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The Influence of Employer Brand Dimensions on the Affective Organizational Commitment of Employees in Small and Medium-Sized Enterprises

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Matea Cvjetković and Tihana Babić

Submitted: 31 March 2023 Reviewed: 07 June 2023 Published: 23 August 2023

DOI: 10.5772/intechopen.112133

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Organizational Culture Cultural Change and Technology Edited by Muddassar Sarfraz

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Organizational Culture - Cultural Change and Technology

Edited by Muddassar Sarfraz and Wasi Ul Hassan Shah

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Abstract

Employer branding is becoming a crucial talent management and communications strategy in many organizations today, given the importance of human resources as the most significant intangible asset of the company. In order to attract, recruit, and retain skilled employees, many companies systematically and proactively implement employer branding programs aimed at their existing and potential future employees. This can be challenging for small and medium-sized enterprises (SMEs) since their HR and marketing departments lack well-established processes, which can affect the commitment of employees. Thus, the aim of this research was to investigate the impact of five employer brand dimensions on affective organizational commitment, as the strongest type of organizational commitment. Data for the study was collected from 104 respondents employed in SMEs in Croatia and was empirically analyzed by applying the PLS-SEM method. The findings of the study showed that application and interest values positively influence affective organizational commitment, outlying the importance of knowledge transfer, workplace creativity, and innovation in a customer and humanitarian-oriented environment, as crucial elements for achieving affective organizational commitment. The research contributes to the existing literature on employer branding for SMEs operating in developing countries and provides guidance to owners and managers when building successful employer brands within their organizations.

Keywords

  • employer branding
  • affective organizational commitment
  • talent management
  • small and medium-sized enterprises
  • Croatia

1. Introduction

Today’s business world is characterized by fierce competition among organizations that are in search of the most talented employees [1]. This is a consequence of numerous demographic changes (population aging, migration, etc.), as well as the development of new trends in which the importance of work-life balance is strongly emphasized. Additionally, in today’s globalized world with many possibilities for remote work, employees can switch between careers and job positions within different companies across the globe. At the same time, many industries are going through extremely rapid technological changes that require new technical and professional skills [2]. As a result, 7 out of 10 organizations struggle with finding and hiring competent and qualified employees [3]. For this reason, many organizations systematically create, integrate, and proactively implement programs for attracting and retaining talented employees [4].

This new approach to managing talent through internal and external promotional activities is defined as employer branding [5]. Building a successful employer brand combines elements of human resources management and marketing and is increasingly considered an effective organizational strategy that can differentiate a company from its competition [6]. Given that it focuses on the uniqueness and exceptionality of the work environment, it has recently become an important strategy for building the company’s reputation and image as a credible and reliable employer [7]. A successfully built employer brand brings multiple benefits to the company. Employer branding activities positively affect the intention of potential candidates to apply for a job position [6], but also increase the motivation and retention of existing employees within the organization [7]. Additional benefits of employer branding include: building a positive image of the company in the eyes of customers, strengthening the financial performance of the organization, establishing a competitive advantage in the market, and creating a favorable organizational culture and work climate [8], which ultimately results in greater employee engagement and commitment [9].

This is particularly important for small and medium-sized enterprises (SMEs), which play a major role in creating new jobs [10]. However, SMEs today operate in a challenging environment, while simultaneously facing limited financial and human resources that can sometimes constrain them from successfully managing all their business operations, including talent management. That can lead to putting higher pressure on the employees who may work in conditions of overtime work, high expectations, and unattainable plans, which can have a negative impact on their job satisfaction and loyalty [10]. For that reason, creating a favorable place to work for their employees has become a focus of many SMEs, who try to differentiate themselves from other companies and become the desirable employer, that is the “employer of choice” [1]. The main focus of the employer branding process is to design a healthy workplace by identifying and including the elements that are important to the company’s current and future employees [7], so as to fulfill their needs and encourage their commitment to the organization. This way employees will stay longer within the company and be motivated to perform at their best, which will reflect on the organizational success as well [9].

Considering the above, the main goal of this study is to realize what elements of the employer brand influence organizational commitment in small and medium-sized enterprises, with a focus on affective organizational commitment (AOC). Affective organizational commitment is considered the most effective approach to measuring loyalty to an organization [11] and is often categorized as the “core essence”, that is, as a permanent, irreplaceable, and central component of organizational commitment [12]. Previous research that has studied employer branding and organizational commitment has focused on large organizations, most of which already have well-established processes and procedures at the level of the human resources department with the intention of providing a stimulating work environment to their employees [13, 14, 15, 16, 17]. Due to the differences between large, small, and medium-sized enterprises, the conclusions of the mentioned studies cannot be directly applied to small and medium-sized enterprises [18]. SMEs are characterized by an informal structure that lacks systemic processes on the organizational level [19], which can affect the comprehensive management of human resources. Thus, the aim of this research is to deepen the conceptualization of previous studies made on employer branding and organizational commitment and to expand the theoretical framework for SMEs operating in developing countries, by understanding which elements of employer brand influence affective organizational commitment for employees working in small and medium-sized enterprises.

