust of subordinates contributes to employees’ job attitudes then in this case using their perception may be the appropriate approach to take. Thirdly, a sample size of 100 was used in this research and could be considered small if one were to compare it to the size of the workforce in the financial sector; hence there should be some caution in the interpreting of the results of this study. Fourthly another limitation to this study is that the R squared associated with the effect of managerial trust on job involvement is very low which could indicate that there are other underlying factors that could have a higher impact on job involvement or the instrument used to measure the construct may not have been the best one. Still it is important to bear in mind that 6.

(16) collecting data in real life is not always predictable and different studies would produce varying results. Finally, although Cronbach’s alpha of all constructs for the pilot study all had values ranging from 0.818 to 0.942, the main research Cronbach’s alpha for “harmony” as a dimension of trust was considered too low (0.589). This indicates low internal consistency and should be seen as a limitation in this study.. Operational Definitions of Terms Trust “A willingness to increase one’s resource investment in another party, based on positive expectation, resulting from past positive mutual interactions.” (Tzafrir & Dolan, 2004). Reliability “Is determined by whether or not co-workers, teams, suppliers, or organizations act consistently, and dependably.” (Shockley-Zalabak, Ellis, & Cesaria, 2000). “Reliability consists of systematic and consistent procedures and behaviours, and is strengthened when promises and commitments are kept and fulfilled.” (Butler, 1991; Gabarro, 1978; Johnson-George & Swap, 1982 as cited in Tzafrir & Dolan, 2004 p. 118).. Harmony “A positive combination of feelings, interests, opinions, purpose, and values inside the employment relationship system creates harmony.” (Tzafrir & Dolan, 2004 p.118). Concern Concern as a dimension of trust is one party belief that another party will not take undue advantage of them (McGregor, 1967: 163; Bromiley & Cummings, 1993 as cited in Mishra 1996).. 7.

(17) Job Attitudes Attitudes according to Carpenter, Bauer, and Erdogan (2010) refers to a person’s opinions, beliefs, and feelings about different facets of his/her environment. Luthans (2006 as cited in Haldar, 2009) classifies three major job attitudes as namely: Job satisfaction, job involvement, and organizational commitment.. Job Satisfaction “Job satisfaction may be defined as a pleasurable or positive emotional state resulting from the appraisal of one’s job or job experiences.” (Locke, 1969). Job Involvement Job involvement is described by Lodahl and Kejner (1965 as cited in Reeve & Smith, 2001) as the amount of meaning attached to ones’ work in relation to ones total self-image. Lawler and Hall (1970 as cited in Ekmekçi, 2011) described the concept as the degree to which a person identifies his entire work situation to be important and is a dominant part of his identity because it satisfies his important needs.. Affective Organizational Commitment Employees feel identified with his/her organization and its policies and form an emotional attachment to the organization (Haldar, 2009).. 8.

(18) CHAPTER II. LITERATURE REVIEW This chapter provides a comprehensive review of literature that is relevant to the research topic. This chapter was arranged in different sections in an effort to provide a more thorough understanding of pertinent issues regarding the subject under study. First it provides foundations of trust which looks at the social exchange theory, theory X and Y, and agency theory. The chapter continues with various definitions on trust which includes a table with quotes and references. The importance of trust in the organization, and the importance of managerial trust in their subordinates are also mentioned. The chapter further looks at the effect of trust on job attitudes and varying dimensions of trust. A table is also included providing the different measurements on trust. Since the study is also focused on employees’ job attitudes, this section also discusses job attitudes which are job satisfaction, organizational commitment (organization affective commitment), and job involvement. The section also looks the effect of trust on job attitudes. Finally this chapter provides a brief introduction to the financial sector in St. Lucia.. Trust Foundations of Trust In examining the concept of trust in the organizational setting, particularly trust of management in their subordinates, the researcher thought to first review literature on three different theories that would add depth to the study. The three theories are namely: Social exchange theory, X and Y theory, and the Agency Theory. Several studies conducted on trust (Tzafrir, 2005; Whitener et al., 1998; Shapiro, 1987; Colquitt et al., 2007) also dimmed it necessary to mention the social exchange theory and agency theory in their research. Although the agency theory is largely viewed as an economic theory and little emphasis is placed on trust, it gives some enlightenment on what motivates management to behave in a certain way including monitoring and controlling of employees (Whitener et al., 1998). The researcher thought to mention the X and Y theory in this research, because it refers to managers assumptions about their employees that would influence them to exhibit certain behaviours towards their employees 9.

