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Organizational Culture and Leadership Style on Job Satisfaction Level of Managers in SME, Penang Essay

The complex society today has its benchmark of goals and fulfillment that should be achieved by individuals. This set of goals and fulfillment includes securing a good job, preferably with a good pay and hopefully, with job satisfaction. What is job satisfaction? Job satisfaction is how content an satisfaction?

Small and Medium Enterprise Corporation Malaysia, SMECORP census report show in 2011, total have 645,136 SMEs in Malaysia. Penang occupied 6.3%from the total. In Malaysia SME total have 3.6million employees, which Malaysia, mployees, contributed a lot of job opportunities to Malaysians. 6.3% of 3.6million is about 3.6million 230,000 employees working in Penang SME.

SMEs play an important role in all economies in the world by contributing 80 percent of global economic growth (Jutla, et al., 2002). The importance of SMEs in developing a nation must not be taken lightly and be underestimated (Ragesh et al., 2010; Noor Hazlina & Seet, 2009). The contribution of SMEs on the various Asian nations’ Gross Domestic Product (GDP) is significant as shown in the Table 1 as follows: As indicated in Table 1, more than 90% of the business establishments (except Singapore) are mainly SMEs. These SMEs
provides job opportunities for more than 40% of their workforce.

Table 3: International SME Development and Growth
Source: Malaysia SME Annual Report 2007.

Research Gap

From the pass many studies (Aria Hassan, 2010; Block, L. 2003; Daft, R. L. 2005; Drucker, P.F. 1999; Harris, L. C. and Ogbonna, E. 2001), it showed some significant relationship between organizational culture and job satisfaction; leadership style and job satisfaction. Not easy to find direct study three variable relationships together.

However, another gap to be observed job satisfaction research mainly is oversea research. Even in Malaysia research also didn’t find a very specific research on Penang, SME manager on their job satisfaction base on two independent variables, organizational culture and leadership styles (Harris, L. C. and Ogbonna, E. 2001; Hsu, H. Y. 2009; Kim, S. 2002; Lee, H. Y. 2008; Lee, T. W. and Mowday, R. T. 1989; Li, Y. C. 2004; Rashid, M. Z. A., Sambasivan, M. and Johari, J. 2003 )


Research Problem

In facing a variety of challenges, knowledge generation and dissemination are more critical than they had in the past. Drucker (1999) pointed out that personal know-how and tacit knowledge are not stored within an organization; in contrast, this knowledge is maintained by employees.

According to past research, managers presented a high turnover rate in the SME industry, for example, Hu et al. (2005) found that the managers in electronics SME had the second highest rate of turnover among all managers in other industry and the rate of turnover was 42% of SME managers expected to remain in their current job for 3 years, 28% anticipated that they would keep the same job for 3-6 years and only 6% planned to remain in the same job for over 10 years.

Past studies show that a positive corporate culture and effective leadership styles can enhance organizational commitment and job satisfaction (Ogbonna and Harris, 2000; Lok and Crawford, 2004).

With a fit between positive organizational culture and suitable leadership style in the organization, a lasting success in business performance can be achieved.
Very few attempts have been made to examine the three variables (organization culture, leadership styles and job satisfaction) in an integrated way.

Therefore the fundamental issue guiding this study is to look more specifically on organizational culture and leadership styles and their effect on the job satisfaction of SME managers working in local Penang SME organizations in Malaysia.

Research Questions

This research attempts to examine the influence of organizational cultures and leadership styles on job satisfaction of SME managers in Penang, Malaysia. In examining the relations, the main research questions are:

1. What is the job satisfaction level of managers in the SME, Penang? 2. Are they satisfied with their current job?
3. To what extent the 2 factors affect job satisfaction of managers in the SME, Penang?
4. What is the moderating effect of age in the job satisfaction?

Objectives of the Research

The objectives of this research are to examine the association between different types of organizational cultures and leadership styles on job satisfaction of SME managers in Penang. The specific objectives of this research are to:

To assess the job satisfaction level of managers in SME Company in Penang.