The research follows the establishment of employer brand dimensions defined by Berthon, Ewing, and Hah, who observed employer branding through the concept of “employer attractiveness” and defined five elements that form “the best employer”: (1) interest value, which focuses on the exciting and creative work environment, (2) social value, whose focus is on collegial connections and team spirit, (3) economic value, which places importance on salary and other compensational packages, (4) development value, that puts imperative on work recognition, self-esteem, and career development, and (5) application value, that appreciates the possibility of knowledge transfer, in the work settings that are customer oriented and humanitarian [20]. By examining the mentioned dimensions, this research aims to shed light on the elements that are important for employees for developing an affective organizational commitment in SMEs. It is estimated that in emerging markets, SMEs generate 7 out of 10 jobs [21], but despite the fact that SMEs employ the majority of workers, little attention and research have been devoted to investigating the impact of employer brand dimensions on affective organizational commitment [22], especially in the European context. Thus, this research aims to fill the identified gap.

The paper is systematized as follows: the introduction is followed by a literature review that briefly presents the concepts of employer branding and affective organizational commitment. The third section focuses on the development of hypotheses, while the fourth section specifies the research methodology. The fifth section presents the empirical analysis and the results of hypotheses testing, which is followed by a discussion of the results together with the limitations and recommendations for future research. In the end, a conclusion systematizes the key findings of the research and describes the theoretical and practical contributions.

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2. Literature review

The theoretical basis for this study is found in the resource-based view, the social exchange theory, and the psychological contract theory. According to the resource-based view (RBV), all the investments in employees (material and immaterial) affect the progress, growth, and development of their skills, which are key to establishing the organization’s competitive advantage [6]. The competitive advantage comes from the company’s internal resources that provide added value, are unique or rare, are difficult to imitate, and are not substitutable [23]. As a result, they increase the intellectual capital of the organization [24] through the complex interaction of people, skills, and technologies that affect the efficiency and productivity of the company [23]. The focus of RBV is on the long-term approach to creating a bond between the employer and the employee [25]. In return for the tangible and intangible investments of the company, employees are more likely to develop feelings of loyalty and commitment toward the organization and work on developing firm-specific resources that help organizations attain their goals.

A similar relationship can be observed through the theory of social exchange, in which organizational commitment appears in the form of the employee’s psychological reactions to the benefits provided by the company and is demonstrated with the investment of time and effort to participate in the success of the organization [26]. Correspondingly, the theory of the psychological contract considers that organizational commitment is formed based on mutually fulfilled promises and is also grounded on the emotional connection between the organization and its employees [27]. As the name suggests, a psychological contract refers to an unspoken agreement that states shared expectations and obligations between two parties; in this case between an employee and an organization [28]. The psychological contract represents a dynamic process that gradually unfolds through the time before employment and throughout various phases of employment [29]. It is precisely the employer branding activities that unify those processes and phases, creating a systematical approach toward the existing and potential employees.

2.1 Employer branding

Building a brand, or “branding,” is a very researched concept in marketing literature, and at its most basic level, it serves differentiation [30]. Differentiation in marketing brings numerous benefits and is observed as a competitive advantage, but in recent years the concept became important in talent management as well. The term “employer branding” was shaped by Ambler and Barrow in 1996 as a set of “functional, economic, and psychological” substances that result from working in a certain company ([7], p. 4). Building an employer brand refers to building a company’s positive reputation as an employer, meaning its potential (future) and current employees perceive it as a great place to work [31].

Building an employer brand is a long-term process that should ensure a constant flow of potential candidates, while simultaneously developing and positioning a positive image of the organization in the eyes of future and current employees [32]. Due to the “global war for talent” and the fact that organizations around the world are struggling to fill their vacant positions with qualified employees, many companies have opened completely new departments dedicated exclusively to strengthening their employer brand [33]. Establishing procedures within the HR department is an important dimension in the way employees are managed, which is often lacking in many small and medium-sized enterprises [34]. Most often, in SMEs, HR processes are managed by the owner-manager [19]. For that reason, creating and establishing an employer brand is a challenge for small and medium-sized enterprises and can affect the motivation and commitment of the employees [35].

Although research related to employer branding in some instances is still in its early stages, it is being recognized as a long-term approach in the future, as organizations increasingly start to realize that the loyalty of employees cannot be taken for granted [36]. Employees are no longer tied to one organization and can freely decide who they will work for, and where they will stay in the long term. Employer branding thus builds upon the discipline that has already proven its value; “branding” assesses the uniqueness of the brand and focuses on its differentiation [36]. It also encourages people’s loyalty and commitment, which is one of the most effective approaches to attracting and retaining employees. For that reason, it is important for organizations to strategically plan the implementation of employer branding strategies, in order to reap all the benefits that come from successfully managing an employer brand, with the ultimate goal of providing their employees with a stimulating working environment, where they will develop the deepest type of loyalty for their organizations—affective organizational commitment.

2.2 Affective organizational commitment

Organizational commitment is defined as a set of attitudes formed toward the organization, which is characterized by a permanent psychological connection that arises from embracing the organizational values and results in a desire to stay within the organization in the long run [23]. This research is based on the theoretical concept developed by Allen and Meyer [37], who observe organizational commitment through three perspectives: affective commitment, normative commitment, and continuance commitment. Affective organizational commitment develops as a result of loyalty and identification with the organization; continuance commitment arises when it is too costly for a person to leave the organization, while normative commitment evolves into a duty to stay within the company [37, 38]. In other words, employees who develop affective organizational commitment stay within the organization because they wish to, those who develop continuance commitment stay because they have to, while those employees whose connection to the organization is based on normative commitment stay in the organization because it is morally acceptable [39].

