Goodness Of Fit Analysis Modified Model Business Essay

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The variable, continuous learning has a significant impact on organizational performance at β=0. 175, C.R.=2.958, p-value=0.003 (p<0.01). Similarly, inquiry and dialogue and team learning have a significant impact on organizational performance at β=0.195, C.R.=3.435, p-value=0.000 (p<0.001) and β=0.128, C.R.=2.416, p-value=0.016 (p<0.05) respectively. In addition, organizational innovativeness has a significant impact on organizational performance at β=0.551, C.R.=9.577, p-value=0.000 (p<0.001).

Additionally, continuous learning, inquiry and dialogue, team learning, empowerment variables have had no significant impact on organizational innovativeness. Similarly, embedded system, empowerment, system connection, strategic leadership variables have had no significant impact on organizational performance.

4.7 Modified Model

4.7.1 Goodness of Fit Analysis - Modified Model

Since the measurement in the hypothesized model is not supported on criteria, the goodness of fit of the modified model is achieved for model fit. (refer to Table 4.19)

Table 4.19

Goodness of Fit Analysis - Modified Model

Indices

Cutoff Value Requriement

Hypothesized Model

Modified Model

Criteria

Chi-square

Better Smaller

1729.847

189.703

Good fit

Df

>0

743

173

Good fit

P-value

>0.05

0.000

0.182

Good fit

Ratio

<2

2.328

1.097

Good fit

GFI

>0.90

0.816

0.958

Good fit

CFI

>0.90

0.921

0.997

Good fit

TLI

>0.90

0.913

0.996

Good fit

RMSEA

<0.08

0.058

0.016

Good fit

Note. Df = Degree of Freedom; GFI = the Goodness of Fit Index; CFI = the Comparative Fit Index; TLI = the Tucker-Lewis Index; RMSEA = the root mean square error of approximation.

As shown in Table 4.19 the modified model returns the best results in comparison to the hypothesized model, goodness of fit index based on the result, chi-square value was reduced from 1729.847 to 189.703, and p-value increased from 0.000 to 0.182. Degree of freedom (Df) value was decreased from 743 to 173. The ratio was decreased from 2.328 to 1.097. The cutoff value requirement is satisfied as indicated by the chi-square, p-value, and ratio factor's results. Goodness of Fit Index (GFI) result of 0.958 must be greater than 0.90 (GFI>0.90) to satisfy the cutoff value, Comparative of Fit Index (CFI) and Tucker Lewis of Coefficient (TLI) results of 0.997 and 0.996 respectively which were fit as the cutoff value requirement over 0.90 (CFI>0.90, TLI>0.90). Roots Mean Square of Approximation (RMSEA) of 0.016 which was fit as the cutoff value must be less than 0.08 (RMSEA<0.08) (refer to Appendix L). Therefore based on the overall results the modified model is considered to be a good-fit for the data and hence it does not need any modification (Byrne, 2005; Hair et al., 2010; Ullman, 2001).

4.7.2 Hypotheses Test

Table 4.20

Hypotheses Test of Modified Model

Hypothesis

Exogenous

Endogenous

β

S.E.

C.R.

P-Value

Status

1

Continuous Learning

Organizational Innovativeness

0.147

0.064

1.997

0.046

Sig.

2

Inquiry and Dialogue

Organizational Innovativeness

-0.012

0.059

-0.177

0.859

Not Sig.

3

Team Learning

Organizational Innovativeness

-0.071

0.058

-1.061

0.289

Not Sig.

4

Embedded System

Organizational Innovativeness

0.200

0.059

3.122

0.002

Sig.

5

Empowerment

Organizational Innovativeness

0.030

0.059

0.409

0.683

Not Sig.

6

System Connection

Organizational Innovativeness

0.192

0.051

3.011

0.003

Sig.

7

Strategic Leadership

Organizational Innovativeness

0.368

0.061

5.253

0.000

Sig.

8

Continuous Learning

Organizational Performance

0.008

0.065

0.104

0.918

Not Sig.

9

Inquiry and Dialogue

Organizational Performance

0.337

0.061

4.615

0.000

Sig.

10

Team Learning

Organizational Performance

0.169

0.059

2.421

0.015

Sig.

