Mediating Role of Members Participation and Sense of Belonging In The Effect of Service Quality on Co-operatives Performance Nur Hidayati



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Mediating Role of Members Participation and Sense of Belonging In The Effect of Service Quality on Co-operatives Performance
Nur Hidayati

Magister Management, Post Graduate Programme, Islamic University of Malang



Hafid Aditya Pradesa*

UB Graduate Program, Brawijaya University Malang
Rifki Hanif

Asia Malang Economy Science College
Hadi Sunaryo

Department of Management, Faculty of Economic Islamic University of Malang

Abstract

As a social and economic entity, co-operative has become important in development of society especially in developing countries. In Indonesia, co-operative plays role as one of economic pillars beside state and private institutions. This paper aims at developing a empirical evidence with contributing to a more comprehensive theoretical understanding of different attitudinal mechanism among members toward organization that increasing the effect of service quality on co-operative performance. About 163 members from 5 largest co-operatives in Malang, East Java, participated in this study. Structural equation modelling was used to test the hypotheses proposed. As members sense of belonging have no important effect to increase co-operative performance, findings has also revealed that only members participation has important role in contribute to greater co-operative performance, with its significant mediating effect in relationship of service quality and sense of belonging on co-operative performance. Practical implications of these results are discussed.
Introduction

Increasing the number of members and the capital does not guarantee an increase in sales and co-operative profitability. It also means that increased member has not been able to optimally empowered by the manager or even board of co-operative enterprise. The co-operative organizations in such developing countries like Indonesia have a long tradition. Thus, it does not perceive themselves as business oriented towards the common good but are focused solely on members’ advantage. Jones and Kalmi (2012) explained the essential features of co-operatives are given by with the two special characteristics: 1) Co-operative ownership is not determined solely by investment or capital ownership in shares, but by model of transaction relationship of members with the enterprise; 2) Voting rights in co-operative model are not determined in relation to capital ownership, inspite of being divided equally among its members.

Business-model co-operatives aim at mobilizing resources through building relationships with their members. It means that members are needed to contribute more in their participative decision. The emergence of social enterprises has also led to a dynamic of hybridization and broadening in the cooperative sector. Academic interest in cooperative organizations as alternative providers of public and social services in recent years. Deregulation and liberalization tendencies have created new opportunities for cooperatives but have also redefined their traditional societal role and organizational identity. Traditional cooperatives are member-focused in their goal structure as they aim at generating economic benefits primarily for their organizational member base.

The co-operative organizations in such developing countries like Indonesia have a long tradition, do not perceive themselves as oriented towards the common good but are focused solely on members’ advantage. Community co-operatives have definitely more in common with the voluntary and non-profit sector than with the traditional social economy. Interestingly, Lang and Roessl (2011) stated co-operative focus not only on improving member’s advantage but also act on behalf of some collective identity. These organizations meaning working “on solving shared problems, claiming to act on behalf of some collective identity”.Model of co-operative enterprise is also properly well suited to developing methods of participatory management among the members. These could be adopted by co-operative enterprise which are ready to maximize performance and service quality.

Ernita et al (2014) suggest that there are also various dimension affecting members participation in cooperative, as one of them is service quality. Besides, motivation members in cooperative divided into motivation material and non material. As Wagner and Moch (1986) believed that co-operative members who are socialized to collectivism and who internalize collectivistic values will prefer a spesific ideology on their collective action and outcomes. Otherwise when another members may be blinded by their belief, others will be more critical and aware about their co-operative and not simply assume that in co-operative daily activities follows basic co-operative principles and values. Particularly for these individuals believe that it is essential for co-operative actually in living true the co-operative philosophy.

Jones and Kalmi (2012) suggest about the problem arise when the incentives for individuals willing to remain in co-operatives, which this may not always be entirely voluntary: sometimes co-operative member may be required to belong to a group by law, sometimes seceding from the group may be difficult. Based on democracy principle. co-operative members could have a right to choose their own level of involvement in the co-operative according to their interest. Co-operative is built and developed to serve its members’ needs rather than trying to change them. Party who could served by co-operative are not only members but also non-members too.

