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Research Report
Presented
To Fuming Jiang
By Annie-Pierre Fortier - 16795884
25th of October 2013 Dynamics of International Strategy
Page | 2
Curtin University
The Effects of Corporate Social
Responsibility on Employees’ Job
Satisfaction: An Empirical Study with Cross-
Cultural Dimensions
Annie-Pierre Fortier
Curtin University
Abstract
This empirical study investigates the effects of the perception of employees on their company’s corporate social responsibility and their job satisfaction. The study adopts a cross-cultural perspective to extend the application to international business. In this perspective, I analysed the impact of two moderating variables: the power distance level and the collectivism values of an individual on the relationship between perceived CSR and job satisfaction. I argued that the perceived CSR of an employee influences his job satisfaction. I also thought that a high power distance increases that relationship and that strong individualistic values decrease the relationship. The data have been collected from a questionnaire conducted among 79 employees of an oil and gas firm in Australia. The findings of the research suggest that there is a strong positive relationship between the perceived CSR and the job satisfaction. It also reveals that individualistic employees tend to have a stronger relationship between the perceived CSR and their job satisfaction.
Keywords: Perceived CSR, job satisfaction, power distance, collectivism versus individualism
1. Introduction
Corporate Social Responsibility (CSR) is a relatively new concept. Bowen (1953) was one
of the first to write about this topic and he defined CSR as an obligation for businesses to
pursue goals that were following the values of the society. Since that time, many different
theories emerged and evolved (Ratnayake 2013). The social responsibility of
businessman elaborated by Bowen became the three domains approach described by
Schwartz and Carroll (2003). Nowadays, according to the Canadian foreign affairs
department: “Corporate Social Responsibility is defined as the voluntary activities
undertaken by a company to operate in an economic, social and environmentally
sustainable manner” (Corporate Social Responsibility 2013). Even if the concept is recent,
extensive amounts of research and studies have been conducted on the topic. As a matter
of fact, there is a minimum of 79,000,000 articles and books on this field in Google Scholar.
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Some scholars have studied the impact of CSR activities on many variables while others
have focused on variables that can influence CSR activities.
This paper will concentrate on the first option by analysing what has been published on
this topic and identifying what has not been published. The question that guides this
literature review is: On which factors can CSR have an impact? The first step is to identify
which factors have been already studied to find a gap in the literature. This paper starts
with the literature review and ends with the description of the gap, with hypothesis for
future research.
2. Literature review
This literature review is non-exhaustive. It focuses only on articles and books studying
CSR as an independent variable. For the purpose of this work, the dependant variables
will be separated in four distinct categories: the effect of CSR on executives, the effects
of CSR on employees, the effects of CSR on the customers and the effects of CSR on
the firm. It is important to mention that the literature review below is non-exhaustive.
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The first category about executives is probably the least developed topic in this area. CSR
affects the managers for some elements such as their salary. Ye Cai and Pan (2011)
used a large sample of American firms to conclude that the increase of CSR is followed
by a decrease of 2.78% in cash compensation for managers. Other studies proved the
opposite. Considering the salary, bonus and stock option, Mahorney and Thorn (2006)
found that there is a positive relation between CSR and the manager’s compensation.
For the second category, a firm’s social responsibility activities can have some impacts
on the employees but this area remains unexplored (Lee, Park et Lee 2013). Mueller and
his colleagues (2012) have conducted a study in 17 countries with a sample of 3047
employees to establish a relation between CSR and affective commitment. According to
their empirical study, there is a positive relation between CSR and affective organizational
commitment. Furthermore, CSR can also have an effect on the employee turnover. The
findings of the empirical study of Galbreath (2007) show that CSR reduces employee
turnover.
The third category is about the relationship between CSR and any variable related to the
consumer. The empirical study of Galbreath (2007) concludes that CSR has a positive
and significant impact on customers’ satisfaction. There are also many studies conducted
on the consumer perception of CSR. Murphy and his colleagues (2013) confirmed that
CSR has an impact on consumers' attitudes, purchase intentions, loyalty, and satisfaction.
