Enhancing firm performance through mutual respect and green compensation: The role of organizational culture as a moderating variable

Rahardika Bagaskara; Suharnomo Suharnomo; Mirwan Surya Perdhana

doi:10.14710/dijb.7.2.2024.166-176

DOI: https://doi.org/10.14710/dijb.7.2.2024.166-176

Enhancing firm performance through mutual respect and green compensation: The role of organizational culture as a moderating variable

Rahardika Bagaskara¹ , Suharnomo Suharnomo², Mirwan Surya Perdhana²

¹Doctoral Program in Economics, Diponegoro University, Indonesia, Indonesia

²Department of Management, Faculty of Economics and Business, Diponegoro University, Semarang, Indonesia, Indonesia

Citation Format:

Abstract

In today's competitive and environmentally conscious business landscape, organizations are increasingly adopting green compensation systems to align employee incentives with sustainability goals. This study investigates the impact of the Green Compensation System, Organizational Culture, and Mutual Respect on firm performance using Structural Equation Modeling with Partial Least Squares (SEM PLS) for data analysis. The findings reveal that the Green Compensation System positively influences Mutual Respect, confirming the first hypothesis (H1). Additionally, a robust organizational culture significantly enhances firm performance, supporting the second hypothesis (H2). Furthermore, Mutual Respect significantly contributes to improved firm performance, validating the third hypothesis (H3). These results underscore the importance of integrating environmentally sustainable compensation programs, fostering a strong organizational culture through open communication, continuous training, and employee recognition. Moreover, strategies to enhance mutual respect among employees are essential. By adopting these recommendations, organizations can achieve superior performance and ensure long-term sustainability.

Note: This article has supplementary file(s).

Fulltext View|Download | common.other

Proofread Certificate

Subject
Type	Other
	Download (498KB) Indexing metadata

Keywords: green compensation system; organizational culture; employee incentive; firm performance; SEM-PLS

Article Metrics:

Article Info

Section: Articles

Language : EN

In Vol 7, No 2 (2024)

Recent articles

Cyber risk management disclosure: A stakeholder theory perspective Does sharia compliance enhance ESG performance to better firm performance? Moderating effects of SRI-KEHATI on the ESG-corporate value nexus More recent articles