Even though all three approaches to organizational commitment are often connected, the nature of their connections differs, meaning that the most importance is given to affective organizational commitment [40] since it is considered a crucial element of the organization’s success [35]. Employees with strongly expressed affective organizational commitment invest more effort in their work and demonstrate better results than those employees who have a low level of affective organizational commitment [41]. The intensity of the employee’s commitment to the organization is based on the organizational characteristics, and not the characteristics of the employees. Organizational commitment arises at higher levels in small enterprises than in large ones [42], which is why SMEs need to pay careful attention to developing and maintaining the organizational commitment of their employees. Well-aligned talent management practices incorporated into the thought-out employer brand should help in reaching this goal.

2.3 Employer branding practices in SMEs in developing countries

Small and medium-sized enterprises in developing countries play a major role in contributing to economic growth, but their business operations are constrained by different market conditions and obstacles such as difficult access to finance, high taxations, frequent employee fluctuations, etc. [43], which is why implementing strategies in building an employer brand can become especially challenging for key people in SMEs. Croatia, as one of the ex-transition countries in Central and Eastern Europe, but also a member state of the European Union, is going through several changes in its talent management practices [44], while simultaneously encountering different challenges with regard to demographic trends (older population, migrations), high cost of labor, vastly present forms of informal work (getting paid under the counter), and high unemployment rates [45]. Moreover, society as a whole is lagging behind the EU standard in its digital transition, and there is a growing need to support the development of digital skills of many employees, promote the development of new, digital jobs and create conditions in which individuals can progress in their careers, with the goal of accelerating the digital transition of society and the economy as a whole [46].

A total of 153,477 SMEs were operating in Croatia in 2021, representing a share of 99.7% of all businesses [47]. They also accounted for a 67.4% share in employment and 63.7% in added value, thus contributing significantly to the country’s economic growth. Many SMEs were severely affected by the COVID-19 crisis, which was especially manifested in liquidity and employment issues [47]. Through various governmental measures, until mid-2021, around 1 billion Euros has been paid to support SMEs’ business functions and save their employees’ jobs [47]. These problems were just added to the existing challenges that SMEs need to cope with, while at the same time struggling to be competitive in the labor market [48]. Due to the limited financial resources, lots of SMEs find it difficult to keep pace with larger organizations, especially in terms of offering attractive compensational packages and benefits. This scarcity of organizational resources affects the application of best human resource management practices due to the high costs of their adoption [49]. The strategies for attracting talented employees can be particularly demanding because in transitional societies small companies are not perceived as the most desirable employers. In addition, job security and other benefits make large state-owned companies still more attractive as employers, compared to small companies that are mostly privately owned [48]. All the indicated reasons look for a more precise direction and understanding of the job elements that could be most appealing to employees of small and medium-sized enterprises in order to become “the employer of choice” [1].

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3. Development of hypotheses

The research in this paper follows the goal of assessing the influence of employer brand dimensions on affective organizational commitment. The analysis of the literature has shown that research on this topic is still very fragmented since it either tests a part of the variables of employer branding [16] or explores different and isolated work elements and conditions that affect organizational commitment [50]. Several studies observed a relationship between employer branding as one, comprehensive construct, and organizational commitment, also as one, comprehensive construct [4, 14]. There is a need to define precisely which dimensions of employer branding affect different types of organizational commitment. This research focuses on affective organizational commitment, as the strongest type of organizational commitment. The hypotheses were formed based on previous research [11, 15, 16, 51], but they were placed in the context of small and medium-sized enterprises operating in a developing country. For a better understanding of the research background, the next sections will provide an overview of the employer brand elements and empirically investigate their influence on the development of affective organizational commitment.

3.1 Dimensions of employer brand and affective organizational commitment

In the last three decades, psychologists, scientists, and the academic and business community studying employer branding have been trying to define and group the factors that constitute a successful employer brand. A well-known approach in the literature is the one defined in 2005 by Berthon, Ewing, and Hah, who developed the “Employer Attractiveness (“EmpAt”) Scale” to test employer attractiveness, observing it through five dimensions: (1) application value (the possibility of applying the existing knowledge in different business situations), (2) interest value (exciting work environment, new work challenges, focus on creativity and innovation), (3) social value (importance of teamwork and collegial relationships), (4) economic value (above-average salary, job security, and other benefits), and (5) development value (the possibility to grow within the organization and build new skills) [20]. The “EmpAt” scale is built upon the definition set by Ambler and Barrow in 1996, where dimensions of interest and social value refer to psychological dimensions, economic value refers to economic benefits, and dimensions of development and application value refer to functional benefits [20].

The studies conducted so far on SMEs have shown that there is a connection between corporate social responsibility and employer branding, and the above has had an additional positive effect on the long-term retention of employees in the company [52]. It was also demonstrated that socially responsible behavior and internal marketing activities were positively related to job satisfaction and commitment to the organization [53]. Another study on SME employees showed that certain dimensions of employer brand, such as application value, economic value, and social value positively influence their decision to stay in the company within the next 6 months [54]. Likewise, a study on small and medium-sized enterprises operating in Switzerland proved that certain components of human resources management (organizational support, procedural justice, and organizational reputation) positively affect organizational commitment [55]. Following the indicated studies, this research aims to extend the understanding of the determinants of affective organizational commitment in small and medium-sized enterprises operating in a developing country, by observing them within the defined dimensions of employer branding.

