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INFLUENCE OF INTERNAL SERVICE QUALITY ON
LOYALTY MEDITED BY EMPLOYEE SATISFACTION
Denny Dharmawan
1
, Zainal Ilmi
2
, Adi Wijaya
3
123
Faculty of Economics and Business, University of Mulawarman Samarinda, Indonesia
[email protected]m
1
, zainal.[email protected]
2
, adi.wijay[email protected].id
3
KEYWORDS
Quality Service
Loyalty
Job satisfaction
ABSTRACT
The purpose of this study was to analyze and prove the influence of
the influence of internal service quality on loyalty mediated by job
satisfaction of employees at pt. Mahakam Gate of the King of Oil
and Gas (Persero) in Kutai Kartanegara Regency. This study used 40
respondents and this study used a survey method with a sample of
employees at PT. Mahakam Gate Raja Migas (Perseroda) in Kutai
Kartanegara Regency with census sampling technique . Respondents
were only interviewed once when they met. Data from the
respondents were then tabulated and tested using statistical methods.
Data were collected using a questionnaire research tool. Based on
the results of the analysis and discussion, it can be concluded that
the quality of Internal Services has no effect on employee job
satisfaction, meaning that the previously formulated hypothesis is
rejected, so that if the quality of Internal Services has increased, it
will not have an impact on increasing job satisfaction. The quality of
Internal Services has no effect on employee loyalty, meaning that
the previously formulated hypothesis is rejected, so that if the
quality of Internal Services has increased, it will not have an impact
on increasing loyalty. Loyalty has a positive influence on employee
job satisfaction, meaning that the previously formulated hypothesis
is accepted, so that if Loyalty increases, then job satisfaction will
also increase, in line with the increase in Loyalty.
INTRODUCTION
The era of globalization demands competition from several countries to compete with
each other in order to win a position as a determining country in the world both in the
economic, socio-cultural, political and so on. For this reason, the development of human
resources is also required to be better because advances in technology, trade and so on are
determined by human resources as the actors and movers of all of it. Human resource
management is very much needed by organizations, both government and private
organizations (Adiwibowo, 2012).
Human resources are the driving force for the activities and routines of an
organization or company. As we know, an organization or company, in which there are
various kinds of individuals belonging to various statuses in the form of educational status,
position, class, experience, gender, marital status, level of expenditure, and the age level of
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each individual (Amin, Siswanto, & Hakim, 2018). For the success of increasing human
resources, it is very necessary for organizations that can carry out transformations in each of
their activities.
Human resources play an important role in the success of the company. The measure
of the success of a company can be seen from the performance of human resources. Human
resource performance is employee productivity as a result of employee growth and ultimately
has an impact on organizational effectiveness (Munadzifah, 2021). Therefore, the Company
must continue to improve the performance of human resources in order to continue to grow
because the increase in human resource performance allows employees to optimize their
work abilities (Ariansyah, 2013).
PT. Mahakam Gate Raja Migas (MGRM) (Perseroda) is a Regional Owned Enterprise
(BUMD) of the Kutai Kartanegara Regency Government. The establishment of PT Mahakam
Gate Raja Migas based on Government Regulation no. 54 of 2017, namely this BUMD is
profit-oriented, in accordance with Law no. 40 concerning Limited Liability Company PT
Pertamina (Persero) officially operates the Mahakam Work Area. PT MGRM (Perseroda)'s
capital is divided into shares owned by the Regional Government of 99% and 1% of which is
divided into shares owned by the Tunggang Parangan Regional Public Company of 0.6%,
and the Regional Electricity and Energy Resources Public Company of 0.4%, which its share
ownership is wholly affiliated with the Regional Government (Hair Jr, Sarstedt, Ringle, &
Gudergan, 2017).
PT MGRM (Perseroda) in Kutai Kartanegara Regency, was established in October
2018, its business activities are relatively new. This of course requires hard work to develop
the company, but the problems that occur in PT MGRM (Perseroda) in Kutai Kartanegara
Regency have not yet collaborated with third parties in developing their company, so that the
profits obtained by the company have decreased (Handoko, 2016).
