The Relationships among Employee Empowerment, Corporate Repututation, and Firm Performance: Research in the Turkish Manufacturing Industry.
| Autor | Ozbag, Gonul Kaya |
Introduction
The last four decades have witnessed significant growth in interest in the subject of corporate reputation among academics and practitioners. However, there is no generally agreed definition of the concept of corporate reputation (CR) since it is complex in nature. In their cross-disciplinary literature review, Fombrun and Rindova (1996) indicated that this ambiguity is the result of the perceptual lenses of different disciplines. Another reason for this complexity is that researchers and practitioners use the terms corporate image, corporate identity, and CR as interchangeable concepts. Corporate image is related to how a company is perceived by external stakeholders, especially customers. It describes what outsiders feel and think about the company based on their experience and observations (Furman, 2010; Lewellyn, 2002). On the other hand, CR is interpreted as the overall perception of a company. As Fombrun stated (1996, p. 11), "Reputations are partly a reflection of a company's identity and image and partly the result of managers' efforts to persuade us of their organization's excellence." Most scholars highlight that CR is a more stable variable and plays a central role in crisis management, contributing to managing a firm's image (Harvey, Morris, & Santos, 2017; Srivastava et al., 1997). Therefore, in the context of this study, corporate reputation can be viewed as a roof over pillars that include corporate image and corporate identity.
A firm can have multiple reputations and the reputation perceived by employees is critical because the greatest reputational leverage can be achieved through them (Fombrun, Gardberg, & Sever, 2000). Employees' role in the establishment of CR by creating a good relationship among an organization's stakeholders is often emphasized in the literature (Ager & Piskorski, 2001; Puncheva-Michelotti, Vocino, Michelotti, & Gahan, 2018; Teece, Pisano, & Shuen, 1997). They are crucial both in building and also in maintaining a good reputation. Externally, a good CR can enhance profitability because it attracts customers to the company's products and investors to make new investments (Fombrun & Van Riel, 2004); but on the other hand, the employees are the ones who produce the product or service for the customers. These two valuable assets, reputation and employees, interactively affect each other as employees actively shape other stakeholders' perceptions of the company (Cravens & Oliver; 2006; Helm 2011; Olmedo-Cifuentes, Martinez-Leon, & Davies, 2014; Taghian, D'Souza, & Polonsky, 2015) as well as being affected by public perceptions of the company they work for (Men, 2012a; Vercic & Coric, 2018). In other words, the reputation of a firm is stimulated by the way customer-facing employees perceive the organization, but being part of a highly prestigious organization or winning team also stimulates human behavior (Carmeli, 2004; Davies, Chun, Silva, & Roper, 2003).
Employees are regarded as one of the most important strategic partners because they interact with external stakeholders on a daily basis. Since a corporate entity is a human organization linked to an external environment (Olins, 1995), the behavior of the staff7 has a major impact on the impressions formed by members of external groups, such as customers, competitors, suppliers, investors, and media commentators (Bromley, 2001). For instance, employee-customer interactions are key ingredients in guiding and maintaining organizational reputation because, rather than relying on purposefully devised marketing communication messages from top management, consumers are more likely to believe information relayed through employees. Through the innovative use of new digital technologies, employees increasingly communicate with other stakeholders and initiate dialogues on social media that are often perceived to be more reliable and trustworthy than intentionally created messages (Kim & Rhee, 2011; Men, 2012b).
Although employee perceptions of an organization lie at the heart of CR and a good reputation starts from within the company (Fombrun et al., 2000), most of the previous studies have focused on external stakeholders, especially customers. The marketing approach has emphasized evaluating customer-based reputation (e.g. Walsh & Beatty, 2007), but internal members' perceptions about an organization are remarkably important for organizations. How can employers expect employees to communicate a favorable reputation to targeted audiences if they do not perceive such a reputation? Previous studies indicate that employee and customer views on reputation are interrelated and interlinked (Fombrun, 1996; Gioia, Schultz, & Corley, 2000; Hatch & Schultz, 2001). Scholars seem to agree that good reputation management should align internal and external perceptions (Doorley & Garcia, 2015; Hatch & Schultz, 2001) and, even over time, employees' perceptions can be consistently kept above those of customers (Davies, Chun, & Kamins, 2010; Davies, Chun, Silva, & Roperet, 2004). Therefore, in this study, reputation is evaluated via employees' perceptions.