If an organization fosters a harmonious relationship with its employees, they will, in turn, perform better at the workplace [56]. A well-developed and defined employer brand can influence the behavior of employees [57], and increase their satisfaction [51], work engagement [58, 59], and job involvement [56]. Also, building a successful employer brand can influence the development of trust in the organization and thus increase identification with the organization [60]. Employees who are committed to the organization show a higher level of motivation and stay longer in their organizations [56]. Considering the above, the following hypotheses were formed:

H1: The application value of the employer brand positively influences employees’ affective organizational commitment.

H2: The interest value of the employer brand positively influences employees’ affective organizational commitment.

H3: The social value of the employer brand positively influences employees’ affective organizational commitment.

H4: The economic value of the employer brand positively influences employees’ affective organizational commitment.

H5: The development value of the employer brand positively influences employees’ affective organizational commitment.

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4. Methodology

To test the proposed hypotheses, a survey questionnaire was chosen as a method in a quantitative approach. The questionnaire as a research method was chosen due to its numerous advantages, such as the simplicity of use and the broad availability of respondents [61]. It is also easy to create and distribute. The survey was conducted through an online questionnaire created in Google Forms, and it consisted of closed-ended questions. All the details of the research were presented to the respondents, at the same time informing them that their answers were anonymous to avoid bias development.

The questionnaire consisted of three parts. The first part comprised questions concerning the respondents’ demographics (gender, age, education, position in the company, and the company’s core activity). The second part of the questionnaire measured independent variables—employer brand dimensions, while in the third part, the respondents had to answer questions that measured the dependent variable—affective organizational commitment.

4.1 Sampling

The sampling frame was chosen from the financial portal Finiinfo, which provides financial and operational information for Croatian companies [62]. A random sample of small and medium-sized enterprises was chosen from the data, taking into account their representation in the activity sector [63]. Every company was double-checked to make sure it fits the definition of SME [64]. The questionnaire was distributed in September 2022, to around 900 e-mail addresses, which were provided by the database. Given that all questions in the questionnaire were marked as mandatory, 100% of all completed questionnaires were considered valid. It took around 3 weeks to collect the answers, which resulted in 104 completed questionnaires, representing a response rate of 11.5%. The demographics of the sample, presented in Table 1, reveal that out of 104 respondents, 59.6% are women and 40.4% are men. The majority of respondents are aged between 31 and 51 (72.1%) and have a higher education level (73.1%). The respondents hold different positions in the organization and are employed in companies of various business activities, ranging from service industries to production, construction, and trade indicating that the sample is representative of the observed population [63].

ConstructCharacteristicFrequencyPercentage
GenderWomen6259.6
Men4240.4
Age<2510.9
25–3098.7
31–404442.3
41–503129.8
51–601413.5
61+54.8
EducationElementary school00
High school2826.9
Higher education6360.6
Postgraduate studies1312.5
Position in the companyOwner2524
Director1514.4
Manager2927.9
Administration3533.7
IndustryProduction1918.3
Construction1514.4
Trade (retail/wholesale)2221.2
Communication services98.7
Hospitality43.8
Transport00
Financial services43.8
Other service industries3129.8

Table 1.

Characteristics of the respondents.

4.2 Operationalization of the observed variables

All observed variables, dependent and independent ones, were measured with a five-point Likert-type scale, whereby employees of small and medium-sized enterprises had to express their agreement or disagreement with given statements ranging from 1 (strongly disagree) to 5 (strongly agree). Cronbach’s alpha coefficients of all observed variables are above 0.7, which indicate a high internal consistency of the instrument [65]. As a dependent variable, affective organizational commitment was measured with items from Allen and Meyer’s Organizational Commitment Scale [37]. It is the multiitem scale that measures three different types of organizational commitment: affective commitment, continuance commitment, and normative commitment. Since this study observes affective organizational commitment, 5 out of 8 questions from the indicated subscale were used in the questionnaire. Certain questions were changed from a negative form to a positive one, mostly to avoid later mistakes when coding the answers [66]. An example of the question included is: “I would be very happy to spend the rest of my career with this organization”. Cronbach’s alpha reliability coefficient is 0.935.

The dimensions of employer branding, as independent variables, were measured with the “Employee Attractiveness (“EmpAt”) Scale” [20]. This multiitem scale consists of 25 items measuring employer attractiveness through 5 dimensions: application value, interest value, social value, economic value, and development value. Each of the dimensions was measured with four items. Examples of the questions included are: “The organization both values and makes use of my creativity”, or “How important is it for you to have a good relationship with your colleagues?”. Cronbach’s alpha reliability coefficients of the scales are social value (α = 0.892), interest value (α = 0.798), economic value (α = 0.780), application value (α = 0.731), and development value (α = 0.785).