11

Embedded System

Organizational Performance

0.124

0.061

1.827

0.068

Not Sig.

12

Empowerment

Organizational Performance

-0.067

0.059

-0.892

0.372

Not Sig.

13

System Connection

Organizational Performance

-0.114

0.053

-1.703

0.089

Not Sig.

14

Strategic Leadership

Organizational Performance

0.012

0.064

0.155

0.877

Not Sig.

15

Organizational Innovativeness

Organizational Performance

0.523

0.077

6.641

0.000

Sig.

Note. β = Regression Coefficient; S.E.=Standard Error; C.R.=Critical Ratio; Sig.=Significant.

The result of observations hypotheses describing the influence between each variable, can be seen in the modified model (refer to Table 4.20). The statistic hypotheses tested on a significance test of direct path are:

Hypotheses 1: There is a significant positive relationship between continuous learning and organizational innovativeness.

Based on the result of the hypothesis test indicated that continuous learning has a positive and direct impact on organizational innovativeness with regression coefficient (β)=0.147 at significant value of 0.046 (p<0.05). The result of the hypothesis test shows that there is a significant positive relationship between continuous learning and organizational innovativeness. It means that for every increase of continuous learning there will also be an increase in organizational innovativeness.

Hypothesis 2: There is a significant positive relationship between inquiry and dialogue and organizational innovativeness.

Based on the result of the hypothesis test indicated that inquiry and dialogue has a negative and direct impact on organizational innovativeness with β=-0.012 at significant value of 0.859 (p>0.05). The result of the hypothesis test shows that there is no significant relationship between inquiry and dialogue and organizational innovativeness.

Hypothesis 3: There is a significant positive relationship between team learning and organizational innovativeness.

Based on the result of the hypothesis test indicated that team learning has a negative and direct impact on organizational innovativeness with β=-0.071 at significant value of 0.289 (p>0.05). The result of the hypothesis test shows that there is no significant relationship between team learning and organizational innovativeness.

Hypothesis 4: There is a significant positive relationship between embedded system and organizational innovativeness.

Based on the result of the hypothesis test indicated that embedded system has a positive and direct impact on organizational innovativeness with β=0.200 at significant value of 0.002 (p<0.01). The result of the hypothesis test shows that there is a significant positive relationship between embedded system and organizational innovativeness. It means that for every increase of embedded system there will also be an increase in organizational innovativeness.

Hypothesis 5: There is a significant positive relationship between empowerment and organizational innovativeness.

Based on the result of the hypothesis test indicated that empowerment has a positive and direct impact on organizational innovativeness with β=0. 030 at significant value of 0.683 (p>0.05). The result of the hypothesis test shows that there is no significant relationship between empowerment and organizational innovativeness.

Hypothesis 6: There is a significant positive relationship between system connection and organizational innovativeness.

Based on the result of the hypothesis test indicated that system connection has a positive and direct impact on organizational innovativeness with β=0.192 at significant value of 0.003 (p<0.01). The result of the hypothesis test shows that there is a significant positive relationship between system connection and organizational innovativeness. It means that for every increase of system connection there will also be an increase in organizational innovativeness.

Hypothesis 7: There is a significant positive relationship between strategic leadership and organizational innovativeness.

Based on the result of the hypothesis test indicated that strategic leadership has a positive and direct impact on organizational innovativeness with β=0.368 at significant value of 0.000 (p<0.001). The result of the hypothesis test shows that there is a significant positive relationship between strategic leadership and organizational innovativeness. It means that for every increase of strategic leadership there will also be an increase in organizational innovativeness.

Hypothesis 8: There is a significant positive relationship between continuous learning and organizational performance.

Based on the result of the hypothesis test indicated that continuous learning has a positive and direct impact on organizational performance with β=0.008 at significant value of 0.918 (p>0.05). The result of the hypothesis test shows that there is no significant relationship between continuous learning and organizational performance.

Hypothesis 9: There is a significant positive relationship between inquiry and dialogue and organizational performance.

Based on the result of the hypothesis test indicated that inquiry and dialogue has a positive and direct impact on organizational performance with β=0.337 at significant value of 0.000 (p<0.001). The result of the hypothesis test shows that there is a significant positive relationship between inquiry and dialogue and organizational performance. It means that for every increase of inquiry and dialogue there will also be an increase in organizational performance.

