disaffected loyalties in a changing contractual environment

International Journal of Value-Based Management13: 123–140, 2000.© 2000Kluwer Academic Publishers. Printed in the Netherlands.

123

Disaffected Loyalties in a Changing Contractual Environment

GEORGE W. WATSON1 & JON SHEPARD2

1Department of Management, College of Business Administration, St. John’s University,8000 Utopia Parkway, Jamaica, New York 11439, U.S.A.2Department of Management, Pamplin College of Business, Virginia Tech, Blacksburg,VA 24061, U.S.A.

Abstract. In this paper we examine the effects of the changing employee-employer rela-tionship on loyalty – a construct we developed along Hirschman’s model. The impact onperceptions of loyalty during a downsizing is assessed using a design that manipulates HRMpolicies toward the use of temporary employees, retraining, employee voice, seniority andcommunity coordination. We introduce ideological orientation as a variable that will havedirect and indirect affects. Both MBA students and managers (N = 269) participated in thestudy. All HRM policies and ideological orientations have direct affects; in addition someindirect effects for ideological orientation emerged.

Keywords: loyalty, ideology, judgment, analysis

1. Introduction

There are many organizational occurrences that researchers might hypo-thesize will impair the loyalty of employees. Relatively recently, we havewitnessed sustained human resource policies that reject employment stabilityand community well-being in favor of profitability objectives and stockholderwealth. These policies persist even in light of reports of their negative andalienating effects (Downs, 1995). Some have viewed these actions as partof a larger shift in the implied social contract that businesses in the U.S.industries had developed with mid-tier employees between 1945 and 1985(Watson et al., 1998a). This implied social contract was founded on reciprocalloyalties – the notion that dedicated employees who performed well wouldhave earned a long-term commitment of employment from their employer.The contemporary discourse, however, describes a new work relationship em-phasizing individual career accountability, portable skill sets, and an attitudeof loyalty but a preparedness to exit. This environment offers an opportunityto reexamine the role of loyalty in today’s workplace. Specifically, we eval-uate the relationship between certain restructuring policies and the subject’sresponses indicative of loyalty, as they are directly and indirectly moderatedby normative ideological frameworks.

124 GEORGE W. WATSON AND JON SHEPARD

If we accept the definition of loyalty as one’s faithfulness or allegiance toa collective (Van Dyne, Graham and Diensch, 1994), then loyalty is rarelytested. Similar constructs, however, (i.e., organizational commitment and or-ganizational citizenship) have been extensively evaluated. What the presentproject uniquely contributes is a contemporary empirical examination ofHirschman’s (1970) claim that ideologies influence levels of loyalty. In theUnited States, as in most large pluralistic societies, such an investigation iscomplicated by the dilemma that no one ideological perspective appears todominate the nation’s socio-historical development or opinions about desir-able future objectives (Shain, 1994; Abercrombie, Hill and Turner, 1980).Therefore, we have called upon the prevailing ideological positions encom-passing the values of individualism and communitarianism in order to assessthe affect of normative ideological structures on one’s responses on indicatorsof loyalty.

2. Literature review: loyalty versus commitment

In general, conceptions of commitment postulate that attachment to an organ-ization will decrease when organizations behave unacceptably (e.g., Cobb,Folger and Wooten, 1995), the member perceives greater opportunity withalternative organizations (Meyer and Allen, 1984), or the organization’s goalsand values are at odds with the member’s (Mowday, Steers and Porter, 1979).

Loyalty, as defined above, and as conceptualized by Hirschman, differsfrom these conceptions in several ways.Loyalists, according to Hirschman,will not necessarily experience a reduction in commitment because of betteroptions, a lack of value congruence or unfair organizational practices. Aloyal member suffers the circumstances quietly whiletrusting that thingswill improve in the future, and/or supports the organization from within,improvingundesirable conditions (Rusbult, Farrell, Roger, Mainous, 1988).In other words, the option of exit, as expected with reduced organizationalcommitment, is not available to a loyal member, even if better opportunitiesexist.

