102 DUY TAN UNIVERSITY INTERNATIONAL SCHOOL PSU DIVISION UNDERGRADUATE THESIS STUDY ON EMPLOYEE SATISFACTION ABOUT SALARY, BONUS AND REMUNERATION POLICIES AT DONG THANH TECHNOLOGY CO , LTD MAJOR BUSIN.
INTRODUCTION
REASONS FOR CHOOSING A RESEARCH TOPIC
The engineering industry in Vietnam is crucial to the economy, showcasing strong development potential and serving as a key player in the country's industrialization efforts Its modernization focuses on enhancing science and technology while bridging the technical gap with developing nations This expansive sector not only has a high demand for recruitment, creating numerous job opportunities, but also plays a vital role in poverty alleviation and significantly contributes to the national budget.
Salary, bonus, and personnel treatment are critical components of Human Resource Management that significantly influence employee motivation and productivity A well-structured remuneration policy not only inspires employees to excel in their roles but also plays a vital role in retaining talent, as highlighted by an Ernst & Young survey indicating that over 70% of employees cite compensation as a key reason for leaving their jobs Effective remuneration strategies help businesses stabilize their workforce, minimize turnover, and enhance corporate governance Furthermore, these policies have a profound impact on societal development, improving employees' quality of life and addressing social issues, ultimately contributing to national economic growth Today, companies are adopting flexible salary and bonus structures aligned with their strategic goals and human resource policies.
Research indicates that employee satisfaction significantly enhances organizational loyalty (Luddy, 2005) By examining employee satisfaction, managers can effectively devise retention and development strategies that boost morale and mitigate "brain drain." Consequently, leaders can refine and enhance human resource policies to improve work efficiency and foster greater employee engagement within the organization.
Over the past three years, Dong Thanh Technology Co., Ltd has experienced stable growth, enhancing its scale, scope of activities, and product quality A key factor in this success is the need for a high-quality workforce, as employee turnover significantly impacts productivity and incurs costs related to recruitment and training Research indicates that salary, bonuses, and remuneration policies are critical factors influencing employees' decisions to stay or leave To evaluate employee satisfaction regarding these policies, I have chosen the topic "Study on Employee Satisfaction about Salary, Bonus, and Remuneration Policies at Dong Thanh Technology Co., Ltd" for my graduation thesis.
RESEARCH OBJECTIVES
This article focuses on organizing theories and models related to employee satisfaction with compensation and reward policies, aiming to develop a research model that evaluates employee satisfaction specifically at Dong Thanh Technology Co., Ltd.
Determining the factors that affect the employee's satisfaction with the salary,bonus and remuneration policy of Dong Thanh Technology Co., Ltd.
Considering the satisfaction level of employees' compensation and compensation policies with respect to factors and general satisfaction.
To enhance employee satisfaction with remuneration and compensation policies at Dong Thanh Technology Co., Ltd., it is crucial for the company and its managers to implement several effective solutions These strategies will not only boost employee morale but also contribute significantly to the overall efficiency of the company's human resource management By prioritizing fair compensation and transparent policies, the organization can foster a more motivated and productive workforce.
SUBJECT AND SCOPE OF RESEARCH
- Subject of research: Satisfaction with salary, bonus and remuneration policies at Dong Thanh Technology Co., Ltd.
- Survey subjects: employees at Dong Thanh Technology Co., Ltd.
Research period: The topic was studied during the internship period from February 14, 2022 to May 20, 2022.
Research space: Dong Thanh Technology Co., Ltd
RESEARCH METHODS
- Satisfaction survey: Employees’ satisfaction about salary, bonus and remuneration policies at Dong Thanh Technology Co., Ltd.
- Direct interviews with employees who are working directly at the company.
- Search for sample information available from domestic and foreign research papers.
Prepare survey questionnaires and collect data After collecting specific data and content, conducting tests, analysis, synthesis and comparison through Excel,SPSS software.