Generally, a bad perception of the firm’s CSR will conduct a negative attitude towards the
firm. However, the study confirms that a good perception does not necessarily leads to
more purchase intentions (Öberseder, Schlegelmilch et Murphy 2013). Some scholars
studied those variables in one specific country such as India (Dutta et Singh 2013). The
results of the study of Dutta and Singh (2013) show that companies with a high range of
CSR activities project a better image for customers and, consequently, have an
advantage over competitors.
The last category is focusing on the effects of CSR on many aspects of the firm. As most
literature papers in this field take a management perspective (Öberseder, Schlegelmilch
et Murphy 2013), this category is definitely the most explored. Literature already contains
a large number of studies on the financial and non-financial benefits of CSR on the firm.
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If we start by analysing what has been done on the financial aspect of the firm in relation
with CSR, we can find many studies. The main topic is the relationship between social
responsibility of a firm and its financial performance (Jean B. McGuire 1988). The second
variable examined in many studies is the value of the firm to the stakeholders. Sarveas
and Tamayo (2013) wrote that CSR activities can add value to the firm only under certain
conditions such as high public awareness and a high level of advertisement. Another
empirical study examines the relationship of those two variables and concluded that a
firm with CSR engagement has a higher value (Jo et Harjoto 2011). Furthermore, Jin and
Drozdenko (2010) indicate that a significant direct link exists between the two variables.
The conclusions of the different papers on CSR and the firm’s value are controversial and
remains unclear (Margolis and Walsh 2003).
For the non-financial variables, the reputation of the organization can be related to CSR
(Gottschalk 2011). The firm’s success is also a variable that has been studied (Galbreath,
2007). The general firm performance is also a hot topic studied by many scholars
(Galbreath & Shum, 2009). Some authors have conducted an empirical study in a cultural
context such as China (Zu 2009). Published in 2003, the literature review of Margolis and
Walsh (2003) examined the empirical relations between CSR and a firm’s performance
in 120 different studies. Finally, innovation of a firm can be influenced by the type of CSR
(Bocquet, et al. 2012). This article is original as it brings a new variable that few
researchers have focused on.
3. The gap of this literature field
This literature review shows that many scholars have established a relation between CSR
as an independent variable and a dependant variable related to employees, executives,
customers and the firm. These topics have been explored and, consequently, refers to
what has been done in the literature.
“Most of the studies in this area assume direct linear relationship which is ‘’naïve’’ as
many potential factors are likely to moderate or mediate the link” (Rowley & Berman, 2000,
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p.397). This leads us to what has not been done which is what this future research will
focus on.
The principal gap identified is the lack of cross-cultural dimension. Some scholars, such
as: Galbreath (2007) even identified that deficiency and suggested that further research
should consider the international dimension. He mentioned in the conclusion of the article
that ‘’Future studies should explore the degree to which CSR impacts on non-financial
benefits such as … reputation across countries.’’ (p.1). It would be false to affirm that no
studies consider the cross-cultural contexts. Only recent studies examine this cultural
environment (Gjolberg 2009) as a bilateral relation but only few have added that variable
to moderate two others.
According to Hofstede, there are 5 cultural dimensions: power distance (PDI),
individualism versus collectivism (IDV), masculinity versus femininity (MAS), uncertainty
avoidance (UAI) and long-term versus short-term orientation (LTO) (Hofstede 2013).
Recently, Mueller and his colleagues considered power distance, human orientation and
institutional collectivism as moderating variables between CSR and the employee’s
commitment (Mueller, et al. 2012). However, almost no other scholars have used the
cultural dimensions to moderate their results. This is where this research will concentrate
to investigate what can be done.
4. Conceptual framework and Hypotheses
Figure 1: Conceptual Framework
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The future study will consider the individualism versus collectivism dimension and the
power distance as two moderating variables between the employee’s job satisfaction and
the perceived CSR of the firm. According to the literature review above, the employee’s
job satisfaction has not been studied in depth. Moreover, the cultural dimension is lacking
in this field. I will briefly explain my variables but further details will be available in the next
assignment.
The independent variable is the perceived Corporate Social Responsibility. Many
definitions are available for CSR (Dahlsrud 2008) and they all refer to 5 dimensions:
environmental, social, economic, stakeholders and voluntariness. The study will use the
perception of the employees on the CSR activities of the firm. The dependant variable is
the employee’s job satisfaction. The moderating variables are two dimensions given by
Hofstede: collectivism versus individualism and power distance.