A second distinction between loyalty and commitment involves the con-gruency of normative frameworks between the individual and the organiz-ation. In the organizational commitment literature, commitment increasesas a person internalizes the values of the organization through socializa-tion (Greenberg, 1994). Hirschman’s conceptualization, however, opposesthis causal direction. According to Hirschman the employee is not atablarasawhen entering an organization, but rather comes with his or her valuesthat have been influenced by the ideological perspectives of the society as awhole. In this view, organizations do not promulgate, disseminate and pro-

DISAFFECTED LOYALTIES IN A CHANGING CONTRACTUAL ENVIRONMENT 125

mote values that are not already insinuated within the hearts and minds ofthe organization’s stakeholders. Instead, organizations appear to emphasizecertain values over others. To the extent an individual emphasizes or toleratessimilar values, to similar degrees, a value congruency exists.

A third distinction between loyalty and commitment involves the de-gree that membership determines behaviors. It is common for organizationalscholars to view commitment as a positive and desirable outcome. This isprimarily due to the affects of commitment upon reducing costs of recruiting,screening and training replacement employees. Loyalty, however, has both avirtue and iniquity. Loyalty is a virtue when it fills the need for order and con-trol within a collective. Loyalty is immoral, however, when it blinds peopleto a violation of the principles of justice, strips them of human compassion orinterferes with their ability to conduct autonomous moral evaluation (Arendt,1964).

A fourth distinction centers on the scope or breadth of organizational com-mitment relative to loyalty. Organizational commitment has one focal point– the organization. Loyalty is a broader abstract theoretical category (Farrell,1983), and may be directed at organizations, family, friends, political parties,shared ideas, causes or even one’s self. It is precisely this aspect of loyaltythat places it at the nexus of pluralistic ideological forces in our society. Forexample, in the classical ideological conception, the prototypical individualistis loyal first to his or her own self-interest. The prototypical communitarian,on the other hand, seeks to enhance the welfare of the collective even atsome expense to one’s self or other individual members. These ideologicalveins, and their hypothesized affects on loyalty, are presented in the followingsection.

3. Individualism, communitarianism, and loyalty

One of the contributions of this investigation is the assessment of how social,broad-based, normative frameworks influence individual loyalties toward col-lectives – such as organizations. Hirschman expressed particular theoreticalinterest in the influence of ideologies. Ideologies express justifications for theway societies are structured and allow us to undertake certain understandingsof events (Jary and Jary, 1991; Weick, 1995). These conceptions, in turn,legitimate social actions (Thomson, 1990). We craft two ideal-type ideolo-gical orientations in this paper: the classical philosophies of individualism(i.e., classical philosophical liberalism) and communitarianism. Concedingthe existence of a continuum of ideas within both of these traditions, weremain confident that it is possible to construct ideal types as pure-form con-


ceptualizations that serve both definitional and analytical purposes (Weber,1910/1979; Salancik and Leblebici, 1988).

3.1. Individualism

In the 17th and 18th centuries despotic feudalism comprised the dominant so-cial order in Europe. In response to these conditions scholars such as Hobbes(1651/1968) and Locke (1690/1980) formulated political philosophies thatadvocated the removal of impediments from people’s lives so that all mightexperience equal fulfillment. These ideas were also powerfully advancedin the 19th century by utilitarian philosophers (e.g., Mill 1859/1993; Sidg-wick, 1883) who argued that institutional systems exist to facilitate individualmaximization of one’s own conception of the good. The resulting ideology,classical liberalism or contemporary individualism, grants primacy to theprinciples of individual autonomy, the inviolability of liberty and a minimizedrole in social formation not only for central governments, but for all institu-tions. In the prototypical individualist’s normative understanding, to engagein conduct that advances the interests of others, while not simultaneously ad-vancing one’s own interests, constitutes exploitation (Gauthier, 1986). Underthese principles, the individual’s freedom, indeed responsibility, to constructand sustain a fulfilling life becomes a central value in society.

It follows from this premise that individual liberty takes precedence overcollective interests. By extension, business owners, as long as they play byprevailing rules, are at liberty to run their organizations as they see fit to max-imize their own economic interests (Friedman, 1979). In the contemporaryworld, in which management and ownership are usually separated (Berle andMeans, 1932), the implication is that managers ought to conduct business soas to maximize shareholder wealth. Government or institutional constraintsupon economic activity are seen as serious abridgments of liberty, as well asan encumbrance to free market efficiencies.

