The relationship between effort-reward imbalance and job satisfaction

Master's Thesis , 2016 , 68 Pages , Grade: 1,0

Business economics - Business Management, Corporate Governance

The specific goal of this work is to provide empirical evidence on the relationship between effort-reward imbalance and job satisfaction. This work will determine whether the absolute value of the balance between efforts and rewards is of relevance.

The research question is addressed in the following structure. The author presents the theoretical foundations of job satisfaction and the effort reward imbalance model complemented with a literature review on existent empirical literature on the interplay of ERI and employees’ well-being. Afterwards the data set, the operationalisation of the variables and the statistical methods will be described. The following chapter presents descriptive statistical data and analyses the results of the applied regression models. Next the findings of this thesis on the background of existing literature will be discussed. Then the findings will be critically appraised and the author points out implications for practice and further research before the last chapter concludes.

The construct of job satisfaction has been in focus of many scholars during the last century. The topic has gained attention from many different disciplines, such as applied psychology, econometrics and the business field. Locke approached job satisfaction with affect theory stating that it results from congruence of the expectations to a job and the fulfilment of these expectations. The present work aims to incorporate different streams by applying the effort-reward imbalance (ERI) model. This model is based on the transactional stress model. It explains employees’ well-being as a result of a balance between invested effort and received rewards plus a psychological dimension called overcommitment (OVC).

Table ofContent

1 Introduction

2 Theoretical foundations
2.1 Job satisfaction
2.2 Effort-reward imbalance
2.3 Empirical findings
2.3.1 ERI and employer health
2.3.2 ERI and job satisfaction
2.4 Formulation of hypotheses

3 Method
3.1 Data sample
3.2 Operationalisation of variables
3.2.1 Dependent variable
3.2.2 Independent variables
3.2.3 Control variables
3.3 Statistical procedures

4 Results
4.1 Descriptive results
4.2 Linear regression
4.2.1 Extrinsic ERI and job satisfaction
4.2.2 Intrinsic overcommitment and job satisfaction
4.2.3 Interaction of extrinsic ERI and overcommitment

5 Discussion

6 Critical appraisal
6.1 Implications for methodology and research
6.2 Practical implications

7 Conclusion

Appendix
A Appendix
A.1 Literature review
A.2 Questions from SOEP survey
A.3 Regression models
A.3.1 Extrinsic hypothesis .
A.3.2 Intrinsic hypothesis . . .
A.3.3 Interaction hypothesis .

References

List of Figures

1 Original ERI model

2 Current ERI model

3 SOEP Questionnaire for effort and reward dimensions

4 SOEP Questionnaire for effort and reward dimensions, continued

5 SOEP Questionnaire for overcommitment

List of Tables

1 Description of the sample

2 Pairwise correlation coefficients

3 Regression models for extrinsic hypothesis

4 Regression models for intrinsic hypothesis

5 Regression models for interaction hypothesis

6 Empirical findings since 2003

7 H1: Regression models 2006

8 H1: Regression models 2011

9 H1: Pooled regression

10 H2: Regression models 2006

11 H2: Regression models 2011

12 H2: Pooled regression

13 H3: Regression models 2006

14 H3: Regression models 2011

15 H3: Pooled regression

1 Introduction

A recent survey by the German magazine Wirtschaftswoche revealed that about 55% of employees in the federal state Northrhine Westphalia evaluate their job conditions as not satisfying (Wirtschaftswoche, 2015). This is alarming as job satisfaction can have an impact on work related behaviour such as absenteeism, organisational commitment, productivity, turnover, organisational behaviour and performance (Clark et al., 1998: 519; Judge et al., 2001: 376; Schleicher et al., 2004: 165, Scott and Taylor, 1985: 599; Judge and Kammeyer-Mueller, 2012: 357). If job satisfaction is the key to such a variety of behavioural patterns, than it is of high importance to understand the underlying dynamics of this concept.

The construct of job satisfaction has been in focus of many scholars during the last century. The topic has gained attention from many different disciplines, such as applied psychology, econometrics and the business field. Locke approached job satisfaction with affect theory stating that it results from congruence of the expectations to a job and the fulfilment of these expectations (Locke, 1976: 1298). A different school of research attempted to explain job satisfaction with equity theory (Adams, 1965: 296, Walster and Berscheid, 1973: 155, Huseman et al., 1987: 228). According to this argumentation, job satisfaction results from the assessment of work input and output by the employees in comparison to their peers. A third research stream addressed the construct of job satisfaction as a result of the working conditions based on the concept of contingency theory following the argumentation of Taylor (1911).