SIGNIFICANCE OF THE STUDY
Chapter 2: Research overview Chapter 3: Research Methods
RESEARCH OVERVIEW
THEORETICAL BASIS OF SATISFACTION WITH THE POLICY OF SALARY, BONUS AND REMUNERATION OF PERSONNEL
Employee satisfaction is a concept that has not been agreed by researchers from different perspectives.
Maslow's (1943) hierarchy of needs theory posits that employee satisfaction is achieved as individuals fulfill their needs from basic to advanced levels Kusku (2003) emphasizes that employee satisfaction is a reflection of how well their needs and desires are addressed, influencing their perception of work Furthermore, Wright and Kim (2004) argue that employee satisfaction arises from the alignment between employees' expectations and their actual experiences in the workplace.
Some researchers believe that employee satisfaction is the employee's positive emotional state with work expressed through their behavior and beliefs (Vroom, 1964; Locke, 1976; Quinn and Staines, 197) ; Weiss et al., 1967).
Employee satisfaction would be defined as the amount of generally positive or emotional influence an individual has on his or her job (Fieldman and Arnold).
Employee satisfaction is commonly understood in two key dimensions: overall job satisfaction and the sense of enjoyment and comfort that employees experience in their roles This satisfaction is reflected in their positive responses to various aspects of their work environment.
2.1.2 Theory of salary, bonus and remuneration policies for personnel
2.1.2.1 Concepts, forms and roles of salary, bonus and remuneration for personnel
Salary is a crucial economic indicator in a commodity-producing economy, reflecting the compensation workers earn after a specific period of employment It is determined by the amount of money paid, the quality of labor contributed by the employee, and the overall production and business outcomes of their organization.
The International Labor Organization (ILO) defines salary as the remuneration or income agreed upon between an employer and an employee, whether specified in a written or oral contract This compensation can be established by national law or regulation and is payable for services that have been or will be performed.
Article 55 of the Labor Code stipulates that an employee's salary is determined through mutual agreement in the contract, reflecting labor productivity, quality, and work efficiency, while ensuring it is not less than the minimum wage set by the State.
Salary is formed from three components: basic salary (accounting for 70-80% of salary), allowances, subsidizes and bonuses
Salary is crucial for both employees and businesses, serving as compensation for labor and fostering a motivated workforce For companies, salaries represent a significant portion of production costs and are vital for enhancing overall business efficiency Implementing a fair and reasonable salary structure not only helps retain and strengthen the workforce but also supports the growth and development of the organization.
A bonus is an extra salary payment designed to enhance the distribution of labor and boost productivity within a business It serves as a financial reward for employees who exceed performance expectations and contribute significantly to the company's success By incentivizing outstanding achievements, bonuses play a crucial role in motivating staff and driving overall efficiency in production and business operations.
Bonuses can be categorized into various forms, including those based on national holidays, business performance (quarterly or annually), and monthly sales revenue Additional bonuses may be awarded for material savings, technical innovation initiatives, and completing projects ahead of schedule Furthermore, bonuses are also given for high-quality productivity, successful sourcing and contracting, and maintaining consistent attendance.
Bonuses serve as a significant material incentive for employees, positively influencing their motivation to enhance performance and productivity while improving product quality and reducing working hours Alongside base salaries, bonuses constitute the primary cash earnings for employees, fulfilling their material and spiritual needs more effectively In many cases, bonuses act as stronger motivators than salaries, driving employees to strive for excellence in their work.
Employee compensation involves addressing both the material and emotional needs of employees, enabling them to effectively perform their duties and contribute to the overall success of the organization.
Human resource compensation involves managers overseeing employee remuneration, from developing compensation policies to implementing them within the organization The primary goal of personnel remuneration is to meet both the physical and mental needs of employees effectively.
Financial: Indirect (insurance; allowance; welfare; paid absence); Direct (worker salary; monthly salary; commission; bonus )
Non-financial factors significantly influence job satisfaction and employee motivation Engaging tasks, a sense of responsibility, and opportunities for recognition from superiors contribute to a fulfilling work experience A comfortable working environment, flexible hours, and appropriate status symbols enhance overall job appeal Additionally, reasonable policies and skillful testing methods can foster a productive atmosphere, while the option to work online offers further convenience and adaptability for employees.
