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Applying Structural Equation Model to Study of the Relationship Model among
leadership style, satisfaction, Organization commitment and Performance in
hospital industry

Chung-Hsiung Fang, Sue-Ting Chang, Guan-Li Chen

Graduate Institute of Industrial Technology Education, National Taiwan Normal University

t07025@ntnu.edu.tw,finance@ktgh.com.tw,evechen2004@hotmail.com

Abstract Medical care is a kind of service industry that is

The main purpose of the study is to determine the
effect of different leadership styles on staff work
satisfaction, organizational commitment and work
performance and establish a causality model among them.
Main results of the study based on the empirical analysis
are as following: 1. Effect of leadership style on work
satisfaction, organizational commitment and work
performance: (1) Work satisfaction has a significant,
positive and direct effect on organizational commitment
and work performance. (2) Leadership has a significant,
positive and direct effect on work satisfaction and can
affect organizational commitment and work performance
indirectly through work satisfaction. (3) Organizational
commitment can affect work performance positively. 2.
Effect of leadership style on work satisfaction,
organizational commitment and work performance on
the basis of grouping model: (1) Leadership style has a
significant, positive and direct effect on work satisfaction
and can affect work performance through work
satisfaction for administrative and nursing staff. (2)
Leadership has a significant, positive and direct effect on
work satisfaction and can affect work performance
through work satisfaction and organizational
commitment for medical technicians.
Keywords: Structural Equation Model, Relationship
Model, Hospital industry
1. Introduction
In knowledge economy of the 21st Century,
competitiveness advantage of an organization lies in
whether the organization can possess intellectual capital,
source of which is exactly the employees. Peter. Drucker
once mentioned the mainstream worker in the 21st
Century is “Intellectual Worker” and the most important
challenge is how to increase intellectual worker’s
productivity, especially for “technical worker” who
possesses both knowledge and labor component. The
primary goal for any organization is to let its employees
be willing to go all out for their work, so that the
organization can realize a continuous growth and
perpetual operation.
different from other service industries on its work
characteristics and high specialization; it is composed of
many talents with various expertise and coordination and
cooperation of the professionals can allow the hospitals
to operate with high efficiency. The average dimission
rate of all regular staff in American large medical
institutions is 32.06% in 2001 and the separation cost
accounts for 3.4%-5.8% in the available master budget of
medical institutions, which is quite high; on the other
side, the staff turnover rate in our domestic medical
industry especially for private medical institutions has
kept on the high side in these years, these figures suggest
talent can't be retained only by high salary or good
training and it is a very important topic how to reduce
staff turnover rate, increase staff loyalty and promote
their work performance, which is the purpose of this
study.
A leader plays an important role to allow the staff to
identify with the organizational goal and value, to enjoy
the work satisfaction and dedicate to their work further
besides to affect the organizational performance for
development and creation of the organization. Many
literatures have showed leadership style can affect work
satisfaction, productivity and organizational commitment
of employees [1]. Porter et al. [2] considered
organizational commitment referred to the acceptance
tendency for organizational goal and value of individual;
that is the identity and devotion degree to a specific
organization and the strong willing of working for an
organization and becoming one of its members. And
employees’ organizational commitment has been a topic
concerned by scholars on management and organization
as well as a problem cared by leaders who hope to
enhance employees’ organizational commitment to retain
employees and improve their work performance. And
work satisfaction is an important efficiency index for
studying organization as satisfaction can affect
employees’ behavior and work attitude indirectly. The
study will apply Linear Structural Equation Model (SEM)
to discuss whether leadership style and organizational
commitment can have influence on work performance by
intermediation of work satisfaction.
2. Literature Review