Obviously there are no “wrong” levels of member involvement. At whatever level members are choose-even if all they do is shop so that they feel they are involved and participating in co-operative development. The needs of co-operative members’ are frequently change over time, and as enterprise, co-operative has increase the effort in meeting basic needs. Dunn (1988) argued that co-operatives are defined as member-owned and member-controlled; member-oriented and also member benefiting governance structures. Another author such Valentinov (2004) underlined the ownership characteristics of co-operatives make cooperative governance relatively ‘expensive’ in terms of transaction costs, especially for the features of collective decision making. This because of the voting majority belongs directly or indirectly to co-operative members, and one member have one vote in members meeting in co-operative organization.

There is empirical evidence about the diseconomies of scale (larger co-operative banks having poorer performance) such as Jones and Kalmi (2011), who found that increased membership ratios are associated with better bank performance.Both members and customers has increased, that is the growth rate of membership has been much faster rather than the growth of customers. The findings from Jones and Kalmi (2011), concerning a positive link between membership and co-operative performance. Previous study show different result that has claimed the relationship of membership and performance founded to be negative (Gorton and Schmid 1999; Leggett and Strand 2002).

As Jones and Kalmi results bringing new horizon are more promising than most previous findings contained in earlier literature concerning about co-operative performance. There are both improvements and potential problems in the democratic and economic development of co-operative. The broadening concept and meaning of membership has certainly made co-operative enterprise more interesting to examined and tested. At the same time, the trend towards centralization and increases of the average size of co-operatives may indicate potential problems in member democracy, which lies in membership problem such as attachment and involvement.

The core of the field of ‘‘co-operative performance’’ lies in the handling of co-operative decisions along manajerial development processes, taking into consideration between members sense belonging and participation. The developments described above suggest that the analysis of co-operative performance has to be enriched by a behavioral perspective. Previous studies such as Hansen et al (2002) explores the effect of trust in the relationships among the members and between the members and the management teams of in co-operatives context. Findings suggest that trust between members and co-op management are important in measuring and affecting members' desires to remain in a group or in a co-operatives they have participated in. Mutual trust could be enhanced by service quality which is delivered by co-operative to its members.

This study focuses on co-operatives performance that are characterized by its applied behavioral model of its members about perception of service quality, participative and sense of belonging. From consumer behavior perspective, spesifically in context of co-operatives we would see members are play role as customers, and so does members as owners. We argued that members has utilizing means and values in co-operative practices when they are seek their participation maximally by a better service quality offered and perceived, as well as members’ feeling about their sense of belonging.
Literature Review and Hypotheses Development
Service Quality

Concept of service quality has been recognized as strategic tool for organization in order to attaining efficiency, fostering its competitive advantage and improved organizational performance (Velanganni, 2014). Service quality is necessary for both the goods and services sectors across industries. Nielsen and Host (2000) stated that the service quality can be viewed from the perspective of organizational behavior and marketing perspective. Thus, elaboration of the concept of quality of service proposed by previous authors such as Grönroos and Parasuraman et al., with more emphasize in "model gap" by Parasuraman, based on the theories of organizations : the perspective of process and organizational structure. Furthermore, these assumption more explained in marketing perspective, service quality related to consumer satisfaction, with regard to the motivation or purpose of purchase, as well as regarding to customer loyalty. In context of co-operative enterprise, members’ personal needs could affect their service expectations which offered by co-operatives. This will led to possibilites that members were delighted with quality of service provided by co-operative when they were asses or doing transaction with co-operative.

As explained above, higher quality of service received by customers will increase their actual behavior such as purchase decision (Berry and Parasuraman, 1997; Ziethaml et al., 1996). On the other hand that the service is a key variable in providing superior services that can satisfy the customer. From satisfied customers, it will affect customer loyalty. In other words, satisfactory service can improve customer loyalty (Parasuraman et al., 1991). Ultimately, the number of loyal customers will increased that affect their commitment to always want to have transaction with co-operative. Therefore service is a variable that would determines firm’s success including cooperatives, Yamit (2001).