Hypothesis 1: The employee’s job satisfaction is positively related to the
perceived CSR activities of the firm.
The job satisfaction of an employee refers to the feeling of satisfaction of dissatisfaction
of this person related to different facets such as his colleagues, salary, job conditions,
supervision, tasks and benefits (Williams 2004). The perceived CSR can have an impact
on the satisfaction of the employees as it is part of the management (supervision). We
believe that a good perception of the CSR activities means that the employee is satisfied
with the type of management and, as a result, has a higher general satisfaction in his job.
Obviously, there are other factors involved in the general satisfaction but we think that the
governance has a high importance.
Hypothesis 2: The relationship between the employee’s job satisfaction and the
perceived CSR activities of the firm is weaker for an employee with individualism
culture values.
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Hofstede has established five cultural dimensions to compare countries. Those
dimensions can also be used to compare individual among the same culture. In general,
Australia is classified as an individualistic country (Hofstede 2013). Briefly, individualistic
cultures tend to accord more importance to personal achievements and are generally
more competitive. It does not necessarily means that all Australians are individualistic.
There are differences in each culture as well. Individualism versus collectivism is part of
the culture orientation. This moderating variable has been added to identify if this
dimension has an impact on the relationship between the independent and dependent
variables. We believe that employees with high individualistic values will have a weaker
relationship between his perceived CSR and his job satisfaction.
Hypothesis 3: The relationship between the employee’s job satisfaction and the
perceived CSR activities of the firm is stronger for an employee with a high power
distance.
Australia is known to be a low power distance culture. Once again, it does not mean that
all Australian have low power distance values. In business, this dimension refers the
hierarchy between employees and managers. In a low power distance context, there are
less authoritarian hierarchy. We believe that an individual with a high level of power
distance will have a stronger relationship between their perceived CSR and their job
satisfaction.
5. Research Methodology
5.1 Sample and data collection
As most studies conducted in this field are empirical, I used this type of research to
investigate these variables. I sent questionnaires to employees of a multinational firm in
Australia. The firm chosen is an international oil and gas company, located in Perth, with
a diverse workforce. The questionnaire has been sent to 250 employees and 79 people
responded to it.
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5.2 Measurements
The questionnaire is available in the appendix of the article, on page 19. To measure the
four different variables, the questionnaire included 45 items with a typical five point Likert
scale from strongly disagree to strongly agree.
Job satisfaction
The job satisfaction of the employees has been measured with one template offered by
Scott Smith (Smith 2013). The scale includes 15 items such as “My job makes good use
of my skills and abilities”. For this variable, 1 means that the employee has a poor job
satisfaction while 5 means that the employee is highly satisfied.
Perceived CSR
The perceived CSR of the company measurement is inspired from the CSR scale used
by Mueller and his colleagues in their previous study (2008) based on the five dimensions
of CSR of Dalshrud (2008). The scale includes five statements such as “My company
does enough towards protecting the environment”. For this variable, having 1 means that
the employee perceived that the company has a low CSR and vice versa.
Power distance
The measurement of the level of power distance of the employee is based on an eight-
item measure developed by Kirkman et al (2009) (“Managers who let their employees
participate in decisions lose power”). The statements marked as 1 means that the
employee has a low power distance while 5 means a high power distance.
Culture orientation
Finally, the culture orientation has been measured with the 16-item scale designed by
Kirkman et al (2009). For half of those statements, 5 means high individualistic values (“It
is important that I do my job better than others”). For the other half, 5 means high
collectivism values (“To me, pleasure is spending time with others”).
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5.3 Control variables
The position title, the age, the number of years of employment in the organization and the
gender were asked in the questionnaire to all respondents. However, due to the time
limitation, those variables have not been considered and controlled. In a further research,
they could be include in the analyses to decrease the number of bias.
6. Analysis and Findings
6.1 Descriptive statistics and correlations
The descriptive statistics and Pearson correlations between independent, dependent and
moderating variables are reported in table 3. The table shows a significant correlation
between the independent and dependent variable. Indeed, the correlation coefficient
between the perceived CSR and the job satisfaction is 0.752 with a high significance. Any
correlation coefficient above 0.6 is considered as high (Churchill 1991). Consequently,
the hypothesis 1 is confirmed. The employee’s job satisfaction is positively related to the
perceived CSR activities of the firm. The other correlations are below 0.6 and insignificant.