3.2. Communitarianism

Communitarianism is rooted in the 18th century political philosophy ofRousseau (1762/1987), who believed that a community is more than the sumof the individuals that comprise it and that collectives have value beyond theirrole in establishing a framework for individual achievement. Whereas theindividualist seeks to remove constraints from personal endeavor, Rousseaudescribes an existence made possible and fulfilling only through the goodcommunity. Contemporary communitarians (e.g., Etzioni, 1995; Ehrenhalt,1995; Sandel, 1996) have advanced similar principles and aim to enhancethe quality of collective living. Consequently, on the argument that a healthy


community is prerequisite for a fulfilling human life, communitarians el-evate the importance of community above absolute individual liberty andautonomy.

In opposition to the individualist’s position that exercise of choice is aparamount value that must be protected from institutional abridgment, theprototypical communitarian holds that institutions play an important role inpreserving the values of the community, as well as in ensuring social justicefor all citizens. Communitarians claim (e.g., Sullivan, 1995) that the indi-vidualist’s call for a minimal state is an example of how little they recognizethat institutions help to promote the good life for all citizens. According tocommunitarians, we are embedded within our community to the extent thatwe learn to view the merit of our life choices through the lens of the com-munity’s ideas, values and beliefs (Taylor, 1989). Nobility and freedom arederived from one’s willingness to subordinate personal interest to the overallcommon good (Young, 1995), so long as the benefits are broadly and fairlydistributed. It is this insistence that social goods should redound to the benefitof all, coupled with the mandate that citizens be allowed to democraticallydetermine the rules by which they live, that distinguishes communitarianismfrom authoritarianism – the historical ideology that individualism expresslyopposes (Sandel, 1996).

From the above discussion we can derive at least two possible dimensionsunderlying one’s ideological orientation. The first dimension taps whether anindividual is fulfilled through the achievement of internally derived pursuitsor through the recognition of socially affirmed accomplishments. The seconddimension refers to whether an individual’s vision for the role of social in-stitutions is to maximize individual freedom, or to mediate the harshness ofoutcomes for the less fortunate by redistribution of wealth or other socialgoods. Figure 1 illustrates the theoretical and empirical model we derivefrom this discussion of ideology and loyalty. The theoretical model (abovethe shaded line) contends that one’s ideological orientation will directly affectone’s loyalty toward an organization. Thus our first hypothesis:

H1: Ideological orientations will directly and significantly affect loyalty.

3.3. Loyalty and downsizing policies

As our objective is to examine the effects of emerging employment relation-ships on loyalty, we constructed several scenarios describing some details ofthese relationships as they are manifest in downsizing events. We hypothes-ize that certain prevalent policies toward employees and the organization’simmediate community will negatively affect loyalties. We consider five suchpolicies in this study.


Figure 1. Theoretical and empirical models.

3.3.1. The use of temporary employeesThe use of temporary employees is one technique with at least two advantagesfor management – labor cost reductions and environmental buffering. Tem-porary employees are rarely offered the benefit packages extended to full-timeemployees – a cost reduction that can save up to one-third of an employee’scost. In addition, unanticipated business cycles can send shock waves throughthe labor force. The resource dependence model (Pfeffer and Salancik, 1978)suggests managing human resource requirements is rendered more expedientthrough buffering a core of key full-time employees with a contingent oftemporary employees that can be forfeited during drawdowns and reabsorbedduring upturns. However, the treatment of employees as disposable resourcesis related to psychological stress (Leana and Feldman, 1992) and economicinstability (Moore, 1996). For these reasons we hypothesize:

H2: The policy to use temporary employees will negatively affect levelsof loyalty.

In contrast, we postulate that individualists will argue that this practiceis satisfactory under the principle that managers have the responsibility tomaximize the value of their owner’s property, and that each person’s positionin the economic order is a consequence of their merits and desires. On theother hand, communitarians will find these temporary associations to be aviolation of the Kantian imperative in so far as it disfavors less fortunatepeople by rendering them a mere means to others’ ends (Kant, 1785/1981).Therefore:


H2a: The policy to use temporary employees will interact with ideolo-gical orientation to moderate levels of loyalty.

3.3.2. The use of seniorityThis policy states that decisions about who to lay off during downsizingshould be made based upon how long an employee has been with the organ-ization. The principle of reciprocal loyalties asserts that the longer a personhas been with a company the more consideration he or she should be given.In practice, however, we see that such decisions are frequently based uponother criteria, such as profitability goals, strategic objectives, the employee’sretirement options or the employee’s performance history. Because loyaltiesare believed to be reciprocal we hypothesize:

H3: The policy to use seniority will be positively related to loyalty.