The theoretical foundation of service quality lies in the product quality and customer satisfaction literature, and which its concept is defined by various authors in consumer behavior literature. Service quality as the gap between expectation and perception of the performance received (Zeithaml et al, 1988). Newman (2001) argued service quality as a degree between customer service expectations and perceptions. A common definition of service quality concept that is defined as a service delivered to customers in order to fulfill their requirements, expectations and satisfactions (Saravanakumar and Jayakrishnan, 2014).

Parasuraman et al. (1985) classified concept of service quality into five dimensions below:


  1. Tangibles, which defined as physical appearance including equipment, personnel, and physical facilities.

  2. Reliability, which defined as ability to provide services that promised to other parties promptly and satisfactorily.

  3. Responsiveness, which defined as the willingness from the staff in helping customers and provide service with a quick response.

  4. Assurance, which includes the ability, courtesy, and trustworthiness owned by the enterprise staff that perceived by customers.

  5. Emphaty, which including ease in relationship with good communication and greater understanding of customers' needs.

Previous research offers evidence that service quality perceptions positively affect the mentioned behavioural intentions. It was found that the better a company’s service quality performance, the higher is the propensity to engage in doing more business with the company (Cronin and Taylor, 1992; Zeithaml et al., 1996), and continuing to do business with the company (Boulding et al., 1993).

Hidayati et al (2016) argued that in context of co-operative, the ability to obtain profitability of co-operative’s business could be driven by quality that offered to its members. Otherwise, Hidayati et al (2016) also argued that service quality will lead to higher member participation and also sense of belonging as the main outcome . Thus, as economic institution, measuring profitability is also a part of co-operative’s performance. In order to gain higher profitability, cooperative is closely linked to the level of sales that can be achieved, and this is supported from its members. We argued that service quality affect the co-operative’s performance, and also attitudinal mechanism among members. The higher service quality provided to members, will have an impact on members sense of belonging and participation, thus ultimately will increasing performance that achieved by co-operative.


Members Participation

Participation is defined as an individual mental and emotional engagement in such a group which its situation prompted him or her to contribute and share responsibility for achieving the goals (Fathorrozi, 2004). From the definition we could argue that there are some key points in participation that may be relevance to individuals mental and emotional, willingness to contribute, and the element of responsibility. The different treatments of participation depend on the field of research, the type of participation scheme, and the outcomes under study. Generally, co-operatives hold a special place in the literature, in a case of full participation. If it is associated with the cooperative, concept of participation is the something that must be done by all existing members of the co-operative, since as it is also mandated by the basic co-operatives principles.

Members participation treated as necessary ingredients for participatory value in co-operatives, which are all rooted in the co-operative principles and values, and therefore form an integral part of the cooperative organization, by definition. In the economics of participation, the focus has been on firm’s ownership and control structures. These elements of organizational impact have been present in the literature on cooperative firms, particularly in the context of the co-operative principles and values, the co-operative difference, and discussions about the role of co-operative firms in communities. Typically, member participation in decision-making is the highest in worker co-ops, because the stakes for employees are also very high. Munkner (1987), and Soewardi (1995), also have a common view, that the participation of members is decisive factor in the success of the cooperative effort so that the participation of members low will affecting the development and accomplishment of an objective cooperative.

As explained above, members participation is main source for the existence and competitiveness in cooperatives. Participation is a also recognized as a co-operative spirit of life, so it is logic that members participation is very crucial in cooperative sustainability. According to Whitney and Lindell (2000), in predicting participation of members can use concept of organizational commitment. Their findings show that the effect of affective commitment is stronger than continuance commitment to members participation. Shape or size of the members participation is reflected in their contribution of planning, decision-making, and also by doing transaction with co-operatives or willingness to attend co-operative members annual meeting. Ernita et al (2014) argued that members participation of co-operatives consisting of several kinds, namely participation in business activities (such as buying and selling or even loan and deposit), participation in the capital of co-operative fertilization (consciousness among members in meet their obligation such as paying major deposits, mandatory deposits, and voluntary deposits).