Aggarwal, P. (2022). Relationship of green human resource management with environmental performance: mediating effect of green organizational culture. Benchmarking An International Journal. Volume 30
Ahmed, M., Guo, Q., Qureshi, M. A., Raza, S. A., Khan, K. A., & Salam, J. (2021). Do green HR practices enhance green motivation and proactive environmental management maturity in hotel industry? International Journal of Hospitality Management, 94, 102852. https://doi.org/10.1016/j.ijhm.2020.102852
Almulhim, Abdulaziz I. & Al-Saidi, Mohammad. (2023). Circular economy and the resource nexus: Realignment and progress towards sustainable development in Saudi Arabia. Environmental Development. 46. 100851. 10.1016/j.envdev.2023.100851
Beck-Krala, E. (2020). Green Rewards. Encyclopedia of Sustainable Management, 1–6. https://doi.org/10.1007/978-3-030-02006-4_208-1
Daft, R. (2015). Organization theory and design. Boston, MA: Cengage Learning
Das, S., & Dash, M. (2024). Green Compensation & Reward System: A Novel Approach Toward the Growth & Sustainability of Organizations. Journal of Advanced Zoology, 45(2)
Dhir, S., Tandon, A., & Dutta, T. (2024). Spotlighting employee-organization relationships: The role of organizational respect and psychological capital in organizational performance through organizational-based self-esteem and perceived organizational membership. Current Psychology, 43(22), 19964–19975. https://doi.org/10.1007/S12144-024-05768-1/TABLES/4
Fapohunda, Tinuke. (2022). Greening the Compensation Design and Management of the Human Resource Function. 10.4018/978-1-6684-3873-2.ch022
Hair, J. F., Hult, G. T. M., Ringle, C. M., Sarstedt, M., Danks, N. P., & Ray, S. (2021). An Introduction to Structural Equation Modeling. 1–29. https://doi.org/10.1007/978-3-030-80519-7_1
Hair, J. F., Sarstedt, M., Pieper, T. M., & Ringle, C. M. (2012). The Use of Partial Least Squares Structural Equation Modeling in Strategic Management Research: A Review of Past Practices and Recommendations for Future Applications. Long Range Planning, 45(5–6), 320–340. https://doi.org/10.1016/j.lrp.2012.09.008
Jain, N., D'lima, C., 2018. Green HRM a study on the perception of Generation Y as prospective internal customers. Int. J. Bus. Excell. 12(2). https://doi.org/10.1504/IJBEX.2018.091916
Kang, E., & Lee, H. (2021). Employee compensation strategy as sustainable competitive advantage for hr education practitioners. Sustainability (Switzerland), 13(3), 1–23. https://doi.org/10.3390/su13031049
Khan, M. H., & Muktar, S. N. (2021). What’s next for green human resource management: Insights and trends for sustainable development. International Journal of Sustainable Development and Planning, 16(1), 181–194. https://doi.org/10.18280/ijsdp.160119
Kumar, M. (2023). Green HRM: An Empirical Study on Validation of Measurement Scale in Indian Environment. Bimtech Business Perspectives. Volume 4(1), 27-42
Kuo, Y. K., Khan, T. I., Islam, S. U., Abdullah, F. Z., Pradana, M., & Kaewsaeng-on, R. (2022). Impact of Green HRM Practices on Environmental Performance: The Mediating Role of Green Innovation. Frontiers in Psychology, 13, 916723. https://doi.org/10.3389/FPSYG.2022.916723/BIBTEX
Liu, L. (2023). Green innovation, firm performance, and risk mitigation: evidence from the USA. Environment, Development and Sustainability, 1–22. https://doi.org/10.1007/S10668-023-03632-Z/TABLES/7
Lubis, NW (2022). Resource Based View (RBV) in Improving Company Strategic Capacity. Research Horizons, 2(6), 587–596. https://doi.org/10.54518/rh.2.6.2022.587-596
Mandago, Jeruto, Rael. (2018). Influence Of Green Reward And Compensation Practice On Environmental Sustainability In Selected Service Based State Corporations In Kenya. European Journal of Business and Strategic Management. Vol. 3 No. 6
Masri, Hiba A.; Jaaron, Ayham AM (2017). Assessing green human resources management practices in Palestinian manufacturing context: An empirical study. Journal of Cleaner Production, 143(), 474–489. doi: 10.1016/j.jclepro.2016.12.087
Mensah, L.E., Shukla, S. and Iqbal, H.F. (2023). Green human resource management practices and employee innovative behavior: reflections from Ghana", IIMBG Journal of Sustainable Business and Innovation, Vol. 1 No. 1, pp. 58-74. https://doi.org/10.1108/IJSBI-02- 2023-0002
Nambisan S., Lyytinen K., Majchrzak A., Song M. (2023). Digital innovation management: Reinventing innovation management in the digital world. Miss Quart. 41 223–238. 10.25300/MISQ/2017/41:1.03
O'Reilly, C.A., Doerr, B., Caldwell, D.F., et al. (2019). Narcissistic CEOs and executive compensation. The Leadership Quarterly, 25, 218–231. https://doi.org/10.1016/j.leaqua.2013.08.002
Sarwono, J. and Narimawati, U. (2015). Creating theses, theses and dissertations using Partial Least Square SEM (PLS-SEM). Yogyakarta: ANDI Publishers
Schein EH (1985). Organizational culture and leadership. San Francisco: Fossey-Bass
Shaba, Yakubu., Adam, Ibn, Sadat. (2023). Corporate Governance and Firm Performance: A Review of Empirical Studies. Asian Journal of Research in Business and Management. Vol 5 No.4
Shah, SMA, Jiang, Y., Wu, H., Ahmed, Z., Ullah, I., & Adebayo, T.S. (2021). Linking green human resource practices and environmental economics performance: the role of green economic organizational culture and green psychological climate. International Journal of Environmental Research and Public Health, 18(20), 10953. https://doi.org/10.3390/ijerph182010953
Somenzari, Marcel & Sacomano Neto, Mário & Ganga, Gilberto & Lizarelli, Fabiane. (2023). The Effects of Leadership on the Organizational Culture: The Case of the National Institute of Social Security. Adminstração Pública and Gestão Social. 10.21118/apgs.v15i4.14428
Sugiyono. (2019). Quantitative and Qualitative Research Methodologies and R&D. Bandung: ALFABETA
Sugiyono. (2022). Quantitative Research Methods. Bandung: Alphabeta
Tang, Y. Chen, Y. Jiang, P. Paille, J. Jia. (2018). Green human resource management practices: scale development and validity, Asia Pacific Journal of Human Resources 56 (1), 31–55, https://doi.org/10.1111/1744-7941.12147
Wang, M., Guo, T., Ni, Y., Shang, S., & Tang, Z. (2019). The effect of spiritual leadership on employee effectiveness: An intrinsic motivation perspective. Frontiers in Psychology, 9(JAN). https://doi.org/10.3389/fpsyg.2018.02627
Widarwati, E. (2023). Corporate Investment And Corporate Performance: Does Crisis Matter?. Journal of Accounting Studies. Volume 1(1). https://jka.ugj.ac.id/index.php/jka/article/view/18/3
Young, A. C. (2023). Young's Model of Organizational Culture. Open Journal of Business and Management, 11, 3125-3134. https://doi.org/10.4236/ojbm.2023.116171
Zia, M., & Siddiqui, D. A. (2023). How Mutual Respect in Terms of Recognition and Appraisal Between Leaders and Followers, Along with Empathy and Liking Affect Follower Job Performance and Well-Being: The Complementary Role of Culture. SSRN Electronic Journal. https://doi.org/10.2139/SSRN.4432268

