Organizational citizenship behavior and employee turnover intention an empirical study in pharmaceutical companies in ho chi min

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Than Thi Thanh Thuyen ORGANIZATIONAL CITIZENSHIP BEHAVIOR AND EMPLOYEE TURNOVER INTENTION: AN EMPIRICAL STUDY IN PHARMACEUTICAL COMPANIES IN HO CHI MINH CITY MASTER OF BUSINESS (Honours) Ho Chi Minh City – 2017 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Than Thi Thanh Thuyen ORGANIZATIONAL CITIZENSHIP BEHAVIOR AND EMPLOYEE TURNOVER INTENTION: AN EMPIRICAL STUDY IN PHARMACEUTICAL COMPANIES IN HO CHI MINH CITY ID: 22140053 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr TRAN HA MINH QUAN Dr NGUYEN THI NGUYET QUE Ho Chi Minh City – 2017 Acknowledgment I would like to express my deep gratitude to my supervisor Dr Tran Ha Minh Quan and Dr Nguyen Thi Nguỵet Que for their precious guidance, valuable suggestions and advice as well as their immense knowledge to support me throughout the process In addition, I would like to thank my family, my friends and my colleagues for their constant encouragement and immediate helps without which the study would not have been possible Abstract The study investigates the influence of relations-oriented leadership behavior, perception of fairness and intrinsic motivation on organization citizenship behavior (OCB) and the influence of OCB on employee turnover intention in the context of Vietnam pharmaceutical industry The model was tested with a sample of 312 employees working for pharmaceutical companies in Ho Chi Minh City The result reveals a good fit between collected data and measurement scales which were introduced and developed in the Western contexts The findings show that relations-oriented leadership behavior, perception of fairness and intrinsic motivation has positive impacts on OCB, and OCB has a negative impact on employee turnover intention The discovery highlights the importance of documenting factors affecting OCB in reducing employee turnover intention towards organization as well as draws the management attention to their recruiting, training and long term development policies Key words: Organizational Citizenship Behavior, turnover intention, relations-oriented leadership behavior, perception of fairness, intrinsic motivation Table of contents Acknowledgement Abstract Table of Contents Introduction .9 1.1 Research background 1.2 Research problem 10 1.3 Research questions and research objectives 12 Theoretical Background and Hypotheses 13 2.1 Organizational citizenship behavior 13 2.2 Employee turnover intention 14 2.3 Relations-oriented leadership behavior 14 2.4 Perception of fairness 16 2.5 Intrinsic motivation 17 2.6 OCB and employee turnover intention 19 Research methodology 22 3.1 Procedure and Sample 22 3.2 Measurement scales 23 3.3 Data analysis 25 Results 26 4.1 Descriptive analysis 26 4.2 Reliability test 27 4.5 Structural Equation Modeling (SEM) 38 4.6 Discussion 42 Conclusion, implications and limitation .43 5.1 Conclusion 43 5.2 Managerial Implications 44 5.3 Limitations and directions for future research 46 References .47 APPENDIX .67 Appendix 1- Questionnaire – English 67 Appendix - Questionnaire – Vietnamese 73 Appendix 3- Description of study sample 78 Appendix 4- Reliability analysis - relations-oriented leadership behavior 81 Appendix 5- Reliability analysis - Perception of fairness 82 Appendix 6- Reliability analysis – Intrinsic motivation 83 Appendix 7- Reliability analysis – Organizational Citizenship Behavior 84 Appendix 8- Reliability analysis – Turnover intention 85 Appendix 9- Exploratory Factor Analysis (EFA) 86 Appendix 10 – Confirmatory Factor Analysis (CFA) 91 Appendix 11- Structural Equation Modeling (SEM) 97 List of figures Figure Conceptual Model .21 Figure CFA measurement model 376 Figure SEM measurement model 378 List of tables Table Source of data collection .26 Table Overall reliability of the constructs and standardized loadings of indicators .29 Table EFA results for measurement scales .35 Table Factor colleration 35 Table Fit indices for the test model result (CFA) 37 Table Fit indices for the test model result (SEM) 39 Table Standardized structural paths in the model 40 Introduction 1.1 Research background Employee is considered as one of the most valuable assets and this becomes competitive advantage of every organization in modern economy (Verma & Dewe, 2008) According to Dobre (2012), human capital has a direct relationship to organizational performance in terms of company’s profit and targets Other studies found that maintaining a stable labor force is an optimal way to obtain effective cost management and enhance quality of service in a firm (Jago & Deery, 2002) as well as achieve sustainable economic development of a nation (Bousrih, 2013) However, keeping well trained and skilled employees is getting more difficult for any organization (Wiggins, 1998) and it is becoming an important challenge for the firms (Reda & Dyer, 2010) as employee will switch to the next job if they are not satisfied with the current employer or the job and employer will be left with no good employees in organization (Laddha, Singh, Gabbad & Gidwani, 2012) Furthermore, employer has to suffer many losses such as investment in recruitment, selection, training and promotion is wasted (Abrams, Ando & Hinkle, 1997), negative influences on work flow, quantity and quality of production as well (Guthrie, 2000) if valued workers leave So, keeping suitable and well-trained employees are becoming the priority in every organization (Mitchell, Holtom & Lee, 2001) There are many reasons why people leave organizations: family matter, unfair treatment observation (Mitchell et al., 2001), salary level, job satisfaction (Lee, Huang & Zhao, 2012), excess workloads, poor colleague relationships (Conklin & Desselle, 2007), perceived organizational support, or employment external opportunities perception (Hofaidhllaoui & Chhinzer, 2014) Another factor that can be taken into consideration is discretionary work behavior, or Organizational Citizenship Behavior (OCB) OCB is defined as employee’s willingness to contribute extra efforts for the achievement of organizational outcomes, willingness to help coworkers, or willingness to obey extra rules (Katz, as cited in Jahangir, Akbar & Haq, 2014) and it is not in formal reward system of organization (Teh, Boerhannoeddin & Ismail, 2012; Konovsky & Pugh, 1994) If employee has high OCB, their turnover intention is likely to reduce so OCB can be considered as one of the important impacts on employee turnover intention 1.2 Research problem Organizational Citizenship Behavior (OCB) has been studied widely over many years by many researchers Its outcomes are also stated including increased employees’ satisfaction (Aamir & Zafar, 2006), enhanced employees retention (Podsakoff & Mackenzi, as cited in Chahal & Mehta, 2011) which means reduced turnover (Aamir & Zafar, 2006) Studies have shown that organizations with high OCB levels can have positive outcomes such as lower levels of turnover and higher levels of efficiency (Podsakoff, Whiting, Podsakoff & Blume, 2009) The benefits of OCB can be great, and the antecedents of OCB haven been studied widely so that managers can provide an appropriate environment to foster OCB’s in their employees (Lilly, 2015) Impacts of OCB on employee turnover intention have been widely studied in terms of job 10 satisfaction (Bolon, 1997; Alotaibi, 2001; Lee et al., 2012; Hofaidhllaoui & Chhinzer, 2014), organizational commitment (Bolon, 1997; Alotaibi, 2001; Lee et al., 2012; Conklin & Desselle, 2007), organizational support (Kamani & Namdari, 2012; Pohl, Battistelli & Librecht, 2013) or leadership style (Jiao, Richards & Zhang, 2011; Suliman & Obaidli, 2013; Lilly, 2015; Shah, Hamid, Memon & Mirani, 2016) but the main field of investigation is in hotel (Lee et al., 2012), engineer (Hofaidhllaoui & Chhinzer, 2014) telecom (Ibrahim & Aslinda, 2014), hospital (Pohl et al., 2013) or finance - banking industry (Jiao et al., 2011; Kamani & Namdari, 2012; Suliman & Obaidli, 2013; Shah et al., 2016) in the U.S, Pakistan, Indonesia Whereas in Vietnam, turnover rate in pharmaceutical companies is still increasing year by year and it continues to be in top three out of 15 industries, even though salary is increased (Towers Watson Vietnam ,2014; Talentnet – Mercer Total Remuneration Survey, 2015) According to Towers Watson Vietnam (2014), its Total Rewards Survey 2014 highlighted that the general industry average staff turnover rate in Vietnam is at 12.7%, higher than the median of 11% By sector, the survey showed that the pharmaceutical industry is the highest not only in terms of overall salary increases with 11.2%, but also in terms of staff turnover rate at 15.9% Furthermore, Talentnet – Mercer Total Remuneration Survey (2015) made a survey with participant list of 520 well-established Multinational Corporations and leading local companies from 15 industries In this year, Pharmaceutical is still in top three industries providing the highest salary increase rate in the market with 10.1% but staff turnover rate is also in top three accounting for 16.7% It can be seen that employee turnover rate in increasing and becoming big concern for organization, especially in ROLB5 -.063 799 122 -.078 -.037 ROLB6 028 651 -.062 133 -.034 ROLB2 -.097 619 -.036 273 -.073 ROLB4 046 613 009 148 037 ROLB1 344 598 -.081 040 -.004 ITMT4 -.004 029 782 039 054 ITMT2 -.143 132 756 -.024 -.062 ITMT1 063 002 638 -.079 -.033 ITMT5 156 -.038 636 042 056 ITMT3 056 -.037 617 122 -.032 PCOF1 -.013 -.006 -.132 984 -.016 PCOF2 011 000 009 801 -.049 PCOF3 057 030 071 661 061 POCF4 -.078 -.029 294 634 050 TOIT3 059 -.076 -.027 062 891 TOIT2 -.010 -.043 050 -.015 793 TOIT1 -.059 175 -.042 -.037 736 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization.a a Rotation converged in iterations Pattern Matrixa Factor OCB8 843 OCB7 715 OCB6 704 OCB4 677 OCB2 633 OCB3 630 OCB1 621 OCB5 608 ROLB3 961 ROLB5 799 ROLB6 651 ROLB2 619 ROLB4 613 ROLB1 598 ITMT4 782 ITMT2 756 ITMT1 638 ITMT5 636 ITMT3 617 PCOF1 984 PCOF2 801 PCOF3 661 POCF4 634 TOIT3 891 TOIT2 793 a Rotation converged in iterations Factor Correlation Matrix Factor 1.000 650 681 618 -.324 650 1.000 647 634 -.317 681 647 1.000 630 -.350 618 634 630 1.000 -.338 -.324 -.317 -.350 -.338 1.000 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization 90 Appendix 10 – Confirmatory Factor Analysis (CFA) 95 Appendix 11- Structural Equation Modeling (SEM) 97 98 100 ... ECONOMICS HO CHI MINH CITY International School of Business Than Thi Thanh Thuyen ORGANIZATIONAL CITIZENSHIP BEHAVIOR AND EMPLOYEE TURNOVER INTENTION: AN EMPIRICAL STUDY IN PHARMACEUTICAL. .. context, especially for pharmaceutical companies in Ho Chi Minh City In- depth interviews with employees in pharmaceutical companies were conducted to modify the measures by examining how they describe... Behavior - Analyze the impacts of Organizational Citizenship Behavior on employees’ turnover intention Theoretical Background and Hypotheses 2.1 Organizational citizenship behavior Organizational citizenship