Hypothesis 10: There is a significant positive relationship between team learning and organizational performance.

Based on the result of the hypothesis test indicated that team learning has a positive and direct impact on organizational performance with β=0.169 at significant value of 0.015 (p<0.05). The result of the hypothesis test shows that there is a significant positive relationship between team learning and organizational performance. It means that for every increase of team learning will also be an increase in organizational performance.

Hypothesis 11: There is a significant positive relationship between embedded system and organizational performance.

Based on the result of the hypothesis test indicated that embedded system has a positive and direct impact on organizational performance with β=0.124 at significant value of 0.068 (p>0.05). The result of the hypothesis test shows that there is no significant relationship between embedded system and organizational performance.

Hypothesis 12: There is a significant positive relationship between empowerment and organizational performance.

Based on the result of the hypothesis test indicated that empowerment has a negative and direct impact on organizational performance with β=-0.067 at significant value of 0.372 (p>0.05). The result of the hypothesis test shows that there is no significant relationship between empowerment and organizational performance.

Hypothesis 13: There is a significant positive relationship between system connection and organizational performance.

Based on the result of the hypothesis test indicated that system connection has a negative and direct impact on organizational performance with β=-0.114 at significant value of 0.089 (p>0.05). The result of the hypothesis test shows that there is no significant relationship between system connection and organizational performance.

Hypothesis 14: There is a significant positive relationship between strategic leadership and organizational performance.

Based on the result of the hypothesis test indicated that strategic leadership has a positive and direct impact on organizational performance with β=0.012 at significant value of 0.877 (p>0.05). The result of the hypothesis test shows that there is no significant relationship between strategic leadership and organizational performance.

Hypothesis 15: There is a significant positive relationship between organizational innovativeness and organizational performance.

Based on the result of the hypothesis test indicated that organizational innovativeness has a positive and direct impact on organizational performance with β=0.523 at significant value of 0.000 (p<0.001). The result of the hypothesis test shows that there is a significant positive relationship between organizational innovativeness and organizational performance. It means that for every increase of organizational innovativeness will also be an increase in organizational performance.

Table 4.21

Summary of Hypotheses Test of Modified Structural Model

 

 

 

 

Modified Model

Hypothesis

Exogenous

Endogenous

Regression Coefficient

P-value

Hypothesis

Status

 

 

 

(β)

 

Hypothesis 1

Continuous Learning

Organizational Innovativeness

0.147

0.046

Accepted

Hypothesis 2

Inquiry and Dialogue

Organizational Innovativeness

-0.012

0.859

Rejected

Hypothesis 3

Team Learning

Organizational Innovativeness

-0.071

0.289

Rejected

Hypothesis 4

Embedded System

Organizational Innovativeness

0.200

0.002

Accepted

Hypothesis 5

Empowerment

Organizational Innovativeness

0.030

0.683

Rejected

Hypothesis 6

System Connection

Organizational Innovativeness

0.192

0.003

Accepted

Hypothesis 7

Strategic Leadership

Organizational Innovativeness

0.368

0.000

Accepted

.

Table 4.21 (Continued)

Summary of Hypotheses Test of Modified Structural Model

 

 

 

 

Modified Model

Hypothesis

Exogenous

Endogenous

Regression Coefficient

P-value

Hypothesis

Status

 

 

 

(β)

 

Hypothesis 8

Continuous Learning

Organizational Performance

0.008

0.918

Rejected

Hypothesis 9

Inquiry and Dialogue

Organizational Performance

0.337

0.000

Accepted

Hypothesis 10

Team Learning

Organizational Performance

0.169

0.015

Accepted

Hypothesis 11

Embedded System

Organizational Performance

0.124

0.068

Rejected

Hypothesis 12

Empowerment

Organizational Performance

-0.067

0.372

Rejected

Hypothesis 13

System Connection

Organizational Performance

-0.114

0.089

Rejected

Hypothesis 14

Strategic Leadership

Organizational Performance

0.012

0.877

Rejected

Hypothesis 15

Organizational Innovativeness

Organizational Performance

0.523

0.000

Accepted

Goodness of Fit Index:

Chi-square

Df

P-value

Ratio

GFI

CFI

TLI

RMSEA

189.703

173

0.182

1.097

0.958

0.997

0.996

0.016 

Squared Multiple Correlation

(SMC):

Organizational innovativeness

Organizational performance

48.60%

69.20%

Note. Df = Degree of Freedom; GFI = the Goodness of Fit Index; CFI = the Comparative Fit Index; TLI = the Tucker-Lewis Index; RMSEA = the root mean square error of approximation.

