Research Article: 2021 Vol: 27 Issue: 2S
Maqsood Ullah, Bacha Khan University Charsadda
Muhammad Yasir, Bacha Khan University Charsadda
Muhammad Hamayun, Bacha Khan University Charsadda
Abrar Ullah, University of Swabi
Sajjad Nawaz Khan, Iqra University
Servant Leadership, Ethical Climate, Turnover Intention, Restaurant Industry
Employees' turnover intention is one of the main problems which exist in the restaurant industry. Therefore, this study investigated the effect of servant leadership and ethical climate on turnover intention; in addition, ethical climate was investigated as a mediator between servant leadership and turnover intention specifically in the restaurant industry of Pakistan. Data from 216 frontline employees and waiters was utilized for data analysis. Afterwards, direct and indirect effects were examined. Findings showed a (i) negative relationship between servant leadership and turnover intention, (ii) positive relationship between servant leadership and ethical climate, (iii) negative relationship between ethical climate and turnover intention, and that (iv) ethical climate mediates between servant leadership and turnover intention. Hence, providing several practical and theoretical implications.
Physical, human, and organizational capital resources are the important types of resources providing a competitive advantage to an organization (Barney, 2001). Therefore, losing any of these resources can lead to serious consequences for any organization. However, the most important of the above mentioned three resources is the human capital resource (Kashyap & Rangnekar, 2016). So, it is very harmful for any organizational success if they lose their human capital resource to its rival. Thus, in most of the organizations, employees’ turnover has been recognized as an important issue, specifically in the hospitality sector with turnover rates ranging from sixty percent to three-hundred percent (Lee & Way, 2010; Kim, Lee & Carlson, 2010; Hinkin & Tracey, 2000). While some turnover of staff is reasonable, excessive turnover imposes major financial pressures on the hospitality organizations (Tracey & Hinkin, 2008; Davidson, Timi & Wang, 2010). Therefore, in this sector, the retention of frontline employees plays a significant role (Nadiri & Tanova, 2010). So, knowing the factors which could minimize turnover is important in this sector in order to maintain a competitive edge over its competitors. Previous literature has shown several reasons for turnover (Kim et al., 2010; Yang, 2008; Karatepe & Uludag, 2008; Cho, Johanson & Guchait, 2009). However, the hospitality industry is still suffering from employee turnover than any other issue.
Prior literature has identified the association between leadership style of a manager and behavior of the employees (Mulki, Jaramillo & Locander, 2006; Kim & Brymer, 2011; Darmon, 2008). In addition, a supportive leader is more likely to maximize the subordinate’s job satisfaction (DeCarlo & Agarwal, 1999), motivation (Jaramillo & Mulki, 2008), thereby reducing turnover intentions (Kim & Brymer, 2011; Jaramillo, Grisaffe, Chonko & Roberts, 2009). In previous research, several leadership styles have been identified to affect employee turnover intention such as transactional leadership, affective leadership (Weng et al., 2016), ethical leadership (Xiao & Zhao, 2017), transformational leadership (Hensenl & Visser, 2018; Jyoti & Bhau, 2015), and authentic leadership style (Azanza et al., 2015). However, less empirical evidence exists thereby investigating the effect of servant leadership style on turnover intention, specifically in a hospitality sector. Furthermore, Hale & Field (2007) described servant leadership behavior as the understanding and practice of an individual’s leadership style which focuses on followers’ development, focuses on the interests of subordinates rather than self-interest, and de-emphasizes glorification of the leader. These leaders focus upon the ethical and rational usage of authority; foster a trusting and sincere relationship with subordinates thereby establishing a healthy and productive workplace environment (Wong, Davey & Church, 2007).
Prior studies have further demonstrated the mediating role of ethical climate between the relationship of leadership styles and subordinates’ behavioral outcomes (Yasir & Rasli, 2018; Demirtas & Akdogan, 2015). According to Victor and Cullen (1988), ethical climate is the prevailing perceptions among employees regarding the organizational procedures and practices that have ethical content. Previous literature shows a negative association between ethical climate and employees’ turnover intention in dissimilar sectors, for instance, marketing (Schwepker, 2001; DeConinck, 2010; Mulki et al., 2006) and healthcare (Mulki et al., 2008; Hart, 2005). Thus, establishment of an ethical workplace climate plays a key role in an organizational success.