(19) including that of trust and lack of trust. The X theory style of management is indicative of low levels of trust in employees while the Y theory indicates higher levels of trust. The three theories mentioned above would have some effect on employees’ perception of trust particularly their perception on whether or not their managers trust them to do their work. This section will look at each of these three theories separately. Social exchange theory Theories of trust are said to be grounded in the social exchange theory (Blau, 1964, as cited in Whitener et al., 1998). Social exchange theory is thought to be one of the most significant theoretical models of understanding behaviour in the workplace. Though there are different views on this theory, most scholars agree that the theory is inclusive of different interactions which leads to some form of obligations by the parties involved (Emmerson, 1976). One basic principle of social exchange theory is that relationships would grow into trusting, loyal, and mutual commitments over time (Cropazano & Mitchel, 2005). The social exchange theory is based on the norm of reciprocity which suggests as an exchange rule that we would help those who help us (Gouldner, 1960). This norm suggests that both parties have and are willing to provide the resources that are of value to both; reciprocating valued resources strengthens the exchange relationship over time (Aselage & Elsenberger, 2003). Lewis and Weigert (1985 p.971 as cited in Tzafrir, 2005) held that “when we see others acting in ways that implies that they trust us, we become more disposed to reciprocate by trusting in them more. Conversely, we come to distrust those whose actions appear to violate our trust or to distrust us.” Managers then could develop trust in their organization by showing trust to their employees and being the initiator of trust (Prusak & Cohen, 2001; Whitener et al., 1998). Theory X and Y Early research of workplace dynamics, particularly that of the Hawthorne Works of the Western Electric Company revealed that there were many factors affecting the performance of employees than what was initially expected. One of the key findings in the research revealed that the managers’ personal behaviour and their leadership method had an effect on employees’ performance. The Hawthorne effect is findings which suggest that managers’ behaviour and their leadership method can have some effect on the performance of employees (Jones & George, 2008). The findings of this research prompted many more research on managerial behaviour and leadership. One such study is that of the X and Y theory which was first posited by Douglas 10.

(20) McGregor, a social psychologist who studied human behaviour underlined by managerial actions. Douglas McGregor suggested two assumptions on how employee work attitudes and behaviours control how managers think and behave (Jones & George, 2008). Theory X is based on the assumption that people dislike work and has to be forced to work; as a result control and direction should be utilized to achieve organization goals (MacGregor 1960, as cited in Sager, 2008). This theory is based on the assumption that 1. The average person has an aversion to work and would avoid doing it they can; and 2. Because of this aversion for work people have to be under stringent supervision where they are controlled and directed even by means of punishment and rewards to do their work (Jones & George, 2008). Douglas himself cautioned that theory X also referred to as the carrot and stick theory of motivation may work under certain circumstances, but may not work at all when man’s motivation is influenced by higher needs. The author further states that if the assumptions of theory X continue to influence the strategies used by management then they would have failed to make use of the full potentials of employees. Theory Y holds the opposing view; hence this provides employees with the opportunity to take their own initiative, to play a more participative role, and to be more self-directed. This theory suggests that the needs of both parties will be met, that is the needs of the organization and that of employees (Sapru, 2006). Haldar (2009) suggest that Theory X managers trust their employees, and in return get trust and respect from them. Agency theory Agency theory also known as the principal agent theory has to do with “delegation relationships in which the principal delegates certain tasks and decisions to an agent on the basis of an explicit or implicit contract.” (Morschette, Scramm-Klein & Zentes, 2009 p.168). The agency theory starts with the supposition that agents acts in their own self-interest in that they make decisions that are beneficial to them and these decisions may not be beneficial for the principal. Although the agency theory has mostly been applied to relationships where the principals are typically owners of the business and the employees are the agents. Typically managers are seen as the agents relative to business owners. They can also be seen as principals relative to their subordinates because of the role that they play on behalf of the owners (Jensen & Meckling, 1976).. The agency theory is based on risked management in an effort to minimize. risk for the principal. 11.