The results in Table 4.21 indicate that the four dimensions of continuous learning, embedded system, system connection, and strategic leadership have a significant positive and direct impact on organizational innovativeness. Therefore, there is a significant positive relationship between continuous learning and organizational innovativeness of the SMEs (Hypothesis 1), there is a significant positive relationship between embedded system and organizational innovativeness of the SMEs (Hypothesis 4), there is a significant positive relationship between system connection and organizational innovativeness of the SMEs (Hypothesis 6), and there is a significant positive relationship between strategic leadership and organizational innovativeness of the SMEs (Hypothesis 7) are accepted and answer the research question 1 (refer to page 13).

The two dimensions, inquiry and dialogue and team learning have a significant positive and direct impact on organizational performance. Organizational innovativeness also has a significant positive and direct impact on organizational performance. Therefore, there is a significant positive relationship between inquiry and dialogue and organizational performance of the SMEs (Hypothesis 9), there is a significant positive relationship between team learning and organizational performance of the SMEs (Hypothesis 10), and there is a significant positive relationship between organizational innovativeness and organizational performance of the SMEs (Hypothesis 15) are accepted and answer the research question 2 and 3 respectively (refer to page 14).

There are no direct paths from inquiry and dialogue (hypothesis 2), team learning (hypothesis 3), empowerment (hypothesis 5) to organizational innovativeness, and there are no direct paths from continuous learning (hypothesis 8), embedded system (hypothesis 1), empowerment (hypothesis 12), system connection (hypothesis 13), strategic leadership (hypothesis 14) to organizational performance. Therefore, the results are rejected as there is no significant impact.

Additionally, Squared Multiple Correlation (SMC) or (R2) indicates continuous learning, inquiry and dialogue, team learning, embedded system, empowerment, system connection, and strategic leadership makeup the variance of 48.60 percent for organizational innovativeness, while 51.40 percent is unobserved.

The SMC organizational performance variance is 69.20 percent, which means that the organizational performance can be explained by continuous learning, inquiry and dialogue, team learning, embedded system, empowerment, system connection, strategic leadership, and organizational innovativeness, while 30.80 percent is unobserved.

SMC of this model is accepted, the results satisfy the standard requirements of R Square >0.200 (Zikmund, 2003).

4.8 Mediating Variable

A mediating effect is created when a third variable intervenes between two other related constructs. Mediation requires significant correlations among all three constructs (Hair et al., 2010).

4.8.1 Mediating Effect of Organizational Innovativeness on Learning Organization and Organizational Performance

As suggested by Hair et al (2010), the initial structural model (Model 1) is developed to examine direct effects of independent variables (learning organization practices) on the mediator (organizational innovativeness) and the direct effects of the mediator variable on the dependent variable (organizational performance). This model would not include a path directly from the independent variables to the dependent variable when is expected to be 0 due to mediation.

Subsequently, the second structural model (Model 2) is specified to examine the relations among learning organization, organizational innovativeness, and organizational performance as well as the mediating effect of organizational innovativeness between learning organization and organizational performance simultaneously. This second structural model would include a path directly from the independent variables to the dependent variable. Comparing two models, full mediation are supported when the relation between the independent variables (learning organization) and dependent variable (organizational performance) in the second structural model are not significant.

The test was to measure whether organizational innovativeness can mediate the relationship between learning organization and organizational performance, and the indirect effect of variable interaction results are as shown in Table 4.22.

