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Journal of Management Studies 44:6 September 2007

doi: 10.1111/j.1467-6486.2007.00691.x

The Role of Perceived Organizational Performance in


Organizational Identification, Adjustment and Job
Performance*

Abraham Carmeli, Gershon Gilat and David A. Waldman


Bar-Ilan University, Israel; Bar-Ilan University, Israel; Arizona State University
abstract Favourable organizational status and prestige has a substantial role in shaping
constituents attitudes and actions. The status and prestige of an organization is often a
reflection of its achievements or performance. In the present study, we investigate the role of
organizational performance or achievement (as assessed by organizational members) in evoking
employees identification, adjustment, and job performance. The results of this study indicate
that two forms of organizational performance (labelled as perceived social responsibility and
development and perceived market and financial performance) are associated with organizational
identification. However, when compared to perceived market and financial performance,
perceived social responsibility and development had a larger effect on organizational
identification, which in turn resulted in enhanced employees work outcomes adjustment and
job performance.

INTRODUCTION
Why does an employee identify with a particular organization? What are the implications of organizational identification for individual behaviours in the workplace? These
questions are key subjects of inquiry in organization theory and behaviour. Recently, we
have been witness to a growing body of research that examines how organizational
image and prestige augment an employees attachment to his or her organization
(Carmeli, 2005; Dukerich et al., 2002; Dutton and Dukerich, 1991; Dutton et al., 1994;
Mael and Ashforth, 1992; Smidts et al., 2001). Researchers have also directed substantial
efforts towards the implications of employees attachment to a variety of behaviours at
work such as organizational citizenship behaviours (Carmeli, 2005; Dukerich et al.,
2002; Dutton et al., 1994) and cooperative behaviours (Dukerich et al., 2002).
A review of the literature raises several issues that warrant further investigation. First,
most of the studies that examined how perceived image or prestige influences the degree
to which an employee is attached to a particular organization tend to use rather broad
Address for reprints: Abraham Carmeli, Graduate School of Business Administration, Bar-Ilan University,
Ramat-Gan 52900, Israel (carmelia@mail.biu.ac.il).
Blackwell Publishing Ltd 2007. Published by Blackwell Publishing, 9600 Garsington Road, Oxford, OX4 2DQ, UK
and 350 Main Street, Malden, MA 02148, USA.

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terms (e.g. well-known, highly prestigious) (e.g. Carmeli et al., 2006; Smidts et al., 2001).
As such, though making a substantial contribution, they have not captured the multidimensional nature of the concept of prestige and its diverse descriptors (e.g. social
responsibility, profitability, work relationships). It seems apparent that employees attitudes would be affected by aspects of a firms performance (Schneider et al., 2003). For
example, a favourable assessment of the firms achievements may influence the degree of
identification an employee develops towards his or her organization. However, it is not
clear as to how such attitudes may be differentially affected by different aspects of
organizational performance. Drawing upon the literature on corporate social responsibility, this study suggests that perceived social responsibility and development performance will have a greater effect on organizational identification than perceived market
and financial performance.
Second, the degree to which an employee identifies with his or her organization (i.e.
organizational or member identification) may have positive consequences for both the
individual (e.g. enhanced organization-related self-esteem and self-worth) and the organization (e.g. having strong human capital that exerts a great deal of effort, knowledge
and skills on behalf of the organization; establishing a cooperative mode of operation).
However, there are relatively few empirical examinations of the consequences of organizational identification (see Dukerich et al., 2002). In fact, there has been a handful of
research efforts to examine the effect of organizational identification on work outcomes
(see Riketta, 2005; Riketta and Van Dick, 2005). The existing studies found only a weak
to moderate relationship between identification and in-role performance and extra-role
behaviour (Riketta, 2005). This raises the need to explore intervening processes. This
study proposes and tests member adjustment (i.e. how well an employee fits in or adjusts
to the organizations professional and social system) as an intervening variable for the
relationship between organizational identification and job performance (i.e. how well an
employee performs his or her job).
The present study aims to contribute to a better understanding of the relationships
between perceived organizational performance, organizational identification, and work
outcomes. Specifically, we examine the organizations performance through employees
assessment of their firm-level achievements regarding a variety of aspects (e.g. profitability, ability to retain essential employees, product development, and satisfaction of customers or clients), and its role in evoking organizational identification. In addition, we
assess empirically the relationship between organizational identification and two forms of
employees work outcomes organizational adjustment and job performance.