Table 1 Descriptive statistics and Pearson correlations (n=79) _____________________________________________________________________________________
Mean Standard Deviation
1 2 3 4
1.Perceived CSR 3.694 1.147 1 2.Job Satisfaction 3.633 1.074 0.752** 1 3.Power Distance 2.796 1.173 0.144 0.262* 1 4.Culture Orientation 2.818 1.090 0.012 -0.09 0.029 1
_____________________________________________________________________________________ ** Correlation is significant at the 0.01 level *Correlation is significant at the 0.05 level
6.2 Hypothesis tests results
We performed hierarchical moderated multiple regression to test the impact of the
moderating variables on the relationship of perceived CSR and job satisfaction. The
results are presented in Table 2.
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The perceived CSR explains 0.560 of the job satisfaction (model 1). The Beta coefficient
shows that it is a positive relationship. The significance of this relationship is 0.000.
According to the results, the culture orientation has an impact on the relationship between
the employee’s job satisfaction and the perceived CSR activities of the firm. This
moderating variable explains 0.564 of the relationship between the independent and
dependent variable (model 2). However, the beta coefficient shows that it is a negative
relationship. We do not have enough significance to confirm that the power distance has
an impact on the relationship between the independent and dependent variables.
Table 2 Regression of Perceived CSR and standard coefficients
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6
Perceived CSR
0.752*** 0.753***
0.718***
0.729***
0.735***
0.714***
Culture Orientation
-0.099 -0.104
-0.094
Power Distance
0.157* 0.152*
0.115
Perceived CSR*Culture Orientation
-0.234** -0.243**
Perceived CSR*Power distance
0.030 0.088
N 79 79 79 79 79 79 R2 0.565 0.575 0.628 0.589 0.590 0.652 Adj- R2 0.560 0.564 0.614 0.579 0.574 0.628 F value 100.158*** 51.432*** 42.288*** 54.552*** 36.016*** 27.312***
†: P<.10; *: p<.05; **:p<.01; ***: p<.001
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Fig. 1. Interaction effect between the culture orientation and the relationship of perceived CSR on the job
satisfaction.
Fig. 2. Interaction effect between the power distance Interaction and the relationship of perceived CSR on
the job satisfaction.
The hypothesis 1 has been proved. It means that the relationship between the perceived
CSR of his company is positively related with his job satisfaction. For example, an
employee would have a better job satisfaction if he considers that his company is socially
responsible.
1
1,5
2
2,5
3
3,5
4
4,5
5
Low Perceived CSR High Perceived CSR
Low
Individualism
High
Individualism
1
1,5
2
2,5
3
3,5
4
4,5
5
Low Perceived CSR High Perceived CSR
Low Power
distance
High Power
distance
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The hypothesis 2 has been supported. The beta is negative which means that an
employee with a high level of individualism has a weaker relationship between the
perceived CSR and the job satisfaction. In this perspective, we can think that an employee
with high collectivism values will have a stronger relationship between the perceived CSR
and his job satisfaction. Further research would be necessary to confirm this hypothesis.
While he two first hypothesis have been supported, there is no sufficient evidence to
support hypothesis 3. However, the direction was correct as the coefficient is positive.
7. Discussion
The objective of the research is to analyze the impact of the perception of the employees
on the CSR activities of their firm on the job satisfaction. The existing research on
corporate social responsibility discusses the effects of it on the executives, the firm itself
and the consumers. Some studies have also already been conducted on the effects of
CSR on the employees. Mueller and his colleagues (2012) conducted a study about the
impact of CSR on the affective commitment of the employees. The findings of the
empirical study of Galbreath (2007) show that CSR reduces employee turnover.
Employee turnover is strongly related to employees’ satisfaction (Johnston, et al. 1988).
However, the relationship between the perceived CSR and the job satisfaction has not
been studied recently. It constitutes a gap in this literature field. For the purpose of this
research, I extended the study by adding two dimensions from Hofstede as moderating
variables.
