Exploring Relationship of Job Satisfaction, Organizatonal Culture, and Employee Performance in Small Medium Enterprise

Abstract

Purpose: The objective of this study was to re-examined the relationship of job satisfaction, organizational culture and employee performance.   Theoretical framework:  There were several studies that examine the relationship between organizational culture, job satisfaction, and employee performance. The employee performance is a consequence of organizational culture and employee job satisfaction. The relationship between the three variables is not surprising, especially the relationship between the two types of performance measures, in-role performance (IRP) and extra-role performance (ERP).   Design/methodology/approach:  This study aims to re-examine the relationship and influence job satisfaction (JS), organizational culture (OC), in-role performance (IRP), and extra-role performance (ERP) using 376 employees who work in several micro, small and medium scale manufacturing companies in Yogyakarta, Indonesia.  The factor analysis was used to test the validity, and Cronbach’ Alpha for reliability of the instrument. The structural equation modeling was used to test the relationship model.   Findings:  The results of this study revealed that JS is a variable that is not related to the other three variables and does not influence either IRP or ERP. This study found that JS is related to and influenced by the organizational culture (OC) adopted. This study strengthened the findings of previous studies that OC is one of the important factors to improve employee performance.   Research, Practical & Social implications: Small Medium Enterprises must strengthen organizational culture in order to increase job satisfaction and employee performance, both IRP and ERP.  The use of longitudinal data needs to be used to test the mediation of the model. Other raters also need to be used to assess employee performance and eliminate common method variances.   Originality/value:  Job satisfaction is not always an independent variable as in many studies but can be a consequence of individual internal and external factors.