PT MGRM (Perseroda) is a company engaged in the oil and gas sector which already
has a subsidiary and is one of the contributors to regional income in Kutai Kartanegara
Regency. Therefore, in running the company, internal service quality, employee satisfaction
and high employee loyalty are needed (Hudayah, 2010).
Based on the research of (Hilmawan & Suryani, 2011) that there are several aspects of
internal service quality that affect job satisfaction and (Izza, Setianto, & Dhamanti, n.d.)
found job satisfaction has an effect on employee loyalty and (Hudayah, 2010)found that
service quality has a direct and indirect influence through satisfaction with consumer loyalty.
According to (Johnston, 2008) loyalty to employees is the result of the satisfaction that
employees have with the company where the employee works, giving rise to a psychological
bond between employees and the company that creates a sense of responsibility towards the
company (Kosasih & Kurniawan, 2018).
The results of pre-research interviews, it can be seen that the quality of internal
services from management to employees has not been maximized, this is because the work
system carried out by the company is good and employees have never received training
related to the work done. This causes employees not to be able to work optimally and causes
low employee satisfaction in carrying out work, so that it has an impact on employee loyalty
at PT. Mahakam Gate of the King of Oil and Gas (Perseroda) in Kutai Kartanegara Regency.
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Based on this phenomenon, the authors are interested in analyzing the factors that
affect the value of external services PT. Mahakam Gate of the King of Oil and Gas
(Perseroda) in Kutai Kartanegara Regency .
METHOD RESEARCH
This study uses a quantitative research approach. The quantitative approach aims to
test theories, build facts, show relationships between variables, provide statistical
descriptions, estimate and predict the desired results. This study consists of 3 variables,
namely the independent variable (X), namely the quality of internal services and job
satisfaction. The dependent variable (Y) is Loyalty. The population used in this study were
employees at PT. Mahakam Gate Raja Migas (Perseroda) in Kutai Kartanegara Regency with
the number of samples selected for this study were 40 respondents. In this study the authors
used two sources of data, namely primary data and secondary data. The data collection
technique that will be carried out in this study is to distribute a list of questions in the form of
statements, or questionnaires in writing or online with closed answers. The data analysis
technique in this study is in the form of descriptive analysis, which is a technique to express
and explain the opinions of respondents based on answers from research instruments that
have been proposed by researchers. From the data that has been collected, then a descriptive
data analysis is carried out, namely by describing objectively and systematically the situation
in the field.
RESULTS AND DISCUSSION
A. Research result
1. Validity and Reliability Test Results
a. Construct Validity Test Results
The construct validity test consists of convergent validity and discriminant
validity. Convergent validity test in Partial Least Square (PLS) with convergent
validity test parameters seen from each must have a value above 0.5 (Hair, 2014:143).
The results of the convergent validity test indicate that the loading factor value has
met the recommended value, which is > 0.5. It can be concluded that the indicator is
declared valid or has met convergent validity. Convergent validity can be seen from
the Average Variance Extracted ( AVE) value. The requirement for the Average
Variance Extracted ( AVE) value is 0.5 to show a good measure of convergent
validity . Here is the Average Variance Extracted ( AVE) value which is described in
Table 5.1.
Table 1
AVE Convergent Validity Value
Cronbach'
s Alpha
rho_A
Composite
Reliability
Average
Variance
Extracted
(AVE)
Internal Service Quality
0.754
0.593
0.819
0.754
Job satisfaction
0.836
0.714
0.732
0.869
Loyalty
0.754
0.819
0.847
0.593
Source: Research Results, 2022
The results of the convergent validity test explain that the AVE value in each
variable has met the criteria, namely > 0.5.
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Discriminant validity test, the parameter measured is by comparing a construct
to be higher than the correlation between the latent variables (Hair, 2014:144). The
discriminant validity test, can be seen in Table 5.2.