(21) Definitions of Trust Different literature gives varying definitions to the concept of trust however there is general consensus that it involves some degree of vulnerability. Mayer, Davis and Schoorman (1995) conceptualized trust as “the willingness of a party to be vulnerable to the actions of another party based upon the expectations that the other party will perform a particular action important to the trustor” (p.712). Luhman (1979) described trust as the level of confidence that one person has towards another that he/she would act in a manner that is reasonable and predictable. , Rousseau et al. (1998 as cited in Saunders et al., 2010) defined trust as a psychological state which includes the intentions to accept vulnerability because the trustor expects positive actions from the trustee. McAllister (1995) describes trust as “the extent to which a person is confident in, and willing to act on the basis of, the words, actions, and decisions of another. The author further suggest that there are two different forms of interpersonal trust which are namely: 1) Cognitive-based this is grounded in the individual’s belief that their peers are reliable and dependable and 2) affect-based trust which is grounded in the idea that interpersonal care and concern should be reciprocated. Rotter (1967 as cited in Travica, 1999) defines trust as expectancy held by an individual or a group that the promise of another individual whether written or verbal could be perceived as reliable.. Table 2.1 Definitions of Trust Authors Carnevale and Wechsler (1992 p. 473). Definitions “faith or confidence in the intentions or actions of a person or a group, the expectation of ethical, fair, and non-threatening behavior, and concerns for the rights of others.”. Luhmann (1979). The level of confidence one has in another party to act fairly, ethical, and predictably.. Mayer, Davis & Schoorman (1995, p.712). “Trust is the willingness of a party to be vulnerable to the actions of another party based upon the expectations that the other party will perform a particular action important to the trustor.”. (continued) 12.

(22) Table 2.1 (continued) Authors Rousseau et al. (1998). Definitions A psychological state which includes the intentions to accept vulnerability because the trustor expects positive actions from the trustee.. Note. Source: This paper. Importance of Trust in the Organization Trust is important in instances where there is high uncertainty, ambiguity and complexity (Shapiro, 1987) this is particularly true when one looks at the concept of the agency theory which supposes that the agent will act in their own self-interest creating an environment of uncertainty. Trust will then be necessary to reduce the need for high monitoring and help with governance issues (Shaw, 1997 as cited in Six, 2005) which is one of methods suggested by the agency theory to help reduce the risk of agents acting in their own self- interest. Trust allows people to take risks “where there is trust there is the feeling that others will not take advantage of me" (Porter et al., 1975 p. 497 as cited in McAllister, 1995). Six (2005) cited research saying that trust also helps in nurturing an attitude of cooperation because it encourages the sharing of information, enhances relationships, helps increase openness and acceptance of each other, and aids in managing conflict and problem solving.. Importance of Managers Trust in Subordinates Kouzes and Posner (1995) identified trust as the most important factor in leadership and listed it as one of the key factors in leader and followers relationships. Kouzes and Posner (2010) states 10 truths about leadership and listed trust as the sixth rule. The authors posits that trust is the social glue that will bind individual and groups together if the leader cannot do something alone then it means that he or she has to rely on someone else to do it. The leader has to give trust to get trust. Managers’ behaviours can provide a platform for trust and that managers hold the obligation in initiating trusting relationships (Whitener et al., 1998). Trust is a mutual transaction between subordinates and their leaders; leaders should trust their subordinates more 13.