We surmise that individualists, under the premise of individual self-determi-nation, will find the practice of ignoring reciprocal loyalties as more accept-able than communitarians. Individualists will argue that there is no personaltrauma attendant to job loss because one’s identity and integrity is solely self-contained and is an individual responsibility. Communitarians, however, willstress that the longer a person devotes his or her time and labor to the en-terprise, forgoing alternative pursuits, and working for the profitable benefitsof that organization, the longer that person’s identity is, in part, defined bythe social role of corporate member and the greater the obligation the organ-ization acquires to reciprocate by considering the welfare of that employee.Consequently:

H3a: Ideological orientation will interact with the policy toward senior-ity to moderate levels of loyalty.

3.3.3. Retraining employeesHuman resource managers frequently view retraining of employees to fill ex-isting vacancies to be an economic decision. Because retraining broadens theskills and capabilities of employees, we view retraining employees as indicat-ive of a managerial policy aimed at retaining employees. Insofar as efforts toretain employees in a downsizing context can be construed as loyalty towardworkers, we would anticipate those workers to reciprocate with higher levelsof loyalty toward the organization, and hypothesize:

H4: The policy to conduct retraining of employees will be positivelyrelated to levels of loyalty.


Individualists, we propose, will argue that the personal achievement ofself-determined goals fosters self-respect. Therefore, individuals alone are ac-countable and responsible for their career outcomes, leaving the corporationunencumbered from retraining obligations. Alternatively, communitarianswill assert that self-respect is derived from the work role and social affiliationswithin organizations and that, consequently, organizations should make everyeffort to ensure that current members are retained. Hence:

H4a: Ideological orientation will interact with the policy toward retrain-ing to moderate levels of loyalty.

3.3.4. Employee voiceSimilarly, under the argument that those most affected by the outcomeof deliberations concerning their destinies should be included in thosedeliberations we hypothesize that:

H5: The policy to accommodate employee voice will positively influencelevels of loyalty.

In addition, we expect that there will be different views, based on ideolo-gical orientation, about whether managers are obliged to consider employees’preferences and ideas during a downsizing. Individualists, who readily agreeto use the organization as a means to personal ends, are more likely to grantmanagement the prerogative to use employees as a means to achieve organiz-ational ends. Communitarians, however, stipulating that those members mostaffected by a managerial decisions should have a voice in what decisions aremade and how they are implemented, as well as declaring that each other’sends should be considered, are more likely to believe that employees shouldhave a voice in the downsizing policies and procedures (Naylor, Willimonand Osterberg, 1997). Therefore:

H5a: Ideological orientation will interact with the policy toward voiceto moderate levels of loyalty.

3.3.5. Community coordinationIn many plant closures and layoffs the outcomes are felt not only by theindividuals who lose their jobs, but also by the surrounding communities.These second-order effects result from losses in disposable income, lossesin the tax base and losses in demand for products and services. Employeestypically live in the surrounding communities, and have family and friendsthat go to school and earn a livelihood in that community. Consequently wehypothesize:


H6: The policy to coordinate with the community will be positivelyrelated to levels of loyalty.

In general, individualists will argue that the best interests of communitiesare met when individuals and organizations pursue their self-interests. Underthis principle organizations have only those obligations to their surroundingcommunities that will provide a net-benefit to themselves (Gauthier, 1986;Friedman, 1979). Communitarians, on the other hand, perceive that organiza-tions have obligations of corporate citizenship requiring them to consider thecommunity interests (Etzioni, 1995). Hence, our final hypothesis:

H6a: Ideological orientation will interact with the policy toward thelocal community to moderate levels of loyalty.

4. Research design and methods

4.1. Design

An experimental research design employing Social Judgment Theory isapplied in this study. Social judgment theory (SJT) is a theoretical and meth-odological approach to analyzing human judgment in social contexts. Themost pervasive form of this theory in management research is judgmentanalysis, sometimes referred to as policy capturing (Stewart, 1988).

SJT externalizes judgment policies by using statistical methods to derivealgebraic models of that judgment process. The research objective of suchan approach is to describe quantitatively the relationship between a judg-ment outcome and the independent variables used to make that judgment.In this study we are interested in how the independent variables of seniority,retraining, participation, community involvement, and the use of temporaryemployees influence the dependent variable of loyalty. We are further in-terested in how ideological orientations directly and indirectly affects theserelationships.