On the other hand, the literature on empowerment differentiates between an empowerment climate (also called structural empowerment) and the psychological form of empowerment. Existing studies have demonstrated the beneficial aspects of employee empowerment and linked it to a range of positive work outcomes (Chang & Liu, 2008; Cekmecelioglu & Ozbag, 2014). However, most of the studies focus solely on one perspective of empowerment and thus a broader perspective simultaneously integrating both organizational and psychological dimensions is usually neglected. Even though they are distinct constructs, the common assumption is that empowerment is specific to the work environment, which involves an empowerment climate (EC), but if employees cannot create an active orientation toward their work via psychological empowerment (PE), empowerment practices may not be adequately captured. Since EC is limited to organizational structures and policies, we include dimensions of PE in our research model to reach a broader understanding of the employee empowerment process. As noted by many scholars (Kim & Rhee, 2011; Men, 2011), these antecedent agents not only affect employees' behaviors and attitudes but also facilitate establishing and safeguarding CR. For that reason, employees' feelings relating to EC and PE are examined as they can significantly affect the internal CR. In sum, it is predicted that empowerment practices contribute to CR, which in turn boosts firm performance (FP).
To the best of the authors' knowledge, there is no study available to date that has studied EC, PE, CR, and FP together. By building links between CR and the two internal antecedents, EC and PE, the current work will provide new empirical evidence on how structural empowerment and PE affect CR and extend the list of internal characteristics of firms that have favorable reputations. In addition, this study uses a corporate insider's perspective to examine how CR and firm performance (FP) are shaped by empowerment practices. Complementing the current empowerment literature that focuses on the consequences of empowerment practices (i.e., job satisfaction, organizational commitment, and identification), this paper establishes a relationship between reputation and the empowerment literature and provides empirical evidence showing why employee empowerment matters due to it building links between CR and FP.
I The theoretical Framework and Research Hypotheses
I.I Psychological empowerment, empowerment climate, and corporate reputation
There are two standpoints on employee empowerment in the literature: EC and PE. EC involves a macro perspective that focuses on organizational structures and policies, while PE involves a micro perspective that focuses on empowerment as an intrinsic motivation (Liden & Arad, 1996). PE differs from EC as the latter emphasizes the process of delegating authority, whereas the former has more to do with enabling. EC occurs when employees have access to "information, support, resources, and opportunities to learn and grow" (Laschinger, Finegan, Shamian, & Wilk, 2004, p. 528). On the other hand, PE occurs when employees have a heightened sense of self and motivation at work (Lee & Koh, 2010), which implies that managers can delegate duties and responsibilities down the hierarchy, but the act of delegation does not necessarily mean that the delegated employees will feel empowered (Wei, Yuan, & Di, 2010)
In essence, EC describes empowering conditions in the work environment while PE refers to the reaction of employees to these empowering conditions (Kirkman & Shapiro, 2001; Laschinger, Read, Wilk, & Finegan, 2014; Menon, 2001). It is the resulting psychological state of empowerment that occurs when employees have a sense of motivation in relation to the work environment (Menon, 2001). Also, it is the employees' psychological reaction to the presence or absence of empowering contextual conditions in the workplace (Laschinger et al., 2004). Conger and Kanungo (1988) suggest that empowerment should be viewed as a motivational construct that means "to enable" rather than simply "to delegate" and they add that there are various other conditions of empowerment besides delegation, resource sharing, or participation. Combining the organizational and psychological domains, employee empowerment may be viewed as a cognitive state, a subjectively empowered experience of power-sharing, competence, and value-internalization in organizations (Chang & Liu, 2008). Accordingly, the current study follows a unifying view of empowerment and proposes that empowerment is also a psychological process and cannot be accomplished unless the individual is psychologically accepting.
Researchers defined EC via three dimensions, including information sharing, autonomy through boundaries, and team accountability...
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