978-1-4244-4589-9/09/$25.00 ©2009 IEEE

2.1 Leadership behavior
Leadership behavior can affect trust and satisfaction
of employees to organization and organizational
citizenship behavior, further enhance the relationship
between leadership style and organizational commitment
directly [3]. So we can consider subordinates would
accept the effect of a leader because the leader is
accepted, trusted or respected by them and he is in the
position with formal authority at the same time.
According to some domestic studies, leadership style of
pharmacy directors is significantly positively related to
work satisfaction of pharmacists, and McNeese-Smith [1]
found leadership behavior of hospital directors is
significantly positively related to productivity, work
satisfaction and organizational commitment of staff.
Organizational commitment and work satisfaction are
different with different leadership styles [1]. Thus we can
see from the concerned literatures, leadership style is
related to organizational commitment and work
satisfaction; leadership styles can affect organizational
commitment positively and leadership style has the most
effect on organizational commitment among all
concerned factors. However some studies also mentioned
the interactions with employees’ work satisfaction of
institutional leadership and consideration-oriented
leadership of hospital directors are not significant
different.
The leadership model proposed by American Ohio
State University in its study on leader behavior
dimension in 1940s is most broadly used and cited,
which divided leader behavior into two behavior
dimensions – consideration and institution, and then Two
Dimension Theory was brought up. Institutional factor
and consideration factor of leadership style could be
significantly positively correlated with organizational
commitment and leadership is probably the most
dynamically influential factor in the process when
individuals integrate with an organization.
2.2 Job satisfaction and Organizational commitment
Many studies have suggested work satisfaction is
highly correlated with organizational commitment [2, 4]
and has a positive influence on organizational
commitment. Williams et al. [5] indicated individual will
feel satisfied with some kind of exchange procedure of
an organization before deciding his commitment degree
to the organization; therefore there is causality between
work satisfaction and organizational commitment [5].
There are many theories about work satisfaction, one of
which was brought up by Herzberg et al. who claimed
satisfaction and dissatisfaction were two independent
events [6], including two dimensions – Motivational
Factor and Hygiene Factor and there is no relative
relation between the both. Motivational Factor is also
called satisfaction factor, referring to the factors that can
increase work satisfaction and is part of the internal
rewards, such as duty, work, achievement sense,
promotion & development etc.; these factors are the core
to motivate employees to work hard and their existence
can induce employees’ satisfaction, however their
inexistence doesn’t cause employees’ dissatisfaction.
Hygiene Factor is part of external rewards, also called
maintenance factor, such as working environment,
leadership style, salary, interpersonal relationship etc.;
they are the basic conditions to maintain employees’
work, although their completion doesn’t make employees
satisfied, their insufficiency can cause dissatisfaction of
employees.
2.3 Organizational commitment and Job
performance
Some studies have showed organizational
commitment is related to work performance [2],
employees with high organizational commitment will
have more work devotion (Steer,1977；Ke Ji-Yun, 1995;
Chen Meng-Xiu, 1998) and employees with high
organizational commitment will have a better work
performance than employees with low organization
commitment [8]; most of the relevant studies indicated
employees with high commitment degree will have a
better adaptation, less sabotage and low dimission rate as
well as high work satisfaction and productivity [1, 9].
Randall suggested organizational commitment with
different degrees will have different effects on individual
and organization, also be likely to have some influence
on work performance [10]. Previous researches about
work performance mostly laid emphasis on
organizational performance, later some studies showed
employees with high organizational commitment would
bring a better work performance, so researchers began to
focus on the importance of organizational commitment
further.
3. Research Design
The present study aims to discuss effect of leadership
style, organizational commitment and work satisfaction
on employees’ work performance.
3.1 Research hypotheses
The study proposed the following 6 hypotheses based
on the structure:
H1: Leadership style has a significantly positive
influence on work performance;
H2: Leadership style has a significantly positive
influence on organizational commitment;
H3: High work satisfaction has a significantly positive
effect on work performance;
H4: High work satisfaction has a significantly positive
effect on organizational commitment;
H5: High organizational commitment has a significantly
positive effect on work performance;
H6: Leadership style has a significantly positive
influence on work satisfaction.
3.2 Measurement
The measurement scale adopted by the study is a
revised structural questionnaire after referring to relevant
literatures, including two main parts – personal
characteristics (duty class, service seniority, education,
marriage status and age) and organization measurement
scale. Measurement scale type contains: Director
Leadership Behavior Measurement Scale: the study
adopted Leadership Behavior Description Questionnaire
(LBDQ) to measure the leadership manner perceived by
subordinates, which falls into consideration and
institutional dimensions in terms of leader
behavior.Work Satisfaction Measurement Scale: as the
study stresses on putting Motivation-Hygiene Theory
into practice, Minnesota Satisfaction Questionnaire
(MSQ) proposed by Weiss et al. [11] was used to
measure the whole work satisfaction of employees from
the view of internal and external
satisfaction.Organizational Commitment Measurement
Scale: the study defines organizational commitment as
the attitude and behavior that individual indentifies with
organizational goal and is willing to work for the
