The Role of Organizational Culture on Spiritual Leadership, Human Capital, and Employee Loyalty

Abstract

This study is proposed to examine the causal effect of organizational culture, spiritual leadership, human capital, and employee loyalty. Specifically, this study applied organizational culture dimension that was developed by Denison who has classified organizational culture into two focuses, external and internal focus, also based on its characteristics, they are stable and flexible. This study also applied spiritual leadership that was developed by Fry (2003). Based on the relevant literatures that are used, this study developed structural model of those four variables. This model then was analyzed by applying Structural Equation Modeling (SEM). Data collection was conducted by applying survey methods that was spreading questionnaires to 291 nurses at 10 private hospitals in Denpasar, Bali proportionally by simple random sampling.

The result reveals that organizational culture does not influence employee loyalty directly. This can be explained due the organizational culture that was developed by private hospital in Denpasar tends to be external focus. This external focus culture is adaptive and flexible to consumer needs that are supported by clear vision and objectives. Therefore, this organizational culture cannot directly influence employee loyalty as internal stakeholders, unless there are other factors that facilitate organizational culture through complete mediation, they are spiritual leadership and human capital. Instead of that, this study also conveys that spiritual leadership fully mediates organizational culture in influencing human capital. Human capital partially mediatedspiritual leadership in influencing employee loyalty. Hence, this study concludes that human capital is crucial factors in that mediating organizational culture and spiritual leadership in influencing employee loyalty. This finding of this study contributes importance implication theoretically and practically on human resources development and organizational behavior.

Keywords: organizational culture, spiritual leadership, human capital, employee loyalty