The present research aims to incorporate all of these streams by applying the effort-reward imbalance (ERI) model (Siegrist et al., 1986: 247, Siegrist, 1996: 27). This model is based on the transactional stress model (Lazarus and Folkman, 1987: 141). It explains employees’ well being as a result of a balance between invested effort and received rewards plus a psychological dimension called overcommitment (OVC) (Siegrist, 2002).

The ERI model has gained popularity in recent years¹. Prior research has mainly investigated workers’ health as the dependent variable (van Vegchel et al., 2005a: 1128, Shimazu and de Jonge, 2009: 60, Buddeberg-Fischer et al., 2008: 31, Preckel et al., 2007: 91). More recently, the propositions by Siegrist were adapted from the field of occupational health to explain work related subjects. Nevertheless, research on the link between ERI and job satisfaction remains limited. The specific goal of this research is to provide empirical evidence on the relationship between effort-reward imbalance and job satisfaction. This master thesis will determine whether the absolute value of the balance between efforts and rewards is of relevance.

The literature review of this thesis has revealed several research gaps in the existing ERI literature regarding the relationship between job satisfaction and the effort-reward imbalance. First, not all hypotheses suggested by Siegrist (2002) have been investigated to a similar extend (van Vegchel et al., 2005a: 1126). This is the result of adaptations of the ERI model since its introduction in 1996. Second, studies combine the ERI model with other frameworks, e.g. the Job Demand-Control (JD-C) model (Karasek Jr, 1979: 285). Therefore it is difficult to determine the reliability of the model independently. Third, many empirical results regarding job well-being and the ERI model are not representative as they are based on small sample sizes or focus on specific occupational groups (van Vegchel et al., 2005a: 1128, van Vegchel et al., 2001: 128, Calnan et al., 2000: 297, Lewig and Dollard, 2003: 366, Yu et al., 2008: 155, Kinman and Jones, 2008: 236, Chung and Wu, 2013: 97). Finally, the measurement of the effort-reward ratio and the underlying dimensions differ considerably among studies (van Vegchel et al., 2005a: 1127).

In order to elaborate on the relationship between the effort-reward ratio on job satisfaction this master thesis will add value to the scientific literature in three ways. First, this thesis investigates all three ERI hypotheses at a time including the overcommitment and interaction hypotheses which received less attention in prior research. Second, this research addresses the pitfall of many ERI studies regarding a small sample size using the two waves of the representative German Socioeconomic Panel (SOEP). Robust linear models will be applied to the independent cross-sections and the combined panel data. Third, this research uses continuous scaled effort, reward and overcommitment variables that offer more information as dichotomised variables.

The research question is addressed in the following structure. Chapter two presents the theoretical foundations of job satisfaction and the effort reward imbalance model complemented with a literature review on existent empirical literature on the interplay of ERI and employees’ well being. Chapter three describes the data set, the operationalisation of the variables and the statistical methods. Chapter four presents descriptive statistical data and analyses the results of the applied regression models. Chapter five discusses the findings of this thesis on the background of existing literature. Chapter six appraises the findings critically and points out implications for practice and further research before chapter seven concludes.

2 Theoretical foundations

In the following chapter the theoretical foundations of this thesis will be outlined. In a first step, job satisfaction will be defined. In a second step, the concept of the effort-reward imbalance (ERI) model is explained. Based on the definitions the existent empirical literature on the relationship between ERI and employee health and job satisfaction is summarised. Finally, the hypotheses for this thesis are derived and explained.

2.1 Job satisfaction

Different disciplines approached job satisfaction, such as applied psychology, economists as well as managers from the field. The research in this area dates back to the beginning of the 20th century (Herkner, 1905; Weber, 1912, 1924) and has mainly tried to decompose the construct itself and to understand the influence factors of job satisfaction (Diestel et al., 2014: 354). As job satisfaction can be characterised as one of several work-related attitudes a person may show it is widely studied in the field of organisational behaviour (Robbins et al., 2009: 62). Together with job involvement and organisational commitment, job satisfaction has attracted the interests of many scholars (Brooke et al., 1988: 139; Keller, 1997: 539). The large interest in job satisfaction can be explained by the expectation of researchers and practitioners. Deconstructing the complex construct might be one leverage for efficiency gains within an organisation. The underlying assumption is that increased job satisfaction may boost productivity and reduce costs. This is why research has tried to elaborate on the link between employees’ job satisfaction and behaviour at the workplace (Georgellis et al., 2012: 464). Absenteeism, organisational commitment, productivity, turnover and organisational behaviour are some of those examples (Clark et al., 1998: 519; Judge et al., 2001: 376; Schleicher et al., 2004: 165, Scott and Taylor, 1985: 599; Judge and Kammeyer-Mueller, 2012: 357).