THEORY DEVELOPMENT AND HYPOTHESES


Organizational Identification
Although interest in the way individuals define themselves in relation to particular social
groups can be traced to social psychology research conducted at the end of the 19th
century, interest in the specific ways in which people define themselves in terms of their
organizational relationships or organizational identification within organizational
context has grown considerably over the last decade (Elsbach, 1999, p. 164; Kreiner and
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Ashforth, 2004, p. 2). Though research interest can be traced to the 1960s and 1970s (e.g.
Katz and Kahn, 1978), it was mainly in the 1980s (e.g. Ashforth and Mael, 1989) and
especially in the 1990s (e.g. Dutton et al., 1994; Elsbach, 1999; Mael and Ashforth, 1992,
1995; Pratt, 1998) that the concept of organizational identification received considerable
research attention (Cornelissen, 2006).
Social identity theory provided the theoretical basis for the concept of organizational
identification (Elsbach, 1999). Social identity theorists (Abrams, 1992; Abrams and Hogg,
1990; Kramer, 1991, 1993; Mael and Ashforth, 1992; Tajfel, 1982; Tajfel and Turner,
1985; Turner, 1982) proposed that individuals develop self-conceptions inter alia through
their affiliation or connection with particular social groups. A core concept of social
identity theory is that the extent to which people identify with a particular social group
determines their inclination to behave in terms of their group membership (Ellemers
et al., 1999, p. 372). Social identification thus refers to the perception of belongingness to
a group classification through which an individual perceives him or herself as an actual
or symbolic member of the group (e.g. I am a man, I am a biologist) (Mael and
Ashforth, 1992, p. 104). Self-conceptions may also include an awareness of the features
that distinguish oneself from other individuals (e.g. I am cheerful, I am generous, etc)
(Abrams, 1992, p. 59). Further, depending on social identity salience, identification is
closely associated with high commitment and involvement within, and efforts invested
into, a social group (Ellemers et al., 1999, 2004; Haslam, 2001).
Organizations can be conceived as social systems through which individuals define
their self-conceptions. Organizational identification is seen as a form of the construct of
social identification (Ashforth and Mael, 1989; Bergami and Bagozzi, 2000; Elsbach,
1999). That is, organizational identification is a particular facet, while social identification is a multifaceted construct. According to Dutton et al. (1994), organizational identification refers to the cognitive connection between the definition of an organization
and the definition a person applies to him- or herself (p. 242). Organizational identification is developed when one integrates beliefs about ones organization into ones
identity (Pratt, 1998, p. 172) or when the self and the group (organization) are merged
(Tyler and Blader, 2000, p. 15).
Social identity theory suggests that an individuals social identity is enhanced when the
group to which he or she belongs is distinctive and more favourable than comparable
groups (Abrams, 1992; Ashforth and Mael, 1989). Studies have found that favourable
organizational status and prestige were associated positively with organizational identification (e.g. Mael and Ashforth, 1992; Smidts et al., 2001, among others). When an
individual views the identity of a particular social group or organization as being
distinctive, central, and enduring (Albert and Whetten, 1985), and incorporates it into his
or her self-concept, and when this identity is, relative to other identities, salient, he or she
is likely to develop strong identification (Ashforth and Mael, 1989; Dutton et al., 1994).
When people define their self-conceptions in terms of their memberships in social groups
(see Oakes et al., 1994), and develop strong identification, they are also likely to be more
sensitive to situational cues.
In what follows, we develop our research model, shown in Figure 1, and provide the
theoretical reasoning for linking perceived organizational performance, organizational
identification, and work outcomes.
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Organizational Performance
Perceived
Social
Responsibility
and
Development