To study the impact of these 2 factors affects the job satisfaction of the managers in SME Company in Penang.

To examine whether age has any moderating effect on the job satisfaction of the managers in SME company in Penang.

Significance and contribution of the study

This study intends to contribute to the existing knowledge base, in particular the influence of organizational cultures and leadership styles on job satisfaction of the SME Manager in Penang. It is noted that even with the literature found from various databases, only a handful looked into the relationship of organizational cultures and leadership styles on job satisfaction of professionals. Very few attempts have been made to examine the three variables in SME Penang (Organizational culture, leadership styles and job satisfaction) in an integrated way.

With increasing globalization, greater knowledge of the interaction of these factors on SME managers working in small and medium industry organizations can be beneficial. Thus, upon gathering the data, finding effective methods in managing SME managers are crucial in order to achieve a high level of innovation performance by SME organizations in Penang.

The significance of this research can be summarized per below: 1) Contribute to the literature review on the relationship of organizational cultures and leadership styles on job satisfaction SME in Penang. 2) Able to identify types of organizational cultures and leadership styles adopted by SME in Penang.

3) Determine job satisfaction level of SME manager in Penang. 6

4) Identify effective cultures and leadership styles in managing SME managers in Penang.

Definition of terms

1.7.1 Organization Cultures
There are a number of definitions of organizational cultures that refer to norms of behavior and shared values among a group of members in an organization. According to Conner (1992), organizational cultures can be defined as the “interrelationship of shared beliefs behaviors and
assumptions that are acquired over time by members of an institution”.

In fact, cultures dominate in a way that impacts employee interaction, organizational functioning and eventually influences all decision making (Graham &Nafukho, 2007). Schein (1985) integrated the concept of assumptions, adaptations, perceptions and learning and then comprehensively defined organizational cultures as patterns of basic assumptions invented, discovered or developed by a given group as it learns to cope with the problems of external adaptation and internal integration that all works well enough to be considered valid and therefore to be taught to new members as the correct way to perceive, think and feel in relation to those problems.

Culture can also be expressed through the organization’s myths, heroes, legends, stories, jargon, rites and rituals. Corporate culture is a key component in the achievement of an organization’s mission and strategies, the improvement of organizational effectiveness and the management of change 7

(Samuel, 2006). A corporate culture can work for an organization to improve performance or against it by creating barriers that prevent the attainment of goals. However, it can be corrected by providing guidance on what is expected by conveying a sense of identity and purpose of unity to members, facilitating the generation of commitment and shaping behavior.

1.7.2 Leadership & Leadership Styles
According to Stogdill (1963), different people will interpret leadership differently based on the individual perspective; there are almost as many definitions of leadership as there are persons who have attempted to define the concept. Stogdill stated that the term leadership is a relatively a recent addition to the English language and it was used only for about two hundred years ago, although the term leader from which it was derived appeared as early as A.D1300.

Leadership has been defined in terms of individual traits, behavior, influence over other people, interaction patterns, role relationships, occupation of an administrative position and perception by others regarding
legitimacy of influence. (Yukl, 2006). Leadership is an interaction between two or more members of a group that often involves a structuring or restructuring of the situation and the perceptions and expectations of members. Some other definitions are as follows:

1) Leadership is “the behavior of an individual when he is directing the activities of a group toward a shared goal.” (Hemphill & Coons, 1957). 8

2) Leadership is “an interaction between persons in which one presents information of a sort and in such a manner that the other becomes convinced that his outcome will be improved if he behaves in the manner suggested or desired” (Jacobs, 1970).

3) Leadership is “the initiation and maintenance of structure in expectation and interaction” (Stogdill, 1974).

Job Satisfaction

Locke (1969) defining job satisfaction as “the pleasurable emotional state resulting from the appraisal of one’s job as achieving or facilitating the achievement of one’s job values”. Spector (1985) defined it as “how people feel about their jobs and different aspects of their jobs. It is the extent to which people like or dislike their jobs. Schmidt (2007) stated that job satisfaction is a reflection of an individual’s behavior that leads to attractive outcomes and is typically measured in degrees of multiple perceptions using multiple constructs or categories.