(23) than the subordinates trust their leaders is because of greater dominance (Lendenmann & Rapaport, 1980 as cited in Butler, 1983). Supervisors who trust their subordinates and maintain a good relationship with them will be able to spend more time in doing their own work and focus on self-development instead of spending majority of the time monitoring employees (Bradach & Eccles 1989; Mayer, Davis, & Schoorman, 1995 as cited in Straiter, 2005) although the article mentions supervisors, in some cases supervisors can be managers according to Bittel and Newstrom (1990) supervisors are managers who reports to middle managers. According to Bromiley and Cummings (1993 as cited in Straiter, 2005) if supervisors trust their subordinates more and believe that employees are treating them fairly then the supervisor will have a more positive affect on employees. Lester and Brower (2003) suggest that when an individual perceives that his or her leader thinks that the employee is worthy of trust, the employee will respond positively. For this reason a subordinate’s perception of his or her leader trust in him or her will have a positive effect on the employee’s job satisfaction. The authors further states that the social exchange theory could apply in this regard and that if subordinates feel that their leaders trust them then they will reciprocated by performing citizenship behaviours that would go beyond what is expected from their employment contract.. Dimensions of Trust Trust in another party is considered to rely on three factors. First, trust relies on the belief that the other party will behave benevolently; second, one party cannot force the other to carry out the expectation because trust involves the willingness to be vulnerable, which creates the risk that the other party may not fulfil that expectation. Third, some level of dependency is needed; the outcomes of one party are influenced by the actions of another (Whitener, Brodt, Korsgaard, & Werner, 1998). Reynolds (1997) proposed four main principles which are at the core of the trust relationship. The four principles are namely: Competence, openness, reliability and equity. The International Association of Business Communicators Research Foundation (IABC, 2000) suggested five dimensions in creating trust in organizations which is called the Organization Trust Model (QT). Competence, openness and honesty, concern for employees, reliability, and identification are the five dimensions in the QT Model. Tzafir and Dolan (2004) found that trust in the work relationships were three dimensional; it consists of harmony, reliability, and concern. 14.

(24) Their instrument on trust measures management trust in subordinates. Schoorman, Mayer and Davies (1996) model on trust consisted of three dimensions ability, benevolence, and integrity. Mishra's (1996) trust in Management Scale consists of four dimensions: reliability, openness/ honesty, competence, and concern.. Trust Measurements Table 2.2 shows various measurements on trust from different authors. Table 2.2 Trust Measurement Authors. Source. No. of items. Cook & Wall, 1980 (as cited in Nyhan & Marlowe 1997). journal of Occupational Psychology. 12 (6- trust in peers and 6trust in management). Fried, Tiegs, & Bellamy, 1992. Journal of Applied Psychology. 3. Coefficient α. 0.90 0.93. Robinson & Rosseau, 1994. Jung & Avolio, 2000. Shockley-Zalabak, Ellis, & Cesaria, 2000. Tzafrir & Dolan, 2004. McAllister, 1995. Journal of Organizational Behaviour. Journal of Organizational Behaviour. 77(bases of trust identified by Gabarro & Athos (1976). 3. 0.73. International Association of Business Communicators (IABC) Research Foundation Management Research. 29 (4-competence, 9openness/honesty, 7concern for employees, 4reliability and 5identification 16 (5 reliability, 5 harmony, and 6 concern). 0.91. Academy of Management Journal. 11 (6-cognition-based and 5-affect-based. 0.91. 0.95. (continued). 15.

(25) Table 2.2 (continued) Authors. Source. No. of items. Cummings & Bromiley, 1996. Trust in Organization Theory. Long version (62) short version (12). Nyhan & Marlowe, 1997. Evaluation Review. Mayer & Davis, 1999. Journal of Applied Psychology. Coefficient α. 12 (8 trust in supervisor and 4 trust in Organization) 21 (4-trust, 6-ability, 5benevolence, and 6integrity. 0.60 0.88 0.89 0.88. Note. Adapted from “Trust Me: A Scale for Measuring Manager-Employee Trust,” by Tzafrir and Dolan. 2004, Management Research, 2(2), p.121. Copyright M. E. Sharpe, Inc.. Job Attitudes The manager’s job involves the ability to recognize, forecast employees’ behaviours to create a productive environment for the organization. Carpenter, Bauer, and Erdogan (2010) refers to attitude as a person’s opinions, beliefs, and feelings about different facets of his/her environment. Hellriegel and Slocum (2007) posits that attitudes consists of three different components 1) An affective component which refers to one’s feelings, moods, sentiments etc. 2) A cognitive component which refers to one’s thoughts, opinions etc. and 3) A behavioural component which refers to one’s tendency to act in a favourable or unfavourable manner based on one’s evaluation of something. The authors further states that all three components work together and does not exist separately; hence one’s attitude will be a reflection of affective, cognitive and behavioural inclinations with regards to something. Luthans (2006 as cited in Haldar, 2009) states that there are three major job attitudes which are Job satisfaction, organizational commitment, and job involvement. Many studies carried out on the relationship between job attitudes and productivity has bought about mix and inconsistent results (Herzberg, Mausner, and Snyderman, 2009). Harrison, Newman and Roth (2006) in their study claim that 16.