Effective human resource management enhances both the material and spiritual well-being of employees, fostering motivation and engagement This approach not only drives new employees to perform at their best but also strengthens their commitment and confidence in their roles and the organization.
Effective human resource management is essential for enhancing the quality and efficiency of production and business operations within enterprises By fostering a stable and skilled workforce, companies can ensure smooth business processes Additionally, investing in human resources boosts the effectiveness of other management functions, cultivates a positive organizational culture, and strengthens the overall spirit of both the enterprise and its employees.
Human resource compensation plays a crucial role in sustaining high-quality personnel within society, thereby contributing to socio-economic stability It creates a conducive environment for the successful execution of each country's human development strategy.
2.1.2.2 Factors affecting the policy of salary, bonus and remuneration of personnel
SUMMARY OF RESEARCH MODELS
Table 2.1: Summary of proposed research models
Vu Thuy Duong & Hoang Van
From Table 2.1 we get the following results:
Factors "Salary", "Bonus" and "Welfare" are 3 factors that always appear in 4 research models.
Factors “Compensation through work” and “Compensation through work environment” appear in 3 research models.
Factor “Allowances, subsidies” appears in 2 research models.
Factors “Stocks”, “Colleague”, “Leader”, “Promotion training”, “Work arrangement”, “Career prospects” each factor appears in a research model.
PROPOSED RESEARCH MODEL
This article examines the factors influencing employee satisfaction regarding salary, bonuses, and remuneration policies, drawing on theoretical frameworks and existing research Based on insights from previous studies and discussions about the compensation regime at Dong Thanh Technology Co., Ltd., it is noted that managers perceive minimal differences among allowances, benefits, and bonuses Consequently, these three aspects are categorized together The proposed model identifies five key factors affecting employee satisfaction in terms of compensation: (1) salary, (2) bonus, (3) allowances, subsidies, and welfare, (4) compensation through work, and (5) compensation through the work environment.
Figure 2.5: Research model proposes employee satisfaction about salary, bonus and remuneration policies.
Table 2.2: Scale of proposed research variables
Employee satisfaction on Salary, bonus
Salary Bonus Allowances, subsidies and welfare
No Factor Reference study Author Publishing year
1 Salary Measuring job satisfaction in terms of Vietnam
2 Bonus Evaluation of employees' satisfaction indirectly about the financial compensation policy of Trieu Manh Co.,
Factors affecting employee's work motivation applied at Asia Cost Commercial Bank, Hue branch
Satisfaction of Eximbank employees in Da Nang branch
Scientific Journal of Hong Duc University
Employee satisfaction is significantly influenced by salary, bonuses, and remuneration policies Many employees seek compensation that aligns with their goals, enabling them to meet their living expenses and recognize their past efforts Ultimately, a fair salary reflects the value employees deserve for their contributions to the company's overall success, facilitating greater satisfaction with compensation structures.
H1: Salary has a positive effect on employee satisfaction in terms of salary,bonus and remuneration policies.
Bonuses play a crucial role in motivating employees by rewarding their contributions and achievements, fostering excitement and respect within the workplace While salaries are important, bonuses can often have a more significant impact on employee satisfaction Individual rewards reflect a commitment to the organization's success, while collective rewards promote cohesion, solidarity, and healthy competition among staff Ultimately, bonuses represent the value employees deserve for exceeding business standards, contributing to the company's overall success, and enhancing employee satisfaction.
H2: Bonus has a positive effect on employee satisfaction in terms of salary, bonus and remuneration policies.
When selecting a job, many workers prioritize allowances, subsidies, and welfare benefits, which are designed to assist employees in overcoming challenges such as work interruptions, transportation issues, housing needs, and health insurance These compensations, often provided in addition to basic salaries, play a crucial role in enhancing employee satisfaction with overall remuneration policies A strong welfare system not only fosters loyalty among employees and their families but also contributes to a more committed workforce, ultimately driving better results for the organization.