H1a
Organizational
identification

Perceived
Market and
Financial
Performance

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H2

Member
Adjustment

H3

Job
Performance

H1b

Figure 1. The research model

Perceived Organizational Performance and Organizational Identification


Part of an individuals self-conception and self-esteem stems from the status and prestige
attributed to the organization in which he or she is employed. Research has thus far
concentrated on the fact that how employees construe the way outsiders view or evaluate
their organization is an important factor that affects the strength of organizational
identification. For instance, Dutton and Dukerich (1991) showed how important
construed external image is for managers. Belonging to a high performance (and by
implication, a highly regarded) organization or group helps individuals to develop
self-continuity, self-distinctiveness, and self-esteem (see Dutton et al., 1994). It is the
desire of individuals to be part of a high performance group and to bask in its reflected
glory, even if this glory is not a direct result of their own actions (Cialdini et al., 1976;
Dutton et al., 1994). Several studies have documented the relationship between perceived image and prestige and organizational identification (e.g. Bergami and Bagozzi,
2000; Dukerich et al., 2002; Mael and Ashforth, 1992; Smidts et al., 2001). However, to
the best of our knowledge, an attempt to capture the multidimensional nature of perceived organizational prestige or reputation has been done in only a handful of studies
(Carmeli, 2005; Fombrun et al., 2000). For example, Carmelis (2005) work distinguished between items that constitute the social indicators of prestige versus those items
that constitute the economic indicators of prestige. Moreover, Fombrun et al. (2000)
have proposed a multidimensional construct of organizational reputation composed of
such dimensions as emotional appeal, products and services, and social and environment
responsibility, among others.
Some existing research has specifically addressed the issue of how perceived organizational image or prestige can influence the degree to which an employee is attached to
a particular organization. These studies have used rather broad criteria (e.g. well-known,
highly prestigious) upon which the perceived image or prestige was assessed. For
example, Bergami and Bagozzi (2000) focused on four aspects of status: being well
known, respected, admired and prestigious, whereas Smidts et al. (2001) dealt more
specifically with aspects such as reputation and prestige. The difficulty in this line of
research is that despite its merit, it does not really capture the multidimensional nature
of the concept of perceived prestige and its diverse descriptors (e.g. social responsibility,
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profitability, work relationships). That is, we need more clarity as to how, or along which
dimensions, employees evaluate their organizations prestige relative to its competitors.
We borrow from the corporate social responsibility (CSR) literature in an attempt to
characterize the dimensionality of organizational prestige in a parsimonious manner.
CSR has commanded increased attention from both academics and managers alike in
recent years. This attention stems largely from organizations realizing the potential
strategic value of pursuing CSR policies ( Jones, 1995; McWilliams and Siegel, 2001).
However, it might also prove useful for understanding identification processes on the
part of organizational members.
Building upon stakeholder theory (Donaldson and Preston, 1995) and the work of
McWilliams and Siegel (2001), we define CSR as actions on the part of the firm that
further a socially-based purpose or stakeholder group. We further delineate CSR as
actions that go beyond the immediate, business-specific interests of the firm and its
shareholders, as well as beyond that which is required by law. Our definition of CSR
focuses on firm-level action that furthers a socially-based purpose, thus partitioning it
from immediate, business-specific matters of the firm.
With this in mind, we make the common distinction in the CSR literature between
performance relevant to the immediate business interests of the firm (market and financial performance), versus interests that advance or acquiesce to social issues beyond the
immediate interests of the firm and its shareholders (social responsibility) (McWilliams
and Siegel, 2001). The former include such concerns as maintaining profitability and
market share. In contrast, CSR performance pertains to a wider gamut of stakeholders
of firms (Donaldson and Preston, 1995; Mitchell et al., 1997). As noted in the literature
(Agle et al., 1999; Hillman and Keim, 2001; Johnson and Greening, 1999; Sharfman,
1996), CSR performance stresses the importance of actions towards employees, such as
employee relations and development, as well as factors pertaining to products or services,
such as product quality. While some degree of relationship has been found between CSR
and profitability/market performance (Hillman and Keim, 2001), they can also be
delineated in terms of their goals, content, and targeted stakeholders of the firm.
Borrowing from research on perceived organizational prestige and construed external
image, we argue that relative to employees working for organizations that are perceived
to be low performers, those who work for organizations perceived to be high performers
are likely to develop a higher level of identification towards those firms. Furthermore, just
as organizational performance is a multidimensional construct, so is the construct of
prestige (see, for instance, Fombrun et al., 2000). Thus, both forms of performance
characterized above, CSR and market and financial performance, should be of some
importance for fostering organizational identification.
However, based on arguments similar to those of Gioia et al. (2000), we suggest that
the connection between CSR performance and organizational identification should be
stronger. That is, when firms are perceived to be performing well in terms of social
responsibility, their images will foster identification since the ideals and values of followers will be highly engaged. Stated another way, the ideals and values of followers will be
realized by members when they perceive their firms to be responsible in terms of the
treatment of employees, the development of quality products, and so forth. In turn,
organizational identification with such firms should be at a maximum. While employees
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are likely to look favourably upon the positive financial or market performance of their
firms, there may not be the same sort of effect on followers ideals and values, and hence,
organizational identification.
Along similar lines, Shamir et al. (1993) put forth a theory of charismatic leadership
