Vol. 2, Issue 5, Part I (2016)
The relationship between workplace ethics and employee attraction, loyalty, and financial performance-in FDI companies operating in Addis Ababa-Ethiopia
Getachew Muhammed Seid, B Mohan Venkataram
The study empirically analyzed the causality relationship between work ethics practices to employees, employee attraction, loyalty, and financial performance. Evidences indicate to the extent of ethical practices and companies’ performance had been strongest and contributed to conclude on the causal relationship. Some 377 workers and 76 managers were asked from 48 sample FDI companies. The conceptual framework was prepared and hypothesized that companies with a strong ethical identity achieve greater degree of employee attraction and loyalty, which in turn, has a positive effect on the financial performance of FDI companies. In order to analysis this causality; the study has used Likert scaling questionnaires. The collected data was then analyzed through structural equation modeling (SEM). Specifically, the study used PCA, CFA and then path analysis. A model has been built and tested for fit; the model fit indices were chi-square to degree of freedom ration, RMSEA, SRMR, TLI and CFI. The SEM estimation result revealed the value of causal relationship between variables. As a result, the work ethics practice to employees was perceived as a significant and direct predictor of employee attraction and loyalty, but it will not serve to directly predict the companies’ financial performance or profitability. Moreover, it revealed that, employee attraction and loyalty in turn has a significant positive effect on profitability of FDI companies; a great extent of employee attraction and loyalty significantly indicates to a high level of profitability. However, it is also concluded that the relationship between work place ethics and financial performance is mediated by employee attraction and loyalty.
How to cite this article:
Getachew Muhammed Seid, B Mohan Venkataram. The relationship between workplace ethics and employee attraction, loyalty, and financial performance-in FDI companies operating in Addis Ababa-Ethiopia. International Journal of Applied Research. 2016; 2(5): 585-596.