(26) Overall job attitude is important in understanding behaviours at work. Based on their findings, the researchers reason that workers with a general positive job attitude will lead them to contribute positive work outputs in their jobs.. Job Satisfaction Job satisfaction has been used in numerous researches and is said to be the most widely used construct in organizational behavioural research; the concept is also seen by researchers as an attitudinal variable (Spector, 1997). Spector defines job satisfaction as the feelings people have towards their jobs or certain parts of their jobs. The author further states that job satisfaction is crucial to the organization for many reasons. On a humanitarian level people deserves to be treated justly and the construct to a certain extent is a reflection of fair treatment. On the humanitarian outlook, job satisfaction can have an effect on employees’ behaviours that can affect organizational functions.. Locke (1969 as cited in Locke, 1970) argues that. “satisfaction, dissatisfaction, and other emotional reactions are value responses.' They are the form in which an individual experiences his appraisal of an objector situation against the standard of what he considers good or beneficial.” Wagner and Hollenbeck (2005, p. 138) define job satisfaction as “the pleasurable feeling that results from the perception that one’s job fulfils or allows for the fulfilment of one’s important job values.” The authors further states that job satisfaction consist of three important components they are namely: values, the importance of values, and perception. Job satisfaction is measured in many researches along with commitment but Mowday, Steers, and Porter (1979) states that there is a difference between job satisfaction and commitment. The authors argue that commitment relates to the general emotional response to the every aspect of the organization, whereas job satisfaction is concerned with one’s job or particular facets of one’s job.. Organizational Commitment Haldar (2009) describes organizational commitment as “A state in which employees identifies with a particular organization, its mission, policies, objectives, goals, and wishes to maintain membership of the organization.” (p.36). Mowday, Steers and Porter (1979) characterized organizational commitment as having three factors: 1) having a strong confidence 17.

(27) and accepting the goals of the organization; 2) having a willingness to use extra effort for the good of the organization; and 3) having strong desire to remain with the organization. The authors further states that commitment goes beyond just having loyalty to the organization but is focused on individuals having an active relationship with the organization and are ready to contribute to the organizations’ wellbeing. Commitments do not just about beliefs but also based on the actions of the individual. According to Allen and Meyer (1991 as cited in Haldar, 2009) model, Organizational commitment is said to exist in three separate dimensions namely: Affective commitment, continuance commitment, and normative commitment. Affective commitment refers to an individual’s emotional attachment to an organization, continuance commitment is based on perceived economic value, and normative commitment refers to the individual wanting to remain with an organization for moral and ethical reasons. Organizational commitment is important in research on organizations particularly in understanding the behaviours of employees in the work environment (Zain & Gill, 1999). Work attitudes including job satisfaction and organizational commitment are vital in determining whether employees decide to leave or stay in the organization (Lambert & Hogan, 2008). This is consistent with Mowday, Porter and Steers (1979) who states that employees with a high level of commitment have loyalty, shares values, and they identify with organization’s goals. Kanter (1972 as cited in Lee & Jamil, 2003) found that there was a positive association between trust and organizational commitment. Other research (Diffie-Couch 1984 as cited in Nyhan & Marlowe, 1997) supposes that mistrust leads to lowered commitment.. Affective organizational commitment Employees feel identified with his/her organization and its policies and form an emotional attachment to the organization (Haldar, 2009). Affective commitment is further described as an emotional bond that employees have to their organization (Rhoades, Eisenberger, & Armeli, 2001). Employees who are affectively committed to their organizations are seen as being able to identify with organizational activities, and have receptiveness in meeting organizational goals (Meyer & Allen 1997, Mowday, Porter & Steers, 1979).. Affective. organizational commitment has also been considered as critical antecedents in turnover (Balfour & Wechsler, 1996; Mowday, Porter, & Steers, 1979 as cited in Lee & Kim, 2010). In the three 18.