that was based on the notion that such leaders communicate or symbolize messages that
contain many references to socially-based values and moral justifications. Thus, they are
able to have accelerated motivational effects on followers by presenting goals or a vision
largely in terms of socialized values. Subsequently, the self-concepts of followers become
linked to those values, resulting in value internalization and identification with the
leaders vision on the part of followers (Lord and Brown, 2001, 2004). Likewise, we
propose here that when a firms performance is perceived highly in terms of CSR, the
self-concepts of followers will become linked to the socialized values inherent in CSR,
thus engendering a higher degree of organizational identification. In sum, the following
hypothesis is suggested:
Hypothesis 1a: Favourable perceived organizational prestige in the form of corporate
social responsibility (CSR) performance will be positively associated with an employees identification with his or her organization.
Hypothesis 1b: Favourable perceived organizational prestige in terms of market and
financial performance will be positively associated with an employees identification
with his or her organization.
Hypothesis 1c: Favourable perceived organizational prestige in the form of corporate
social responsibility (CSR) performance will be more highly associated with an
employees identification with his or her organization, as compared to favourable
perceived organizational prestige in terms of market and financial performance.
Organizational Identification and Work Outcomes
Organizational identification has several implications for individual behaviours and
performance. The present study focuses on two potential consequences that have not yet
been examined in the literature: member adjustment and job performance. Our interest
is to extend previous work (e.g. Carmeli, 2005) by examining the degree to which
organizational identification may not only be associated with different aspects of organizational prestige, but may also predict aspects of work outcomes.
Individuals who hold strong organizational identification are concerned with the
well-being of their organization. As noted by Dutton et al. (1994, p. 254), when people
strongly identify with their work organization their sense of survival is tied to the
organizations survival. This link leads individuals to direct efforts on behalf of their
colleagues and the organization as a whole (Dutton et al., 1994) as part of the process of
creating distinctiveness from other groups and favourable bias towards members in the
group with which the individuals are associated (Kramer, 1991). Hence, it is likely that
employees who strongly identify with their organization will perform their tasks better
than employees who identify less with their organization.
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In addition, employees who identify with their organization are likely to become more
integrated within this collective. We used the term member adjustment and considered it as
an individual-level construct that refers to the extent to which an employee becomes
integrated or fits in with his or her organizations professional and social system. As
explained below (see the Methods section), we constructed this measure based on its
suitability to the work context of our sampled organizations.
How is identification associated with an employees adjustment within his or her work
organization? When individuals strongly identify with their work organization, they
possess similar attributes and share common issues with their group members. These
similarities are said to create intra-group cohesion (Dutton et al., 1994; Kramer, 1991).
Social cohesion is akin to people who develop high level of adjustment to or adjustment
within a system. They fit in with a specific organizational system. Identification is a
critical driver of member adjustment. For instance, theory and recent empirical evidence
suggest that organizational identification directly and indirectly leads to positive interactions with other group members manifested in cooperation (Dukerich et al., 2002;
Dutton et al., 1994) and organizational citizenship behaviours (Bergami and Bagozzi,
2000; Dukerich et al., 2002; Dutton et al., 1994). Interactions are the cornerstone of
member adjustment. If an individual is not identified with his or her work organization,
it is unlikely to expect her or him to develop a high level of adjustment or to simply fit in.
Identification is a key motivational factor that facilitates the process of becoming integrated within an organization. Thus, the following hypothesis is suggested:
Hypothesis 2: A members identification with his or her organization will be positively
associated with his or her degree of adjustment within the organizational system (i.e.
becoming integrated).
Theory suggests that organizational identification is likely to result in enhanced in-role
performance because people who strongly identify with their organization are likely to
exert much effort, contribute their best for the social system, cooperate, develop lower
turnover intentions and actual turnover, and are expected to exhibit high performance
as they feel a strong sense of belongingness (e.g. Abrams et al., 1998; Mael and Ashforth,
1995; Tyler, 1999). However, empirical evidence suggests that the relationship between
organizational identification and job performance (in-role behaviour or performance) is
weak. For example, Rikettas (2005) meta-analysis revealed that organizational identification correlated weakly with in-role performance (r = 0.17). This finding is in line with
those of previous studies which indicated that the relationship between organizational
commitment and performance was weak (Mathieu and Zajac, 1990) or mixed (Meyer
et al., 2002).
The above discussion raises the need to explore intervening variables that may convert
organizational identification into enhanced work performance. In the current study, we
suggest that member adjustment within the organization is directly related to job (in-role)
performance. We reason that people who develop strong identification to an organization are likely to experience a sense of adjustment (fitting in within the organizational
system). Members who fit in within their organizational system enjoy productive shared
resources with others that enhance their job performance. In other words, people who fit
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in are likely to reciprocate resources, and experience a sense of vitality, positive regard
and mutuality (Dutton and Heaphy, 2003) that enable them to perform their job more
successfully. Hence, the following hypothesis is suggested:
Hypothesis 3: An employees adjustment with his or her organization is positively
associated with job performance.