Table 4.22

Indirect Effect of Variables Interaction

 

Model 1

Model 2

Hypothesis

Direct Effects Estimate - No link

Direct Effects Estimate - Link

Mediating Hypothesis

Hypothesis 16

Continuous Learning à Organizational Innovativeness = 0.143*

Organizational Innovativeness à Organizational Performance = 0.784***

Continuous Learning à

Organizational Performance = 0

0.147*

0.523 ***

0.008

Full Mediation

Note. * p < 0.05; ** p < 0.01; *** p < 0.001.

Table 4.22 (Continued)

Indirect Effect of Variables Interaction

 

Model 1

Model 2

Hypothesis

Direct Effects Estimate - No link

Direct Effects Estimate - Link

Mediating Hypothesis

Hypothesis 17

Inquiry and Dialogue à

Organizational Innovativeness = 0.047

Organizational Innovativeness à Organizational Performance = 0.784***

Inquiry and Dialogue à

Organizational Performance = 0

-0.012

0.523***

0.337***

Non Mediation

Hypothesis 18

Team Learning à

Organizational Innovativeness = -0.041

Organizational Innovativeness à Organizational Performance = 0.784***

Team Learning à

Organizational Performance = 0

-0.071

0.523***

0.169*

Non Mediation

Hypothesis 19

Embedded System à

Organizational Innovativeness = 0.214***

Organizational Innovativeness à Organizational Performance = 0.784***

Embedded System à

Organizational Performance = 0

0.200**

0.523***

0.124

Full Mediation

Hypothesis 20

Empowerment à

Organizational Innovativeness = 0 .017

Organizational Innovativeness à Organizational Performance = 0.784***

Empowerment à

Organizational Performance = 0

0 .030

0.523***

-0.067

Non Mediation

Hypothesis 21

System Connection à

Organizational Innovativeness = 0.167**

Organizational Innovativeness à Organizational Performance = 0.784***

System Connection à

Organizational Performance = 0

0.192**

0.523***

-0.114

Full Mediation

Hypothesis 22

Strategic Leadership à

Organizational Innovativeness = 0.357**

Organizational Innovativeness à Organizational Performance = 0.784***

Strategic Leadership à

Organizational Performance = 0

0.368***

0.523***

0.012

Full Mediation

Note. * p < 0.05; ** p < 0.01; *** p < 0.001.

Table 4.22 shows the indirect effect estimates to test the mediating effects of organizational innovativeness, learning organization practices and organizational performance on the seven relationships as hypothesized in Hypothesis 16 to Hypothesis 22. From the result, Hypothesis 16, Hypothesis 19, Hypothesis 21, and Hypothesis 22 are supported.

Referring to the results of Model 1 and Model 2 (refer to Table 4.22), full mediation is established when the significant relations between the independent variables and dependent variable in Model 2 have no significant impact. The indirect effect on organizational innovativeness mediates the relationship between continuous learning and organizational performance of the SMEs (Hypothesis 16); organizational innovativeness mediates the relationship between embedded system and organizational performance of the SMEs (Hypothesis 19); organizational innovativeness mediates the relationship between system connection and organizational performance of the SMEs (Hypothesis 21); and organizational innovativeness mediates the relationship between strategic leadership and organizational performance of the SMEs (Hypothesis 22).

4.9 Chapter Summary

This chapter offers specific details regarding the results of data analysis. Structural Equation Modeling (SEM) AMOS 18.0 was used in testing the measurement and the structural model. To further improve the model, it was modified based on the highest modification index by deleting the indicators. The final model produced good-fit results. The results of the structural model provided support to seven hypotheses: there is a significant positive relationship between continuous learning and organizational innovativeness of the SMEs (Hypothesis 1), there is a significant positive relationship between embedded system and organizational innovativeness of the SMEs (Hypothesis 4), there is a significant positive relationship between system connection and organizational innovativeness of the SMEs (Hypothesis 6), there is a significant positive relationship between strategic leadership and organizational innovativeness of the SMEs (Hypothesis 7), there is a significant positive relationship between inquiry and dialogue and organizational performance of the SMEs (Hypothesis 9), there is a significant positive relationship between team learning and organizational performance of the SMEs (Hypothesis 10), and there is a significant positive relationship between organizational innovativeness and organizational performance of the SMEs (Hypothesis 15). The results satisfied the objectives and answered all research questions.

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