H3: Allowances, subsidies & welfare has a positive effect on employee satisfaction in terms of salary, bonus and remuneration policies.
Work for employees is defined as the essential tasks assigned by their organization, which play a crucial role in shaping their purpose and motivation When employees are given significant responsibilities that align with their skills, personal attributes, and interests, they are more likely to engage with their work, take ownership of their results, and experience greater opportunities for advancement This alignment fosters a sense of satisfaction and fulfillment in their professional lives.
H4: Compensation through work has a positive effect on employee satisfaction in terms of salary, bonus and remuneration policies.
In an era of increasingly developed society, employees go to work not only for
A positive working environment is crucial for employee satisfaction and productivity Organizations can enhance this atmosphere by fostering strong behavioral relationships, ensuring labor safety and hygiene, and promoting cultural activities and physical fitness Additionally, effective leadership plays a vital role; how leaders commend, criticize, and reward employees significantly influences overall morale and satisfaction, particularly in relation to salary and bonus policies Creating a supportive workplace encourages employees to invest their skills and dedication fully.
H5: Compensation through work environment has a positive effect on employee satisfaction in terms of salary, bonus and remuneration policies.
2.4.6 Employee satisfaction on salary, bonus and remuneration policies
Employee satisfaction with salary, bonuses, and remuneration policies is crucial for business success, as these factors significantly influence motivation and productivity Implementing effective compensation strategies ensures that employees feel valued and fairly rewarded, leading to increased motivation and performance Conversely, poorly designed salary and bonus structures can result in dissatisfaction and negative outcomes for the organization.
COMPANY OVERVIEW
3.1.1 Overview of the formation and development of the company
Company name: Dong Thanh Technology Co., Ltd
Head office: 02 Dong Thanh 2, Hoa Phat Ward, Cam Le District, Da Nang, Vietnam
E-mail: admin@dtco.com.vn
Website: www.dtco.com.vn
Field of activity: Installation of industrial mechanical, electrical and refrigeration systems
Business registration certificate: Business code: 4103003187 First registered on April 8, 2019 Register for the 3rd change on 12/25/2020.
Being a professional refrigeration and mechanical contractor.
Be a reliable partner with customers for sustainable development.
Pioneer: leading in technology, creativity and breakthrough.
Enthusiasm: Tireless and full of enthusiasm.
Humanity: Focusing on people is the key factor.
Honesty: Behave honestly and transparently in all activities.
Fairness: Fair to customers and partners
3.1.1.4 The process of formation and development
Dong Thanh Engineering Company Limited was officially established in April
In 2019, Dong Thanh Technology Co., Ltd expanded its production area to approximately 5,000 m², focusing on the supply, design, and installation of mechanical and electrical systems Despite having adequate premises, the company's technical facilities have seen limited modernization This shift towards independent economic accounting and financial autonomy signifies a new phase of development for the company.
In June 2019, the company partnered with Toyota to implement a VRV air conditioning system in the Toyota showroom in Hue, marking its first significant project This collaboration not only established a strong market presence but also generated substantial profits, signifying an important
In January 2020, we collaborated with both domestic and international partners, including Nam Phat Resort, Specter Garment Technologies, Sacombank, Techcombank, Mensa Industries, and Top Glove Corporation, to successfully execute various assembly, maintenance, and repair projects This partnership significantly enhanced labor productivity and accelerated operational efficiency.
In August 2020, we expanded our production capabilities by adding workshops for industrial refrigeration systems, air conditioning and ventilation systems, heavy and light electrical systems, fire protection systems, water supply and drainage systems, mechanical services, and other related industries.
In early 2021, Dong Thanh Engineering Co., Ltd faced significant challenges due to the Covid-19 pandemic, which led to temporary delays in construction activities and resulted in an unstable business environment with uneven development across its operations.
Since July 2021, the company has diligently worked to resume operations following the Covid-19 pandemic, while also inaugurating a new transaction office located at 31 Cao Xuan Duc, Thuan Phuoc Ward, Hai Chau District, Da Nang, Vietnam.