Table 2
Discriminant Validity Value
Internal Service
Quality
Job
satisfaction
Loyalty
Internal Service Quality
0.522
0.000
0.000
Job satisfaction
0.559
0.696
0.000
Loyalty
0.577
0.568
0.770
Source: Research Results, 2022
Table 5.2 shows that the correlation between variables is greater than the
correlation between other variables. This shows that the discriminant validity test
conditions are met or have a good model.
b. Reliability Test
The reliability test can be seen from the value of Cronbach's alpha and the
value of composite reliability . To be said to be a reliable construct, then the value of
Cronbach's alpha must be > 0.6 and the value of composite reliability must be > 0.7
(Hair , 2014:147). To be said to be a reliable construct, then the value of Cronbach's
alpha must be > 0.5 and the value of composite reliability must be > 0.7 (Hair ,
2014:147).
Table 3
Construct Reliability Value
Cronbach's
Alpha
rho_A
Composite
Reliability
Average Variance
Extracted (AVE)
Internal Service
Quality
0.754
0.593
0.819
0.754
Job satisfaction
0.836
0.714
0.732
0.869
Loyalty
0.754
0.819
0.847
0.593
Source: Research Results , 2022
Table 5.3 shows the Cronbach alpha value > 0.6 and the Composite Reliability
value > 0.7. it can be concluded that all constructs of all variable items have good
reliability in accordance with the required minimum value limit.
2. Description of Internal Service Quality
Respondents' responses to the Quality of Internal Services PT. Mahakam Gate
King Oil and Gas (Perseroda) in Kutai Kartanegara Regency, as follows:
Table 4
Respondents' Responses to Internal Service Quality
No
Statement
Answer
Total
Ave
rage
STS
TS
CS
S
SS
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Provide a good system and environment
1
description of the work performed
by the employee is clear
33
7
167
4.18
2
company 's work system is good
5
28
7
162
4.05
Providing great leaders
3
Leaders motivate employees
20
20
180
4.5
4
Leaders guide employees in carrying
out their work
15
5
13
7
132
3.3
5
Leaders provide training for
employees
15
5
7
13
138
3.45
Provide attractive compensation
6
Employees get compensation from
the company for their performance
5
7
28
183
4.58
7
Employees get appreciation from the
company for their performance
12
28
188
4.7
Total
28.8
Average
4.10
Source: Research Results, 2022
Information:
- Average 1.00 - 1.80 in the category Very Bad
- Average 1.81-2.60 in the Bad category
- Average 2.61 - 3.40 in the category Fair / Moderate
- Average 3,41-4.20 in the Good category
- Average 4.20-5.00 in the category Very Good
From Table 5.4 it can be seen that the value of respondents' responses to the
Quality of Internal Services PT. Mahakam Gate Raja Migas (Perseroda) in Kutai
Kartanegara Regency obtained an average of 4.10 which can be categorized as good
because the average value obtained is in the range of 3.41-4.20.
3. Job Satisfaction Description
Respondents' responses to job satisfaction of PT. Mahakam Gate King Oil and
Gas (Perseroda) in Kutai Kartanegara Regency, as follows:
Table 5
Respondents' Responses to Job Satisfaction
No
Statement
Answer
Tota
l
Ave
rage
STS
TS
CS
S
SS
Mentally challenging work
1
Employee carry out the work
applying the skills possessed.
13
15
12
146
3.65
2
Employees carry out work
according to their abilities.
28
12
116
2.9
3
Employees carry out work with
freedom of duty.
28
12
116
2.9
4
Employees work get feedback from
13
27
187
4.68
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the work done.
Worthy reward
5
Employees feel that the wage
system in the workplace is fair.
7
18
15
168
4.2
6
Employees get a promotion policy
at my workplace is as expected.
20
20
140
3.5
7
Employees carry out work
according to the skills I have.
13
7
15
5
132
3.3
8
Wage system in the workplace
according to standards.
33
7
167
4.18
9
Employees receive wages in
accordance with the demands of the
work given.