Moreover, few researches exist which investigates the effect of servant leadership on work outcomes (Walumbwa, Harnell & Oke, 2010; Liden, Wayne, Liao & Meuser, 2015; Jaramillo et al., 2009). However, to date, few researches have been carried out which investigates the mechanism by which servant leaders influence their subordinates’ attitudes and behavior specifically in the restaurant industry (Jang & Kandampully, 2018). Furthermore, the association between servant leadership and ethical climate is explored by few empirical studies (Jaramillo et al., 2009; Coetzer et al., 2017). Thus, this research extends prior literature thereby investigating the effect of servant leadership on ethical climate. Current study also explored the relationships between servant leadership, ethical climate, and turnover intention in a single model in the understudy sector. As, prior literature lacks empirical evidence regarding the mediator role of ethical climate between servant leadership and turnover intention, Thus, the current research seeks to analyze the mediating effect of ethical climate between servant leadership and turnover intention.
Lastly, the concept of servant leadership behavior is very important (Brownell, 2010), however, fewer studies have focused on this concept in the hospitality sector. As turnover of individuals in this sector is very high since the job nature is labor-intensive (Walsh & Taylor, 2007; Jang et al., 2018). Another way to minimize the rate of employee turnover is through leadership behavior (Partington, 2016; Gerstner & Day, 1997). Thus, this research adds to the existing body of knowledge on hospitality management thereby highlighting the significance of servant leadership and ethical climate towards reducing turnover intentions in the restaurant industry of Pakistan. Hence, current research intends to (a) analyze the effect of servant leadership on turnover intention, (b) investigate the effect of servant leadership on ethical climate, (c) examine the effect of ethical climate on turnover intention, and (d) investigate the mediating role of ethical climate between servant leadership and turnover intention in the restaurant industry of Pakistan.
The previous literature shows no agreement on what constitutes servant leadership behavior and how it affects followers since Greenleaf initially introduced this notion (Yasir & Mohamad, 2016). Thus, different conceptualizations of servant leadership behaviors have emerged (Van-Dierendonck, 2011; Najam & Mustamil, 2020). For instance, Barbuto & Wheeler (2006) identified five factors for instance; altruistic calling, emotional healing, persuasive mapping, wisdom, and organizational stewardship. Moreover, Liden & colleagues (2008) have suggested various dimensions for it, such as, (a) analytical abilities which include the awareness of institutions and duties needed by a leader to help subordinates, (b) empowering implies promoting followers to solve problems and complete duty, enabling followers to grow, showing respect for job growth and development of followers, (c) placing followers first includes communicating to subordinates that fulfilling their needs at work is given priority, (d) behave ethically suggests engaging with subordinates in a fair, honest and open way, (e) emotional healing indicates openness towards the personal problems of followers, thereby building respect for the community and demonstrating concerns for the community’s participation.
Turnover is known as a persistent problem in any organization, regardless of its size and location. When an individual quits an organization, it also seriously affects the productivity of the remaining employees. Scholars described turnover intention as the intention of an individual to depart from an organization in the near future (Cohen et al., 2016). Previous literature has shown several antecedents of turnover intentions (Tuzun, 2007; Sari et al., 2019; Hao et al., 2017; Vizano et al., 2021; Pham et al., 2021). Carmeli & Weisberg (2006) identified that turnover intentions apply to three specific elements in the withdrawal processing (thoughts of leaving the workplace, thinking of finding a different job, and then the expectation of quitting). High individual turnover is considered harmful to the company in terms of the cost of recruitment and loss of work outcomes (Addae et al., 2006). Literature has indicated that organizations might reduce turnover costs by avoiding action that has led to higher turnover intention (Hughes et., 2010). Prior literature shows several reasons which lead towards turnover intention, including personal (Wocke & Heymann, 2012), environmental concerns (Wheeler et al., 2007), and job-related factors (Hang-Yue et al., 2005; Kim, 2016).
