Effects of mental disorders on employee innovative performance: Evidence from the Indonesian fertilizer industry

Daud, Ibrahim; Sulastini; Husnurrofiq; Alfisah, Erni Article Effects of mental disorders on employee innovative performance: Evidence from the Indonesian fertilizer industry Contemporary Economics Provided in Cooperation with: VIZJA University, Warsaw Suggested Citation: Daud, Ibrahim; Sulastini; Husnurrofiq; Alfisah, Erni (2020) : Effects of mental disorders on employee innovative performance: Evidence from the Indonesian fertilizer industry, Contemporary Economics, ISSN 2300-8814, University of Economics and Human Sciences in Warsaw, Warsaw, Vol. 14, Iss. 4, pp. 555-565, https://doi.org/10.5709/ce.1897-9254.427 This Version is available at: https://hdl.handle.net/10419/297550 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ www.ce.vizja.pl 555 This work is licensed under a Creative Commons Attribution 4.0 International License. The purpose of this study is to investigate the role of mental disorders in employee innovative performance. Decision making and creativity among the employees of Indonesian fertilizer companies was also considered in this study. By implementing a research survey, 200 questionnaires were distributed among the employees of fertilizer companies. Structural Equation Modeling (SEM) was the preferred method for data collection. The study concludes that mental disorders play a crucial role in employee innovative performance. The employees suffering from mental disorders do not perform worse and cannot contribute to the innovative activities of the company. Mental disorders decrease the employee performance and influence decision making which further affects innovative performance. Mental disorders also influence employee creativity which affects innovative performance. Therefore, mental disorders have an effect on innovative performance of the employees, as influences decision making and employee creativity . 1. Introduction 1. Introduction Fertilizer companies grow exponentially in importance among various countries,and are an essential part of agricultural activities. Agriculturally developed countries require extensive services from the fertilizer industry. Therefore, fertilizer companies provide significant support to the agricultural sectors of all countries (Acha & Mossneh, 2020). They also provide various chemicals which are helpful in resolving various issues with crops. Therefore, there is a relationship between the agricultural and fertilization industries. Indonesia‘s fertilizer industry has a positive effect on agricultural products. It releases many agricultural products which help crops survive and the industry flourish. This industry plays an important, positive developmental role in Indonesia, as it provides numerous business opportunities (Ali & Sari, 2019; Wisesa et al., 2019). According to the literature, this industry has significantly affects the economy. Due to the handsome contribution of fertilizer industry into the Indonesian economy, it is considered crucial and the Indonesian government is focusing heavily on its performance (Gultom et al., 2020).. Considering the relationship of agricultural and fertilization industries, the performance of the latter affects the former. Products provided by the fertilizer industry are of key importance to the agriculture industry. The Indonesian fertilizer industry’s growth from 2016 to 2019 is shown in Figure 1.Consumption value in USD million is shown in relation to the Indonesian industry. It is clear that the Indonesian fertilizer industry is growing sustainably in each year. In 2016, the consumption of this industry amounted to 1411.2 million.In 2017, the consumption of this industry amounted to 1489.8, while in 2018, the consumption was 1495.4 and finally, in 2019, the consumption reached 1532.6 million. Increase in Effects of Mental Disorders on Employee Innovative Performance: Evidence from the Indonesian Fertilizer Industry ABSTRACT D91, D23. KEY WORDS: JEL Classification: Psychological illness, decision making, creativity, innovative performance, fertilizer companies. 