Despite the vast amount of existing literature regarding the influence of job satisfaction on employee performance no unified support was found for this relationship. Judge et al. (2001) suggest that further research regarding the sources for job satisfaction might reveal new insights to understand the complex connection.

One of the first authors who attempted this was Locke (1976). He approached the topic with affect theory. It states that job satisfaction results from congruence of the expectations to a job and the fulfilment of these expectations. A different school of research attempted to explain job satisfaction with equity theory. According to their argumentation, job satisfaction results from the assessment of work input and output by the employees. If this ratio is similar to their peers, the employees report higher satisfaction levels (Adams, 1965: 296; Walster and Berscheid, 1973: 155; Huseman et al., 1987: 228). In addition to affect and equity theory job satisfaction can also result from the individual disposition of the employee and the working conditions he is in. The following paragraphs will shortly outline the dispositional and situational approach to job satisfaction.

The disposition of an employee is important to understand his evaluation of job satisfaction. A widely accepted definition of job satisfaction by Locke (1976) describes job satisfaction as “a pleasurable or positive emotional state resulting from the appraisal of one’s job or job experiences” (Locke, 1976: 1304). It is “a work-related attitude that reflects the extent to which an employee evaluates certain aspects of his or her job” (Diestel et al., 2014: 355). As an attitude, job satisfaction is an individual perception and has a significant influence on one’s personal definition as pointed out by Hulin (2002). Research revealed the importance of cognitive and affective support for job satisfaction (Brief and Roberson, 1989: 717; Weiss et al., 1999: 1; Schlett and Ziegler, 2014: 88).

The situational approach to job satisfaction complements the person focused perspective. This line of research concentrates on the working conditions and the working environment. Prominent representatives of this approach are Herzberg and Mausner (1959) and Hackman and Oldham (1976). Herzberg and Mausner (1959) investigated factors that influence job satisfaction in positive or negative ways. Hackman and Oldham (1976) developed a job characteristics model to investigate job satisfaction. The existence of unions and their impact on job satisfaction has been studied by Freeman (1978), Borjas (1979) and Farber (1987). Neuman et al. (1989) were able to show that job enlargement has a positive effect on job satisfaction and Spector (1997) identified various facets of job satisfaction. Results regarding the influence of salary vary. Whereas Judge et al. (2010) found just a small correlation between pay and job satisfaction, Cornelissen et al. (2011) found significant evidence for an impact of pay on job satisfaction.

The interactional approach to job satisfaction integrates the dispositional and the situational approach to job satisfaction. It suggests that the employee’s dispositions have an indirect effect on the behaviour of the employee through the interaction of the individual and the work environment (Magnusson, 1999). Therefore, the dispo- sitionally influenced perceptions of the environment can affect job satisfaction as an attitude, while the situation itself might play an important role as well (Mischel and Shoda, 1998). Summarising the most important aspects mentioned above, the following definition of job satisfaction will be used:

“Individual job satisfaction is a work-related attitude that reflects the extent to which an employee evaluates certain aspects of his or her job – such as co-workers, the supervisor, career opportunities, the organisation, and working conditions – as beneficial to him or her.”

Diestel et al. (2014: 355) based on (Hausknecht et al., 2008; Locke, 1976; Schlett and Ziegler, 2014; Weiss, 2002)

2.2 Effort-reward imbalance

The literature focusing on the sources on job satisfaction provides evidence that the employee’s health but also his well-being and job satisfaction are the result of a stressful job environment (Blane, 1999; Karasek and Theorell, 1990; Lévi et al., 1999; Siegrist, 2002). Different models were developed to explain these findings. Prominent examples of this line of research are the person-environment fit (French et al., 1982) and the demand-control relation (Karasek and Theorell, 1990).