Overall, job satisfaction is associated with an employee satisfaction from both psychological and physical perspectives. Thus, job satisfaction is recognized as a complex construct that includes both intrinsic and extrinsic factors. (Herzberg, 1959). He also identified the intrinsic as derived from internal job-related rewards such as recognition, achievement, advancement and responsibility. Extrinsic factors result from external
environment-related rewards such as salary, policies, and interpersonal relations in supervision and working conditions. Spector (1985) identified nine subscales for the Job Satisfaction 9

Survey (JSS): pay, promotion, supervision, fringe benefits, contingent rewards, operating conditions, co-workers, nature of work and communication.

1.7.4 SME Manager
SME manager can be explained in 2 parts- SME and the manager. SME is the industry and manager is the position in an organization.
Small and medium enterprises or SMEs, also called small and medium-sized enterprises and small and medium-sized businesses, SMBs. SMEs are companies whose headcount or turnover falls below certain limits. The manager is an individual who is in charge of a certain group of tasks, or a certain subset of a company. A manager often has a staff of people who report to him or her.

Job Satisfaction underpinning theory

1.8.1 Herzberg Job Satisfaction Theory:
Herzberg developed his theory that there are two dimensions to job satisfaction: motivation and “hygiene”. Hygiene issues, according to Herzberg, cannot motivate employees but can minimize dissatisfaction, if handled properly. In other words, they can only dissatisfy if they are absent or mishandled. Hygiene topics include company policies, supervision, salary, interpersonal relations and working conditions. They are issues related to the employee’s environment. Motivators, on the other hand, create satisfaction by fulfilling individuals’ needs for meaning and personal growth. They are issues such as achievement, 10

recognition, the work itself, responsibility and advancement. Once the hygiene areas are addressed, said Herzberg, the motivators will promote job satisfaction and encourage production. (Christina M. Stello, 2011)


Literature Review

In this chapter, a literature review on the independent variable, organizational culture and leadership styles, also the dependent variable, job satisfaction.


Independent variable – Organizational Culture

Organizational culture is generally seen as a set of key values, assumptions, understandings and norms that are shared by members of an organization and taught to new members as correct (Daft, 2005). It is argued that organizational culture may be the critical key that managers can use to direct the course of their firms (Smircich, 1983). A culture creates distinctions between one organization and others, conveys a sense of identity for its members, facilitates commitment towards the organization’s goals, enhances the stability of the social system, reduces ambiguity and serves as a control mechanism that guides and shapes the attitudes and behavior of employees.

However, a culture can also become a liability when it becomes too strongly entrenched within the norms, values and mindsets of the employees and resist changes. A culture can also become a barrier to change, diversity and other transformations required for the organization to adapt in today’s dynamic, 11

globalized business environment. The study of organizational culture can take on a multitude of aspects.
Robbins (2005) elaborated that there are seven primary characteristics that, in aggregate, capture the essence of an organization’s culture: innovation and risk taking, attention to detail, outcome orientation, people orientation, team orientation, aggressiveness and stability. Each of these characteristics can exist on a continuum from low to high. Daft (2005) discussed on the three levels of corporate culture, with each level becoming less obvious, i.e. visible, expressed values and underlying assumptions and deep beliefs.

Culture can also be determined by its strength, which is the degree of agreement among employees about the importance of specific values and ways of doing things. A strong culture is one which core values are both intensely held and widely shared, and hence have greater impact on employee behavior. Research has found that a strong culture is linked to high agreement among members, increases behavioral consistency builds cohesiveness, loyalty and organizational commitment and more importantly, reduces turnover (Robbins, 2005).

According to Wallach (1983), an organization’s culture can be a combination of three categories – bureaucratic, innovative or supportive – to varying degrees. Wallach’s (1983) framework is adapted for the purpose of this study. Wallach (1983) states that the Organizational Culture Index (OCI) profiles culture on the three stereotypical dimensions and can be derived from the combination of these three dimensions.