1STIE Indonesia 2Universitas Islam Kalimantan Muhammad Arsyad Al-Banjari Correspondence concerning this article should be addressed to: Ibrahim Daud, STIE Indonesia, Kota Banjarmasin, Kalimantan Selatan 70124, Indonesia E-mail: [email protected] Ibrahim Daud 1 , Sulastini 2 , Husnurrofiq 1,2 , and Erni Alfisah 1,2 Primary submission: 18.11.2019 | Final acceptance: 15.04.2020 556 Ibrahim Daud, Sulastini, Husnurrofiq, Erni Alfisah 10.5709/ce.1897-9254.427DOI: CONTEMPORARY ECONOMICS Vol. 14 Issue 4 555-5652020 the consumption of this industry is the indication of growth which leads to better performance (Dalle et al., 2020). Higher performance of this industry is very important because of its relationship with agriculture (Utami et al., 2016). In this regard, the Indonesian government’s focus is to boost this industry, as it plays a vital role in various revenue-generating activities.. Additionally, the industry’s significance can be attributed to the number of created employment opportunities. However, the issues in this industry may negatively affect performance. Due to the issues in this sector, the performance of fertilizer companies has a negative influence. The negative influence in this industry may negatively affect both fertilizer and agriculture industries. Employees are always the most important part of every company which has influence in every sector (Razzaq et al., 2019). Generally speaking, various organizations and their employees face the issues related to psychological wellbeing. Mental disorders are one of the major issues which negatively affect employee performance, which ultimately has a negative effect on company performance. According to the current study, mental disorders affect employee decision making. Factors affecting decision making play a significant role in performance (Dalle & Hastuti, 2017). Mentally disturbed minds are unable to make better decisions. Moreover, mental disorders also disturb the creativity of the employees. Creative performance of the employee has role in creativity as the mental disorders have an effect on the ability of human mind (Badcock, , 2019). There are numerous studies available in the literature discussing fertilizer companies (Sanders et al., 2013; Sanusi, 2015; Yadav et al., 2009), however, innovative performance was not a topic in any of them. Various studies discuss innovation among companies, but mental disorders are not considered. It is very important to discuss this issue among the companies, because of the effects on innovative performance. The relationship between mental disorders, decision making, creativity, and employee innovative performance is not considered by the previous investigations. Moreover, this study examined the mediating effect of decision making between mental disorders and innovative performance which is also not considered by other studies. Along with this, the mediation effect of employee creativity was also not considered between mental disorders and innovative performance by previous studies. Hence, this study provides significant practical and theoretical contribution. 2. Hypotheses Development 2. Hypotheses Development Fertilizer companies are crucial in improving the effectiveness of crop productivity. These companies provide various nutrients to fertile the soil and increase the productivity of crops. Increase in the productivity of crops in crucial in agricultural performance (Ripoche et al., 2015). Different crops require different chemicals and in different weather conditions various insects may attack crops which significantly affects them influences productivity. Therefore, powerful medicines are always required from the fertilizer companies to destroy the harmful agent and increase the productivity of crops. There is an important relationship between the productivity of crops and fertilizer companies. Different countries focus on the production of different crops, such as wheat, cotton, rice, and sugarcane are the most famous crops produced by different nations. However, all these crops required significant medication. Crop production is one of the branches of agriculture that deals with making crops for use as food as well as fiber. Indonesia has a well-developed crop production infrastructure. The Indonesia keeps vast and rich arable fertile soils which produce high quality crops. Indonesia is one of the world's main manufacturer of an extensive range of agricultural tropical products as well as merchandise, includingpalm oil, cocoa, natural rubber, cassava, coffee, tea, rice, and tropical spices. All these agricultural products are highly important and connected with fertilizer companies. These companies provide different products which has an effect on productivity. Indonesia’s land soil is also suitable for crop production (Lisson et al., 2010). However, among the fertilizer companies, there are various other factors which affect the performance of these companies. These different factors are related to the employees of the organizations. According to this study, mental disorders play an important role in employee performance which affects company performance. Mental disorders affect employees of various organizations (Kirk-Brown & Van Dijk, 2016). The www.ce.vizja.pl 557 Effects of Mental Disorders on Employee Innovative Performance: Evidence from the Indonesian Fertilizer Industry This work is licensed under a Creative Commons Attribution 4.0 International License. current study highlights that mental disorders influences decision making abilities of employees and employee creativity which alters innovative performance. Therefore, the relationship between mental disorders, decision making, creativity and employee innovative performance was examined in this study. Figure 2 shows the relationship between mental disorders, decision making, creativity and employee innovative performance. Mental disorders can be described as “a disease or period of sickness affecting the body or mind.” They also denote to a widespread range of mental health conditions — disorders that influence individuals’ mood, thinking, as well as behavior. Examples of mental illness include depression, eating disorders, anxiety disorders, schizophrenia, and addictive behaviors. Mental disorders are linked to innovative performance. They shape the behavior of the employee towards the job and define the performance. Literature also highlights that psychology has a relationship with performance (Schinke et al., 2018). A positive psychological effect on the employee has positive consequences regarding performance. However, a negative psychological effect negatively affects employee performance. Innovative performance is one of the most important elements of an organization. Employee innovative performance leads the company towards success, which is a well-explored phenomenon in the literature (Belderbos, Gilsing, Lokshin, Carree, & Sastre, 2018). Generally, mental disorders have a negative effect on innovative performance of the employee. The more prevalent the disorders, the less innovative the performance. Thus, the above discussion leads to the following hypothesis; Hypothesis 1: Mental disorders have a negative effect on innovative performance. Moreover, mental disorders are linked with decision making processes of employees. Decision making is the procedure of selecting by classifying a decision, assembling information, and measuring alternative resolutions. A step-by-step decision-making procedure can help one make more cautious, thoughtful decisions by establishing related information as well as defining various alternatives. The making of a decision is an important part of job performance (Vohs et al., 2018). Decision making is a highly important psychological process. In psychology, decision-making is observed as the cognitive procedure consequential in Figure 1. Indonesian fertilizer industry growth. Source: IFA, Mordor Intelligence 558 Ibrahim Daud, Sulastini, Husnurrofiq, Erni Alfisah 10.5709/ce.1897-9254.427DOI: CONTEMPORARY ECONOMICS Vol. 14 Issue 4 555-5652020 the collection of a good or a course of action among numerous alternative opportunities. Decision-making is the procedure of classifying as well as selecting alternatives, grounded in values, preferences and beliefs of the decision-maker. Anemployee suffering from a mental disorder negatively affects performance. Relationship between mental disorders and employee performance is already described in the literature (Huang & Simha, 2018). Hypothesis 2: Mental disorders negatively affect decision making. Negative effects of mental disorderson employee decision making further affect innovative performance. Decrease in employee decision making ability decreases employee innovativeness. Therefore, decision making has a relationship with innovative performance of employees at organizations. Previous studies also highlighted the important association between decision making and innovative performance (Hughes et al., 2019; Su et al., 2016). Therefore, better decision making increases the changes of better innovative performance. The fact that improved decision making has a positive influence on innovative performance is evident from practice. Moreover, from above discussion, it is evident that mental disorders have a significant effect on innovative performance. Mental disorders also have a significant effect on decision making and decision making has a significant effect on innovative performance. The relationship between these three variables allows the decision making to be treated as a mediating variable between mental disorders and innovative performance by following the recommendations of Baron and Kenny (1986). Hence, the above discussion on previous studies lead to the below hypotheses; Hypothesis 3: Decision making has a positive effect on innovative performance. Hypothesis 4: Decision making mediates the relationship between mental disorders and innovative performance. The above discussion highlighted that mental disorders affect innovation performance and employee decision making. Moreover, mental disorders also have an effect on employee creativity. There is a direct effect of mental disorders on employee creative behavior. It is also given that psychologist and creative behavior are linked (Jang, 2018). Creative behavior can be described as a creative act, or a set of acts, which is manifested through behavior. Creative behavior is not passive; it is an action, which supports creative output or a solution to a challenge. Creative performance of the employee has the ability to generate new ideas and lead towards innovative performance. However, mental disorders have a negative effect on employee creativity. The employees suffering from mental disorders cannot improve their job performance and act creatively. Therefore, psychological factors decrease the employee creative performance. Decrease in creative performance also affects innovative performance, as creative performance or creativity has a relationship with innovative performance (Brem & Utikal, 2019; Christensen-Salem et al., 2020; Song et al., 2020). Moreover, similar to the decision making, creativity also is also used as mediating variable between mental disorders and innovative performance. Hypothesis 5: Mental disorders negatively affect creativity. Hypothesis 6: Creativity has a positive effect on innovative performance. Hypothesis 7: Creativity mediates the relationship between mental disorders and innovative performance. 3. Research Method 3. Research Method The c urrent study explored the relationship between mental disorders, decision making, creativity, and employee innovative performance. In analysis, four variables were measured. To measure the variables, a questionnaire was developed with the help of previous studies. The questionnaire included various questions regarding mental disorders, decision making, creativity and employee innovative performance. Mental disorders were measured by asking questions related to depression, anxiety disorders, schizophrenia, eating disorders and addictive behaviors. Decision making was measured by asking questions related to the participation of the employee in various matters. Employee creativity was measured by evaluating questions related to the employee’s creative behavior towards new idea generation. The behavior of the employee towards new idea generation serves as evidence of the employee’s creativity. Finally, the innovative performance of the employee was measured by examining the contribution of the employee in different innovation related activities and their achievements. www.ce.vizja.pl 559 Effects of Mental Disorders on Employee Innovative Performance: Evidence from the Indonesian Fertilizer Industry This work is licensed under a Creative Commons Attribution 4.0 International License. Questionnaires were used for data collection. A Likert scale was used to collect the data. In the questionnaire, all the questions were close-ended. None of the question was open-ended, therefore, respondents were bound to answer on a specific rating. Employees of Indonesian fertilizer companies, including managerial and non-managerial employees, were selected as the respondents of the study. In addition to this, this study distributed the questionnaires to the employees using cluster sampling, the most suitable technique to collect data from wide population. 200 questionnaires were distributed among the employees of fertilizer companies. A total of 110 questionnaires were returned and used for data analysis. Hence, 110 questionnaires were entered into the Excel sheet and data was analyzed to check the missing value and outlier which is very important to examine in order to get accurate results from the collected data (Aydin & Şenoğlu, 2018). 4. Findings4. Findings Data analysis of the study used Smart PLS to obtain the end results. Step wise PLS-SEM was performed in this study in which the first step is given in Figure 3. Figure 3 shows the measurement model of PLS highlighting the factor loadings. Factor loadings also given in Table 2. PLS outer model for reliability and validity is widely used and acceptable process (F. Hair Jr et al., , 2014; J. F. Hairet al., 2012; Zahra et al., 2019). According to previous studies, factor loadings must be above 0.7, few studies shows that factor loadings must be above 0.5. The Table 2 shows that all the factor loadings are above minimum threshold level. Furthermore, this study examined Cronbach alpha, composite reliability (CR) and