Dong Thanh Technology Co., Ltd is experiencing significant growth, currently employing 170 regular staff members and enhancing their quality of life The company plans to recruit and train an additional 100 assembly technicians to undertake new projects Over the years, Dong Thanh has consistently fulfilled its obligations to the state, fully paying land rent and contributing millions of dong to the state budget This rapid development is attributed to the dedicated efforts of its employees Looking ahead, the company aims to leverage the potential of Vietnam's over 70 million population while expanding into international markets.
After 3 years of operation, Dong Thanh Technology Co., Ltd has strived to overcome many difficulties during the Covid-19 pandemic, challenging to assert itself in the market Not only satisfied with what has been achieved, the whole Company always strives to complete and exceed production plans, best respond to market demand, create a solid foundation for future development.
3.1.2 Organizational structure and functions of each department
Figur e 3.1: Organization chart of Dong Thanh Engineering Co., Ltd
Occupational safety and quality management department
The Chairman of the Board is the primary individual responsible for overseeing and managing all company activities This role includes ensuring that production and business operations are efficient and compliant with relevant laws, while also being accountable to the State for the company's overall performance.
The director is responsible for managing and overseeing the daily operations and production activities of the company, as appointed by the chairman This role includes the authority to make decisions on contracts valued at less than 50%, as well as to determine the company’s long-term and short-term development strategies and annual business plans.
The Vice Director plays a crucial role in supporting the Director by overseeing various employees involved in production management and labor mobilization This position involves advising the Director on the formulation of production plans and ensuring their effective implementation.
Development Manager: project manager, responsible for the construction and orientation of the company's works.
The Administrative and Human Resources Department provides essential advice and support to the Board of Directors on personnel organization and management, administrative operations, and legal matters This department is responsible for developing salary regulations, labor rules, and working processes related to recruitment, training, appointments, dismissals, commendations, discipline, and employee evaluations Additionally, it collaborates with the grassroots Trade Union to create annual welfare and reward programs, ensuring that all tasks are executed within its designated authority and responsibilities.
The Accounting Department plays a crucial role in supporting the director by organizing the Finance, Accounting, and Credit functions across the company It aids in monitoring and controlling cash flow, assets, and key financial activities while focusing on developing both short-term and long-term financial plans The department seeks to create and attract capital, ensuring strict management of investment funds and promoting balanced and effective use of resources Additionally, it provides periodic financial reports and quick updates on production and business activities, enabling the director to make timely decisions Furthermore, it ensures that employee salaries are processed accurately and on time.
The Materials Department is responsible for receiving and inspecting equipment, compiling statistics, and proposing purchase and sale strategies to ensure that all materials meet the operational needs of the company It collaborates with the Accounting Department to create a strategic financial spending plan that promotes effective expenditure Additionally, the department works closely with other departments to develop comprehensive plans and processes for transportation, assembly, and construction activities.
The Project Department is responsible for preparing bids, estimating costs, and appraising project feasibility It manages both short-term and long-term investment initiatives, ensuring effective execution of ongoing projects The department formulates business plans and fosters partnerships with domestic and international entities in investment, production, and business sectors By leveraging foreign relations, it seeks profitable construction opportunities and coordinates tasks within the construction team Additionally, it submits investment projects and supplementary tasks for approval from the director.
3.1.3 Results of the company's production and business activities
Table 3.1: Production and business situation of Dong Thanh Engineering Co., Ltd from 2019 - 2021
Net revenue from selling goods and providing services
Gross profit on sales and service provision 160 2.020 3.532 1163% 75%
Net profit from business activities 18 614 43 3311% -93%
QUALITY RESEARCH
Qualitative research seeks to determine if the proposed factors and their observed variables align with the current circumstances of Dong Thanh Engineering Co., Ltd Additionally, it aims to identify any additional observed variables The findings from this research will inform the development of a questionnaire for subsequent quantitative research.