Hidayati et al (2016) argued that co-operative should have more attention about improving its services, which this will led to strengthening and expanding members involvement or participation in the cooperative activities. Members’ participation is seen as one of important issues in the cooperative sector (Birchall and Simmons, 2004). Members’ participation will be reached to the fullest if the services offered by co-operatives in line or above the expectation of its members. By increasing members participation, co-operative will have more possibility to fostering its benefits, which ultimately led to greater organizational performance. As many previous authors said that members’ participation and manager performance could increasing success of co-operative, and members’ participation will treated as dominant factor for reaching co-operative’s goals and objectives.
Members Sense of Belonging

The concept of sense of belonging is grounded in concept of commitment, particulary affective commitment (Allen and Meyer, 1990). Sense of belonging would be seen as component of individuals emotional attachment for their organization. By adopting these general assumption, we would like to validate the same feeling of co-operative members in articulate their emotional attachment to co-operative organization as their “sense of belonging”. The term sense of belonging in co-operative members is more likely seen as affective state of individuals feeling, not a normative state.

As explained by Bollen and Hoyle (1990), individual decision is made based on “global affective response which is associated with belonging to the group”. What is implied from these assumption that individuals feeling for decide to remain in a group is based on the affective elements. Hansen et al (2002) further to explain this concept by taken it as construct measured in the impact of trust on co-operative membership retention, in which it was manifested as perception among individuals of their group cohesion.

Jones and Kalmi (2012) argued about important differences in the membership policies of co-operatives. In some co-operatives, notably credit unions, all of individual customers are required to become members to access co-op services, which it is a must. Otherwise, in most co-operatives, individuals have an option as their willingnes to whether they want to become co-operative members or not. In these cases, co-operative policies often plays a decisive role in member recruitment and treatment.

In some social groups there are norms or values ​​used by members as a guideline about how members should behave in manner. In co-operative context, Stoel and Sternquist (2004) suggest that membership of a particular social group in such co-operative enterprise will influence perception of members. Co-operative’s members also plays role as owner of co-operative enterprise, and they should follow the norms that were developed, and having great responsibility to behave properly. In other words, the permanent members of co-operative enterprise should pay more attention and run values ​​or norms prevailing in their co-operatives.

On the other hand in the mechanism of the relationship between the members of a particular social group will involve some of the following variables such as values, roles, attitudes and behaviors. As members of a group or organization, individuals must follow the values espoused and must behave properly according to the norms that exist and responsible for the organizational sustainability. Thus, the sense which has manifested in responsibility manner and commitment to the organization as well as the suitability of the role expected by existing norms that may affect the organizational performance concerned.


Co-operative Performance

Organizational performance is one of the most important constructs in management research. Arguing about the definition of organizational performance is a surprisingly and widely open question with only few studies which using a consistent definitions and measures (Kirby, 2005). Performance is so commonly tested and examined in management research that its structure and definition are rarely explicitly justified. However, the evidence is existed that even with a narrower domain, organizational performance is not a one-dimensional construct nor is it likely to be characterizable with a single operational measure (Richard et al, 2009).