25
15
175
4.38
Supportive working conditions
10
Work environment Employees feel
comfortable.
13
22
5
152
3.8
11
Work environment Employees feel
safe.
13
15
12
159
3.98
12
The lighting in the employee's
workplace is bright.
28
12
172
4.3
13
Employees' workplaces are far from
disturbing noise.
13
15
12
159
3.98
Supportive coworkers
14
Coworkers are friendly with fellow
employees
13
15
12
159
3.98
15
Co-workers are pleasant.
13
22
5
152
3.8
16
The attitude of superiors leads to
increased employee job satisfaction
13
22
5
152
3.8
17
Employees get social needs (care)
in the work environment.
28
12
144
3.6
Personality compatibility with work
18
The talent possessed by the
employee is in accordance with the
demands of the job.
28
7
5
137
3.43
19
The abilities possessed by
employees are in accordance with
the demands of the job.
13
15
12
159
3.98
20
The personality of the employee is
in accordance with the work done
28
12
116
2.9
Total
75.2
Average
3.76
Source: Research Results, 2022
Information:
- Average 1.00 - 1.80 in the category Very Bad
- Average 1.81-2.60 in the Bad category
- Average 2.61 - 3.40 in the category Fair / Moderate
- Average 3,41-4.20 in the Good category
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- Average 4.20-5.00 in the category Very Good
From Table 5.5 it can be seen that the value of respondents' responses to job
satisfaction of employees of PT. Mahakam Gate Raja Migas (Perseroda) in Kutai
Kartanegara Regency obtained an average of 3.76 which can be categorized as good
because the average value obtained is in the range of 3.41-4.20.
4. Loyalty Description
Respondents' response to the loyalty of PT. Mahakam Gate King Oil and Gas
(Perseroda) in Kutai Kartanegara Regency, as follows:
Table 6
Respondents Response to Loyalty
No
Question
Answer
Total
Ave
rage
STS
TS
CS
S
SS
Obey the rules
1
Employees obey existing rules
12
7
21
169
4.23
2
Employees carry out the rules well
9
16
15
166
4.15
Responsibility to the company
3
The ability of employees to carry out
their duties to the best of their ability
13
15
12
146
3.65
4
Courage of employees to every risk
in carrying out their duties
9
16
15
166
4.15
Willingness to cooperate
5
Employees can cooperate with other
fields
9
13
18
169
4.23
6
Employees cooperate with fellow
employees
8
17
15
167
4.18
A sense of belonging
7
Employees participate in
maintaining an attitude to achieve
company goals
8
16
16
168
4.2
8
Employees feel responsible for
achieving company goals
10
14
16
166
4.15
Interpersonal relationship
9
Employees always maintain social
relations between employees
10
14
16
166
4.15
10
Employees always maintain a
harmonious relationship with
superiors
10
11
19
169
4.23
11
Employees always maintain a
comfortable work situation
12
7
21
169
4.23
12
Employees always get support from
coworkers.
15
6
19
164
4.1
Total
49.6
Average
4.13
Source: Research Results, 2022
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Information:
- Average 1.00 - 1.80 in the category Very Bad
- Average 1.81-2.60 in the Bad category
- Average 2.61 - 3.40 in the category Fair / Moderate
- Average 3,41-4.20 in the Good category
- Average 4.20-5.00 in the category Very Good
From Table 5.6, it can be seen that the value of respondents' responses to
employee loyalty at PT. Mahakam Gate Raja Migas (Perseroda) in Kutai Kartanegara
Regency obtained an average of 4.13 which can be categorized as good because the
average value obtained is in the range of 3.41-4.20.
5. Inner Model Measurement Results
The results of the measurement of the inner model were analyzed by looking at the
significance of the relationship between the constructs indicated by the t statistic and p
value generated from the PLS Bootstrapping output .
a. Test t Statistics
The results of the test the magnitude of the influence is measured by the value
of the path coefficient ( path coefficient ). The path coefficient that has a value of t
statistics 1.96 is said to have an effect and t statistics < 1.96 is said to have no effect.