The qualitative research design employs structured interviews with 30 employees from various departments at Dong Thanh Technology Co., Ltd., including 4 human resources experts and others from accounting and project supply sectors The interviews will be meticulously recorded and synthesized to refine the content scale, laying the groundwork for the subsequent phase of the official investigation.
QUANLITIVE RESEARCH
Quantitative research aims to measure employee satisfaction in terms of salary, bonus and remuneration policies in a more scientific and accurate way.
The quantitative research method is known for its high generalizability, reliability, and representativeness, yielding objective results through data collection and statistical analysis grounded in mathematical principles.
The study employs a quantitative research approach, utilizing direct surveys conducted at the company or online questionnaires distributed to employees This method ensures precise collection of survey results in a systematic manner.
Research period: February 2022 to April 2022.
To evaluate employee satisfaction regarding salary, bonuses, and remuneration policies, the study employs a combination of primary and secondary data Primary data was gathered using a convenience sampling method, targeting employees at Dong Thanh Technology Co., Ltd.
To begin, a survey questionnaire must be designed and administered to gather data Once the data is collected, it is essential to review and discard any unsatisfactory responses, such as blank entries or uniform selections across all questions Following this, the data will undergo coding and entry, leading to a comprehensive analysis All information will be encrypted and analyzed utilizing SPSS 20 software.
Use the following formula to determine the sample size: n= N
In there: n: number of samples to be determined
N: Overall quantity e: allowable error Selectable e = ± 0.01 (1%), ± 0.05 (5%), ± 0.1 (10%).
The total employee count at Dong Thanh Technical Co., Ltd establishes the population size for the study, with a specified tolerance level of e = ± 0.05 Consequently, the minimum sample size necessary for accurate analysis is determined to be n = 170.
Larger sample sizes in research enhance the accuracy and representation of the population's characteristics In this study, we distributed a total of 170 ballots and successfully collected 170 votes; however, after screening, only 160 votes were deemed suitable for analysis.
A total of 160 questionnaires were distributed to employees of Dong Thanh Technology Co., Ltd., encompassing both male and female participants from various departments, including administration, human resources, accounting, materials, and project management This survey aims to gather a wide range of accurate data.
QUESTIONNAIRE
The survey questionnaire includes all 25 questions including 2 main parts:
The survey utilized a 5-level Likert scale ranging from dissatisfied to satisfied to assess various factors influencing employee satisfaction Key aspects evaluated included salary, bonuses, allowances, benefits, and overall remuneration related to both job performance and the working environment The findings provide insights into employee satisfaction concerning compensation policies and incentives.
(2) Personal information: Includes general questions used to collect information related to survey respondents: gender, age, education level, working position, income level.
SOME METHODS OF DATA ANALYSIS
Descriptive statistics are coefficients that succinctly describe or summarize a given data set, which may be representative of the whole or a sample of a population.
Descriptive statistics encompass two main categories: concentration trend measures and volatility measures Concentration trend measures assess central tendencies through the mean, median, and mode, while volatility measures evaluate data dispersion using standard deviation, variance, minimum and maximum values, kurtosis, and skewness.
Run descriptive statistics on the popular software SPSS.
3.6.2 Testing of Cronbach's Alpha scale
Cronbach's alpha test, also known as the alpha coefficient, assesses the internal consistency of observed variables within a factor, determining which variables are appropriate for inclusion in a measurement scale The reliability coefficient test follows specific criteria to evaluate the suitability of these variables.
Cronbach's Alpha reliability coefficient: α ≥ 0.9: Very good factor scale
0.7 > α ≥ 0.6: Acceptable factor scale for new studies
0.6 > α ≥ 0.5: Factor scale is not suitable
0.5 > α: Factor scale is not suitable
The Total Correlation Coefficient, also known as the Corrected Item-Total Correlation, measures the degree of correlation between an observed variable and other variables within a factor This coefficient indicates how much a specific observed variable contributes to the overall value of the factor A standard threshold for evaluating this contribution is set at ≥ 0.3; values below this threshold (< 0.3) suggest that the observed variable does not contribute meaningfully and should be excluded from the evaluation factor.
