Does corporatisation improve organisational commitment? Evidence from public hospitals in Indonesia

The past two decades have seen many countries corporatising their public hospitals with the expectation that this reform will improve hospitals’ performance. In doing so, the hospital cannot neglect the importance of employees’ commitment as hospitals are labour-intensive and their performance is dependent upon employees’ commitment. However, evidence from the health sector in general shows that reform can bring unintended consequences for the employees such as higher stress levels due to higher workload. Corporatisation as one of the common reform in the hospital sector is certainly not immune from this threat. To examine the consequences of corporatisation on organisational commitment, we conducted a study in 54 public hospitals in East Java, Indonesia. We applied a multilevel structural equation model to survey data on 1282 workers in those hospitals. Analysis suggests that the longer a hospital has been corporatised, the greater the organisational commitment of its employees. Incentives improve organisational commitment, while training and resource availability have no association with it. Employees in larger hospitals are more committed than those in smaller hospitals. Our findings shed light on the debate on corporatisation as a lever for improving organisational commitment in public hospitals in developing countries.