The output results of Calculate PLS Bootstrapping are as follows:
Figure 1
Calculate PLS Bootstrapping
Based on the results of bootstrapping calculations above, shows that internal
service quality is not related to loyalty because the t statistic value obtained is 0.439 <
1.96 and internal service quality is not related to job satisfaction because the t statistic
value obtained is 0.056 < 1.96 . However, there is a relationship between loyalty and
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job satisfaction because the t statistic value obtained is 3.151 1.96 . An indicator can
also be said to be influential if it has a p value 0.05. In Table 5 . 7 The following is the
value of t-statistics.
Table 7
Path Coefficient Test
Mean, STDEV, P-Values
Original
Sample
(O)
Sample
Mean
(M)
Standard
Deviation
(STDEV)
T Statistics
(|O/STDEV|)
P
Values
Internal Service Quality ->
Job Satisfaction
-0.014
0.014
0.255
0.056
0.955
Internal Service Quality ->
Loyalty
-0.122
-0.125
0.279
0.439
0.661
Loyalty -> Job Satisfaction
0.468
0.507
0.154
3,151
0.002
Source: Data Processing Results, 20 22
Based on the calculation results of 3 ( three ) hypotheses, it was found that 1 ( one )
hypothesis was accepted and 2 ( two ) hypotheses were rejected, as follows:
1. Internal Service Quality has no effect on job satisfaction with a p-value of 0.955 < 0.05 ,
meaning that the hypothesis that has been formulated previously is rejected . This means
that if the quality of Internal Services has increased, it will not have an impact on
increasing job satisfaction.
2. Internal Service Quality does not have an effect on loyalty with a p-value of 0.661 < 0.05 ,
meaning that the hypothesis that has been formulated previously is rejected . This means
that if the quality of Internal Services has increased, it will not have an impact on
increasing loyalty.
3. Loyalty has an influence on job satisfaction with a p-value of 0.002 <0.05, meaning that
the hypothesis that has been formulated previously is accepted. In addition, the original
sample value was 0.468, which indicates a positive relationship between the two. This
shows that if Loyalty increases, then job satisfaction will also increase, in line with the
increase in Loyalty.
B. Discussion
1. Internal Service Quality on Job Satisfaction
The research findings show that internal service quality has no effect on job
satisfaction of employees of PT. Mahakam Gate Raja Migas (Perseroda) in Kutai
Kartanegara Regency , meaning that the hypothesis that has been formulated previously is
rejected, so that if the quality of Internal Services has increased, it will not have an impact
on increasing job satisfaction. The results of the study also found that the Internal Service
Quality of PT. Mahakam Gate Raja Migas (Perseroda) in Kutai Kartanegara Regency is
categorized as good and the job satisfaction of PT. Mahakam Gate King Oil and Gas
(Perseroda) in Kutai Kartanegara Regency is categorized as good.
The findings of this study are not in line with the opinion of (Hair Jr, Sarstedt,
Ringle, & Gudergan, 2017) which states that the quality of internal services is an HR
management system which is the main foundation for realizing employee satisfaction.
This is in line with (Hair Jr, Sarstedt, Ringle, & Gudergan, 2017) which asserts that the
quality of internal services is a condition where an employee is satisfied with the services
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provided by internal service providers. The research findings are also supported by
(Pandey & Khare, 2012) research (2011) which found that the quality of internal services
has a positive and significant effect on job satisfaction .
2. Internal Service Quality To Loyalty
The research findings show that internal service quality has no effect on employee
loyalty of PT. Mahakam Gate Raja Migas (Perseroda) in Kutai Kartanegara Regency ,
meaning that the previously formulated hypothesis is rejected, so that if the quality of
Internal Services has increased, it will not have an impact on increasing loyalty. The
results of the study also found that the Internal Service Quality of PT. Mahakam Gate
Raja Migas (Perseroda) in Kutai Kartanegara Regency is categorized as good and the
loyalty of PT. Mahakam Gate King Oil and Gas (Perseroda) in Kutai Kartanegara
Regency is categorized as good.