METHODS
Respondents and Data Collection
Two hundred and seventeen employees and their direct managers were surveyed. These
subjects were employed by four companies competing in the electronics and media
industry in Israel. We chose these companies because of the collaboration provided by
their managers. This support includes pre-research interviews with the companies
managers to learn about the work and environmental contexts. In exchange, we offered
to feed back the key findings and managerial implications, and promised complete
confidentiality.
The present study presents a four-step method. First, as indicated above, interviews
were conducted with the executive director or human resource manager of each
company to provide in-depth explanations about the research and to learn about the
work context. These interviews provided us with useful information about the performance indicators upon which these organizations evaluate their employees achievements. They also allowed us to construct measures of member adjustment and job
performance relevant to their work context. Second, we drew on the literature and used
validated and established measures to examine most of our research variables. In accordance with the common wisdom of wording and translation (Brislin, 1986), the measures
were translated into Hebrew, and then retranslated back into English by three professional copy editors. Third, we conducted a pre-test survey among 38 randomly selected
employees. No substantial refinements were required. Alpha coefficients were all above
the value of 0.70. Finally, on the basis of this pre-test, we administered a structured
questionnaire in which the items were randomly distributed.
Data were collected from two key sources: employees and their direct supervisors.
Data regarding forms of perceived organizational prestige, organizational identification,
and control variables were collected by an employee survey. Data about member
adjustment and job performance were collected from the direct supervisors of respective
employees. The head of the human resource management department in each organization provided us with a list of employees and their direct supervisors. The supervisors
were asked to provide an assessment of their employees adjustment and performance
approximately two weeks after data from employees were collected.
We received 161 usable matched surveys from employees and their direct supervisors,
which represents a response rate of 74.2 per cent. From a comparison between the
sample and the overall target population, we concluded that the participants were a fair
representation of the overall target population. Ninety-four of the respondents were
women (58.3 per cent). The respondents average age was 37.24 years (SD 10.41), and
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their average tenure in the organization was 5 years (SD 5.15). Sixty employees held a
high school certificate, 51 (31.6 per cent) held a Diploma certificate, 36 (22.3 per cent)
held a Bachelors Degree, and 14 (9.3 per cent) held a Masters Degree or above.
Dependent Variables and Mediator
Work outcomes. We used two measures of work outcomes, labelled as member adjustment and
job performance. A three-item scale was constructed to evaluate the extent to which an
employee integrates or fits in with his or her organization. First, we presented the concept
of member adjustment to the senior executives. Then, we used the interviews mentioned
above to construct items that suited the work context in these organizations. The items
were discussed with the senior executives prior to their inclusion in the survey. The same
procedure was applied for measuring employees job performance. The items that
constitute both measures (member adjustment and job performance) are presented in the
Appendix and were subjected to exploratory factor analysis. To reduce potential halo
effects, we used a total of 19 supervisors to evaluate their employees. No supervisor
evaluated the performance of more than 10 employees. The results of this factor analysis
indicated a two-factor solution, namely member adjustment and job performance, as
distinct forms of work outcomes. Together, these two factors explained about 75 per cent
of the variance, each with eigenvalues greater than 2. We also conducted a confirmatory
factor analysis as part of our full measurement measure (see description in the Results
section). The cumulative results of these factor analytic procedures suggest that these are
distinct measures. The Cronbachs alphas for member adjustment and job performance
were 0.85 and 0.87, respectively.
Organizational identification. We used the first four items (listed in the Appendix) of the
organizational identification measure developed by Mael and Ashforth (1992). This is a
well-established measure and has been used extensively in many studies on organizational identification (e.g. Dukerich et al., 2002; Mael and Ashforth, 1995). The measure
was assessed on a five-point scale (ranging from 1 = strongly disagree to 5 = strongly
agree). The Cronbachs alpha for this measure was 0.74.
Independent Variables
Perceived organizational performance. To measure perceived organizational performance we
used seven items from the scale developed and used in the study of Delaney and Huselid
(1996) that encompasses two performance measures. Respondents were asked to assess
on a Likert scale (ranging from 1 = much worse than the competitors, to 4 = much better
than the competitors), their organizations performance in relation to its key competitors.
Results of an exploratory factor analysis produced two factors, which we labelled as
perceived social responsibility and development (sample items are relations between management and other employees and development of new products, services, or programmes), and (2) perceived market and financial performance (sample items are growth in
sales and profitability). All items are listed in the Appendix. We should note that these
factors are similar to our hypothesized factors of perceived organizational performance.
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Aspects of product/service development load with social responsibility, as do practices