organizational goal and to keep to be one of the
organization’s members with loyalty and identity to the
organization. So the study revised the measurement scale
put forward by Mowday et al. [12] and developed a
three-dimension measurement scale that contains
emotional, continuous and normative commitments
based on the three-dimension measurement proposed by
Meyer et al. [13] to be the organizational commitment
measurement method.Work Performance Measurement
Scale: the study defined work performance as individual
performance, that is to say individual’s performance on
quality and quantity of organizational task achievement
and the study took three dimensions proposed by [14] to
evaluate individual performance objectively and evaluate
work performance by employees’ self-assessment.
3.2 Subjects
Study object of the questionnaire is 1100 medical &
nursing persons (excluding physicians) of a teaching
hospital of some region in Middle of Taiwan and 50% of
staff of each department was chosen by simple random
sampling according to the staff list provided by the
hospital; the researcher went to the hospital to deliver
and recover the questionnaires and at last 458
questionnaires were distributed and 397 effective
questionnaires were returned with an effective return rate
of 88%.
3.3 Data Collection & Analysis
Collection of investigated data was conducted with
SPSS and AMOS 3.6 and SEM was used to analyze and
discuss the relationship among “Leadership Style”,
Organizational Commitment”, “Work Satisfaction” and
“Work Performance”.
4. Data Analysis
4.1 Sample Description
In the study samples, persons of 26-30 were dominant
in the aspect of age with a proportion of 37.6%, and
persons of 25 years old were in the secondary place
(29.7%); as for “education”, persons with junior college
background were in the majority, accounting for 51% in
the overall samples and persons with university
background were in the next place (36.9%); with regard
to marriage status, married persons were the most with a
proportion of 65.2%; and most persons have worked for
1-3 years, taking up a proportion of 31.5% for service
seniority and the next is persons with less than 1 year
seniority (19.4%); as for duty class, there were 193
nursing persons (48.5%), 85 medical technicians (21.4%)
and 120 administrative persons (30.2%) in total.
4.2 Research Tool Reliability & Validity Analysis
The study measurement scale is developed by
referring to measurement scales of foreign scholars, and
the structural questionnaire is also revised by referring to
concerned literatures as well as comments of relevant
experts and scholars, so the questionnaire has some
extent of content validity. As for reliability and validity
analysis, Cronbach’s α reliability coefficient and
confirmatory factor analysis were respectively used to
describe the reliability and validity of measurement
scales of main constructs in the study. At first
Cronbach’s α coefficient was applied to analyze the
reliability of each measurement scale, and the analysis
results of leadership style measurement reliability,
organizational commitment, work performance and work
satisfaction are 0.956, 0.910, 0.807 and 0.9524 separately.
On the whole, reliability of each measurement scale has
exceeded 0.7 that was suggested by [15] as an acceptable
level. From values of composite reliability and extracted
variance of each construct, we can see composite
reliability of each dimension has exceeded the acceptable
level 0.7, and all extracted variances have exceeded 0.5
except efficiency and effectiveness of work performance,
which means the internal consistency of the indexes is
acceptable.
4.3 Measurement for Model
The study conducted analysis with Structural Equation
Modeling (SEM) in order to validate and test the whole
theory model; at first all measurement question points on
leadership style, work satisfaction, organizational
commitment and work performance were summed up for
average that was regarded as the measurement point of
the dimension in the first order, next the first-order
dimension was regarded as the multiple measurement
index for the second-order construct; that is leadership
style construct includes consideration and institutional
dimensions; work satisfaction contains work,
professional development and leadership environment
dimensions; organizational commitment is composed of
endeavor, retaining in the position and value three
dimensions; and the question point was regarded as the
observation variable for measurement model of
dimension of work performance.
4.3.1Model Fitness
RMSEA Value of the investigated hospital was 0.098
and didn’t reach the ideal level 0.08, but the above
values were still in the acceptable range. Chi-square
value and degree of freedom of the study are not good as
the whole model sample number is 397, which are
related to the sample size. Increment fitness is good and
in the acceptable range. As for parsimonious fitness, all
values are acceptable except for CN value that is over
200. Effect analysis for each construct in the study
includes direct effect, indirect effect and whole effect
analyses and Figure 2 shows the whole theory model
revised in accordance with the final effect dimension.
Firstly we would like to discuss the effect of each
dimension of the studied hospital on work performance.
From Figure 2, we can see organizational commitment
and work satisfaction have a direct, significant and
positive effect on work performance, of which path
coefficients are β12=0.21 and γ12=0.38; that is
organizational commitment and work satisfaction both
have a direct effect on work performance, and work
satisfaction has a more significant effect between the
both; from the point of view of whole effect, leadership
style construct acquired values of 0.21, 0.018 and 0.075
through β11γ12, γ21β12 and γ22β11β12 the three paths with a
total positive effect of 0.303; on the other hand,
organizational commitment only has a direct effect and
work satisfaction can produce effect through γ22β21 path
with value of 0.132 besides producing a direct effect, and
the total positive effect is 0.5123.
4.3.2 Path analysis
The model analysis based on duty classification of
nursing, administrative and medical technical duties is
described hereunder.
Firstly we would like to discuss the effect of each
dimension of the administrative group on work