The person environment-fit model identifies two main causes for low job satisfaction and higher stress levels. The first origin is the incongruence between the job requirements and the employee’s abilities. The second origin is the discrepancy between a person’s objectives and ambitions and the work environment (French et al., 1982; Harrison, 1978; Kahn, 1981). The evaluation of the fit is dependent on the person’s cognitive appraisal of the situation. This assessment defines the strategy to cope with the situation. An incongruence may result in stress and an adverse health reaction. The argumentation is in line with the transactional stress model (Lazarus, 1991; Lazarus and Folkman, 1987). Nevertheless, the person-environment fit model is not able to explain which influences at work trigger stress or why people continue in a job that does not fit (Siegrist, 1996: 29).

Another wide-spread model to understand job satisfaction is the person focused environment-fit model. Karasek and Theorell (1990) developed their Job Demand-Control (JD-C) model which emphasises the employee’s working situation. The authors identify two main sources of stress for employees which are inherent of basic job characteristics. Stress, which is referred to as psychological strain, results from a combined impact of job demand and the degree of control the employee has over his work. The JD-C model suggests two main predictions. First, the strongest stress reaction will be the result of a situation where job demands are high and the employee’s control is low – so-called high strain jobs. Second, the highest motivation and personal growth and learning will appear where the job demands and the employee’s control are high – so-called active jobs. The JD-C model is able to explain stress resulting from discrepancies between demand and control. Nevertheless, it provides no explanations how rewards can effect and promote a higher employee satisfaction.

Due to the pitfalls of the person-environment fit and the JD-C model, present research investigates the source for job satisfaction with the effort-reward imbalance (ERI) model (Siegrist, 1996; Siegrist et al., 1986). It suggests two negative influence factors for employee’s well-being in general: on the one hand an imbalance between applied efforts of the employee and received rewards and on the other hand an intrinsic component called overcommitment (OVC). In comparison to the person environment-fit and the JD-C model it offers explanations why people continue working in a stressful environment. Additionally, it considers determinants of job quality that expand beyond the task itself and includes a reward dimension in its argumentation.

The origins of the ERI model lie within the field of medical sociology where it was introduced to predict the risk for cardiovascular diseases (Siegrist et al., 1986). At a later stage, it was applied to job-related constructs (e.g. absenteeism, turnover and job satisfaction) (Derycke et al., 2010; Griep et al., 2010; Li et al., 2005). The ERI framework is based on the premise of social reciprocity that has been identified as a key assertion of social behaviour (Cosmides and Tooby, 1992; Marmot et al., 1999). In line with the transactional stress model by Lazarus and Folkman (1987) it explains employees’ well being as a function of balanced invested efforts and received rewards, similar to equity theory (Adams, 1963, 1965) and social exchange theories (Emerson, 1972; Homans, 1961). In contrast to equity theory, the ERI model does not differentiate between various levels of equity. The model focuses on stress that results from an imbalance between the applied effort and the perceived rewards rather than their actual value. It presents the equity of rewards as a function of endowed efforts (Siegrist et al., 2004) and thereby can be considered an adapted application of distributional fairness to the field of occupational health (Siegrist et al., 1986).

Siegrist (2002) argues that an imbalance between deployed efforts and resulting rewards can cause negative emotions and stress that finally can elevate the risk for coronary heart diseases. The influence of the work role for general health is derived from the importance of work to achieve self-regulatory needs (van Vegchel et al., 2005a: 1118). Work enables an individual to acquire self-efficacy by personal achievement; it supports self-esteem by providing moments of recognition and ultimately helps to identify one’s role in society (self-integration). An employee who is endowing effort expects a corresponding reward in return and with those fulfils his self-regulatory needs.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Original ERI model by Siegrist (1996: 30)

The original ERI model from 1996 differentiated the extrinsic and intrinsic effort dimension. This is depicted in figure 1. The extrinsic efforts are demands and obligations burdened on a person, while the intrinsic efforts of a person is determined by critical coping strategies and the need for control. These efforts have to be compensated with rewards that can be either monetary (i.e. salary, wages, bonuses), non-monetary (i.e. esteem) or status. An imbalance between high effort and low reward is referred to as a gratification crisis (Siegrist, 1996). This crisis puts at risk the satisfaction of the aforementioned self-regulatory needs and bears the risk of “active distress” (Siegrist et al., 1986: 251). Results are negative emotions that can lead to physical and mental diseases, caused by a sustained activation of the autonomic nervous system (Weiner, 1992).