with regard to employee relations. In line with stakeholder theory, it is somewhat
common in the literature to consider aspects of products (e.g. product quality) and
employee relations together in a unified factor of CSR (e.g. Agle et al., 1999; Hillman
and Keim, 2001; Waddock and Graves, 1997). Together, these two factors explained
about 61 per cent of the variance with eigenvalues greater than 1.8. We also conducted
a confirmatory factor analysis as part of our full measurement measure (see description
in the Results section). The cumulative results of these factor analytical procedures
suggest that these are distinct measures. The Cronbachs alphas for perceived social
responsibility and development prestige and perceived market and financial prestige
were 0.74 and 0.71, respectively.

Data Analysis
To test the research model presented in Figure 1, Structural Equation Modelling (SEM)
(Bollen, 1989) was performed using AMOS 5 (Arbuckle, 2003; Byrne, 2001). In order to
assess the fit of the research model in Figure 1, we used several goodness-of-fit indices as
suggested in the SEM literature ( Joreskog and Sorbom, 1993; Kline, 1998) such as
chi-square statistics divided by the degree of freedom (c2/df); Relative Fit Index (RFI),
Normed Fit Index (NFI), Comparative Fit Index (CFI), TuckerLewis coefficient (TLI),
and Root Mean Square Error of Approximation (RMSEA). As suggested by the SEM
literature ( Joreskog and Sorbom, 1993; Kline, 1998), the following criteria of goodnessof-fit indices were used to assess the model-fitting: c2/df ratio is recommended to be less
than 3; the values of RFI, NFI, CFI, and TLI are recommended to be greater than 0.90;
RMSEA is recommended to be acceptable up to 0.08.
We used structural equation modelling to test the mediating effect of: (1) organizational identification on the relationship between both perceived market and financial
performance and perceived social responsibility and development and member adjustment; and (2) member adjustment on the relationship between organizational identification and job performance. This procedure was based on a recent review by Schneider
et al. (2005) who indicated the inappropriateness of the Baron and Kenny (1986)
approach for testing full mediation. In addition, MacKinnon (2000) noted that a simultaneous test of the significance of both the path from an initial variable to a mediator and
the path from the mediator to an outcome provides, relative to other approaches,
provides the best balance of type I error rates and statistical power.

RESULTS
The means, standard deviations, reliabilities, and correlations among the research variables are presented in Table I. The correlation coefficients among the predictors do not
exceed the value of 0.60, suggesting that the multicollinearity among the research
variables is probably not severe (see Nunnally, 1978). Cronbachs alphas for the research
variables ranged from 0.71 to 0.90.
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Age
Gender (1 = female)
Job tenure
Perceived market and financial performance
Perceived social responsibility and development
Organizational identification
Member adjustment
Job performance

N = 161.
Alpha reliabilities appear in parentheses.
* p 0.05, ** p 0.01, *** p 0.001.

1.
2.
3.
4.
5.
6.
7.
8.

37.24

5.00
3.04
3.07
3.90
3.73
3.92

Mean
10.41

5.15
0.53
0.52
0.62
0.84
0.68

s.d.