Last update:

No citation recorded.

Last update:

No citation recorded.

Author(s) Rights

In order for Diponegoro International Journal of Business (DIJB) to publish and disseminate research articles, we need publishing rights (transferred from author(s) to publisher). This is determined by a publishing agreement between the author(s) and DIJB. This agreement deals with the transfer or license of the copyright of publishing to DIJB, while authors still retain significant rights to use and share their own published articles. DIJB supports the need for authors to share, disseminate and maximize the impact of their research and these rights, in any databases.

As an author, you have rights to a large range of uses of your article, including use by your employing institute or company. These Author rights can be exercised without the need to obtain specific permission. Authors publishing in DIJB has wide rights to use their works for teaching and scholarly purposes without needing to seek permission, including:

use for classroom teaching by Author or Author's institution and presentation at a meeting or conference and distributing copies to attendees;
use for internal training by the author's company;
distribution to colleagues for their research use;
use in a subsequent compilation of the author's works;
inclusion in a thesis or dissertation;
reuse of portions or extracts from the article in other works (with full acknowledgement of final article);
preparation of derivative works (other than commercial purposes) (with full acknowledgement of final article);
voluntary posting on open web sites operated by author or author’s institution for scholarly purposes,

(but it should follow the open-access license of Creative Common CC-by-SA License).

Authors/readers/third parties can copy and redistribute the material in any medium or format, as well as remix, transform, and build upon the material for any purpose, even commercially, but they must give appropriate credit (the name of the creator and attribution parties (authors detail information), a copyright notice, an open-access license notice, a disclaimer notice, and a link to the material) and provide a link to the license.

Authors/readers/third parties can read, print and download, redistribute or republish the article (e.g. display in a repository), translate the article, download for text and data mining purposes, re-use portions or extracts from the article in other works, sell or re-use for commercial purposes, remix, transform, or build upon the material, they must distribute their contributions under the same license as the original Creative Commons Attribution-ShareAlike (CC BY-SA).

Copyright Transfer Agreement for Publishing (Publishing Right)

The authors submitting a manuscript do so on the understanding that if accepted for publication, the copyright for publishing (publishing right) of the article shall be assigned/transferred to the Department of Management, Faculty of Economics and Business, Universitas Diponegoro as the publisher of DIJB.

Upon acceptance of an article, authors will be asked to complete a 'Copyright Transfer Agreement for Publishing (CTAP)'. An e-mail will be sent to the Corresponding Author confirming receipt of the manuscript together with a CTAP form by the online version of this agreement.

DIJB, the publisher, and the editorial board make every effort to ensure that no wrong or misleading data, opinions or statements be published in the journal. In any way, the contents of the articles and advertisements published in DIJB are sole and exclusive responsibility of their respective authors and advertisers.

Remember, even though we ask for a transfer of copyright for publishing (CTAP), our journal Author(s) retain (or are granted back) significant scholarly rights as mentioned before.

The Copyright Transfer Agreement for Publishing (CTAP) Form can be downloaded here