A bureaucratic culture is hierarchical and compartmentalized. There are clear lines of responsibility and authority. Work is organized and this culture is usually based on control and power. Such organizations are stable, cautious, usually mature, power-oriented, established, solid, regulated, ordered, structured, procedural and hierarchical.

An innovative culture refers to a creative, results-oriented, challenging work environment. It is characterized as being entrepreneurial, ambitious, stimulating, driven and risk-taking. A supportive culture exhibits teamwork and a peopleoriented, encouraging, trusting work environment. These places are warm and people are generally friendly, fair and helpful to each other. Supportive cultures are characterized as open, harmonious, trusting, safe, equitable, sociable, relationships-oriented, humanistic, collaborative and likened to an extended family.

Wallach (1983) further elaborated that an employee can be more effective in his or her current job and realizes his or her best potentials, when there is a match between the individual’s motivation and the organizational culture. For instance, by using McClelland’s three social motivators: a person with a high need of achievement will thrive in an innovative culture, an affinitive person will fare well in a supportive culture and a power-oriented person will perform best in a bureaucratic culture. This has significant implications in recruitment, management, motivation, development and retention of employees.

Few published studies describing the corporate culture of Malaysian companies, which are generally more or less similar to other fast-growing, competitive, 13

developing Asian countries. Government offices are generally considered to be bureaucratic, while publicly-listed and private companies are more

entrepreneurial in nature. This is exemplified in a study done by Rashid et al. (2003), where companies listed on the Kuala Lumpur Stock Exchange were found to be predominantly competitive and value risk-taking, demanding goals and market superiority.

Another study by Rashid et al. (2004) showed that among manufacturers in the
country, many had mercenary culture, which emphasized on strategy and winning in the marketplace. To balance this, there exists to a lesser degree consensus, network and supportive cultures within Malaysian companies, consistent with the cultural values of Malaysian managers. Tradition, loyalty, teamwork and personal commitment are among some of the values prevalent in Malaysian companies.

Independent variable – Leadership styles

Daft (2005) defined leadership as an influence relationship among leaders and followers who intend real changes and outcomes that reflect their shared purposes. Over the course of time, a number of dimensions or facets of leadership behavior have been developed and applied as researchers continue to discover what contributes to leadership success and failures. These included, among others, autocratic versus democratic, task-oriented versus peopleoriented, and the contingency approaches.

The first studies on leadership styles conducted by Kurt Lewin and his associates in 1970s, identified the autocratic, democratic and delegative leadership styles. An autocratic leader is one who centralizes authority and derives power from position, control of rewards, and coercion. A democratic leader style involves the leader including one or more employees in the decision making process but the leader maintains the final decision making authority. A delegative leader style, on the other hand, delegates authority to others, relies on subordinates’ knowledge for completion of tasks and depends on subordinate respect for influence.

Subsequently, a series of studies on leadership styles (e.g. By Ohio State University, University of Michigan and University of Texas) were designed and conducted in the 1950s. This resulted in the development of reliable questionnaires (e.g. Leader Behavior Description Questionnaire, LBDQ) and
models (e.g. Leadership Grid by Blake and Mouton) that would, in time, dominate much of leadership-related research and literature for years to come. Overall, the research into the behavior approach culminated in two major types of leadership behaviors – people-oriented and task-oriented.

People-oriented leadership, which is equivalent to the consideration (Ohio State University), employee-centered (University of Michigan) and concern for people (University of Texas) focuses on the human needs of subordinates, respects their ideas and feelings and places importance on establishing mutual trust. Task-oriented leadership, which is equivalent to initiating structure (Ohio State University), job-centered (University of Michigan) and concern for production (University of Texas), focus on directing activities towards efficiency, cost15

cutting, and scheduling, with an emphasis on goal achievements and work facilitation.
Theories of leadership then evolved to adopt a contingency approach when researchers failed to find universal leader traits or behaviors that would determine effective leadership. Following this school of thought, research focused on the situation in which leadership occurred. Leadership styles can be contingent upon situational variables, the nature of the followers and the leaders themselves. Many theories have been put forward, including Fiedler’s contingency theory, Hersey and Blanchard’s situational theory, the Vroom-Jago contingency model, Leader-Member Exchange theory and the Path-Goal theory. Depending on the researcher’s conceptions and preferences, most leadership studies have been carried out in various ways.