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5. Results

For the analysis and interpretation of the results and the testing of the proposed hypotheses, the method of partial least squares structural equation modeling (PLS-SEM) was applied, since it has already been used in a large number of similar studies [16, 35, 56, 67]. The method was performed using the SmartPLS 3 software [68]. There are several reasons for choosing PLS-SEM as an analysis method: it works effectively with small samples as well as with complex models and can be applied in a large number of different research situations [69]. The advantage of the PLS approach compared to multiple regression analysis is that the PLS approach considers the entire conceptual model and shows the effects of all related constructs that can be influenced by the regression [35]. Another advantage is that with the PLS-SEM method, there are no assumptions about data distribution [70].

5.1 Results of multivariate statistical analysis

The results obtained by the PLS-SEM method were processed in two phases: (1) the assessment of the measurement model and (2) the assessment of the structural model [71], which are described in detail in the next sections. Given that the conceptual model was determined to be of a reflective type, the research follows the predetermined steps set for its analysis [69].

5.1.1 Assessing the measurement model

The assessment of the measurement model includes the evaluation of reliability and validity [72]. Cronbach’s alpha and the composite reliability (CR) are used in the reliability analysis, with acceptable values over 0.70 [71]. To evaluate the validity, the measures of indicator reliability, convergent validity, and discriminant validity are used. Indicator reliability is confirmed if the values of standardized outer loading are above 0.7, while the convergent validity is presented with average variance extracted (AVE), whose acceptable values are higher than 0.5. The results of indicator reliability and convergent validity are presented in Table 2.

ConstructVariableOuter loadingsCACRAVE
Social valueSOC10.9030.8920.9210.744
SOC20.788
SOC3
SOC4		0.856
0.898
ECON10.798
Economic valueECON20.6910.7800.8510.590
ECON30.862
ECON40.708
Interest valueINT1INT20.749
0.860		0.7980.8680.623
INT30.692
INT40.845
Application valueAPP1
APP2
APP3
APP4		0.744
0.810
0.720
0.679		0.7310.8280.547
DEV10.894
Development valueDEV20.8940.7850.8240.533
DEV30.610
DEV40.493
AOC10.888
Affective org. Comm.AOC20.8760.9350.9510.794
AOC30.897
AOC4
AOC5		0.906
0.888

Table 2.

Model evaluation measurements.

Notes: CA = Cronbach alpha, CR = composite reliability, AVE = average variance extracted.

As visible from the table, the measures of Cronbach’s alpha and composite reliability (CR) are within acceptable ranges, and so are the measures for average variance extracted. On the other hand, standardized outer loadings for several items (ECON2, INT3, APP4, DEV3, DEV4) are below their acceptable value of 0.7, so further analysis was conducted to see if the indicator deletion would have an impact on AVE and composite reliability [69]. As this was not the case, the loadings were retained in the model.

In order to assess discriminant validity, the Fornell-Larcker criterion and the heterotrait-monotrait (HTMT) ratio of correlations were observed [69]. Table 3 shows the Fornell-Larcker criterion. From the table it is visible that the AVE of each latent variable is higher than the squared correlations of the other latent variables, so the criterion is satisfied as well [71].

123456
1. AOC0.891
2. Social value0.2150.863
3. Economic value0.1280.6460.768
4. Interest value0.5940.2780.2210.789
5. Application value0.4450.4140.5480.3170.740
6. Development value0.2500.5350.6950.2230.5660.744

Table 3.

Discriminant validity: Fornell–Larcker criterion.

Note: AOC = affective organizational commitment.

Another measure of discriminant validity is the HTMT ratio, shown in Table 4. For the model to be valid, the interval of the HTMT data should not include the value of one for all the combinations of constructs, which is also present in this case [69].

123456
1. AOC
2. Social value0.206
3. Economic value0.1310.791
4. Interest value0.6710.3080.261
5. Application value0.5110.5370.7580.382
6. Development value0.2140.6480.9430.2470.737

Table 4.

Discriminant validity: HTMT ratio.

Note: AOC = affective organizational commitment.

The indicated results demonstrate that model is appropriate for further analysis of the structural model assessment and hypothesis testing.

5.1.2 Assessing the structural model

Before analyzing the structural model, the variance inflation factor (VIF) was calculated in order to check for multicollinearity issues [72]. Table 5 reports such results, which are all within acceptable values of below 5.

ConstructAffective organizational commitment
Affective org. Commitment
Social value1.812
Economic value
Interest value		2.547
1.147
Application value1.661
Development value2.176

Table 5.

Multicollinearity—Variance inflation factor (VIF).

The absence of multicollinearity allows the valuation of the structural model, which was derived from the bootstrapping method with 5000 samples [69]. The results are presented in Table 6, which also indicates the outcomes of hypothesis testing.

Structural relationsPath Coef.SDt-valuep-valueResult
H1Application- > AOC0.361**0.1232.9420.003Confirmed
H2Interest- > AOC0.504***0.1005.0440.000Confirmed
H3Social- > AOC0.0580.1150.5030.615Not confirmed
H4Economic- > AOC−0.2920.1521.9230.055Not confirmed
H5Development- > AOC0.1050.1330.7880.431Not confirmed

Table 6.

Hypothesis testing.

p < 0.10.


p < 0.05.


p < 0.01.


Note: AOC = affective organizational commitment.

The table shows that the application value positively influences affective organizational commitment (β = 0.361; p < 0.05), which confirms hypothesis H1. The interest value also has a positive influence on affective organizational commitment (β = 0.504; p < 0.01), thus confirming the second hypothesis. Other independent variables did not show a statistically significant or positive influence on affective organizational commitment, so hypotheses H3, H4, and H5 cannot be confirmed.