average variance extracted (AVE) which is shown in Table 3. Discriminant validity by using cross-loadings is given in Table 4. According to J. Hair et al. (2017), CR and AVE must be above 0.7 and 0.5, respectively. All the values are above minimum level as shown in Table 3. In the next process, PLS-Structural model was used (Dahri, Hameed, Nawaz, Sami, & Bux Shah, 2019; Henseler, Ringle, & Sinkovics, 2009). After the analysis of reliability as well as validity, this study used t-value and beta value for hypotheses testing. Hypotheses testing is given in Figure 4. All the hypotheses having t-value above 1.96 was accepted, however, below t-value 1.96 was not accepted. Table 5 shows the direct effect results and Table 6 shows the indirect effect results. All the hypotheses have t-value above 1.96, therefore, all the hypotheses are supported. Figure 2. Theoretical framework of the study showing the relationship between mental disorder, decision mak ing, creativity and employee innovative performance. 560 Ibrahim Daud, Sulastini, Husnurrofiq, Erni Alfisah 10.5709/ce.1897-9254.427DOI: CONTEMPORARY ECONOMICS Vol. 14 Issue 4 555-5652020 No. Missing Mean Median Min Max SD Kurtosis Skewness PI1 1 0 3.327 3 1 7 2.955 -1.113 0.367 PI2 2 0 3.473 4 1 7 1.053 -0.168 0.302 PI3 3 0 3.345 3 1 7 2.082 -1.155 1.406 PI4 4 0 3.491 4 1 7 2.118 -1.231 0.307 PI5 5 0 3.4 3 1 7 1.023 -0.244 0.314 PI6 6 0 3.418 4 1 7 2.082 -1.202 0.335 DM1 7 0 2.782 2 1 7 2.095 -0.192 1.07 DM2 8 0 2.791 2 1 7 1.265 -0.506 0.035 DM3 9 0 2.664 2 1 7 2.099 0.058 1.208 DM4 10 0 2.645 2 1 7 1.837 0.35 1.116 DM5 11 0 2.545 2 1 7 1.891 0.429 1.192 DM6 12 0 2.627 2 1 7 1.123 -0.083 0.153 CR1 13 0 2.818 2 1 7 2.077 -1.274 1.012 CR2 14 0 2.691 2 1 7 2.088 -0.197 1.057 CR3 15 0 2.682 1 1 7 1.358 -0.568 1.059 CR4 16 0 2.645 2 1 7 2.034 0.019 1.13 CR5 17 0 2.755 2 1 7 2.05 -1.006 1.152 IP1 18 0 3.427 4 1 6 1.626 -1.204 0.209 IP2 19 0 3.355 3 1 6 1.756 -1.402 0.128 IP3 20 0 3.4 3 1 6 2.597 -0.297 0.11 IP4 21 0 3.273 3 1 6 1.656 -1.419 0.018 IP5 22 0 3.327 3 1 6 1.596 -1.318 1.184 IP6 23 0 3.327 3 1 6 2.641 -0.402 0.074 Table 1. Missing Value and Outlier Figure 3. PLS outer model. www.ce.vizja.pl 561 Effects of Mental Disorders on Employee Innovative Performance: Evidence from the Indonesian Fertilizer Industry This work is licensed under a Creative Commons Attribution 4.0 International License. Creativity Decision Making Innovative Performance Mental disorder CR1 0.897 CR2 0.87 CR3 0.934 CR4 0.887 CR5 0.893 DM1 0.884 DM2 0.923 DM3 0.882 DM4 0.887 DM5 0.872 DM6 0.912 IP1 0.945 IP2 0.964 IP3 0.954 IP4 0.959 IP5 0.947 IP6 0.957 PI1 0.951 PI2 0.919 PI3 0.933 PI4 0.94 PI5 0.945 PI6 0.929 Table 2. Factor Loadings Figure 4. PLS-structural model. 562 Ibrahim Daud, Sulastini, Husnurrofiq, Erni Alfisah 10.5709/ce.1897-9254.427DOI: CONTEMPORARY ECONOMICS Vol. 14 Issue 4 555-5652020 5. Implications and Limitations of the 5. Implications and Limitations of the Study Study This study considered the vital relationship between mental disorders, decision making, creativity and employee innovative performance which is not considered by the previous studies. In this direction, this study followed the literature gap examining the effect of mental disorders on innovative performance of employees. Previous studies did not discuss the innovative role of employee in relation to the mental disorders. Especially, the relationship between mental disorders and innovation performance among Indonesian fertilizer companies is not considered. This relationship was not clear among the employee of fertilizer companies. Along with this, the current study also considered the decision making and employee creativity with mental disorders and innovative performance. Both the decision making, Alpha rho_A CR (AVE) Creativity 0.939 0.94 0.953 0.804 Decision Making 0.949 0.952 0.96 0.798 Innovative Performance 0.98 0.981 0.984 0.911 Mental disorder 0.972 0.972 0.977 0.877 Table 3. CR and AVE Creativity Decision Making Innovative Performance Mental disorder CR1 0.897 0.865 0.507 0.425 CR2 0.87 0.86 0.552 0.465 CR3 0.934 0.89 0.552 0.459 CR4 0.887 0.866 0.484 0.445 CR5 0.893 0.84 0.47 0.45 DM1 0.845 0.884 0.504 0.461 DM2 0.893 0.923 0.513 0.436 DM3 0.861 0.882 0.422 0.333 DM4 0.82 0.887 0.486 0.409 DM5 0.872 0.882 0.499 0.412 DM6 0.881 0.912 0.53 0.424 IP1 0.495 0.471 0.945 0.803 IP2 0.505 0.497 0.964 0.81 IP3 0.557 0.537 0.954 0.775 IP4 0.574 0.549 0.959 0.84 IP5 0.553 0.532 0.947 0.839 IP6 0.598 0.58 0.957 0.818 PI1 0.43 0.382 0.766 0.951 PI2 0.48 0.432 0.839 0.919 PI3 0.469 0.451 0.778 0.933 PI4 0.46 0.442 0.791 0.94 PI5 0.495 0.463 0.796 0.945 PI6 0.476 0.437 0.821 0.929 Table 4. Discriminant Validity