According Mauget and Declerch (1996), which assesses the performance of co-operative (ie agricultural co-operatives) that operates in a single business and multi business concluded, stated about no specialized cooperative produces better performance than the multi-faceted co-operative enterprise. Several other ratios commonly used is the ratio of "value-added over turnover", such as the structure of capital, ability to raise capital, as well as economic performance such as profitability, value added to turnover capital, and nett profit on sales or contributing economically such as retun on invested-capital (Tvorik and Mc Givern, 1997, Wirtz and Shamdasani, 1997, and Clark, 2002). Based on this understanding, as performance measures that were outlined, then co-operatives performance viewed and analyzed based on members' perceptions on the number of sales achieved, the ratio of sales to capital, ratio of profitability obtained, and the number of co-operative members.
Hypotheses Development


Members Participation



Co-operative Performance


Service Quality



Sense of Belonging

Figure 1. Conceptual Model


The relationships depicted above represented through a direct and indirect effect in structural model. Based on the previous findings and theoretical described previously, we expect that service quality could predict co-operative performance with mediating role of members participation and sense of belonging. The hypotheses built on existing literature show that there are a variety of more-or-less interconnected antecedents of co-operative performance to a member’s sense of belonging in maintaining co-operative members participation.Hypotheses proposed in this study that:

H1 Co-operative service quality will increase its members participation

H2 Co-operative service quality will increase its members sense of belonging

H3 Co-operative service quality will increase its performance

H4 Members sense of belonging will increase its members participation

H5 Members participation will increase co-operative performance

H6 Members sense of belonging will increase co-operative performance
Methodology

Population and Sample

Population in this study are members of public co-operatives which has been registered in the Indonesian Ministry of small medium enterprises and co-operatives and placed in Malang, East Java, Indonesia. There are five state co-operatives which observed in this study, and members of its co-operatives are taken as respondent. A cross-sectional design was used to survey a list of 163 co-operative members, to whom questionnaires were personally distributed. Data collected during at different times, with a view to sampling a wide range of co-operative members. In order to secure high response rate, the questions were structured in such way, in order to be sure that members with different educational backgrounds can understand the measured items and fill the questionnaire in fast and reliable way.



Ethical Considerations

This research effort was designed to minimize potential ethical considerations and risks to human subjects. All participants received in their survey packets a cover letter explaining the voluntary nature of the study. Additionally, no individually-identifying data was collected on the survey forms. After completion of questionnaires, participants who had filled out the informed consent and who had voluntarily participated were given options to either submit their completed questionnaires without their names and any personal labels indicated in the questionnaires.


Measures

As exlanatory study, this research was aimed to examine and analyze the mediating role of members’ participation and sense of belonging in the relationship of service quality and co-operative performance. Thus, considering about previous empirical and theoritical foundation, we have developed the research instruments which are used to measure the variables observed in this study.



Service Quality

Generally, service quality was developed based on concept from Parasuraman et al (1988) which had been also utilized in many previous researchs. Questionnaire in this study consist five items adapted and made corresponding relevant to a co-operative’s service setting. A scale which consist of 5 item developed to measure service quality used a Likert scale ranging from zero to five (0 = very disagree, 5 = very agree) to rate how often they perceive service quality which have been delivered by co-operatives.



Members Participation

Members participation is members form of behavioral intention in co-operative enterprise which plays important role as basic foundation for co-operative success. Such behavioral form of members participation such as attending general assembly or co-operative annual meeting, holding a position in the board of directors, holding a position in the executive board, and priority decision to buy and use co-operative products or services (Pozzobon and Zylbersztajn, 2011). A scale which consist of 4 item developed to measure members’ participation used a semantic scale ranging from zero to five (0 = Never, 5 = Often) to rate how often they engaged in each behavior.



Members Sense of Belonging

Sense of belonging is defined as a psychological contract form between the members and the co-operatives (Hidayati et al, 2016), as including mental work, attitudinal mechanism which is not formaly written but manifested in the form of commitment, dedication and responsibility. A scale which consist of 4 item developed to measure sense of belonging used a semantic scale ranging from zero to five (0 = Never, 5 = Often) to rate how often they engaged in each attitude mechanism.



Co-operative Performance

Performance is outcome from a job or work achieved by co-operative relating to sales, ratio of sales to capital, and the number of members. This performance is measured based on the perception of respondents on performance indicators of sales, ratio of sales to capital, SHU, and the number of members. A scale which consist of 3 item developed to measure co-operative performance used a Likert scale ranging from zero to five (0 = very disagree, 5 = very agree) to rate how co-operative members assumed about their organizational performance.