The coefficient of determination, R2, is used as a measure of the predictive accuracy of the model [69]. The R2 for affective organizational commitment in this study is 0.462, which can be interpreted as moderate [71], and reveals that 46.2% of the variation in developing affective organizational commitment occurred under the influence of employer branding dimensions [73]. Additionally, predictive validity was calculated through a cross-validated redundancy measure, which is based on Stone-Geisser’s Q2 value [70]. The Q2 value for affective organizational commitment is Q2 = 0.353, which is interpreted as acceptable predictive relevance, meaning that the model has predictive validity for the endogenous construct [71]. The effect size coefficient is obtained by calculating Cohen’s f2 [72]. The effect size is interpreted according to reference values, where 0.02 represents a small, 0.15 is a medium, and 0.35 is a large effect of an individual exogenous construct on an endogenous construct [74]. From the above, it follows that interest value has a large effect on affective organizational commitment (f2 = 0.412), application value has a medium effect on affective organizational commitment (f2 = 0.146), while other values have a weak effect on affective organizational commitment (f2 economic value = 0.062, f2 development value = 0.009, f2 social value = 0.003).

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6. Discussion

The main objective of this research was to measure and understand the influence of employer brand dimensions on affective organizational commitment. To achieve the indicated goal, the research was placed within the framework of already established studies in the domain of employer branding, by testing five elements of the employer brand to identify the factors that are significant for the development of affective organizational commitment, as the strongest type of organizational commitment.

The study showed that the application value (β = 0.361; p = 0.003 < 0.05) has a positive and significant effect on the affective organizational commitment among employees of Croatian small and medium-sized enterprises, thus confirming hypothesis H1. This means that employees develop an emotional connection and identification with the organization when the company provides the opportunity to apply the previously gained knowledge, so they understand that the effort invested in training and education pays off through activities at the workplace. Given that no research was found that measured the impact of the same independent variable, the results can be linked to the research conducted on employees of medium-sized and large public and private organizations in Portugal, which showed that career development and communication in the organization positively affect the AOC [11]. Another study on IT employees in India proved a significant relationship between employer branding (as a comprehensive construct) and organizational commitment (also as a comprehensive construct) [75]. Similarly, a study conducted on employees of two banks in India, showed that all five dimensions of employer brand have a positive influence on organizational commitment, with the mediating influence of employee engagement [56]. The results indicate that it is important for SME employees to know that their knowledge and skills are used in a valuable way that contributes to the success of the company. They want to learn and grow at their workplaces but also encourage the growth of their colleagues. The importance of information sharing at all organizational levels indicates the significance of an inclusive, open environment where no employee is left behind. By sharing knowledge and ideas, employees together provide valuable products or services to their customers while giving back to their community. They want to make a difference. The importance of a humanitarian work environment was also demonstrated in a study on 347 executives in India whose results indicated corporate social responsibility influenced the perception of the entire employer brand [76]. On the other hand, research on small and medium-sized enterprises in Switzerland showed that employee skills management does not affect the development of affective organizational commitment [55]. The lack of research on application value, and the varying results in the published literature ask for additional studies in order to gain better insights into the effect of application value on AOC. The differences between developing and developed countries also demonstrate that employees in developing countries are in need of further training to upgrade their skills to be competitive in the labor market, which could be one of the explanations for why this element of employer branding is valuable for SME employees in Croatia.

This research has also shown that interest value (β = 0.504; p = 0.000 < 0.01) has a positive and significant effect on the affective organizational commitment of employees in SMEs, meaning that hypothesis H2 was also supported. In other words, when a company provides an exciting work atmosphere in which employees are presented with numerous work challenges where they can use their creativity, they will develop a psychological and emotional connection with that company. The results can be connected with research conducted on managers of multinational companies in Belgium, which showed that the lived employment experience, which is manifested by a sense of personal achievement obtained through challenging and creative tasks, is positively related to the development of AOC [75]. This is important for SMEs since they are known for their innovativeness and creativity, which often influences their success [77]. Knowing that an organization fosters out-of-the-box thinking and encourages employees’ originality can do a great deal for the development of AOC and long-term connection to the organization. This was also proven in a study conducted on small and medium-sized ICT enterprises in China, which showed that AOC mediated the influence of interpersonal trust on employee innovation. The mentioned study also tested gender differences and showed that the direct impact of interpersonal trust on innovative behavior was significantly larger for women, however for men, the affective organizational commitment increased their knowledge-sharing intentions [78].

Future studies are also encouraged to test the gender differences to understand if there are differences between the man and women in their perception of EB dimension importance and to see whether these differences have an effect on affective organizational commitment. The results of H1 and H2 hypothesis testing point to the fact that employees look for interesting and challenging organizational culture in which their work is meaningful and appreciated. Through their skills, open communication, and knowledge sharing, they can contribute to the success of their company, while at the same time working in an environment that takes care of its customers and society.