Nearly all leadership research can be classified into powerful influence, behavior, trait approach and situational approach. Currently, the most influential contingency approach to leadership is the Path- Goal theory (Robbins, 2005). This theory was developed by Robert House and extracts the key elements of the Ohio State leadership research on initiating structure and consideration, and the expectancy theory of motivation. The theory states that the main goal of the leader is to help subordinates attain the subordinates’ goals effectively and to provide them with the necessary direction and support to achieve their own goals as well as those of the organization (Silverthorne, 2001).

In this theory, the leader increases follower motivation by either; (1) Clarifying the follower’s path to the rewards that are available or 16

(2) Increasing the rewards that the follower values and desires. Path clarification means that the leader works with subordinates to help them identify and learn the behaviors that will lead to successful task accomplishment and organizational rewards. Increasing rewards means that the leader talks with subordinates to learn which rewards are important to them, i.e. whether they desired intrinsic rewards from the work itself, or extrinsic rewards such as promotions. The leader’s job is to increase personal payoffs to subordinates for goal attainment and make the paths to the payoffs clear and easy to travel.

The Path-Goal theory suggests a fourfold classification of leader styles:

directive, supportive and participative styles. It is assumed that leaders are flexible and that the same leader can display any or all of these behaviors depending on the situation.
Directive leadership tells subordinates exactly what they are supposed to do. Leader behavior includes planning, making schedules, setting performance goals and behavior standards and stressing adherence to rules and regulations. Mehta et al. (2003) added that this leadership style provides specific direction to subordinate work activity by organizing and defining the task environment, assigning the necessary functions to be performed, specifying rules, regulations and procedures to be followed in accomplishing tasks, clarifying expectations, scheduling work to be done, establishing communication networks and evaluating work group performance. Directive leadership behavior is similar to the initiating structure or task-oriented leadership style.


Supportive leadership shows concern for subordinates’ well-being and personal needs in which the leaders are open, friendly and approachable. The leader creates a team climate and treat subordinates equally. Mehta et al. (2003) further elaborated that a supportive leadership style is one in which the leader creates a facilitative task environment of psychological support, mutual trust and respect, helpfulness and friendliness. Supportive leadership is similar to the consideration or people-oriented leadership described earlier. Participative leadership consults with subordinates about decisions. Leader style includes asking for opinions and suggestions, encouraging participation in decision making, meeting, discussion and written suggestions, similar to the selling style in the Hersey and Blanchard model mentioned previously. Various studies in organizational behavior have found that allowing subordinates to participate in decision-making leads to increased motivation (Mehta et al., 2003).

Achievement-oriented leadership sets clear and challenging goals for
subordinates. Leader behavior stresses high-quality performance and improvement over current performance. Achievement-oriented leaders also show confidence in subordinates and assist them in learning how to achieve high goals.
The two situational contingencies in the Path-Goal theory are the personal characteristics of group members and the work environment. Personal characteristics can include subordinates’ locus of control, experience, perceived ability, skills, needs and motivations.

Work environment contingencies can include the degree of task structure, the nature of the formal authority system and the work group itself.
Task structure describes the extent to which tasks are defined and have explicit job descriptions and work procedures. The formal authority system includes the amount of legitimate power used by leaders and the extent to which policies and rules constrain employees’ behavior. Work group characteristics consist of the educational level of subordinates and the quality of relationships among them.

The outcome of matching the right leadership behavior with the right situation while taking into consideration the various subordinate and work environments contingencies will result in favorable outcomes such as increased effort, improved satisfaction and performance (Daft, 2005). The study of leadership behaviors as conceptualized under the Path-Goal theory has been applied in many types of researches and has been generally accepted as a good measure of subordinate’s perceptions of leadership style based on participative, supportive and directive.