The research findings are not in line with the opinion of (Pitoy, Pio, & Rumawas,
2020) which states that the quality of internal services is a human resource management
system . is the main foundation for realizing employee satisfaction and this satisfaction of
course occurs if employees are loyal. This shows that there is an influence of internal
service quality on loyalty, but previously it was mediated by job satisfaction. Meanwhile,
the research findings of (Wijaya, n.d.) found that service quality has a direct and indirect
influence through satisfaction on consumer loyalty.
(Hair Jr, Sarstedt, Ringle, & Gudergan, 2017) revealed that in the business world
the most important thing is how employees are treated in the company. Not only
measured by the salary given but also from the environment and conditions of the
workplace and with the quality of internal services to employees it will increase employee
satisfaction.
(Kosasih & Kurniawan, 2018) explains that satisfaction is determined by the level
of individual job characteristics to meet their needs, satisfaction of an outcome to meet
expectations that reflect the difference between what is expected, satisfaction is the result
of the perception of work providing fulfillment of important individual work values and
satisfaction is a function of how fairly individuals are treated at work and satisfaction is a
function of personal traits and genetic factors on the characteristics of the work
environment.
3. Loyalty to Job Satisfaction
research findings show that loyalty has a positive influence on job satisfaction of
employees of PT. Mahakam Gate Raja Migas (Perseroda) in Kutai Kartanegara Regency,
meaning that the hypothesis that has been formulated previously is accepted , so that if
Loyalty increases, job satisfaction will also increase, in line with the increase in Loyalty.
The results of the study also found that the loyalty of employees of PT. Mahakam Gate
Raja Migas (Perseroda) in Kutai Kartanegara Regency is categorized as good and the job
satisfaction of PT. Mahakam Gate King Oil and Gas (Perseroda) in Kutai Kartanegara
Regency is categorized as good. findings are supported by the opinion of (Hair Jr,
Sarstedt, Ringle, & Gudergan, 2017) which states that loyal and productive employees
certainly do not automatically occur without first awakening a sense of satisfaction from
within the employee with his work, superiors, equipment and facilities, as well as other
aspects of the job . other aspects . Furthermore, according to (Adiwibowo, 2012), there
are four possible conditions of loyalty , namely: l low loyalty (low attitude and low
behavior) and latent loyalty (high attitude and high behavior) .
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The findings of this study are also supported by (Hair Jr, Sarstedt, Ringle, &
Gudergan, 2017) which finds that there is a positive relationship between job satisfaction
and loyalty to company employees , where increased satisfaction will increase employee
loyalty , where the dimensions of coworkers in the job satisfaction variable have a
correlation. highest with loyalty. The findings of this study are also in line with research
by (Adiwibowo, 2012) which found that there was an influence of loyalty on job
satisfaction. On the other hand, (Adiwibowo, 2012) found that job satisfaction has an
effect on employee loyalty .
CONCLUSION
Based on the results of research and discussion, it can be concluded that the quality of
Internal Services has no effect on job satisfaction of employees of PT. Mahakam Gate Raja
Migas (Perseroda) in Kutai Kartanegara Regency , meaning that the hypothesis that has been
formulated previously is rejected, so that if the quality of Internal Services has increased, it
will not have an impact on increasing job satisfaction. Internal Service quality has no effect
on employee loyalty of PT. Mahakam Gate Raja Migas (Perseroda) in Kutai Kartanegara
Regency , meaning that the previously formulated hypothesis is rejected, so that if the quality
of Internal Services has increased, it will not have an impact on increasing loyalty. loyalty
has a positive influence on job satisfaction of employees of PT. Mahakam Gate Raja Migas
(Perseroda) in Kutai Kartanegara Regency, meaning that the hypothesis that has been
formulated previously is accepted , so that if Loyalty increases, job satisfaction will also
increase, in line with the increase in Loyalty.
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