The design employs a standard approach to SJT studies by developing acompletely random, one-quarter, fractional factorial which yields eight scen-arios and no cue intercorrelations (Alexander and Becker, 1978). The order ofthe policy cues within each vignette is randomly altered. In this case we useda random number table to select the sequence of the cues in each vignette.Randomizing the order of the cues helps to reduce serial effects due to theway the cues are sequenced in the vignettes. The order of the eight vignetteswas also randomly determined.


4.2. Cluster analysis

In addition, we apply cluster analysis to the regression beta weights derivedby running a regression equation for each of the 269 subjects. A hierarchicalclustering algorithm, using Euclidean distance, is applied to the beta weightsto determine the number of likely cluster patterns for the subjects. Thesecluster centers are used to seed a K-means clustering algorithm that groupsthe weights. One-way analysis of variance is conducted on key demographicvariables to validate that differences do, in fact, exist between these clusters.The final test is a one-way analysis of variance on the ideological factor scoresas we postulate that differences in ideological orientation are at least partiallyresponsible for the way one responds to organizational policies.

4.3. Sites and samples

The data used in this analysis was collected from 269 subjects over a periodof seven and one half months. Subject data was gathered from three locations.At the first site, a large research university located in a rural region of the mid-Atlantic United States, 140 full-time MBA students participated. The secondsite was a branch campus of the same university located in a large metro-politan region 250 miles north of the main campus; 65 part-time studentswho were employed full time participated. The third site was a large utilitycompany in the mid-Atlantic region undergoing restructuring; 65 full-timeemployees (non-students) participated.

4.4. Judgment task and measures

We asked all subjects to read eight vignettes containing orthogonal manipu-lations of the five policies described above. After each scenario the subjectswere asked to make judgments relative to their likely commitment, trustand citizenship toward this organization. In addition, data was collectedon several demographic variables, including gender, socio-economic status,age, and various aspects of employment history (including experience withdownsizing). The following measures were applied.

4.4.1. Ideological orientationThe Ideological Orientation Scale offers an index of 18 items and twofactors (Watson, Shepard, Stephens and Christman, 1998). The scale meas-ures one’s orientation to individualist or communitarian ideological positions.Two factors underlie one’s ideological orientation. The first is defined as thesource of self-fulfillment. This factor assesses the degree to which a personderives fulfillment from the pursuit of individually derived goals, versus the


extent to which one derives fulfillment from collectively determined pursuits.An example item is:

The second factor is defined as institutional roles. This factor measuresone’s beliefs about the degree to which social institutions should mediate theinequities and inequalities in economic outcomes, versus whether institutionsshould have minimal roles in these matters, confining themselves to ensuringthat individual security, autonomy and liberty are not abridged. An exampleitem is:

Subjects respond to items containing two statements, representing counter-acting ideological positions, separated by a six point scale. The scale allowsthe subject to indicate which statement he or she most agrees with and howmuch he or she agrees with it. The higher the score, the more communitarianthe respondent.

4.4.2. LoyaltyThe construct of loyalty has been found difficult to formulate (Farrell, 1983;Withey and Cooper, 1989). As indicated above we have generally accep-ted the definition of loyalty proffered by Van Dyne, Graham and Dienesch(1994). In this latter study the authors conceived of loyalty as one’s in-clination to serve the common good of the collective. They asked theirsubjects several questions tapping into ideas of willingness to work overtime,willingness to do outside volunteer work, accepting another job offer, and re-commending the organization as a good place to work. To us these ideas seemreasonably reflective of loyalty with the exception of Hirschman’s assertionthat loyal people somehow develop a faith or trust that things will eventuallywork out (Rusbult, Farrell, Roger and Mainous, 1988; Farrell, 1988; Witheyand Cooper, 1989). Consequently we asked the following questions after eachscenario: ‘I would recommend a friend for a job in this company’; ‘Even if


Table 1. Regression results for direct affects

Variable Coefficient T -ratio

Temporary employees –0.131 2.58b

Use of seniority –0.189 4.02c

Retraining employees +0.366 7.76c

Employee voice +0.586 11.64c

Community coordination +0.582 12.35c

Self-fulfillment +0.011 3.60c

Institutional roles –0.049 7.75c

R-sq= 0.204 F = 78.30c

a p <= 0.05.b p <= 0.01.c p <= 0.001.

