Academic journal article International Journal of Management

The Effects of Internal and External Equity on Components of Organizational Commitment: An Empirical Study in the Egyptian Hotel Sector

Academic journal article International Journal of Management

The Effects of Internal and External Equity on Components of Organizational Commitment: An Empirical Study in the Egyptian Hotel Sector

Article excerpt

The purpose of this study was to investigate the relative importance of employee perception of internal equity versus employee perception of external equity in predicting each of the components of organisational commitment (affective commitment, continuance commitment and normative commitment) in the Egyptian hotel sector. Data were collected through a direct survey in which 368 randomly-chosen employees completed anonymous questionnaires. 328 respondents were non-managers while 48 were managerial employees. Respondents were drawn from hotels located in Cairo and Alexandria. The results show that perception of internal equity is more important than perception of external equity in predicting each of the components of organizational commitment.

(ProQuest: ... denotes formula omitted.)

Introduction

According to Adams (1963: p. 335), "perception of equity is the extent to which an employee perceives he/she is treated fairly relative to comparable others inside (perception of internal equity) and outside (perception of external equity) the organization".

Organisational commitment is defined as the strength of an individual's identification with and involvement in his/her organisation (Mowday, Porter & Steers 1982) and has three components: a) Affective Commitment: An employee's positive emotional attachment to the organisation (Meyer & Allen 1993). b) Continuance Commitment: The individual commits to the organisation because he/she perceives high costs of losing organisational membership (Becker 1960). C) Finally, Normative Commitment: The individual commits to and remains with an organisation because of feelings of obligation (Meyer & Allen 1990).

While organisational commitment has been extensively studied as a function of perception of equity and other predictor variables, there has not been sufficient research on it as a function of equity in the Egyptian hotel sector. There has also not been sufficient research on the relative importance of internal equity versus external equity in predicting commitment.

To fill this void, the main objective of this study was to investigate the relative importance of perceptions of internal equity versus perceptions of external equity as predictors of each of the three components of organisational commitment at Egyptian hotels.

Where: The employee's perception of equity is determined by comparing his/her perception of the ratio of the outcome he/she receives to his/her inputs compared to the ratio of comparable others' outcomes to their inputs in the same organisation and other organisations.

And where Perception of internal equity is the extent to which an employee perceives he/she is treated fairly relative to comparable others inside the organization. And in the context of this study, it is calculated by averaging the employee's perceptions of equity regarding salaries, fringe benefits, promotion opportunities, recognition, salary raises and status - compared to similar employees in the organization.

Organisational commitment has negative relationships with negative work outcomes such as employee turnover (Wagner 2007, Falkenburg & Schyns 2007). On the other hand, it positively correlates with positive outcomes such as job performance (Decotiis & Summers 1987), and organisational performance (Roca-Puig et al. 2007).

This study would increase the knowledge of how to improve the effectiveness of the relationship between organisations and their employees through increasing employees' commitment. The study will also help managers at Egyptian hotels to reduce negative consequences of low levels of commitment such as turnover and increase positive work outcomes such as performance through increasing perception of equity. The practical importance of this study lies in the fact that the tourism industry and especially the hotel sector are of crucial importance to the Egyptian economy (a major source of employment and foreign currency). …

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