31 Chapter II Literature Review Chapter 2, literature review, discussed on the theory and literature that are significant with the thesis. It started with the theoretical foundation that discussed around the phenomenon of the thesis, in this case the transformation in organization and transformation from the individual perspectives. Continued with the main variable which has been identified in the previous chapter namely change readiness and change commitment. Lastly the chapter elaborated on the synthesized research framework and how it was developed. II.1 Theoretical Foundation This research would like to explore the causes of organizational change challenge from the lens of attitude in individuals, especially readiness and commitment to change. In the case of PT Sumber Belajar Berkah, the employees experienced a series of fundamental changes ranging from the change in strategy, business process, structure, performance evaluation and the reward system. These changes felt to be exhausting to the employees leading towards resistance to change, as they are not well equipped and well communicated pertaining to the faced transformation II.1.1 Change in Organization Change is a continuous process and always happens for a reason. As the world changes, industry changes, and companies can either resist the change or follow and transform themselves to stay in business. Research shows that in 2022, every fifth organization worldwide was undergoing reinvention within a 12-month period (Nadya Zhexembayeva, 2024). The scale of these changes varies, with current data indicating that in 2024, 44.9% of reinvention efforts were categorized as radical, while 33.4% were intermediate, and 21.7% represented incremental changes (Nadya Zhexembayeva, 2024). This highlights the nature of change and organization is inseparable. 32 The necessity for organizational change grows from the nature of the business environment that is dynamic. Leaders must be vigilant in assessing internal and external factors to and act fast to changes that are not only necessary but also embraced by employees (Wang et al., 2023a).Changes may occur in many ways including modifications to an organization’s strategy, process, structure, and culture (Cummings & Worley, 2014). As market conditions become more unpredictable especially in the current Volatile, Uncertain, Complex, Ambiguous (VUCA) (Fatima et al., 2020) organizations must be fast in anticipating shifts and preparing to implement change swiftly (Fatima et al., 2020). The research from Accenture (2025) highlights a rise up to 183% in the rate of transformation affecting business and organization since 2019, this number increase 33% in just the past year (Accenture, 2025). These numbers highlight the growing need for organizations to proactively anticipate and manage change rather than react passively. Change has become an integral component of maintaining efficiency, responding to market demands, and sustaining competitive advantage (Alqudah et al., 2022) Organizational change can be explained as a multidimensional process that includes various elements. (Vakola et al., 2009)) identified four key aspect of change: change content, change context, change process, and change criterion issues. Change process refers to the steps taken during implementation, often determined by the level of employee participation. Change content refers to the specific change that is being introduced to the organization, which may target administrative, technological, or structural aspects of the organization. The organizational context refers to the external and internal states of the organization that influence how employees function within the change environment. Lastly, change criteria refer to individual employee attributes that can impact and influence the success or failure of a transformation (Holt et al., 2007). 33 Other than the four aspect of change, organizational transformation can be explained in other various form such as change in strategy, people focused change, structural change, technology, and even reactive change caused by external crises such as during the Covid-19 (Hubbart, 2023). However, while change is essential, the execution is equally important. Without change management, the speed of change within an organization may be slower than the speed of external developments, creating challenges in maintaining operational stability. This is why change management is important in ensuring that transformations are not only well-executed but also sustainable over time. Change management can be understood as a structured process of shifting an organization’s direction, structure, and capabilities in order to meet the dynamic external and internal demands by managing it so that it is not out of control(By, 2005). Successful change management will follow three phases: preparation, implementation, and follow-through (Rosenbaum et al., 2018) A widely recognized change management model is Kurt Lewin’s Three- Step Change Model, which conceptualizes change as a planned process consisting of three phases: unfreezing (preparing for change), changing (implementing change), and refreezing (stabilizing the new state) (Lewin, 1947).This model highlights the importance of creating a robust change to prevent going back to previous behaviors. Subsequent models of change management are often built upon Lewin’s foundation, and address different aspects of the change process or getting more detailed. Some frameworks emphasize phased transitions, while others explore continuous adaptation, top-down versus bottom-up approaches, or incremental versus radical transformations (Rosenbaum et al., 2017) Another influential model is Kotter’s Eight-Step Change Model, which 34 focuses on a people-centric approach to change and how important each stage is to alleviate the people’s buy-in. Kotter (2012)emphasizes that top- down transformation by guiding organizations through 8 steps that can influence both behavioral and structural aspects of change. Both models can be integrated and viewed in the same angle as it can be seen in Figure II.1. While both Lewin’s and Kotter’s models offer valuable insights, their success depends on proper implementation. If executed incorrectly or out of sequence, these models may lead to resistance, inefficiencies, and ultimately, failed change efforts. Therefore, organizations must carefully select and apply change management frameworks that align with their specific transformation needs. Figure II. 1 Lewin and Kotter model of Organizational Change Organizational change, as it is necessary and important for organization survivability, growth, and adaptation, will often leads to negative responses or consequences. Resistance, uncertainty and disruptions are common reactions from the employee or other stakeholders when facing the transformation, especially when the change process is introduced suddenly or without planning. Disruptive and unwanted changes, perceived by the employees can create turbulence for both employees and organization. Hence when talking about change at organizational level, it is important to also consider the implication of transformation to the employee. 35 Meaney (2008) surveyed over 3,000 executives and found two-thirds of organizations did not succeed in implementing noticeable or significant change, even after conducting transformation initiatives. This is because organizational change depends largely on how individuals within organization respond to it (Oreg et al., 2011). Employees play critical role in determining whether a transformation will be successful or failed. Hence, it is essential for organizations to view employees as part of change and included them in the transformation effort and also understand how individuals perceive the transformation. II.1.2 Change at Individual Level Individuals play a critical role in the success of organizational transformation. Employees are the foundation of any organization, and without their involvement and coordination, change efforts cannot be effectively implemented (Bala et al., 2021). Organizational change does not happen in isolation—it requires employees to actively engage with new systems, processes, and expectations. Lewin’s three-step model of unfreezing, changing, and refreezing highlights the necessity of involving employees in every stage of the change process. Leaders play an essential role in this transition by instructing employees on what to do and contribute to the change and addressing concerns (Porras, 1992). Beside individual employees, leaders and their attitudes toward change significantly impact employee reactions to change.