-0.01
0.57***
0.01
-0.10
-0.28***
-0.20*
-0.08

Table I. Means, standard deviations (s.d.), alpha reliabilities, and correlations

0.15*
-0.08
-0.11
-0.08
-0.19*
-0.10

0.04
-0.11
-0.21**
-0.37***
-0.16*

(0.71)
0.59***
0.33**
0.18*
0.18*

(0.81)
0.39***
0.26**
0.18*

(0.76)
0.30***
0.32***

(0.84)
0.65***

(0.90)

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Preliminary Analyses
Prior to testing the model fit and research hypotheses, we sought to show evidence of the
construct validity of the exogenous and endogenous variables. Using confirmatory factor
analysis (CFA), a measurement model (with all latent variables) was tested in order to
assess whether each of the measurement items would load significantly onto the scales
with which they were associated. The results of the overall CFA showed acceptable fit
with the data; a c2 of 452.3 on 137 degrees of freedom, and other goodness-of-fit statistics
(CFI = 0.95; RFI = 0.94; IFI = 0.97; TLI = 0.96, CFI = 0.97; RMSEA = 0.10) were
achieved. Standardized loadings on factors ranged from 0.58 to 0.90. Results indicated
that the relationship between each indicator variable and its respective variable was
statistically significant (p < 0.01), establishing the posited relationships among indicators
and constructs, and thus, convergent validity (see Hair et al., 1998, p. 652). We also
compared this measurement model with an alternative, single factor model. The results
of the overall CFA showed a poorer fit with the data for the alternative, single factor
model. A c2 of 755.9 on 140 degrees of freedom, and other goodness-of-fit statistics
(CFI = 0.92; RFI = 0.90; IFI = 0.93; TLI = 0.92, CFI = 0.94; RMSEA = 0.15) were
achieved. Hence, though the goodness-of-fit statistics for our target model are somewhat
mixed, they cleared the Hu and Bentler (1999) criterion for the CFI and similar indices
and other parameters (e.g. high standardized loadings), which lends support to the
hypothesized measurement model.
Drawing on Shrout and Bolgers (2002) study, we also used bootstrap analyses which
refer to a computer-based method for assigning measures of accuracy to statistical
estimates (Efron and Tibshirani, 1993, p. 10). This procedure aims to obtain appropriate model fit tests and standard errors presuming non-normality distribution (Bollen and
Stine, 1990). Instead of relying on a known normal distribution as a prerequisite for
hypothesis testing, bootstrap is based on repeatedly re-running the analyses of interest on
samples drawn from the original database.
Following Shrout and Bolger (2002), 1000 bootstrap samples were created from the
original database, and thus 1000 estimates of the mediated effect. Using AMOS, we
conducted this bootstrap procedure two times, once for each of the two mediated effects
proposed in our model. The model fit better in 968 bootstrap samples, and the results
indicate that the mediated effect reported earlier was significant (p = 0.03).

Model Comparisons and Overall Model Fit


We first compared the model shown in Figure 1 (which we will refer to as model 1) with
that same model with an additional path from organizational identification to job
performance (model 2). Thus, we were comparing the hypothesized mediated relationship (model 1) to an alternative partially mediated relationship (model 2) for these
variables. These models were not significantly different (p = n.s.), suggesting that the
addition of this path for partial mediation did not improve our modelling.
Next, we also compared model 1 to an alternative non-mediated model (model 3) in
which three independent variables (perceived market and financial performance, perceived social responsibility and development, and organizational identification) affect
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Perceived
Social
Responsibility
and
Development

0.32*
Organizational
Identification

Perceived
Market and
Financial
Performance

0.55***

Member
Adjustment

0.71***

Job
Performance

0.08

Figure 2. The results for the hypothesized full mediation model


Note: Standardized parameter estimates. N = 161. *** p < 0.001; ** p < 0.01; * p < 0.05.
This is a simplified version of the actual model. It does not show indicators, error terms, and exogenous
factor variances.

directly member adjustment and job performance. The overall fit of model 3 was poorer
than model 1. A c2 of 283.8 on 132 degrees of freedom and RMSEA of 0.07 for model
1 versus a c2 of 305.3 on 130 degrees of freedom and RMSEA = 0.10 for model 3 were
achieved. Therefore, we retained model 1, the fully mediated and most parsimonious
version, as the preferable model. The overall fit of model 1 was reasonable. A c2 of 283.8
on 132 degrees of freedom, and other goodness-of-fit statistics (CFI = 0.98; NFI = 0.97;
RFI = 0.95; TLI = 0.98; RMSEA = 0.07) indicate that the model fits the data well. The
multiple squared correlation coefficients (R2s) for organizational identification, member
adjustment, and job performance were 0.12, 0.30 and 0.50, respectively. The results of
the model are depicted in Figure 2.
Perceived social responsibility and development was positively related to organizational identification (b = 0.32, p < 0.05), in support of Hypothesis 1a. However, there
was no significant relationship between perceived market and financial performance and
organizational identification (b = 0.08, p = n.s.), thus rejecting Hypothesis 1b. It should
be noted that the correlation (see Table I) between the two perceived measures of
performance is significant and positive, thus allowing for overlapping effects on identification. Nevertheless, our findings suggest that the predominant predictive variable is
perceived social responsibility and development. Thus, these results provide support to
Hypothesis 1c, which posited that compared to perceived market and financial performance, perceived social responsibility and development would have a larger effect on
organizational identification.
Organizational identification was positively associated with member adjustment
(b = 0.55, p < 0.001), supporting Hypothesis 2. We also tested the mediating effects of (1)
organizational identification on the relationship between both perceived social responsibility and development and perceived market and financial performance and member
adjustment, and (2) member adjustment on the relationship between organizational
identification and job performance. To this end, we followed Schneider et al.s (2005)
recommendation to use structural equation modelling to assess a full mediation model.
As described above, the mediation research model showed better fit of the data than the
alternative models. The findings, depicted in Figure 2, indicate that organizational
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identification mediated the relationship between perceived social responsibility and