An ethical climate is the prevailing perceptions of typical organizational procedures and practices that have ethical content (Victor & Cullen, 1988). Moreover, ethical organization meets the legal requirement and complies with ethical concerns (Dove et al., 2015; Stewart et al., 2011). Obeying an ethical corporate code of conduct is an indicator of responsible organizational behavior that leads to ethical decision-making by leaders (Yang et al., 2016; Mulki et al., 2008). The ethical climate of the organizations can influence an individuals’ perception, directly and indirectly, of how work is done in that organization (Maignan & Ferrell, 2000; Ghani et al., 2019). In such ethical workplace climate, the social implications of corporate rules, regulations, and processes are taken into consideration (Victor & Cullen, 1988; Yasir et al., 2017). An ethical workplace climate is comprised of shared beliefs regarding the ethical position of an organization and has a greater influence on an organization that has no formal code of conduct (Yasir et al., 2017; Grover & Enz, 2005).
Servant Leadership and Turnover Intention
Previous literature shows that each specific type of leadership style plays a significant role in any organization thereby having the ability to affect important work outcomes (Khan et al., 2017; Shah et al., 2017; Hashim et al., 2017; Hutabarat et al., 2021; Yang & Kim, 2018; Suong et al., 2019). Specifically, servant leadership style which is an employee-oriented leadership style instills positive work behaviors between subordinates (Ehrhart, 2004). These leaders empower followers and encourage positive change (Yasir & Mohamad, 2016; Liden et al., 2008). Studies show that servant leadership behavior is an important factor in affecting employees’ turnover intention (Babakus et al., 2010; Jaramillo et al., 2009; Kashyap & Rangnekar, 2016). Thus, the following hypothesis was proposed:
Hypothesis 1 Servant leadership is significantly and positively related to turnover intention
Servant Leadership and Ethical Climate
A leader establishes an organizational climate that has the ability to motivate individuals in an organization thereby influencing important organizational outcomes (Litwin & Stringer 1968). Therefore, leadership behavior in an organization plays a significant role in establishing an ethical workplace climate (Topcu et al., 2015). Moreover, a servant leader act as a positive ethical role model that contributes towards establishing an ethical workplace climate where doing the right thing is valued, expected and encouraged (Brown et al., 2005). Previous research indicates that individuals exhibiting servant leadership led to the development of an ethical workplace climate (Jaramillo et al., 2015). Thus, servant leadership can be one of the most suitable forms of leadership style that promote the establishment of an ethical workplace climate because it emphasizes on subordinate’s well-being and moral grounding (Burton et al., 2017; Burton & Welty-Peachey, 2013; Jaramillo & Noboa, 2015; Shim & Park, 2019). So, current research hypothesized that:
Hypothesis 2 Servant leadership is significantly and positively related to ethical climate
Ethical Climate and Turnover Intention
An ethical workplace climate is the shared perceptions of employees’ regarding what is ethically correct behavior and how ethical issues should be handled in an organization (Victor & Cullen, 1988). Although establishing an ethical climate is not easy and can be costly as well, however, it has the ability to provide organizations with both long- and short-term benefits (Victor & Cullen, 1988; Treviño & Nelson 2011). An ethical organization addresses ethical concerns and follows legal requirements (Stewart et al., 2011). Therefore, a positive perception of an ethical workplace climate has the ability to decrease employees’ turnover intentions (Jaramillo et al., 2006). Moreover, previous literature shows a negative association between ethical climate and employees’ turnover intention (Schwepker, 2001; DeConinck, 2010; Mulki, Jaramillo & Locander, 2006). Moreover, O’Neill, et al., (2009) study shows that the ethical workplace climate in the hotel industry plays an important role because when an employee perceives that the organizational climate is ethical thus, they are less likely to leave that specific organization. So, current study hypothesized that:
Hypothesis 3 Ethical climate is significantly and negatively related to turnover intention
Ethical Climate as a Mediator
Prior research indicates that managers will affect employee’s perception of an ethical workplace climate through leadership behavior, which has the ability to influence the subordinate’s turnover intention (Schminke et al., 2005; Brown et al., 2006; Jaramillo & Noboa, 2015). Previous studies have also investigated the mediating role of ethical climate between ethical leadership style and workplace deviance (Yasir & Rasli, 2018), servant leadership style and public service motivation (Shim & Park, 2019). Moreover, past research has explored the mediating effect of ethical climate between leadership styles and work outcomes (Shapira-Lishchinsky et al., 2018; Yasir & Rasli 2018; Mayer et al., 2010). However, previous literature lacks empirical evidence regarding the role of ethical climate as a mediator between servant leadership and turnover intention, So, this research hypothesized that:
Hypothesis 4 Ethical climate mediates between the relationship of servant leadership and turnover intention
This research utilized a convenience sampling method that is a non-probability sampling technique. In this method, respondents are chosen based on the researcher's convenience, as this technique saves time, less costly, and allows researchers to study hard to reach populations. Moreover, three hundred questionnaires were distributed between the frontline employees in Pakistan’s restaurant industry, however, two hundred and sixteen questionnaires were returned which were completed and appropriate for doing further analysis, thus the response rate was 72%.