7.1 Main Arguments and Findings
The findings show that there is a strong positive relationship between the perceived CSR
and the job satisfaction of employees. The more an employee has a positive perception
on the CSR activities of its firm, the more he will be satisfied in his workplace. The results
of this study also show that the relationship between the employee’s job satisfaction and
the perceived CSR activities of the firm is weaker for an employee with individualism
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culture values. It means that an employee with low individualistic values has a stronger
relationship between his perceived CSR and his job satisfaction. Finally, the study did not
come to the conclusion that the level of power distance of an employee affects the
relationship between the employee’s job satisfaction and the perceived CSR activities of
the firm.
7.2 Research Implications
The conclusions of this study has implications for managers, in any type of businesses.
It can contributes to the development of CSR in organizations as employees are more
satisfied with their job when the company has a good corporate responsibility. From a
management point of view, this study suggests that firms should invest in CSR as it brings
a higher degree of satisfaction among the employees. It has been proved that employees
with a high job satisfaction are more effective (Arvey, et al. 1989). This research also
advance a new dimension to this relationship by bringing an individual cultural perspective.
It suggests that the culture orientation of an employee has an impact on the relationship
between the perceived CSR and the job satisfaction. In this perspective, a firm that
accords more importance to CSR should hire employees with high collectivism values. In
the same idea, firms with minimal CSR should consider hiring individuals with strong
individualistic values.
8. Limitation and Future Research Direction
Several limitations have been identified for this study. The time has been the biggest
constraint and created different limitations.
First of all, this study has limitations in terms of sampling. It took a long time to receive
the data, which consisted of 79 respondents out of 250. The sample comes from a specific
workplace which is an oil and gas company. Most of the respondents are from the same
level in the organization and all have similar positions. It does not allow the study to
determine the variations from different workplaces and employment titles.
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Secondly, like in most of the quantitative empirical research (Cui et Jiang 2012), this study
has limitations related to the significance of the relationships. As a consequence of the
first limitation, the reliability has not been tested which makes the study less credible. As
mentioned previously, with more time, I could have analysed the controllable variables
and tested the reliability of each variable which is important in any quantitative research.
Thirdly, this study has constraints in its measurement of variables. As an example, there
was only six items in the questionnaire about the perceived CSR. One statement was
about environment, two were about community investment, one was about social
responsibility towards the employees, one was about economy and one was a general
statement. With those six statements it is hard to actually find out if an employee has a
good perception of the CSR activities of the firm. For example, if a respondent strongly
disagrees with the environment statement but strongly agrees for the statements about
social responsibility, the results can be biased if, for this person, the environment is the
most important issue. The culture orientation has limitations as well. We decided to
conduct the study on the individualism level instead of collectivism. The statements were
measuring the level of individualism only. Answering the statements with 5 meant that the
respondent strongly agreed and, consequently, was individualistic. We can suppose that
answering 1 meant that the individual was collectivism. However, the questionnaire to
measure collectivism are slightly different that the one to measure individualism. In this
perspective, it would be interesting to conduct a similar study with statements measuring
the collectivism level.
Further research could be made with a bigger sample to have more significant results. It
would be important to analyse the reliability of each variable and analyse the control
variables. It could also be interesting to conduct a similar study in different workplaces to
see if the results are comparable. Indeed, this study has been conducted in an oil and
gas company. Perhaps different results would come up from employees in a bank or in a
school for examples. It is indeed too early to generalize our findings. Moreover, only two
dimensions of culture of Hofstede have been integrated to this research. It could be
interesting to investigate on the other dimensions such as masculinity versus femininity
or long-term versus short-term orientation.
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Acknowledgements
I am grateful for the help provided by professor Fuming Jiang. I also want to thanks the
oil and gas company located in Perth who agreed to send questionnaires to its employees.
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Appendix I
Questionnaire Presented by Annie-Pierre Fortier
Postgraduate Student in International Business at Curtin University
Important notice:
This questionnaire will be used for a course work assignment purpose only. It will not be published. All the information and data provided will be treated strictly confidential. No individual information will be identified from the report. The findings will be reported in an aggregated form.
The respondents are completely voluntary for participating this survey for the purpose of completing an assignment. Respondents can withdraw their participation at any point of time.