development and member adjustment, and that the relationship between organizational
identification and job performance was mediated by member adjustment. We found no
evidence for the hypothesized mediating effect of organizational identification in the
relationship between perceived market and financial performance and member
adjustment.
Hence, these results generally indicated a mediating effect of organizational identification in the relationship between perceived social responsibility and development and
member adjustment. However, no evidence was found for the mediating effect of
organizational identification for the relationship between perceived market and financial
performance and member adjustment, as the latter was not significant. Employees who
fit in within the organizational system or manage to adjust within their work organizations also exhibited a higher degree of job performance (b = 0.71, p < 0.001). This
finding is in support of Hypothesis 3.

DISCUSSION
The objective of this study was to examine the role of perceived organizational performance in predicting employee identification with a particular organization, and the
implications of identification processes for employee adjustment and job performance.
Employees who perceive that their organization is doing better than its competitors, and
by implication, enjoy favourable prestige and status, tend to bask in its accomplishments
(Cialdini et al., 1976), resulting in strong identification with the high perceived performance organizations to which they belong. These results are consistent with previous
research that found similar patterns of this relationship (e.g. Schneider et al., 2003; Smidts
et al., 2001). However, our study provides a different array of investigation. Our measurement of perceived organizational performance does not intend to examine the way in
which outsiders evaluate the organization (e.g. Smidts et al., 2001), or to examine the
impact of both financial performance and market performance on aggregated employee
satisfaction (Schneider et al., 2003). Rather, our research used an individual level analysis
to examine how an employee assessment of his or her organizations achievements over
the past three years relates to his or her level of organizational identification.
In addition, our study contributes to the literature by examining how different forms
of perceived organizational performance may affect organizational identification. Our
results show that compared to market- and financially-based performance, which is
based mainly on such direct economic criteria as profitability and market share, social
responsibility and the development of quality products and services exhibited a larger
effect on organizational identification. This is an interesting finding. Carmelis (2005)
study in not-for-profit organizations found that the magnitude of influence of perceived
external social prestige on employees emotional attachment (i.e. affective commitment)
varies. His finding, in combination with the current results, would suggest that although
employees care about the economic achievements of their organizations, they are even
more concerned about social responsibility and value added by their firms, in terms of
products and services and employee relations, which ultimately derive from core values.
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These findings raise some interesting questions. While identification and commitment are conceptually different constructs, they both represent a degree of attachment
to an organization. It is not clear, however, whether perceived social and economic
organizational prestige have differential effects on forms of commitment and identification. Why and under what conditions, for example, will perceived social and
economic organizational prestige augment identification and commitment to the organization? Is it possible for a member to develop strong identification and low commitment (and vice versa) to the organization? What is the role of individual and
organizational differences in the relationship between perceived organizational prestige
and both identification and commitment? More specifically with regard to potential
organizational differences, would the effect of perceived market and financial performance be stronger in certain types of organization or industry? One might expect that
an organization that defines itself and is defined by its members primarily according to
economic success would elicit increased identification when it achieves such success in
the eyes of its members. This issue is discussed further below as we address the limitations of our study.
In addition, research suggests that high social group prestige and status has positive
implications for augmenting identification. However, in the case of low social group
prestige and status, one way to cope with such threat is through social mobility. Yet,
research has indicated that this mobility may not always be viable (see Ellemers et al.,
1997). More knowledge about the conditions under which high- and low-organization
prestige and status results in various forms of identification (Kreiner and Ashforth, 2004)
is needed.
Considering the efforts that organizations invest into the creation of a social system
with which their employees feel a sense of belongingness (see McCowan et al., 1999), this
study also contributes to a better understanding of the consequences of organizational
identification (for reviews of the implications of identification, see Van Dick (2004) and
Van Dick et al. (2004)). Specifically, it represents a first attempt to directly examine the
relationship between organizational identification and the extent to which organizational
members become integrated within a particular work organization. Our study provides
support for the importance of organizational identification for his or her adjustment
within an organizational system. It indicates that employees who identify with a particular organization also fit in well with it. This is very important as organizations strive to
find ways to both enhance the knowledge, skills, and abilities of their employees and to
make sure that they fit in with the system, a critical factor in any long-term success.
Hence, it is clearly important for organizations that their members become integrated
because this has, as demonstrated in this study, positive implications for individual
performance, and thus for organizational viability.
Surprisingly, our study is among the very few that have tested the relationship between
organizational identification and job performance. We were also able to provide support
for the role of organizational identification in the enhancement of job performance. The
results confirm the notion that employees who identify with a particular organization
tend to exert their best efforts for it, and thus exhibit a relatively higher level and quality
of performance. In sum, our research contributes to a growing research interest directed
to study social identity theory in organizations.
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In addition, we suggest that the current findings provide further support for stakeholder theory which urges managers to consider a holistic array of employees, customers,
suppliers, and the larger community, in addition to the profit maximizing concerns of
owners and shareholders (Donaldson and Preston, 1995; Preston and Sapienza, 1990). If
a firm is indeed successful in balancing the needs and goals of multiple stakeholder
groups, it is likely to reap benefits in terms of organizational identification and outcomes.
Limitations and Future Research Directions
This study contains several limitations and can be further developed in future research.
We discuss both the limitations and some possible avenues for future research simultaneously. One should be cautious with making causal inferences from an initial exploration. Nevertheless, the results of this study are consistent with the research that has
examined the relationship between organizational image and prestige and organizational identification. In addition, we used different sources to provide us with data on
perceived organizational performance and organizational identification (obtained from
employees), and member adjustment and job performance (obtained from managers).
Clearly, a longitudinal design is needed, although such an approach would not completely resolve the difficulty of substantiating causality, a key issue in organizational
science. Experimental methods may help to establish causal relationship.
We also believe that collecting data through reputation or CSR rankings may shed
light on the causal relationship between prestige and individual perceptions in certain
industries. Further, it should be noted that the opposite causal process may be viable,
such that member adjustment and performance would engender identification, and thus,
increase organizational performance and reputation.
Our measurement of perceived organizational performance is a point of strength
because it may incorporate employees self-evaluations of their organizational achievements, as well as the construed external prestige. However, future studies could refine this
approach, attempting to make distinctions between the employees self-evaluation of their
organizations performance, how they construe the achievements that outsiders attribute
to their organization, organizational performance as evaluated directly by external
stakeholders, and organizational performance as manifested in secondary data. This
would give a more complete picture regarding the influence of organizational performance on organizational identification. In addition, the present study represents an
attempt to investigate organizational performance, not as a uni-dimensional construct,
but instead in terms of a delineation based in the CSR literature. Future studies may
benefit from the incorporation of other delineations of organizational performance that
were not examined in the current study. We also believe that although we have not found
significant differences between the sampled organizations, a larger sample of organizations may reveal differences in organizations prestige and their influence on members.
Finally, one should realize that unobserved variables can also influence organizational
identification, and as noted earlier, there are conditions that may impact the relationship
between organizational performance and prestige and organizational identification.
That is, it is certainly conceivable that certain types of people may more strongly identify
with firms for which they perceive strong market and financial performance. For
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example, highly competitive or achievement-oriented individuals may be prone to identifying with such organizations. This issue deserves further investigation.
In short, we hope that this study will offer a new line of research of organizational
identification and work outcomes. Specifically, we believe that the construct of member
adjustment is of particular interest and may benefit, together with job performance, from
further research exploring the conditions under which identification enhances member
adjustment and job performance.
Practical Implications
There are several practical implications that can be drawn from our findings. First, the
sense of identification that employees experience with their respective organizations is
relevant to understanding their work performance. As such, identification is clearly a
phenomenon that managers should attempt to foster. Second, with that said, the results
of our study indicate that the relationship between organizational identification and job
performance may be best understood through a focus on member adjustment. Hence,
while it is clearly important to have employees who strongly identify with the organization, managers should understand that identification does not necessarily result in
enhanced job performance it also depends on how well their employees integrate with
the organizational system.
Third, given the importance of identification, it is imperative that managers understand its antecedents. The present research suggests that employees form identification
based largely on their perceptions of organizational performance. However, the relative
importance of those perceptions may vary depending on how performance is conceived.
Although identification may be formed based partially on a firms market or financial
performance, it is more likely to be based on perceptions of how the firm is able to deal
with employee issues (e.g. attraction, retention, relations, and so forth), as well as on the
extent to which it continually develops quality products and services. Such aspects of
performance may be especially important in terms of tapping into employee pride and
values. Thus, the present findings provide support for the motivation of firms to pursue
corporate social responsibility policies and practices.
NOTE
*The authors wish to thank the editor and three anonymous reviewers for their helpful comments and
suggestions on an earlier draft of this article.

APPENDIX: ITEMS USED TO MEASURE THE STUDY VARIABLES


Items Measuring Job Performance (alpha = 0.87)

[name of the employee] fulfils the organizational rules and procedures


Reports submitted by [name of the employee] are reliable and trustworthy
[name of the employee] produces a high quality of work outcomes
[name of the employee] is strict about doing the job right the first time

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Items Measuring Member Adjustment (alpha = 0.85)


[name of the employee] is successful at maintaining good relationships with his/her
co-workers
[name of the employee] manages to fit in with the work group easily
[name of the employee] accepts criticism and uses it to advance his/her work
Items Measuring Organizational Identification (from Mael and Ashforth,
1992) (alpha = 0.74)

This organizations successes are my successes


When I talk about this organization, I usually say we rather than they
I am very interested in what others think about my organization
When someone praises this organization it feels like a personal compliment

Items Measuring Perceived Social Responsibility and Development


(alpha = 0.71)

Quality of products, services or programmes


Development of new products, services or programmes
Ability to retain essential employees
Relations between management and other employees

Items Measuring Perceived Market and Financial Performance


(alpha = 0.74)
Growth in sales
Profitability
Market share

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