Although the literature points out that economic value, in terms of salaries, compensation, bonuses, and other rewards, positively affects the development of organizational commitment [4, 11], in this case, it turned out to be exactly the opposite; that is, it has a negative impact on affective organizational commitment (β = − 0.292; p = 0.055 < 0.10), thus rejecting hypothesis H4. It can be concluded that above-average compensation packages or above-average salaries for SME employees do not play a significant role in the development of emotional attachment to the organization. This is important for small and medium-sized enterprises that lack financial resources and cannot compete with large organizations in offering stimulating compensation packages. Results could be partially compared to the study conducted on the employees working in government agencies in UAE, which showed that salary was not significantly related to affective organizational commitment [79]. On the contrary, a study conducted on the universities’ academic and administration staff in Central and Eastern Europe, showed that rewards and salaries significantly influence employees’ attitudes related to the increase in organizational performance, and this effect was mediated by affective organizational commitment, meaning that economic benefits have a direct effect on AOC, which in turn also influences the performance of employees [80]. Another study conducted on SME employees in Pakistan showed that salary package increases the organizational commitment of employees [81]. Future studies on SMEs in the European context are encouraged, to get a precise answer on the influence of economic value on the AOC, due to the large differences in cultural, economic, political, and other environmental factors between the mentioned countries, and because people in particular Eastern, Asian, economies tend to place greater importance on extrinsic factors due to the lower living standards [82].

Social (β = 0.058; p = 0.615 < 0.10) and development values (β = 0.105; p = 0.431 < 0.10) in this study did not show a significant impact on affective organizational commitment, meaning that hypotheses H3 and H5 could not be supported. However, several studies have shown that they play a large role in building the overall commitment of employees [4, 11, 15, 56], therefore they should not be neglected when creating a positive and stimulating work environment. A partial comparison of the results could be found in a study on Chinese SMEs that discovered that co-worker support did not influence organizational commitment [82]. On the contrary, a study conducted on U.S. Army personnel demonstrated that interpersonal conflict was negatively related to affective organizational commitment, while support from the supervisors positively influenced affective organizational commitment [83]. Another research conducted on employees of government districts showed that social networks among employees predict affective organizational commitment [84]. In spite of the results of this study on Croatian SMEs, it is still recommended to keep a friendly atmosphere within the company and encourage positive bonds and collegial support among co-workers, since many studies showed it influenced organizational commitment as a whole, making employees feel as part of a bigger family and contributing to their sense of belonging [35]. The same applies to the development value as some studies have shown that support practices that influence the self-esteem, fulfillment, and development of employees help in achieving AOC [55]. The above can result in higher productivity, loyalty, and better performance of employees [4]. The company can then affirm itself as a good and desirable employer, allowing its employees to build their identity as the important and valuable human capital of the organization.

6.1 Research limitations and recommendations for future studies

The main limitation of the study is the sample size. A small percentage of completed questionnaires indicates insufficient motivation of employees of small and medium-sized enterprises to participate in the research. The recommendation for future studies goes in the direction of collecting a larger number of responses. Also, the questionnaire as a data collection method has certain weaknesses that are most often manifested in misunderstanding the questions or not reading the statements carefully [85]. The study is cross-sectional in nature, thus providing only a snapshot of the employee’s current opinions and beliefs at the moment they were fulfilling the questionnaire. Future studies should observe the longitudinal impact of the EB dimension on affective organizational commitment to gain better and more accurate insights.

Another limitation relates to the number of dimensions through which the employer brand was observed. Since some authors used a larger number of employer brand dimensions in their research [11, 86], there is a possibility that the results would be different if more elements were included. Future studies are encouraged to include more EB dimensions to get a comprehensive picture of all the elements that influence affective organizational commitment in SMEs in developing countries. This research measured the influence of the employer brand on affective organizational commitment as one of the three types of organizational commitment. It would be advisable to include normative and continuance commitment in future studies in order to get a complete picture of the influence of the employer branding dimensions on the organizational commitment of small and medium-sized enterprises in the Republic of Croatia, while additional research could include a larger number of moderating and mediating variables, such as organizational support, internal communication, work-life balance, etc.

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7. Conclusion

This research aimed to investigate the influence of employer branding dimensions on the affective organizational commitment of employees working in small and medium-sized enterprises operating in Croatia. Previous research that studied the indicated connection is scarce and fragmented, taking into consideration just a few elements of the employer brand, or the organizational commitment as a comprehensive construct, not observing its individual dimensions. In order to fill the identified research gap, the model was developed to test the link between 5 employer brand dimensions and affective organizational commitment. The results proved that for SME employees two dimensions have a significant influence: application value and interest value.

The development of affective organizational commitment is one of the most valuable feelings that an employer can gain from their workers because it translates into employee loyalty, increased motivation, and a desire to stay in the long run within the company. This is important for small and medium-sized enterprises that display informal organizational structure and approach to human resources management, and due to the lack of financial resources cannot compete with large organizations in offering stimulating compensation packages. The challenges that SMEs face are even bigger when operating in developing countries. Considering the turbulent and changing environment in which companies today operate, employees need to feel secure in their organizations in order to give their best and outperform their competition. Employer branding serves as an important link that connects human resources, internal communications, and marketing, therefore creating a synergy through which a unified message is sent to all the stakeholders while promoting an organization as a desirable place to work. Important theoretical and practical contributions arise from this study and are elaborated on in detail in the following section.