Analysis

Based on Partial Least Square (PLS) approach, we tested the research hypotheses in structural equation modeling. The structural model shown in Figure 1 was analyzed using the PLS method through the SmartPLS package. As a second generation multivariate technique (Fornell and Cha, 1994), PLS can simultaneously evaluate the measurement model (outer model) and the structural model (inner model) with the purpose to minimize error variance (Chin, 1998).




Result And Discussion
Result

The means, standard deviations and correlations for the study variables are shown in Table 1. The alpha reliabilities ranged from 0.678 to 0.839, these are all good reliability criteria and clearly acceptable and allowed for further analyses. In Table 1, we also present the correlations between the latent variables, with major correlations were highly statistically significant (p < .001).



Table 1. Means, Standard Deviations, and Correlation Coefficients




AVE

CR

Mean

SD

1

2

3

4

  1. Service Quality

0.519

0.842

3.710

2.747

(.765)










  1. Members Sense of Belonging

0.665

0.888

4.202

2.086

.395**

(.839)







  1. Members Participation

0.504

0.796

3.566

2.230

.484**

.381**

(.678)




  1. Co-operative Performance

0.642

0.842

3.804

2.005

.465*

.230**

.495**

(.727)

Notes: *p , 0.01; (two-tailed significance); Cronbach’s alphas for each scale are italicised and shown in the diagonal.

From Table 1 AVE and composite reliability can be assessed to confirm discrimination and convergent validity among constructs in study. By assessing discriminant validity using the average variance extracted (Fornell and Lacker, 1981), AVE values for each factor was compared with and exceeded the squared correlations between that factor and all other factors. The average variance extracted (AVE) for the constructs of service quality, members sense of belonging, members participation, and co-operative performance were 0.519, 0.665, 0.504, and 0.642, respectively. While the composite reliabilities were 0.842, 0.888, 0.796, and 0.842, respectively.

In order to test the hypotheses, a structural model was estimated with four constructs consist of: co-operative service quality, members sense of belonging, members participation, and co-operative performance. In the model, co-operative service quality is the lone exogenous constructs, while the co-operative performance is the lone endogenous constructs.


Table 2. Direct and Indirect Effects in Model


Effect in Model



Direct


Indirect (through Co-operative Members Participation)

Indirect (through Members Sense of Belonging)

  1. Service Quality to Members Participation

0.408**







  1. Service Quality to Sense of Belonging

0.452**







  1. Service Quality to Co-operative Performance

0.271*

0.178*

0.104*

  1. Members Participation to Co-operative Performance

0.436**







  1. Sense of Belonging to Members Participation

0.229*







  1. Sense of Belonging to Co-operative Performance

-0.021







Notes: **p , 0.01; (two-tailed significance); *p , 0.05; (two-tailed significance);

All of the hypotheses were tested and analyzed using Partial Least Square method. The explanations of each hypothesis which have proposed in this study are stated below :



Hypothesis 1. This hypothesis proposed that higher service quality perceived by co-operative members will increase their participation. Path coefficients from the structural model in service quality to members participation were .408 (p < .000). From the result we conclude that hypothesis 1 is accepted, which mean that for such members who participated in this study reported that if they could perceive better service quality which offered by co-operative would increase levels of their participation as co-operative members.

Hypothesis 2. This hypothesis proposed that higher service quality perceived by co-operative members will increase members’ sense of belonging. Path coefficients of the structural line from service quality to members’ participation were .452 (p < .000). From the result we conclude that hypothesis 2 is accepted, which mean that such members who have better and positive perception about service quality offered by co-operative would increasing their levels of sense of belonging.