performance. Leadership style has a significant, positive
and direct effect on organizational commitment and work
satisfaction, of which path coefficients are γ21=0.27 and
β11=0.65; that is to say leadership style and work
satisfaction have a direct effect on organizational
commitment; work satisfaction has a significant, positive
and direct effect on work performance and organizational
commitment, of which path coefficients are γ12=0.29 and
γ22=0.54 respectively.
5. Conclusion and Suggestion
According to the theory model established by referring
to concerned literatures and test of fitness of SEM,
leadership style can affect organizational commitment
and work satisfaction positively and work satisfaction
can affect organizational commitment and work
performance positively. Thereby conclusion of the study
is as following:
Generally, although leadership style can’t affect work
performance directly, staff of the hospital can show a
good work performance through acquirement of work
satisfaction (professional development > leadership
environment > work); additionally organizational
commitment (value commitment > devotion commitment
> retention commitment) also has its due effect on work
performance. According to further measurement analysis
of duty grouping model, work satisfaction has no direct
or indirect effect on work performance of medical
technicians, however organizational commitment has a
direct effect on work performance, especially “Value
Commitment” has the biggest contribution; and work
satisfaction especially “Professional development”
produces a major effect on work performance of nursing
staff, on the contrary, organizational commitment has no
significant effect on their work performance, which
means nursing staff don’t care for organizational
commitment, but consideration and care of their directors
can affect their work performance. Conclusion of the
study is same with the finding that organizational
commitment is significantly positively correlated with
work performance in the studies of [16].
5.1 Management Implication
The study has an active meaning both on academe and
practice according to the above findings. From the view
of final whole effect of the study, leadership style and
work satisfaction can affect work performance and
organizational commitment of hospital staff; that means
good directors who can establish a relationship full of
trust and friendliness with staff and can give
encouragement and appreciation to staff when they show
good performance are necessary for enhancing staff
morality in medical industry. And suggestions to hospital
management and department directors are stated
hereunder:
1. It is suggested leaders of each level in various
departments change their leadership style flexibly along
with time’s change; that is it would be better the
high-level and department directors be equipped with
connective leadership because employees in medical
industry are the professionals who have accepted
high-level or special education and training and they
expect their directors can be friendly, respectable and
easy to close, moreover they are long for being highly
evaluated and effective communications with directors.
Therefore leaders should adopt not the past invariable
leadership style but multiple leadership styles and use
different strategies according to various situations so as
to stimulate different employees to exert their greatest
potential.
2. Strengthen chance and channel of training and
development to meet demand of professional
development of employees. The researcher also thinks
leadership style can affect organizational commitment
and work performance through work satisfaction, since
medical professionals have high expectation and
long-term planning for their self-improvement, they hope
to meet the professional requirements on expertise, skill
and attitude and further to promote their development
and self-realization by active participation in all kinds of
learning activities for enhancing their expertise and
review processes in their work. If directors can care for
and pay attention to career development of subordinates
and help them to develop actively, the employees not
only will produce sense of identity to the organizational
goal and value, but also will improve their work
performance.
3. Establish a Proper Performance Evaluation
Mechanism One of the features of medical industry is
person serving person and it is hard to quantify and
measure the work performance, particularly for nursing
work that is complicated and multifarious, requiring a
scrupulous and continuous nursing process and various
nursing time with different diseases, so it is different
with work of medical technicians which is finished after
the technicians provide necessary services to patients,
and it is suggested the performance evaluation system of
balanced score card of each department be adopted to
allow the employees to take part in the establishment of
performance measurement criteria and effectiveness
measurement method and application of evaluation result,
thus on one side goal of a department can be connected
with goal of the hospital, on the other side the
department can know its work performance and acquire
the sense of achievement and confirmation by
comparison.
5.2 Study Limitation & Future Study Suggestion
The study adopted Likert Scale to measure perception
of interviewees on measurement of different variables,
and the interviewees answered the questions in a
retrospective way based on their subjective judgment,
especially there was no objective data for organizational
performance measurement, so data collected in the study
may have some kind of deviation and it is suggested to
use interview to know opinions on leadership style, work
satisfaction, organizational commitment and work
performance of employees in medical industry deeply in
order to let the empirical study result can meet actual
demands more precisely in the future study; secondly the
study only took one hospital as the object and the result
can not be deduced to other institutions, so future studies
can discuss whether other different measurement
approaches or other important dimensions can be
included in the analysis model, in addition several
different hospitals can be taken as the study objects at the
same time and it is believed the study findings will be of
more universality and practicability.
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