7.1 Theoretical and practical contributions

Several contributions emerge from the research. On the theoretical side, this is one of the first studies that aims to confirm the connection between the dimensions of employer brand and affective organizational commitment, at the same time placing the constructs in the context of small and medium-sized enterprises operating in Croatia, as a developing country. This research has shown that in small and medium-sized enterprises, two dimensions of the employer’s brand are extremely important for the development of AOC: application value and interest value. The findings additionally support the theoretical basis of the study grounded on the resource-based view, social exchange theory, and psychological contract theory. The results of the study demonstrate that when an organization fosters an environment that enables employees to learn and express themselves in a creative way, at the same time feeling useful to the company and other stakeholders, psychological bonds will develop between them and their company. This research additionally improves the understanding of the employer branding concept from the standpoint of small and medium-sized enterprises and allows for a better understanding of which dimensions are most important to their employees. Another theoretical contribution that builds on the previous studies is in confirming that HR procedures and policies are needed at the organizational level, as to ensure the high satisfaction and loyalty of employees, and that includes SMEs as well, which often lack such practices [55].

On the practical side, the research can help human resources managers and key people in small and medium-sized enterprises by pointing out those elements that are important in creating a stimulating work environment in which employees want to stay in the long term. By understanding the concept of employer branding and the influence of its dimensions on affective organizational commitment, key people in SMEs can effectively manage talent within their organizations, despite the many constraints they face. This can also result in the development of a positive reputation and public image as a desirable employer. The research has demonstrated that by focusing on intangible benefits, primarily by allowing employees to apply their knowledge in different business situations and offering exciting, challenging, and creative work environments, SMEs can be competitive in the labor market and create positive employer brands. Knowing what employees look for in an organization is the key to fulfilling their needs, which could result in developing strong affective organizational commitment. Companies need to be aware that it is extremely important to put employees in the first place and give them a reason to stay within the organization—before someone else does.

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Appendix A: Assessment of the measurement model

Table A.1. Outer loadings

Aff. comm.SOC.ECONINTAPPDEV
AF_COMM10,888
AF_COMM20,876
AF_COMM30,897
AF_COMM40,906
AF_COMM50,888
SOC10,903
SOC20,788
SOC30,856
SOC40,898
ECON10,798
ECON20,691
ECON30,862
ECON40,708
INT10,749
INT20,860
INT30,692
INT40,845
APP10,744
APP20,810
APP30,720
APP40,679
DEV10,894
DEV20,894
DEV30,610
DEV40,493

Table A.2. Construct reliability and validity

Cronbach’s Alpharho_AComposite reliabilityAverage variance extracted
Aff. comm.0,9350,9360,9510,794
Social0,8920,9680,9210,744
Economic0,7800,8440,8510,590
Interest0,7980,8220,8680,623
Application0,7310,7560,8280,547
Development0,7850,8070,8240,553

Table A.3. Discriminant validity—Fornell–Larcker criterion

AFF.COMSOCECONINTAPPDEV
Aff. comm.0,891
Social0,2150,863
Economic0,1280,6460,768
Interest0,5940,2780,2210,789
Application0,4450,4140,5480,3170,740
Development0,2500,5350,6950,2230,5660,744

Table A.4. Discriminant validity—heterotrait-monotrait ratio (HTMT)

AFF. COMMSOCECONINTAPPDEV
Aff. comm.
Social0,206
Economic0,1310,791
Interest0,6710,3080,261
Application0,5110,5370,7580,382
Development0,2140,6480,9430,2470,737

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Appendix B: Assessment of the structural model

Table B.1. VIF values

Affective Commitment
AFFECTIVE COMMITMENT
SOCIAL1812
ECONOMIC2547
INTEREST1147
APPLICATION1661
DEVELOPMENT2176

Table B.2. Bootstrapping results – hypothesis testing

Original SampleMeanSt. DevT Stat.P Value
SOCIAL - > AFF. COM.0,0580,0320,1150,5030,615
ECONOMIC- > AFF. COM.-0,292-0,2030,15219230,055
INTEREST - > AFF. COM.0,5040,4970,10050440,000
APPLICATION - > AFF. COM.0,3610,3500,12329420,003
DEVELOPMENT - > AFF. COM.0,1050,0500,1330,7880,431

Table B.3. Quality Criteria – R square

Original Sample (O)Sample MeanStandard DeviationT StatP Value
AFFECTIVE COMMITMENT0,4620,5010,08355360,000

Table B.4. Quality Criteria – Q value (Construct Crossvalidated Redundancy)

SSOSSEQ2 (=1-SSE/SSO)
AFFECTIVE COMMITMENT520,000336,4760,353
SOCIAL416,000416,000
ECONOMIC416,000416,000
INTEREST416,000416,000
APPLICATION416,000416,000
DEVELOPMENT416,000416,000

Table B.5. Quality Criteria – f square

Original SampleMeanSt. DevT StatsP Values
SOCIAL - > AFF. COMM0,0030,0170,0270,1260,900
ECONOMIC > AFF. COMM0,0620,0510,05411600,246
INTERES - > AFF. COMM0,4120,4560,23817330,083
APPLICATION - > AFF. COMM0,1460,1670,11412860,198
DEVELOPMENT - > AFF. COMM0,0090,0200,0260,3670,714

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Written By

Matea Cvjetković and Tihana Babić

Submitted: 31 March 2023 Reviewed: 07 June 2023 Published: 23 August 2023

© 2023 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution 3.0 License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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