(28) dimensions of organizational commitment, affective commitment is believed to be the strongest predictor affecting performance (Meyer, Stanley, Herscovitch, & Topolnytsky, 2002).. Job Involvement Lodahl and Kejner (1965 as cited in Reeve & Smith, 2001) described job involvement as the amount of meaning attached to ones’ work in relation to ones total self-image. Lawler and Hall (1970 as cited in Ekmekçi, 2011) described the concept as the degree to which a person identifies his entire work situation to be important and is a dominant part of his identity because it satisfies his important needs. The construct of job involvement is believed to have some similarity with organizational commitment but also defers on some level. Both constructs are interested in how the employee identifies with his/her work experiences but defers in that job involvement relates to identifying with one’s immediate work activities and organizational commitment relates to one’s attachment to the organization (Brown, 1996). Job involvement along with affective commitment is seen as work attitudes and predictors of work-related outcomes including intentions to leave (Freund, 2005). Hung (2008) cited research which states that when a job can meet one’s mental needs then an individual can feel more encouraged to work harder and improve their performance. According to Haldar (2009) involvement and participation are intertwined which means that one cannot work out without the other hence in other for employees to be involved in their jobs that have to be given the opportunity to participate. Blau and Boal (1987) identified job involvement and affective commitment into high and low categories and further combined them into four categories describing the employees. The four categories are namely: 1) Stars which are employees with high affective commitment and high job involvement; 2) Lone wolves, a group of employees with high job involvement, but low affective commitment; 3) Corporate citizens are employees with high affective commitment, but low job involvement and 4) Apathetic employees which includes employees with both low affective commitment and job involvements. Based on these categories of employees, it can be assumed that a high job involvement does not necessarily correspond with a high affective commitment and vice versa.. 19.

(29) The Effect of Trust on Job Attitudes Numerous literatures on the concept of trust in the organization has concurred that it plays an important role in organizational success. Interpersonal trust is considered as an important factor to fuel employees’ satisfaction and commitment and help enrich effective organizational processes (paliszkiewicz, 2011). Six (2005) quoted several research that states that trust helps in creating creative innovative behaviour. Nyhan and Marlowe (1997) made mention of several research that have shown that trust is interconnected with both attitudinal and behavioural attributes of employees their jobs and organizations. Hassan and Ahmed (2011) states that trusting relationship in work groups can transform into positive outcomes including job satisfaction, organizational commitment, intentions to stay, and work engagement. The authors further states that trust between leaders and members of the work group is fundamental in effective functioning and that leaders play the principal role in initiating and developing trust. In a research done by Dirks and Ferrin (2002) suggested that trust will have a greater relationship with variables that are nearer to trust psychologically such as attitudes relating to work. Dirks and Ferrin further posits that behavioural and performance outcomes would have a lesser relationship with trust because these outcomes are a function of many contextual determinants. The finding in their research supports their hypothesis that trust has a higher relationship with work attitudes than behavioural and performance outcomes and lends some form of credibility to other research which links trust with work attitudes and behaviours. Kanter (1972 as cited in Lee & Hamil, 2003) found that there was a positive association between trust and organizational commitment and that trust complements organizational commitment. Nyhan (1999) states that there is a significant association between trust and affective organizational commitment. Blake and Mouton (1984 as cited in Nyhan, 1999) suggests that trust is the key in developing affective commitment.. The Financial Sector in St. Lucia Now that we have looked at the literature, regarding variables used in this research, we can now focus briefly on the case country. St. Lucia is a small island country located in the Caribbean region. The country is 238 square miles in size and has a population of 165, 595 20.