In evaluating the reliability of a variable, the Cronbach's Alpha coefficient is crucial If the value of Cronbach's Alpha if Item Deleted exceeds the overall Cronbach's Alpha, it indicates that the variable should be excluded from the factor analysis.
Exploratory factor analysis (EFA) is a quantitative technique that simplifies a large set of interrelated measurable variables into a smaller, more meaningful set of factors, while retaining the majority of the original information.
In EFA, the factor model is represented by the equation:
Xi = Ai1 * F1 + Ai2 * F2 + Ai3 * F3 + + Aim * Fm + Vi*Ui
Xi : the i-th measure variable that has been normalized
Aij: normalized multiple regression coefficient of factor j for variable i
Vi: standardized regression coefficient of characteristic factor i for variable i
Ui: characteristic factor of variable i
The specific factors are interconnected and related to common factors, which can also be represented as linear combinations of the measurement variables, as demonstrated by the following model.
Fi = Wi1*X1 + Wi2*X2 + Wi3*X3 + + Wik*Xk
In there: Fi: estimate the value of factor i
Wi: weight or multiplier weight k: number of variables
Regression analysis establishes the relationship between two variables, allowing for the prediction or estimation of one variable based on the values of one or more independent variables This method is essential for examining how multiple independent variables influence a dependent variable, which serves as an outcome indicator influenced by various causal factors.
The generalized multivariable regression equation in linear form is:
Where: b0 : base coefficient bi: regression coefficient of independent variable i xi: independent variables (influential factors) e: error
The process of multiple regression analysis is performed through the following steps:
Step 1: Perform Pearson matrix test to detect correlation between variables.
The independent variables are correlated with each other and related to the dependent variable is a condition for performing regression analysis.
Step 2: Build and test the regression model: Regression analysis is to check whether the research model is appropriate, the hypotheses about the influence of each factor on the dependent variable are accepted accept no.
Step 3: Check for violations of regression assumptions When the assumptions are not violated, the regression model is considered suitable for the study population Therefore, it is necessary to check for necessary assumption violations after constructing the regression equation.
Statistical testing in research involves formulating hypotheses regarding the relationships between market concepts, followed by gathering sample data to evaluate these hypotheses.
The process of testing research hypotheses can be divided into 5 steps:
Step 1: Set up the hypothesis to be tested
Step 2: Choose a significance level (sig or p)
Step 3: Select the appropriate test and calculate the test statistic
Step 4: Determine the critical value of the test.
Step 5: Compare the test value with the critical value to make a decision.
The significance level, often denoted as sig or p, represents the extent to which a researcher accepts the possibility of making an error in their findings In the context of scientific research within the business sector, it is common practice to set the significance level at 5%.
In statistical analysis, the three commonly reported significance levels are 1% (p < 0.01), 5% (p < 0.05), and 10% (p < 0.1) The 5% level is widely used in the industry, although researchers may opt for a 10% significance level, which increases the likelihood of committing a Type I error.
3.6.6 Check the correlation phenomenon of residuals
The regression model is said to have autocorrelation if the random errors ui are not independent of each other , ie : cov ( ui , uj ) ≠ 0 , with i ≠ j
We consider several methods of identifying autocorrelation:
Step 1: Estimate the OLS model and calculate the residual ut
Step 2: Calculate the statistical value and look up the critical value table of the statistic to get the values above du and the critical value below dL of that statistic
Step 3: Consider the test problem
Step 1: Estimate the original regression model to calculate the residuals ut
Step 2: With the obtained parts, make a new dataset including n-p observations to estimate the model and obtain the coefficient of determination R2 of this model. Then the statistic γ2 = (n-p).R2 has a squared distribution with p degrees of freedom
Step 3: With a given significance level α, find the critical value γα2(p) to compare with the value of the statistic calculated in the previous step, and then make a decision to reject the null hypothesis Ho if γ2 > γα2( p), otherwise, we accept Ho and conclude that there is independence between observations in the model.