This research used the following measurement scales and items were anchored at a five points Likert Scale, ranging from 1=strongly disagree to 5=strongly agree. This research used seven items scale provided by Liden, et al., (2015), which is a shorter version of the servant leadership behavior scale originally provided by Liden, et al., (2008) having twenty-eight items. The current research used five items scale of turnover intention from Jung & Yoon (2013), which was adapted from Seashore, et al., (1982); Camp (1994); Cammann, et al., (1979); Mathieu & Zajac (1990). Lastly, this research used seven items measurement scale from Schwepker (2001), which has been mostly used in the previous literature in order to measure organizational ethical climate.
The demographic description of the understudy sample, comprising of 216 male respondents (100% of sample size). Furthermore, respondents having age group of less than 25 years were 80 respondents, 25 to 35 years were 95 individuals, 35 to 45 years were 33 respondents, 45 to 55 years were 6 respondents, and more than 55 years were 2 respondents (37.0%, 44.0%, 15.3%, 2.8% and 0.9% of the sample respectively). Moreover, the education status of respondents was as follows; matric were 63, intermediate were 72, graduates were 29, postgraduate were 5 and others were 47 respondents (29.2%, 33.3%, 13.4%, 2.3%, 21.8% of the sample respectively). Finally, respondents’ level of experience was as follows; less than 1 year were 39, 1 to 5 year(s) were 101, 5 to 10 years were 56, and more than 10 years were 20 respondents (18.1%, 46.8%, 25.9% and 9.3% of the sample respectively).
Table 1 indicates that the mean values vary between the lowest value of 2.5569 to the highest value of 3.4333 of the servant leadership and turnover intention respectively.
Descriptive Analysis (N216)
Measurement Model Assessment
This research initially examined the measurement model and afterwards the structural model thereby to test the hypothesized model. Moreover, measurement model is assessed by analysing the reliability, convergent validity, and discriminant validity.
In this research, convergent validity was examined by factor loadings. Below table 2 highlights the item loadings for understudy constructs in order to assess the convergent validity.
|Ethical Climate||Servant Leadership||Turnover Intention|
A threshold value greater than or equal to 0.7 for each item’s loading is considered as reliable (Hair et al., 2016). Thus, items SL5 “My leader puts my best interests ahead of his/her own”, TI5 “I will quit this company if the given condition gets even a little worse than now”, and EC7 “If an employee in our restaurant is discovered to have engaged in unethical behavior that results in personal gain (rather than organizational gain), she or he will be promptly reprimanded” were deleted which were having values less than the required threshold value.
Discriminant validity in this research is assessed by the values of the square root of Average Variance Extracted (AVE) and that the item loadings to be greater than the cross- loadings. In addition, reliability is assessed by examining the values of Cronbach’s alpha, composite reliability, and AVE.
Table 3 illustrates the construct reliability and validity. Cronbach alpha is acceptable when its value is more than 0.7, composite reliability is acceptable when its value is more than 0.7, and average variance extraction is acceptable when its value is more than 0.5 (Hair et al., 2010). Thus, values in table 3 shows that the constructs have high validity and reliability
Reliability And Validity
|Construct||Cronbach Alpha||Composite Reliability||AVE|
The bold values identified in table 4 are the square root of AVE thereby indicating an adequate discriminant validity, as the bold values are more than the correlation value between the constructs (Fornell & Larcker, 1981).