In a later version of the ERI model Siegrist provides a slightly different framework that is shown in figure ??. Siegrist identifies two spheres, extrinsic and intrinsic, that determine the effects on health in the ERI model. The balance between efforts and rewards represents the extrinsic sphere and has a direct impact on employee’s health. Efforts are demands and obligations for the individual at work. Rewards can be received in forms of adequate salary, esteem through appraisal by colleagues and supervisors, job security or career opportunities (Siegrist, 2002).

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Current ERI model by Siegrist (2008)

The intrinsic sphere is called overcommitment (OVC). The latter concerns the coping style how employees deal with stressful situations and how they assess the demands towards them. As this depends on the individual disposition of an employee, it reflects his need for control and approval. An employee that is overcommitted tends to report a lower job satisfaction because he overestimates his own resources and underestimates the external demands. This discrepancy re- sults in perceived stress. It can occur independently from the existence of an external effort-reward imbalance. Integrating the intrinsic and extrinsic dimension of the ERI framework, Siegrist assumes that overcommitted employees tend to report a lower job satisfaction while an effort-reward imbalance is present (Siegrist, 2002). This conclusion is based on the reasoning that overcommitted employees with their increased need for control and approval suffer more from an imbalance of efforts and rewards than do non-overcommitted employees.

Siegrist (2002) proposes three theoretical predictions based on his theoretical reasoning. First, he proposes the extrinsic hypothesis which suggests that the imbalance between high efforts and low rewards is associated with an elevated risk for poor health. The second hypothesis is called the intrinsic hypothesis. It proposes that a high level of OVC itself increases the risk for poor health. The third hypothesis integrates both the extrinsic and intrinsic hypothesis. Siegrist (2002) argues that the highest risk for poor health results from an interaction of a present ERI and an overcommitted individual. He does not explicitly state whether the nature of the interaction is additive or synergistic.

Siegrist et al. (2004: 1484) also provide an explanation, why people continue in their job, if they suffer from an effort-reward imbalance. An employee might not have many options on the job market as he has low skills or restrictions in mobility. Another explanation offered by Siegrist is that an employee accepts the imbalance to increase the probabilty of future promotions with anticipated efforts. A third reason can be the motivational pattern of the employee that causes him to ignore the effort-reward imbalance.

2.3 Empirical findings

After the concepts of job satisfaction and effort reward imbalance have been explained the next section will give an overview of the present empirical work with the ERI framework and its results. At first, studies regarding the influence of effort-reward imbalance on employee’s health and job satisfaction will be summarised. Based on these findings the research question of this thesis is characterised and the hypotheses to be tested are stated.

The metastudy by van Vegchel et al. (2005a) provides an overview on the research on the relationship between ERI and employee health as well as job satisfaction until 2003. Van Vegchel et al. (2005) reviewed 45 relevant studies since the emergence of the ERI model in 1986 till 2003. The selection criteria were a publication in the aforementioned time frame, the incorporation of at least two of the three core dimensions and the consideration of an impact measure to objectively verify the propositions of the ERI model. Based on these criteria, descriptive, conceptual and psychometric papers were excluded from the literature review of van Vegchel et al. (2005a). To guarantee the quality of the findings only peer-reviewed papers were considered.

In order to give an overview about the development of the research since 2003, the author of this thesis performed an additional structured literature review consistent with the criteria of van Vegchel et al. (2005a). The literature research was performed on 15th October 2015 on Ebscohost searching the Business Source Complete and the Academic Search Complete databases. Due to the familiarity of the effort-reward imbalance model in literature the “effort-reward AND imbalance” was the only search operator. In order to include all papers basing their research on this model, those papers having “effort-reward imbalance” in their abstract were considered for further screening. It is noteworthy that the search on Ebscohost (Business Source Complete, Academic Search Complete) for “effort-reward imbalance” from 2004 till 2015 revealed 355 in comparison to 18 results in the time span before 2004. This increase in publications regarding the topic documents the large interest in the model. It confirms the assumption that the chosen search operator is defendable, since the model can be considered a known framework. In order to limit the found sources to the business field, only papers in the Business Source Complete database were considered. This reduced the number of papers to 45 scholarly peer reviewed journals. Sixteen papers were rated B or C level paper by the German Association for Business Research which have been included preferably in the literature summary. The residual thirty papers were also scanned with focus on the relevance for the topic and included – if relevant. The empirical research findings since 2003 are summarised in table 6 in the appendix.