Members Participation


β5 = 0.435 (Sign)




β1 = 0.408 (Sign)



Co-operative Performance

Service Quality




β3 = 0.270 (Sign)



β4 = 0.228 (Sign)




β6 = -0.020 (NS)

β2 = 0.452 (Sign)

Members Sense of Belonging

Figure 2. Result of Structural Model
Hypothesis 3. This hypothesis proposed that higher service quality perceived by co-operative members will increase co-operative performance. Path coefficients of the structural line from service quality to co-operative performance were .271 (p < .009). From the result we conclude that hypothesis 3 is accepted, which mean that co-operative members who have good perception about service quality they perceive would increase levels of co-operative performance.

Hypothesis 4. This hypothesis proposed that higher sense of belonging felt by co-operative members will increase their participation. Path coefficients from the structural model show beta coefficient of sense of belonging to members’ participation were .229 (p < .014). From the result we conclude that hypothesis 4 is accepted, which for such co-operative members who feel more in their sense of belonging would increase levels of their participation for co-operative.

Hypothesis 5. This hypothesis proposed that higher participation of co-operative members will increase co-operative performance. The significant path coefficients of the structural line from members’ participation to co-operative performance were .436 (p < .000). From the result we conclude that hypothesis 5 is accepted, that for members who have more participated in co-operative activities would increase levels of co-operative performance.

Hypothesis 6. This hypothesis proposed that higher sense of belonging felt by co-operative members will increase co-operative performance. Path coefficients from the structural model show beta coefficient of sense of belonging to co-operative performance were - .021 (p < .328). From the result we conclude that hypothesis 6 is rejected, which mean that co-operative members who feel higher sense of belonging for co-operatives could not increase levels of co-operative performance.
Testing of Mediating Effect

  1. Mediating effect of sense of belonging on relationship between service quality and members participation

The calculation result shown beta coefficient of service quality to members participation through sense of belonging : β2 x β4 = 0.452 x 0.228 = 0.103. Direct effect of service quality to members participation (β1) found were 0.408. It can be concluded that sense of belonging plays a mediating role on the effect of co-operative service quality on members participation. The nature of its mediation effect can be seen in Figure 3 below.


Sense of Belonging




β4 = 0.228 (Sign)



β2 = 0.452 (Sign)

Service Quality



Members Participation




β1 = 0.408 (Sign)

Figure 3. Mediating effect of Sense of Belonging on Relationship Between Service Quality and Members Participation




  1. Mediating effect of sense of belonging on relationship between service quality and co-operative performance

The calculation result shown beta coefficient of service quality to co-operative performance through sense of belonging could not be generated because direct effect of sense of belonging on co-operative performance founded to be insignificant. Direct effect of service quality to members participation (β3) found were 0.270. Based on the criteria stated by Hair, et al. (2010), from this structural model can be concluded that sense of belonging have no mediation role on the effect of service quality on co-operative performance.


Sense of Belonging


β6 = -0.020 (NS)

Service Quality




β2 = 0.452 (Sign)




Co-operative Performance




β3 = 0.270 (Sign)

Figure 4. Mediating Effect of Sense of Belonging on Relationship Between Service Quality and Co-operative Performance




  1. Mediating effect of members participation on relationship between sense of belonging and co-operative performance

The calculation result shown beta coefficient of sense of belonging to co-operative performance through members participation : β4 x β5 = 0.228 x 0.435 = 0.099. Direct effect of sense of belonging on co-operative performance founded to be insignificant. It can be concluded that members participation plays a mediating role on the effect of sense of belonging on co-operative performance. The nature of its mediation effect can be seen through figure below.


Members Participation




β5 = 0.435 (Sign)



Sense of Belonging





β4 = 0.228 (Sign)




Co-operative Performance




β6 = - 0.020 (NS)

Figure 5. Result of Mediating Effect of Members Participation on Relationship Between Sense of Belonging and Co-operative Performance




  1. Mediating effect of members participation on relationship between service quality and co-operative performance

The calculation result shown beta coefficient of service quality to members participation through sense of belonging : β2 x β4 = 0.452 x 0.435 = 0.196. Direct effect of service quality to co-operative performance (β3) found were 0.270. It can be concluded that members participation plays a mediating role on the effect of co-operative service quality on co-operative performance. The nature of its mediation effect can be seen through figure below.