Fornell – Larcker Criterion
|Construct||Ethical Climate||Servant Leadership||Turnover Intention|
The discriminant validity is further established when the item loadings are higher than the cross-loadings (Chin, 1998). Thus, table 5 indicates that the item loadings are higher than the cross-loadings thereby establishing discriminant validity.
|Item||Ethical Climate||Servant Leadership||Turnover Intention|
Henseler, et al., (2015) provided the HTMT criterion thereby to analyze the discriminant validity, so, if the value of HTMT is less than 0.9, discriminant validity is established. Thus, table 6 highlights that the values are less than 0.9 thereby establishing discriminant validity.
|Construct||Ethical Climate||Servant Leadership||Turnover Intention|
The VIF value of more than 5 indicates the existence of multicollinearity (Field, 2009). According to table 7, VIF values are less than 5, thus indicating the non-existence of multicollinearity.
|Dependent Construct||Predictor Construct||Collinearity (VIF<5)|
|Turnover Intention||Servant Leadership||2.404|
|Ethical Climate||Servant Leadership||1|
The subsequent table 8 and figure 1 indicate the structural model of the current research.
|Hypothesis||Path Coefficient (O)||Standard Deviation (STDEV)||T Statistics (|O/STDEV|)||P Values||Remarks|
|EC --> TI||-0.342||0.072||4.726||0||Supported|
|SL --> EC||0.764||0.028||27.738||0||Supported|
|SL --> TI||-0.403||0.079||5.071||0||Supported|
The table 8 illustrates that servant leadership has a negative effect on turnover intention (β=-0.403, t=5.071, p<0.05). Therefore, hypothesis 1 is supported. Moreover, servant leadership had a positive effect on ethical workplace climate (β=0.764, t=27.738, p<0.05). Thus, hypothesis 2 is also supported. Furthermore, ethical climate has negative effect on turnover intention (β=-0.342, t=4.726, p<0.05). Hence, hypothesis 3 is also supported. In addition, figure 1 further illustrates the results of the path analysis.
According to table 9, the results are at a moderate level as R2 values of 0.25, 0.50, and 0.75 are considered as weak, moderate, and substantial respectively (Hair et al., 2016)..
Coefficient Of Determinant (R2)
|Construct||R2||R2 Adjusted||Explanatory Power|
According to Cohen (1988), the f2 values of 0.02, 0.15, and 0.35 are considered as small, medium, and large effect sizes respectively. See Table 10 :
f2 – Effect Size To R2
|Construct||Turnover Intention||Ethical Climate|
Recommended values of Q2 are 0.02, 0.15, and 0.35 as small, medium, and large respectively indicating the level of the predictive relevance for endogenous construct (Hair et al., 2016). See Table 11 :
|Endogenous latent construct||Q2||Level of predictive relevance|
After conducting the bootstrapping analysis (see figure 2), results shown in table 12 indicate that ethical climate plays a mediating role between the association of servant leadership and turnover intention in Pakistan’s restaurant industry.
Specific Indirect Hypothesis
|Path||Original Sample (O)||Standard Deviation (STDEV)||T Statistics (|O/STDEV|)||P Value||2.50%||97.50%|
The current research examines the underlying mechanism which links servant leadership behavior with turnover intention through ethical climate as a mediator in the context of the restaurant industry of Pakistan. Thus, in this section, the objective wise discussion is provided.
First objective: To investigate the effect of servant leadership on turnover intention.
Results of this research show that servant leadership behavior is significantly and negatively associated with turnover intention in the restaurant industry of Pakistan. Therefore, the findings of this research are consistent with the past literature that identifies the negative association between servant leadership and turnover intention (Hunter et al., 2013; Jaramillo et al., 2009). Thus, servant leadership behavior has the ability to influence individuals’ attitudes and behavior specifically influencing employees’ turnover intentions. Past literature also shows that employee’s development and welfare is a key concern of a servant leader which influences employee’s turnover intention (Hunter et al., 2013). So, servant leaders are having the attributes of forgiveness, providing continuous emotional support, empowering and supporting their subordinates thereby leading towards less occurrence of employees’ turnover intention.
Second objective: To examine the effect of servant leadership on ethical climate.
The findings of current study indicate that servant leadership is significantly and positively related to the ethical climate in the restaurant industry of Pakistan. Findings of this research are also in line with the previous researches which show that if leaders exhibit servant leadership behavior, it will have a positive effect on ethical workplace climate (Burton et al., 2017). Moreover, prior literature also shows that subordinates get motivated and act in a morally responsible way and are also likely to engage in ethical decision making if the leader with servant leadership characteristics is solving problems within an ethical-driven environment and consistently exhibits ethical behavior (Burton & Peachey, 2013). Thus, servant leaders contribute towards establishing a workplace environment where doing the right thing is expected, valued, and encouraged (Brown et al., 2005). Hence, this research shows that it is necessary for a leader to recognize their influence in establishing an ethical workplace climate, because it positively influences subordinates’ perceptions, attitudes, and behaviors, specifically in the restaurant industry of Pakistan.