2.3.1 ERI and employer health

The basic ERI model originates in applied psychology research and its effect on well-being has mainly been studied with workers’ health as the dependent variable (Buddeberg-Fischer et al., 2008; de Jonge et al., 2000; Shimazu and de Jonge, 2009; van Vegchel et al., 2001). In their review van Vegchel et al. (2005a) find considerable support for the influence of ERI on employee’s health. Many of the studies investigating the connection between cardivascular incidences and the existence of an ERI confirmed the extrinsic hypothesis. Significant support was found for the intrinsic hypothesis. A majority of the studies showed elevated CVD rates and symptoms for highly committed employees. The few studies that investigated the interaction hypothesis were not able to confirm the elevated risk in presence of ERI for highly committed employees (van Vegchel et al., 2005a: 1122). Four relevant studies for the research question at hand were identified through the additional literature review. Preckel et al. (2007) performed a cross-sectional study in the aircraft manufacturing industry in Germany (N=1,587) ¹. Their results suggest an association of all components of the ERI model with health-related quality of life, vital exhaustion, depression and quality of sleep. The single constructs of effort and reward were able to explain more variance than the ERI ratio. Additionally, overcommitment seems to have an influence while there was no proof of an interaction effect (ERIxOVC) on health (Preckel et al., 2007: 91). Buddeberg-Fischer et al. (2008) published one of the few longitudinal studies analysing the ERI model. A sample of 433 Swiss physicians were followed up after graduation and interviewed during their first years of residency. Questions addressed the effort, reward and overcommitment, physical and mental well-being and life satisfaction. The results support the hypothesis that ERI and OVC are “strong predictors for physical and mental health as well as for satisfaction in life in young physicians” (Buddeberg-Fischer et al., 2008: 37). Shimazu and de Jonge (2009) performed a three-wave panel study among Japanese male blue-collar workers in a construction machinery company (N= 211). A unidirectional relationship between employees’ health and ERI was found significant. In many studies authors based their research on a categorised independent variable identifying risk groups or implementing cut-off values where an effort-reward imbalance is present and where not. These investigations primarily applied logistic and probit models to test the ERI hypothesis. A research by (Lehr et al., 2010: 260) investigated cut-off values for ERI and OVC in order to identify hazardous health conditions. The study was not able to provide generally applicable cut-off values.

2.3.2 ERI and job satisfaction

More recently, the ERI model attracted the attention of organisational psychologists. Several authors used the ERI model to investigate the impact of a gratification crisis on job satisfaction or job well-being.

The meta-analysis by van Vegchel et al. (2005a) found six studies that tested the ERI hypotheses as by Siegrist (2002). Most of these studies are cross-sectional and use ERI proxies (van Vegchel et al., 2005a: 1124). Five of the six studies could establish a relationship between ERI and poor job-related well being (Bakker et al., 2000; Calnan et al., 2000; de Jonge et al., 2000; Lewig and Dollard, 2003; van Vegchel et al., 2002, 2001). Bakker et al. (2000) investigated the relationship between ERI and the burnout syndrome and poor job-well being with a sample of 204 German nurses in a cross-sectional design. The study also confirmed the association of ERI and burnout as nurses reporting ERI had a higher score on two of three core dimensions of burnout. The study supports the interaction hypothesis of Siegrist (2002). Nurses that indicated characteristics of overcommitment were at higher risk for burnout in case they experienced an ERI. Calnan et al. (2000) compared the predictive power of the JD-C model by Karasek and Theorell (1990) and the ERI model. In their cross-sectional study from 1,089 general practitioners they found a small impact of the ERI constructs on job satisfaction. De Jonge et al. (2000) used a large representative Dutch sample (N=11,636) to study the relationship between the JD-C and ERI model on employee well-being. Logistic regression showed independent cumulative effects of both models on employee well-being with no significant differences regarding gender or age. The study supports the extrinsic hypothesis and offers evidence for the validity of the intrinsic overcommitment hypothesis. A cross-sectional study by van Vegchel et al. (2001) investigates the relationship between ERI and employee well-being based on a sample ancillary health care workers (N=167). The researchers were able to proof a connection between ERI and poor job-satisfaction. High efforts and high rewards caused an increased risk of physical symptoms and exhaustion, but the effect of overcommitment was not significant. In a consecutive analysis, van Vegchel et al. (2002) were able to deconstruct the reward dimension and its impact on adverse health. While esteem and job security play a major role for job-well being, salary is only partially able to compensate for high efforts.

