**2. Literature review**

The theoretical basis for this study is found in the resource-based view, the social exchange theory, and the psychological contract theory. According to the resourcebased view (RBV), all the investments in employees (material and immaterial) affect the progress, growth, and development of their skills, which are key to establishing the organization's competitive advantage [6]. The competitive advantage comes from the company's internal resources that provide added value, are unique or rare, are difficult to imitate, and are not substitutable [23]. As a result, they increase the intellectual capital of the organization [24] through the complex interaction of people, skills, and technologies that affect the efficiency and productivity of the company [23]. The focus of RBV is on the long-term approach to creating a bond between the employer and the employee [25]. In return for the tangible and intangible investments of the company, employees are more likely to develop feelings of loyalty and

commitment toward the organization and work on developing firm-specific resources that help organizations attain their goals.

A similar relationship can be observed through the theory of social exchange, in which organizational commitment appears in the form of the employee's psychological reactions to the benefits provided by the company and is demonstrated with the investment of time and effort to participate in the success of the organization [26]. Correspondingly, the theory of the psychological contract considers that organizational commitment is formed based on mutually fulfilled promises and is also grounded on the emotional connection between the organization and its employees [27]. As the name suggests, a psychological contract refers to an unspoken agreement that states shared expectations and obligations between two parties; in this case between an employee and an organization [28]. The psychological contract represents a dynamic process that gradually unfolds through the time before employment and throughout various phases of employment [29]. It is precisely the employer branding activities that unify those processes and phases, creating a systematical approach toward the existing and potential employees.

#### **2.1 Employer branding**

Building a brand, or "branding," is a very researched concept in marketing literature, and at its most basic level, it serves differentiation [30]. Differentiation in marketing brings numerous benefits and is observed as a competitive advantage, but in recent years the concept became important in talent management as well. The term "employer branding" was shaped by Ambler and Barrow in 1996 as a set of "functional, economic, and psychological" substances that result from working in a certain company ([7], p. 4). Building an employer brand refers to building a company's positive reputation as an employer, meaning its potential (future) and current employees perceive it as a great place to work [31].

Building an employer brand is a long-term process that should ensure a constant flow of potential candidates, while simultaneously developing and positioning a positive image of the organization in the eyes of future and current employees [32]. Due to the "global war for talent" and the fact that organizations around the world are struggling to fill their vacant positions with qualified employees, many companies have opened completely new departments dedicated exclusively to strengthening their employer brand [33]. Establishing procedures within the HR department is an important dimension in the way employees are managed, which is often lacking in many small and medium-sized enterprises [34]. Most often, in SMEs, HR processes are managed by the owner-manager [19]. For that reason, creating and establishing an employer brand is a challenge for small and medium-sized enterprises and can affect the motivation and commitment of the employees [35].

Although research related to employer branding in some instances is still in its early stages, it is being recognized as a long-term approach in the future, as organizations increasingly start to realize that the loyalty of employees cannot be taken for granted [36]. Employees are no longer tied to one organization and can freely decide who they will work for, and where they will stay in the long term. Employer branding thus builds upon the discipline that has already proven its value; "branding" assesses the uniqueness of the brand and focuses on its differentiation [36]. It also encourages people's loyalty and commitment, which is one of the most effective approaches to attracting and retaining employees. For that reason, it is important for organizations to strategically plan the implementation of employer branding strategies, in order to

*The Influence of Employer Brand Dimensions on the Affective Organizational Commitment… DOI: http://dx.doi.org/10.5772/intechopen.112133*

reap all the benefits that come from successfully managing an employer brand, with the ultimate goal of providing their employees with a stimulating working environment, where they will develop the deepest type of loyalty for their organizations affective organizational commitment.

#### **2.2 Affective organizational commitment**

Organizational commitment is defined as a set of attitudes formed toward the organization, which is characterized by a permanent psychological connection that arises from embracing the organizational values and results in a desire to stay within the organization in the long run [23]. This research is based on the theoretical concept developed by Allen and Meyer [37], who observe organizational commitment through three perspectives: affective commitment, normative commitment, and continuance commitment. Affective organizational commitment develops as a result of loyalty and identification with the organization; continuance commitment arises when it is too costly for a person to leave the organization, while normative commitment evolves into a duty to stay within the company [37, 38]. In other words, employees who develop affective organizational commitment stay within the organization because they wish to, those who develop continuance commitment stay because they have to, while those employees whose connection to the organization is based on normative commitment stay in the organization because it is morally acceptable [39].

Even though all three approaches to organizational commitment are often connected, the nature of their connections differs, meaning that the most importance is given to affective organizational commitment [40] since it is considered a crucial element of the organization's success [35]. Employees with strongly expressed affective organizational commitment invest more effort in their work and demonstrate better results than those employees who have a low level of affective organizational commitment [41]. The intensity of the employee's commitment to the organization is based on the organizational characteristics, and not the characteristics of the employees. Organizational commitment arises at higher levels in small enterprises than in large ones [42], which is why SMEs need to pay careful attention to developing and maintaining the organizational commitment of their employees. Well-aligned talent management practices incorporated into the thought-out employer brand should help in reaching this goal.

#### **2.3 Employer branding practices in SMEs in developing countries**

Small and medium-sized enterprises in developing countries play a major role in contributing to economic growth, but their business operations are constrained by different market conditions and obstacles such as difficult access to finance, high taxations, frequent employee fluctuations, etc. [43], which is why implementing strategies in building an employer brand can become especially challenging for key people in SMEs. Croatia, as one of the ex-transition countries in Central and Eastern Europe, but also a member state of the European Union, is going through several changes in its talent management practices [44], while simultaneously encountering different challenges with regard to demographic trends (older population, migrations), high cost of labor, vastly present forms of informal work (getting paid under the counter), and high unemployment rates [45]. Moreover, society as a whole is lagging behind the EU standard in its digital transition, and there is a growing need to support the development of digital skills of many employees, promote the

development of new, digital jobs and create conditions in which individuals can progress in their careers, with the goal of accelerating the digital transition of society and the economy as a whole [46].

A total of 153,477 SMEs were operating in Croatia in 2021, representing a share of 99.7% of all businesses [47]. They also accounted for a 67.4% share in employment and 63.7% in added value, thus contributing significantly to the country's economic growth. Many SMEs were severely affected by the COVID-19 crisis, which was especially manifested in liquidity and employment issues [47]. Through various governmental measures, until mid-2021, around 1 billion Euros has been paid to support SMEs' business functions and save their employees' jobs [47]. These problems were just added to the existing challenges that SMEs need to cope with, while at the same time struggling to be competitive in the labor market [48]. Due to the limited financial resources, lots of SMEs find it difficult to keep pace with larger organizations, especially in terms of offering attractive compensational packages and benefits. This scarcity of organizational resources affects the application of best human resource management practices due to the high costs of their adoption [49]. The strategies for attracting talented employees can be particularly demanding because in transitional societies small companies are not perceived as the most desirable employers. In addition, job security and other benefits make large state-owned companies still more attractive as employers, compared to small companies that are mostly privately owned [48]. All the indicated reasons look for a more precise direction and understanding of the job elements that could be most appealing to employees of small and mediumsized enterprises in order to become "the employer of choice" [1].