I knew my job was secure I would be looking for another job.’ The secondcomponent of loyalty goes beyond passivity toward organizational citizenshipor extra-role behavior. To assess this component we asked two questions re-flective of citizenship: ‘I would work voluntary overtime to make-up for theloss of co-workers’; and ‘I would attend voluntary, unrewarded events thathelp to enhance the image of my company.’ The third component in the loy-alty measure is trust in management. Likelihood of trusting management wasmeasured by asking: ‘I believe the word of this company’s management canbe trusted.’ Subjects used a seven point Likert-type scale, ranging betweenstrongly agree to strongly disagree, to respond to each of these questions.

5. Results

5.1. Judgment analysis

5.1.1. Direct affectsLinear multiple regression was performed using the composite loyalty scoreas the dependent variable and the policies, as well as ideological orientationas the independent variables. Table 1 contains the results of this analysis.All policies yield significant direct affects. One policy, however, is not in thehypothesized direction. The use of seniority – indicating reciprocal loyalty –was expected to increase levels of loyalty, instead, using senioritydecreasedlevels of loyalty. Both factors of ideological orientation had significant directaffects on the composite loyalty indicator. The direction of these affects wasalso interesting. Those subjects that reported that they received greater fulfill-ment from collective endeavors (those that scored high on the self-fulfillment


Table 2. Stepwise regression results for direct and moderatingaffects

Variable Coefficient T -ratio

Use of temporary employees 0.132 2.62b

Use of seniority 0.66 2.87b

Retraining employees 0.368 7.86c

Employee voice NS

Community coordination NS

Sources of self-fulfillment NS

Institutional roles 0.077 8.70c

Temporaries× fulfillment NS

Seniority× fulfillment NS

Retraining× fulfillment NS

Voice× fulfillment 0.014 12.5c

Community× fulfillment NS

Temporaries× roles NS

Seniority× roles 0.026 2.08a

Retraining× roles NS

Voice× roles NS

Community× roles 0.031 12.51c

R-sq= 0.21 F = 85.02c

a p <= 0.05.b p <= 0.01.c p <= 0.001.

factor) generally exhibited higher levels of loyalty toward the restructuringorganization. However, those subjects that indicated that institutions playa role in mitigating social inequalities and economic hardships, tended toexhibit less loyalty toward these restructuring organizations. These findingsgenerally support our hypotheses numbered 1 through 6 – that policies andideological orientations directly affect indicators of loyalty.

5.1.2. Moderating affectsA step-wise regression procedure was used to test the possible moderatingaffects of ideological orientation on the composite loyalty score. Stepwiseregression retains those independent variables that explain the most variancein the dependent variable. In this procedure the product terms of sources offulfillment and each of the policy cues were calculated and the product termsof institutional roles with each of the policy cues were calculated. Theseproduct terms were then included as possible candidates for the stepwise


regression. Each policy cue and the ideological orientation scores for self-fulfillment and institutional roles were also included as possible candidates.Table 2 contains the results of this analysis. The direct affects for the use oftemporary employees, use of seniority, retraining, and institutional roles wereretained in the final step. Moreover, the product term of sources of fulfillmentwith employee voice (hypothesis 5a), the use of seniority with institutionalroles (hypotheses 3a), and coordinating with community with institutionalroles (hypothesis 6a), were also retained in the final model. One interpretationof these findings would suggest that those persons that receive greater fulfill-ment through collective endeavors would experience greater loyalty if theirvoice is included in the decision making processes. In addition, those that seea mediating role for institutions will be less loyal if seniority is included inemployee retention decisions (under the argument that some criteria, such asperformance should be the criteria for retention). Furthermore, those that seea mediating role for institutions will be more loyal if companies coordinatewith the community during downsizing. These results at least partially sup-port our hypotheses that one’s ideological orientation moderates indicationsof loyalty (hypotheses 3a, 5a, 6a).

5.1.3. Policy importanceWhen examining the importance of various policies on an outcome variablesuch as loyalty, scholars assert that standardized regression weights are themost appropriate measure of importance (Lane, Murphy and Marques, 1982).Using this criteria, and Table 1, we can determine that coordinating with thecommunity (0.582, p£0.001) and including employee voice (0.586, p£0.001)were by far the most influential predictors in judgments of loyalty. Retrainingof employees (0.366, p£0.001), the use of seniority (0.189, p£0.001) and theuse of temporary employees (0.131, p£0.01), although significant, were oflesser importance.