For example, in the context of international marketing channels (Mehta et al., 2003), small and middle-sized firms (Li, 2004), company managers (Silverthorne, 2001), steel industry (Downey et al. 1975), automotive industry (Chang et al., 2003) and market orientation of UK firms (Harris and Ogbonna, 2001).

Researchers of marketing channels in the distribution and logistics industry have attempted to show the path-goal theory’s usefulness as a strategy to 19

secure the compliance of channel members and have conceptually and empirically linked it to channel related phenomena such as manifest conflict, cooperation, channel efficiency and effectiveness, role clarity, role conflict, role ambiguity, and channel member satisfaction (Mehta et al., 1996) Not everyone agrees that a particular style of leadership will result in the most effective form of organizational behavior.

Different styles were needed for different situations and each leader needs to know when to exhibit a particular approach. No one leadership style is ideal for every situation since a leader may have the knowledge and skills to act effectively in one situation but may not emerge as effectively in a different situation (Rad and Yarmohammadian, 2006). Leaders affect their subordinates both directly through their interactions and also through the organization’s culture (Li, 2004).

Past research on corporate leadership in Malaysia frequently focused on its unique, multi-ethnic, multi-cultural and collectivist society. It is acknowledged that leadership in Malaysia is deeply entrenched and connected to its diverse Asian culture, traditions and values. Hence, commonly-accepted leadership theories from the west and how it is thought to affect other organizational behavior factors may not be directly transferable to the Malaysian context. Organizational success in obtaining its goals and objectives depends on managers and their leadership style. By using appropriate leadership styles, managers can affect employee job satisfaction, commitment and productivity.



Many factors related to turnover have been identified by previous research to be significantly correlated with job satisfaction (Chang, Choi, & Kim, 2008; Moore, 2000). In a review of past literature, Rad and Yarmohammadian (2006) justified the need to investigate job satisfaction is exemplified in the seemingly observed relationship between the levels of job dissatisfaction, absenteeism, grievance expression, tardiness, low morale and high turnover. Thus, job satisfaction is an immediate antecedent of intention to leave the workplace and turnover. Unsatisfied workers will leave their jobs more than their satisfied colleagues. Furthermore, more satisfied employees have more innovative activities in continuous quality improvement and more
participation in decisionmaking in organizations. 21


Relationship between organization culture, leadership styles

& job satisfaction
Research involving two or all three subjects of organizational culture, leadership styles and job satisfaction has attracted considerable interest from both academics and practitioners. Examples of a few key studies in the area are:

(1) Corporate culture and leadership style in United Kingdom (Ogbonna and Harris, 2000), Canada and Korea (Dastmalchian et al., 2000). (2) Organizational culture and leadership style on job satisfaction and commitment (Lok and Crawford, 1999, 2004).

(3) Leadership style and organizational culture to effect change (Brooks, 1996; Smith, 2003).
(4) Leadership and organizational culture in a private organization toward performance (Block, 2003).
Despite numerous references to a relationship between organizational culture and leadership styles in many parts of organization theory and research, little systematic research has been conducted to investigate the link between the nature of the relationship of these two concepts and their effect on job satisfaction. Since these two concepts are important in the functioning of an organization (Lok and Crawford, 2002, 2004; Ogbonna and Harris, 2000; Fiedler, 1996; Schein, 1992), further research is required to provide the insight information to the leaders and organizations.


On the other hand, previous research on corporate culture in Malaysia (Kamal, 1988; Jaina, Md. Zabid, Anantharaman, 1997) focused more on different ethnic backgrounds (Malays, Chinese, and Indians) and used
Hofstede’s model of organizational culture (Hofstede, 1980). Job satisfaction is recognized as an important topic in organizational culture because of its relevance to the physical and emotional health of employees (Oshagbemi, 1999).

Although a considerable number of researchers have argued that there is a constant interplay between organizational culture and leadership, there are limited empirical studies examining the relation between leadership and culture as well as their joint effect on important organizational outcomes (Trice and Beyer, 1993). More importantly, research has found that the harmonious combination of appropriate leadership styles with certain types of organizational cultures can positively influence employees’ performance (Harris and Ogbonna, 2000).

