Exploring the Impact of Social Exchange Factors on Organizational Commitment: A Study of Development Bank of Ethiopian Amhara Region Branches

Abstract

Despite the extensive research on organizational commitment, studies that specifically examine the impact of social exchange factors on organizational commitment are needed. More empirical evidence of the effects of social exchange is necessary because most studies have been conducted in developed countries, and less is done in the context of development banks in Ethiopia. Consequently, this research aims to examine the impact of social exchange factors on organizational commitment among Bank employees by investigating the association between work environment, job security, pay satisfaction, and involvement in decision-making with employees' organizational commitment. Using a census sampling technique, 208 employees filled out Likert-scale questionnaires to collect cross-sectional data and utilized multiple linear regression to test the hypothesis. Descriptive and inferential statistics were employed to examine the data using STATA 17. The findings indicate that the mean value for job security, pay satisfaction, Participation in decision-making, and organizational Commitment was above average. Weighted least square estimation was fitted where Payment satisfaction (B=0.202, P_value<0.06), job security (B=0.25, P_value<0.001), Participation in decision making (B=0.28, P_value<0.001) were significant and had a positive effect however work environment (B=0.05, P_value<0.48) is not effective at a 5% level of significance. This W.L.S. result suggests that employees are committed to D.B.E. However, the work environment was insignificantly related to organizational commitment.

In conclusion, the results indicate that job security, pay satisfaction, and Participation in decision-making are significant determinants of organizational commitment. However, the work environment has little impact on employees' commitment to the organization; these help the Bank continue its strategy with moderate changes for the best outcome above average, develop strategies to enhance employee commitment and improve organizational performance. The study highlights the importance of job security, fair compensation, and the opportunity for employees to participate in decision-making processes to increase commitments.