The following paragraph will present shortly the most relevant studies from the literature review linking ERI to job satisfaction after 2003. Yu et al. (2008) found support for the extrinsic hypothesis based on a cross-sectional study with workers at a thermal power plant in China (N=878). The interaction hypothesis for overcommitment was not supported. Kinman and Jones (2008) were able to proof a correlation of all ERI elements on job satisfaction. In a sample of 844 academics high efforts, low rewards and overcommitment caused higher strain levels. The validity of the ERI model was confirmed for the surveyed sample. Derycke et al. (2010) studied the job dissatisfaction and the impact of ERI on the intent to leave the company. In their cross-sectional survey with a sample of 1,531 mainly female Belgian health care workers in different settings they found evidence for the extrinsic hypothesis. Yet neither the intrinsic nor the interaction hypothesis were confirmed. Chung and Wu (2013) tested the ERI model with a sample Taiwanese public transport drivers (N=927). Their regression analysis showed that the effort-reward imbalance and overcommitment were strong and independent predictors of strain and health outcomes. One of the few longitudinal studies found was executed by Rydstedt et al. (2007). This research tried to find differences regarding ERI among managers and manual workers. Managers consistently reported higher levels of work-related demands as well as extrinsic and intrinsic effort than the manual workers (Rydstedt et al., 2007: 273). These findings call for a more differentiated analysis of occupational groups in order to identify specific strain factors which might be linked to the job itself (Rydstedt et al., 2007: 275). Matiaske et al. (2015) followed this recommendation investigated the impact of New Public Management governance on employees in Germany with the ERI model. Their analysis of the German Socio-Economic Panel (SOEP) revealed a high level of stress for job centre employees in comparison to other occupational groups.

2.4 Formulation of hypotheses

The literature review has revealed empirical support for the hypothesis suggested by Siegrist (2002). Despite the diffusion of the ERI model, research regarding the connection of ERI and job satisfaction is still limited. So far, most of the studies used probit or logit models and applied cut-off values for the ERI and OVC dimension. This dichotomisation has been criticised (MacCallum et al., 2002: 16) and there is evidence that there exist no common cut-off values for the effort-reward ratio (Lehr et al., 2010: 260). The existing body of literature concentrates on the extrinsic hypothesis and usually uses small sample sizes or special occupational groups (van Vegchel et al., 2005a: 1128).

To contribute to the developing literature on ERI and job satisfaction, this thesis will use the representative German Socioeconomic Panel (SOEP) to increase the generality of the ERI model and its hypotheses. Additionally, this thesis follows the critique by van Vegchel et al. (2005a) and will endow linear regression models making use of continuous independent variables for ERI and OVC. In other words, not the existence of ERI and its impact on job satisfaction is in focus, but rather if and how the value of the ERI ratio is associated with job satisfaction.

It is hypothesised that a larger effort-reward ratio leads to a more severe gratification crisis. This in turn, impacts the job satisfaction negatively. Therefore, the extrinsic hypothesis was slightly adjusted compared to the proposal by Siegrist (2002):

H1: The absolute value of the effort-reward ratio is negatively associated with job satisfaction.

In a similar manner, the second proposition of Siegrist was adapted. Using OVC as a continuous variable allows to analyse whether the value of OVC has a significant association with job satisfaction. Thus, the intrinsic hypothesis is:

H2: Higher values for overcommitment are negatively associated with job satisfaction.

Finally, the interaction between ERI and OVC is analysed. Based on the reasoning of Siegrist (2002) the interaction of ERI and OVC influences job satisfaction. For this thesis and the continuous scales of ERI and OVC, the interaction hypothesis is translated in the following manner:

H3: The interaction effect of the effort-reward ratio and OVC amplifies the negative impact on job satisfaction and therefore is also negatively associated with job satisfaction.

[...]

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¹ Search on Ebscohost (Business Source Complete, Academic Search Complete) 389 publications(2004-2015) compared to 26 (prior 2003).

¹ N = observations

• College: University of Cologne (Faculty of Economic and Social Sciences)
• Course: Master thesis in Personnel Economics and HRM
• Grade: 1,0
• Author: Niklas Bein (Author)
• Publication Year: 2016
• Pages: 68
• Catalog Number: V506906
• ISBN (eBook): 9783346094810
• ISBN (Book): 9783346094827
• Language: German
• Tags: Effort Reward Imbalance, Job Satisfaction, SOEP, German socioeconomic panel