(30) according to census 2010 estimates (Foreign & Commonwealth Office). St. Lucia is mostly dependent on tourism and banana production as the main source of revenue. Other major industries include construction, light manufacturing and the financial services. The financial sector which consists of the banks, insurances and credit unions, in 2008 is recorded to have 1660 employees (government of St. Lucia statistics department). The sector is believed to have contributed to 15.5% to GDP in 2009 (St. Lucia government statistics dpt. & Eastern Caribbean Central bank). St. Lucia was chosen for this study primarily because it is a small developing country, and little research has been done there. To the knowledge of the researcher, no previous research has been done regarding trust and its effect on employees’ job attitude in the aforementioned country. For this reason this research hopes to provide some contributions to the financial and sector, and possibly to the country at large.. 21.

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(32) CHAPTER III. RESEARCH METHODOLOGY This chapter refers to the research methodology which gives a detailed report on the methods used to carry out this study. This chapter contains the research framework, research procedure, research methods, sampling, ethical considerations, instrumentation, data collection methods, and finally data analysis methods.. Research Framework The research framework as shown in figure 3.1 below was created based on the review of literature. The literature showed that that harmony, reliability and concern are used as dimensions in measuring interpersonal trust and that is based on the instrument created by Tzafrir and Dolan (2004) in measuring managerial-subordinate trust. The literature review also shows that trust has a relationship with job attitudes particularly with job satisfaction and organization commitment. The control variables used in this model was suggested by Straiter (2005) that personality in particular positive and negative affect would possibly have some influence on job satisfaction outside of trust and tenure would possibly have an effect on affective organizational commitment outside of trust. Control variables are used in other to rule it out as a different explanation to the findings of a research. Control variables should not be restricted to the method section of a study but for the role of the variables to be truly understood it is essential that they are addressed in the hypothesis, results, and the discussions (Atinc, Simmering, & Kroll, 2011; Becker, 2005; Spector & Brannick, 2010). Hence this research will include two added hypothesis to facilitate the use of the control variables tenure, negative affect, and positive affect as control variables in this research.. 23.

(33) Job Attitudes H3. Perceived Managerial Trust  Harmony  Reliability  Concern. Job Involvement. Affective Organizational Commitment. H4. H5. Job Satisfaction. Control Variables H1. H2. Tenure. Positive Affect Negative Affect. Figure 3.1 Research framework. Hypothesis of the Study The three main hypothesis of this study were H3, H4, and H5. To accommodate for the use of control variables controlling for the effect of tenure, positive, and negative affect; two additional hypotheses were included H1 and H2. Ha: µ > 0 1.. Ha: There is a significant relationship between tenure and affective organizational commitment.. 2.. Ha: There is a significant relationship between positive and negative affect and job satisfaction.. 3.. Ha: There is a significant and positive relationship between perceived managerial trust in subordinates and job involvement.. 4. Ha: There is a significant and positive relationship between perceived managerial trust in subordinates and affective organizational commitment when controlling tenure.. 24.

(34) 5. Ha: There is a significant and positive relationship between perceived managerial trust in subordinates and job satisfaction when controlling positive and negative affect.. Research Procedure This research followed a quantitative research layout and entails the following elements as suggested by Coughlan, Cronin, and Ryan (2007). The authors proposed that the following elements influence the forcefulness of quantitative research hence the researcher will follow each of steps explained below and figure 2.2 shows a graphical summary of the research procedure.. 1. Research purpose/research problem: This section of the study identified why research in managerial trust in their subordinates is important in the organization. 2. Aims/objectives/research. questions:. This. section. shows. what. the. researcher. accomplished by doing this research, the questions were selected based on the purpose of the research and finally the Operational definitions: The researcher provided clear definitions of all the terms and concepts that are mentioned in the study. 3. Literature Review: The researcher provided a careful analysis of literature on organizational trust, job attitudes namely: Job satisfaction and organizational commitment (affective organizational commitment) and job involvement mainly from books, journals, and articles. 4. Conceptual framework/Hypothesis formulation: A conceptual framework was established based on the research purpose and the variables which are measured in this research. The hypothesis was formulated as a platform for testable predictions in the study. 5. Sample: Convenience sampling used in this research, employees from the financial sector in St. Lucia was targeted. 6. Ethical Considerations: Participants were guaranteed confidentiality with information provided to the researcher. 7. Research Methods: This section includes the study design, and instruments that were used. This study took a quantitative approach. The instrument was reduced and slightly adjusted to suit the purposes this research. A pilot study of 30 participants was carried 25.