Third objective: To investigate the effect of ethical climate on turnover intention.
The findings of this research indicate that ethical workplace climate is significantly and negatively related to turnover intention in Pakistan’s restaurant industry. Results of this research are consistent with the past literature which indicates a negative association between ethical climate and employee’s turnover intention in several sectors, for instance, sales (DeConinck, 2010; Schwepker, 2001; Mulki et al., 2006), health care (Hart, 2005; Mulki et al., 2008), and garment industry (Rubel et al., 2017). Thus, when individuals perceive that ethical norms are present in the organization it led to lower levels of turnover. Hence, the presence of an ethical climate can influence an individual willingness to work in the restaurant industry of Pakistan.
Fourth objective: To analyze the mediating role of ethical climate in the relationship between servant leadership and turnover intention.
Findings of this research are consistent with the fourth hypothesis of the current study. Results of this study show that ethical climate plays a key mediating role between servant leadership and turnover intention in the restaurant sector of Pakistan. Therefore, the ethical climate has the ability to influence employee’s turnover intention through their perceptions of the attitude and behavior of their manager/boss. In addition, individuals exhibit lesser intention to leave the organization if they feel assisted by the attitude and behavior of their leaders in the ethical workplace climate. Hence, an ethical work climate will lead towards lesser turnover intention and is dependent upon the leadership attitude and behavior, specifically in the restaurant industry of Pakistan.
Servant leadership plays a significant role in any organization however less empirical evidence exists that investigates the underlying mechanism through which servant leadership behavior is associated with turnover intentions specifically in the restaurant industry. In the hospitality industry employees’ turnover is high because of labor-intensive nature of their work (Walsh & Taylor, 2007; Kim et al., 2010). So, to minimize the rate of the employees’ turnover, the manager’s leadership style plays an important role (Gerstner & Day, 1997). Thus, current research attempted to address this literature gap thereby investigating ethical climate as a mediator between servant leadership and turnover intention in the restaurant industry of Pakistan. Findings of current research support that ethical workplace climate mediates between the relationship of servant leadership and turnover intention. Moreover, this research implies that restaurant managers should demonstrate servant leadership behavior thereby establishing an ethical workplace climate that might influence subordinates’ turnover intentions. Lastly, training programs should be conducted for the managers in the restaurants in order to assist them in the understanding significance of the servant leadership style and ethical workplace climate, because these factors have the ability to influence turnover intention.
The current research is having some limitations. Such as, the research sample is drawn from Pakistan’s restaurant industry thus, the results of this study should be generalized with care. This research examined the mediating role of ethical climate between servant leadership and turnover intention relationship; however, numerous other mediating variables exist that may have the ability to mediate between the association of servant leadership and turnover intention. Moreover, sample size of this study is appropriate, however, it seems to be relatively low. Furthermore, one of the limitations of this research is that it utilizes a convenient sampling method which is a nonprobability sampling technique.
The hypothesized model was examined in the restaurant industry of Pakistan, more empirical evidence is warranted in order to explore the understudy model in dissimilar cultures and sector. In the future, other potential mediating variables should be examined thereby further clarifying the underlying mechanism that associates servant leadership style with turnover intention. Furthermore, additional research is required thereby utilizing a longitudinal research design in order to investigate the interrelationship between servant leadership, ethical workplace climate, and turnover intention. Lastly, further research is needed which shall be based on a probability sampling technique.
This research shows that the restaurant industry needs to be aware of the significant role played by the supervisor and/or manager at the workplace and his/her role in establishing an ethical workplace climate thereby minimizing turnover intentions. As subordinates need positive supervisory support explicitly servant leadership behavior thereby to establish an ethical workplace climate and minimize turnover intention specifically in Pakistan’s restaurant sector. Thus, the restaurant industry needs to promote servant leadership behavior and establish an ethical workplace climate thereby minimize employees’ turnover intention
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