Members Participation


β4 = 0.435 (Sign)

Service Quality




β2 = 0.452 (Sign)




Co-operative Performance




β3 = 0.270 (Sign)

Figure 6. Result of Mediating Effect of Sense of Belonging on Relationship Between Service Quality and Members Participation


Based on the criteria stated by Hair, et al. (2010), it can be concluded that sense of belonging have partial mediation on the effect of service quality on members participation. This because of beta coefficient between sense of belonging on members participation smaller than coefficient value between service quality and members participation.

As there is no significant effect of sense of belonging on co-operative performance, we found that no mediating effect of sense of belonging could generated on the relationship between service quality and co-operative performance. Members participation would fully mediate the relationship of sense of belonging on co-operative performance, because direct effect among them found to be insignificant. As illustrated in the Figure 7, not all of the relationship has significant path coefficients. Therefore, an effective co-operative performance could be enhanced when there are:



  1. Higher service quality perceived by members (direct effect), or higher participation among co-operative members(direct effect).

  2. Higher service quality perceived by members which it followed by increased sense of belonging and increased participation among co-operative members. Rather than members participation, sense of belonging would plays role as a main outcome of co-operative service quality. The effect of service quality on sense of belonging is the largest effect among variables observed in this study.



Co-operative Service Quality



Co-operative Performance

Co-operative Members Participation




Members Sense of Belonging

Figure 7. Final Model


Conclution and Recommendation

The findings show that good co-operative performance is not derived by members sense of belonging, but it generated by higher perceived service quality and members participation. But generally, results of this study provide strong support for the predictive power of perceived service quality on (1) attitudinal mechanism such as sense of belonging and members participaton; and (2) organizational outcome such as performance.

Our findings were consistent with the proposed research framework, which this was not really suprising since the model was based on previous empirical findings and suggestions about developing integrated model in service quality – performance in context of co-operative enterprise. The importance of disciplined and consistent follow-through about co-operative practical knowledge is highlighted here.

There is a need also to pay greater attention to these detail; particularly critical in the various enterprise. Service industries cannot recall their 'product'. Dissatisfied customers will simply go away. It is important for the management in co-operatives to understand the emotional attachment and participation among its members and giving support requirements for developing co-operative performance. To enhance the performance of co-operatives, there is a need to mantain members’ attitudes. Thus, co-operative must have concern in establishing good service climate.

In final model with reduced insignificant effect, we see that members participation have important role in mediate the effect of service quality and sense of belonging on co-operative performance. As a part of attitudinal mechanism, sense of belonging founded have no important directly impact on co-operative performance. The result of structural equation model confirmed only one hypothesis are rejected. Findings of this study lead to some implication : First, members participation have important role in mediate the effect of service quality and sense of belonging on co-operative performance. Second, greater service quality perceived by members will increase sense of belonging, which this effect is the largest one.

Overall, these outcomes appear to be in line with the arguments that (i) service quality is not only plays role as important antecedent of attitudinal or behavioral outcomes among co-operative members, but also for organizational performance outcome; and (ii) members participation is important factor in an social and economic enterprise such as co-operatives. Finegrained conceptual understanding of how this organizational dynamic in co-operative model is shaped in terms of members participation, thus contributing to a more comprehensive theoretical understanding of different organizational forms of cooperatives.

A critical role for manager in co-operative enterprise to enhance the quality of service provided by every staff through formal and informal training and development. Feedback from members on their engagement contains elemen of quality. Refinement of the scale for measuring service quality in co-operative, proposed in this study, is certainly possible based on further trends in co-operative enterprise. In our view, this members participation deserves more attention in future research on co-operatives. Especially future empirical research is needed to both identify new pieces of theory, better define the connections between members participation and the other antecedents or outcomes, and to test emerging models.

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