(35) out to assess the feasibility of using this particular instrument. Principal Component Analysis revealed several items that were faulty which were removed from the final instrument. 8. Data Analysis/Results: This research used SPSS to analyze for data collected through the survey method. The results were communicated and significance of results was provided. 9. Discussions: The link between the literature and findings were discussed, the researcher also discussed whether hypothesis were supported or not. 10. Conclusion/Recommendation: Study limitations and strengths were discussed and recommendations for future research provided and also recommendations for the financial sector in St. Lucia. 11. References: Detailed references for all materials including books, journals, and articles used were provided.. Figure 3.2 on the next page shows a graphical summary of the research procedure of steps one to eleven as outlined above.. 26.

(36) Figure 3.2 Research procedure. 27.

(37) Research Design This study examined the relationship between employees’ perception of management trust and its effect on employee job satisfaction and affective organizational commitment. Due to the nature of this research, where the researcher was trying to establish the relationship among variables, a quantitative approach was found to be the most appropriate. In a quantitative research method, the researcher explored the relationship among variables using numerical data. Because the aim was to empirically seek precise measurement on how different variables impacted on each other; in particular the relationship of managerial trust with job attitudes, then according to Neill (2007), this research was justified in using the quantitative method to conduct this study.. Sampling Purposive or Judgmental sampling was used in this research. This is where the researcher chose participants who in his or her opinion were best suitable to provide the required information and who would also be willing to share it, Kumar (1996). The population of this study was employees in the financial sector in St. Lucia. The sample were employees because the researcher aim was to measure subordinates’ perception of managers’ trust in their employees and the effect it would have on their job satisfaction, affective commitment, and job involvement. In this case the outcome would be dependent on what the employees perceive and not on whether or not managers believe that they trust their employees. Employees from the financial sector were chosen because it provided a wide pool of workers making it more convenient to get participants for the survey. Employees had to be in their positions for 6 months or more since this could be enough time to build an employeeemployer trust relationship. Each participants were asked if they had been working in the organization for six months or more before they were given the questionnaires to ascertain that the criteria was met. Also in the questionnaires the participants were asked the number of years that they have been working for their organization, hence if any did not meet the criterion of 6 months or more, the questionnaire would be considered invalid. The financial sector included banks, insurance companies and the credit unions.. 28.

(38) Sampling Characteristics After conducting a pilot study of 30 participants and running factor analysis as a data reduction method and also to refine the instrument as explained later on in this chapter, the main study was conducted. There were six items in the demographic information which were explored in this study: Gender, age, education, tenure, years of experience, and position held at the organization. The descriptive analysis revealed that 54% of the respondents were female and 46% were male. The most frequent respondents were within the age range of 21-25 accounting for 33% of the sample, and the least frequent were within the age range of 50 or more accounting for 4% of the sample. Most of the respondents have an Associate degree (51%) and majority have been working at respective organizations for 0-4 years (35%). The majority of the respondents also have work experience of 5-9 years (33%). Finally the most frequent job position was bank teller accounting for 28% of the respondents. Table A1, A2, and A3 with the coding system used in SPSS for demographic variables, descriptive statistics for job positions, and other demographics is provided in the Appendix section of this research.. Ethical Considerations The data collected for this research followed the ethical guidelines suggested for researchers. The main ethical issues this research will follow are taken from Miles and Huberman (1994, as cited in Punch, 2000) they are namely: 1. Informed consent of participants: This means that participants will be informed about research. The researcher will ensure non-coercive consent of each participant. 2. Privacy: Information was safeguarded to ensure the identities of participants were protected. 3. Ownership of data and conclusions: Since the researcher is affiliated with the National Taiwan Normal University and this research was done as a part of a thesis, the research results will be published and be available at the NTNU library for reference. 4. Uses of Results: The researcher’s aimed that the findings in this research be used appropriately and not be misused in anyway. 29.