Position Title:
No of year of employment in this organization:
Circle the accurate answer
Age 1. 20-25; 2. 26-30; 3. 30-35; 4. 36-40; 5. 41-45; 6. 46-50; 7. 51-55; 8. 56-60; 9. 61-65; 10. 66-over
Gender: 1. Male; 2. Female
For each statement listed below, circle the number
to the right that best represents your answers.
Use the rating scale to select the right number
Variables
Scale
Strongly Strongly
Disagree Agree
1. In most situations, managers should make decisions without consulting their subordinates
1 2 3 4 5
2. My company is maintaining a good reputation/positive image in public
1 2 3 4 5
3. Winning is everything 1 2 3 4 5
4. Family members should stick together, no matter what sacrifices are required.
1 2 3 4 5
5. I have the tools and resources to do my job well. 1 2 3 4 5
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6. My company does enough to support cultural and charitable initiatives and campaigns
1 2 3 4 5
7. A company’s rules should not be broken – not even when the employee thinks it is the company’s best interest
1 2 3 4 5
8. Parents and children must stay together as much as possible 1 2 3 4 5
9. To me, pleasure is spending time with others. 1 2 3 4 5
10. The well-being of my coworkers is important to me. 1 2 3 4 5
11. It is my duty to take care of my family, even when 1 have to sacrifice what I want.
1 2 3 4 5
12. My company is a fair market participant 1 2 3 4 5
13. Employees should not express disagreements with their managers
1 2 3 4 5
14. I feel encouraged to come up with new and better ways of doing things.
1 2 3 4 5
15. When a customer is dissatisfied, I can usually correct the problem to their satisfaction.
1 2 3 4 5
16. On my job, I have clearly defined quality goals. 1 2 3 4 5
17. Competition is the law of nature 1 2 3 4 5
18. My job makes good use of my skills and abilities. 1 2 3 4 5
19. It is important to me that I respect the decisions made by my groups.
1 2 3 4 5
20. It is important that I do my job better than others. 1 2 3 4 5
21. I feel good when I cooperate with others. 1 2 3 4 5
22. I rather depend on myself than others. 1 2 3 4 5
23. My company does enough towards protecting the environment
1 2 3 4 5
24. I understand why it is so important for my company to value diversity (to recognize and respect the value of differences in race, gender, age, etc.)
1 2 3 4 5
25. If a coworker gets a prize, I would feel proud. 1 2 3 4 5
26. I have the tools and resources to do my job well. 1 2 3 4 5
27. My personal identity, independent of others, is very important to me.
1 2 3 4 5
28. I rely on myself most of the time; I rarely rely on others. 1 2 3 4 5
29. I often do "my own thing." 1 2 3 4 5
30. My supervisor’s manager visibly demonstrates a commitment to quality.
1 2 3 4 5
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Curtin University
31. When another person does better than I do, I get tense and aroused.
1 2 3 4 5
32. My work gives me a feeling of personal accomplishment. 1 2 3 4 5
33. Once a top-level executive makes a decision, people working for the company should not question it
1 2 3 4 5
34. Employees who often question authority sometimes keep their managers from being effective
1 2 3 4 5
35. Senior managers visibly demonstrate a commitment to quality. 1 2 3 4 5
36. Employees should not express disagreements with their managers
1 2 3 4 5
37. The Company does an excellent job of keeping employees informed about matters affecting us.
1 2 3 4 5
38. In work-related matters, managers have a right to expect obedience from their subordinates
1 2 3 4 5
39. Managers should be able to make the right decisions without consulting with others
1 2 3 4 5
40. I am satisfied with the way my company is taking responsibility for its employees
1 2 3 4 5
41. I am satisfied with the opportunity to get a better job in this company 1 2 3 4 5
42. I am satisfied with the information I receive from management on what’s going on in the company
1 2 3 4 5
43. I am satisfied with the way my company manages social responsibility
1 2 3 4 5
44. I am satisfied with my involvement in decisions that affect your work
1 2 3 4 5
45. Considering everything, I am satisfied are you with my job 1 2 3 4 5
46. I am satisfied with the information I receive from management on what is going on in your division
1 2 3 4 5