According to Yousef (2000), the relationship between leadership styles and job satisfaction has received a lot of attention in the past research however findings have been mixed (Savery, 1994; Yousef, 2000). Research therefore does not directly link employee satisfaction to a specific leadership style. Instead, many suggest that leadership style needs to adapt to the culture or situation as it attempts to reduce employee dissatisfaction.

Based on a comprehensive literature review by Yousef (2000), several researchers have also looked into the relationship between leadership styles and job performance. The findings were inconsistent as well. A couple of 23

studies in the steel industry and electronic meeting systems reported higher satisfaction and performance levels under directive leadership style when given a highly structured task, while supportive leadership style is preferred for unstructured problems (Kahai et al., 1997). Results from investigations of the antecedents of commitment have not been entirely consistent (Yousef, 2000).  Organizational culture plays an important role as well in generating commitment and enhancing performance (Lok and Crawford, 2001). In particular, studies in various industries and countries showed that innovative and supportive cultures had strong positive effects on commitment and job satisfaction, while bureaucratic cultures had a negative impact (Lok and Crawford, 1999; Rashid et al., 2003; Wallach, 1983).

Results from various organizations in the United Arab Emirates suggest (in support of many western studies) that those who perceive their superiors as adopting consultative or participative leadership behavior are more committed to their organizations, more satisfied with their jobs and their performance is high. When employees are dissatisfied at work, they are less committed and will look for other opportunities to quit. If opportunities are unavailable, they may emotionally or mentally “withdraw” from the organization. Thus the job satisfaction is an important attitude in assessing the employee’s intention to quit and the overall contribution of the employee to the organization. 24

Rashid et al. (2003) surveyed over 200 companies listed on the Kuala Lumpur Stock Exchange. Combining these findings with studies from other countries,
both western and non-western, it is reasonable to expect that different types of leadership styles and organizational cultures do affect organizational commitment, which in turn, influences both job satisfaction and employee performance. Samad (2005) studied 584 managerial-level of employees in Telekom Malaysia and reported that job satisfaction did play a positive moderating role in the relationship between organizational commitment and job performance.

However, Leong et al. (1994) found a weak correlation between the two variables, Lee and Mowday (1989) found negligible relationship and Wright (1997) reported a negative relationship between the two. In summary, many studies across different industries and geographical regions revealed strong correlations between organizational cultures with job satisfaction. There are very few relevant studies in the Malaysian context have been published to date but through our findings, no research being done on the relationship of organizational cultures, leadership styles and job satisfaction of SME managers working in SME industry, which has significant contribution to the Penang.


Theoretical Framework

For the purpose of this research proposal, Hsu (2009) conceptualization of the relationships between organizational culture, organizational commitment and job satisfaction together with Lee (2008) study on “Association between 25

organizational culture and leadership behavior and organizational commitment, job satisfaction and employee performance- A Malaysian Perspective” performance


partially adapted.
Based on the literature review, the theoretical framework per Figure 1 below; igure

Figure 1: Research Framework

From the literature and framework above, the following research hypothesis derived.
H1: Organizational Culture affects Job Satisfaction of the employees. Job
H2: Leadership Style affects Job Satisfaction of the employees. H3: Age has a moderating effect on the level of Job Satisfaction

Research Methodology

Research Instrument

This study adopts a quantitative approach and the data solely depends on the primary data. The instrument to be used to collect the data in this research is a set of questionnaire. The questionnaire consists of two main sections – Section A and B.

Section A is regarded respondent’s profile, such as Gender, Age Group, Position in this organization, Highest Level of Academic Qualification and Total Year of Working Experience in this company.
Section B is pertaining to the measurement of variables under studied. There are total three variables in this study – one dependent variable which is Job Satisfaction, and two independent variables which are Perceived Organization Culture and Perceived Leadership Style. The Job Satisfaction is measured with ten items, and Organization Culture and Leadership Style, they are assessed by 20 and 15 items respectively. This is self-administered questionnaire. Respondents will be asked to indicate their agreement on each item on a 5-points Likert scale. The scale points are 1=Strongly Disagree,
2=Disagree, 3=Neutral, 4=Agree, and 5=Strongly Agree. A set of questionnaire is appended in Appendix A for reference.


