Professionalisation, entrepreneurial orientation and employee engagement in family and non family firms : a study of graduate employees in Indonesia

  • E Eko Suhartanto

Student thesis: Doctoral Thesis

Abstract

Employee engagement is essential for both employee and business outcomes. For example, research suggests that employee engagement can encourage employee retention and boost profitability. Recent trends, however, depict a decline in levels of employee engagement with differences further observed between family and nonfamily firms. Using a sample of 545 highly educated Indonesian employees, this thesis employs Structural Equation Modelling to examine the potential effects of firm professionalisation and Entrepreneurial Orientation (EO) factors on employee engagement in family and nonfamily firms.This thesis finds that professionalisation and EO are not dichotomous, but may mutually promote employee engagement. Drawing on the Personal Engagement Concept (PEC) and Social Exchange Theory (SET), the study posits that professionalisation provides predictability, transparency and perceived justice to compensate for any uncertainty that may be attached to the entrepreneurial firm. Equally, entrepreneurial behaviour provides challenging and stimulating work to compensate for inflexibility that may be attached to the professionalised firm. These dynamics together enhance employee engagement.The positive impact of professionalisation and EO factors on employee engagement is however lower in family firms. This may be due to the typical family firm behaviours, such as self-control, dual-roles, and altruism, that could interfere with formal business procedures and reduce employee perceptions of predictability, transparency and justice. In particular, family firm owners' dual roles may reduce employee involvement in decision-making processes, thereby discouraging employee creativity.To effectively encourage employee engagement, this thesis therefore proposes that both family and nonfamily firms should heed the various human resource aspects of professionalisation. For family firms, in particular, since natural nepotism and subjective decisions could undermine any formal authority bestowed upon employees in family firms, installing formal recruitment procedures, performance reviews, training, and performance-based pay is recommended as a more effective strategy to boost employee engagement.
Date of Award1 Oct 2016
LanguageEnglish
Awarding Institution
  • University Of Strathclyde
SupervisorSamuel Mwaura (Supervisor) & Sarah Drakopoulou Dodd (Supervisor)

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