5.2. Cluster analysis

As described above, a hierarchical clustering algorithm was run to obtaindistance coefficients for various numbers of possible clusters. The distancecoefficients began to drop off with six clusters remaining. Therefore, wesurmised that the regression weights for the various policies tended to groupinto six clusters (Alderfer and Blashfield, 1984). Subsequently a K-Meansclustering analysis, seeded for six clusters, was conducted. Table III containsthese results.


Table 3. Cluster differences

Variable Cluster 1 Cluster 2 Cluster 3 Cluster 4 Cluster 5 Cluster 6

Loyalty 4.422 4.049 4.538 4.314 4.193 4.258

scorec

Self- 41.482 44.457 41.147 41.187 43.537 40.654

fulfillmentb

Institutional 18.777 18.439 18.384 17.987 17.993 18.099

rolesa

Age 3.802 4.104 3.359 2.826 3.807 3.502

categoryc

Socio-econ- 4.646 4.604 4.537 4.374 4.767 4.685

class categorya

Sex 1.2713 1.3036 1.2938 1.3745 1.2365 1.2108

categoryc

a p <= 0.05.b p <= 0.01.c p <= 0.001.

5.2.1. Cluster validationA one-way analysis of variance was conducted across all clusters to identifywhether differences between clusters exist. Differences between clusters wereidentified in the loyalty score, age categories, gender categories and socio-economic class categories, all indicating that differences between clusterswere highly likely. We also used one-way analysis of variance to determ-ine whether there were differences in ideological orientation between theseclusters. Both sources of fulfillment scores and institutional roles scores weredifferent between clusters, further indicating that ideological orientation isone factor moderating respondent’s loyalty score.

6. Discussion and conclusion

In this paper we have sought to establish a broader conceptualization andoperationalization of loyalty than is generally outlined in the organizationalcommitment literature or previous literature evaluating Hirschman’s loyaltyconstruct. We have evaluated the direct and indirect effects of ideologicalorientation on organizational loyalty within the context of certain human re-source policies commonly implemented during a downsizing event, including


the use of temporary employees, retraining employees, employee voice in thedecision making process and coordinating with the community. We find thatideological orientation and these policies have significant direct affects onindicators of loyalty. In addition, we discovered that particular ideologicalorientations interact with certain policies to moderate levels in the indicatorsof loyalty. These direct and moderating affects of ideology represent com-pelling evidence for Hirschman’s (1970) claim that loyalties are influencedby the general ideological orientations exhibited in the broader social mi-lieu. As Hofstede (1980) has demonstrated, an appreciation for these nationalsocio-historical normative structures enable us to better explain, predict andunderstand the expectations and behaviors of organizational members.

Limitations in this study generally entail those inherent in any use of re-search judgment analysis. This includes the nature of the algebraic modelwhich does not account for corporate implied or explicit promises (e.g., thepsychological contract discussed by Rousseau and Aquino, 1993). Moreover,although there is no evidence of cue intercorrelations, there may in fact berelationships between factors such as the use of temporary employees and theretraining of employees. The unexpected direction in the use of the tenure cuemay have been an artifact of the relatively young sample from a region thatis traditionally opposed to labor organizations (labor organizations generallyallocate some benefits and resources based on seniority criteria). Investigatingregional attitudes regarding tenure and organized labor might be a usefulrelated study. Finally, we asked respondents to evaluate the policies of thecompanies that were deemed important parts of the community’s economicviability. The results may not have been the same if we had not included thiscaveat.

The results also affirm that ideological orientations to influence one’sresponses to various management policies during downsizing. These resultsalso raise many questions about the nature of ideological reasoning and thesaliency of these human resource policies for the respondent. The authorspresent this study as an initial effort toward understanding the influence ofwidespread ideologies on constructs such as loyalty.

In conclusion, as in many constructs in the organizational sciences (e.g.perceptions of justice, and job satisfaction) loyalty appears to be strengthenedby the inclusion of employee voice. In addition, although we have anecdotalevidence the community coordination is a concern for many observers, thecurrent study empirically links loyalty and concern for the community.


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