Population and Sample

The population for this study composed of all managers in the SME in manufacturing sector companies located in Penang. A two layer sampling method will be employed in selecting the respondents for this study. In the first layer, the companies that formed the respondents will be selected using a simple random sampling method. The list of all the SME in the manufacturing section publishes on the SME website will be used as the population. Each company will be assigned a number and random numbers will be generated to select 380 companies to form the participants. In the second layer, 5 sets of questionnaire will be given to the Human Resources managers of the 380 companies selected. The questionnaire will then be distributed to the managers in their company. The selection of managers is at the discretion of the Human Resources managers.


Pilot Test

Test Pilot is a trial run of procedures and instruments that you plan to use. Pilot test will be conducted with 50 managers of SME in the manufacturing sector randomly picked from the population to ensure that the instrument used is reliable. The returned data on the questionnaire will be entered into the SPSS statistical software. A reliability test will be run and Cronbach’s Alpha coefficient value will be examined. It is suggested that Cronbach’s Alpha value of 0.7 and above is considered good reliability of the measure. However, if the Cronbach’s Alpha value below than 0.7, then we will look further into the value of 28

“Cronbach’s Alpha if item Deleted”. We will screen through all the items to determine which item if this item deleted will improve the Cronbach’s Alpha value. If necessary, we will add in additional items to enhance the reliability of the measure.

In addition, we will also examine the value of “Corrected item-Total Correlation”. The value of 0.4 to 0.6 is considered acceptable. This statistic can be used to test validity of the measure. If the value is too small such as 0.05, it means this item is no correlated to other items. In other words, this item is not relevant in this measure. Contrary, if the value is too high such as 0.8, then it means this item is too correlated with other items or it is duplicated with other items. The pilot test will be repeated to achieve the acceptable level of reliability and validity.


Method of Analysis

This study will employ descriptive statistic and an inference statistic approach to test the hypothesis and achieve the objectives of this research. However, before we begin any actual data analysis, we will perform the goodness of measure test.

3.4.1 Goodness of Measure
Reliability is one of the elements to ensure the goodness of measure. It is suggested that Cronbach’s alpha coefficient should be above 0.7 for reliability to consider the scale as consistent scale. As presented in the Pilot Test, the


reliability will be assessed and enhanced before the actual data collection and analysis. In other words, the goodness of data has been pre-assessed.

3.4.2 Descriptive Statistic

A descriptive statistic table will be generated using the SPSS statistical software. The table will report the total numbers of respondent and the demographic statistics, mean values and standard deviation of Job Satisfaction, Organization Culture and Leadership Style. These are the basis statistics to describe the samples.

From this descriptive statistics, specifically from the mean score of Job Satisfaction, we will know the satisfaction level of managers of the SME manufacturing section in Penang. This statistic is able to achieve the first objective of this research – To assess the job satisfaction level of managers in

SME companies in Penang.

3.4.3 Inferences Statistic
Various statistical analysis techniques will be employed in this study. These techniques are multivariate analysis and hierarchical multiple regression analysis. Each technique has its own purpose in related to the objective of the research and hypothesis testing. To test the following research hypothesis, multivariate analysis will be carried out.


H1: Organizational Culture affects Job Satisfaction of the employees. H2: Leadership Style affects Job Satisfaction of the employees.

The outcome of this data analysis will help us achieve the second objective – To study the impact of these 2 factors affects the job satisfaction of the managers in SME companies in Penang. To test on the following hypothesis, we will carry out the hierarchical multiple regression analysis. H3: Age has a moderating effect on the level of Job Satisfaction. With the outcome of this test, the third objective of this study will also can be achieved – To examine whether age has any moderating effects in the job satisfaction of the managers in SME companies in Penang.

The above data analysis plan and its purpose of each test in regards to the research objective can be summarized in the table below.


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