Luận văn thạc sĩ UEH factors influencing organizational commitment and intention to stay of core employees in small medium sized companies in hochiminh city

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Huỳnh Thiên Hải FACTORS INFLUENCING ORGANIZATIONAL COMMITMENT AND INTENTION TO STAY OF CORE EMPLOYEES IN SMALL - MEDIUM SIZED COMPANIES IN HOCHIMINH CITY MASTER OF BUSINESS (Honours) Ho Chi Minh City - Year 2012 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Huỳnh Thiên Hải FACTORS INFLUENCING ORGANIZATIONAL COMMITMENT AND INTENTION TO STAY OF CORE EMPLOYEES IN SMALL - MEDIUM SIZED COMPANIES IN HOCHIMINH CITY ID: 60340102 MASTER OF BUSINESS (Honours) SUPERVISOR Dr NGUYỄN THỊ NGUYỆT QUẾ Ho Chi Minh City - 2012 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com INDEX ACKNOWLEDGEMENTS LIST OF FIGURES LIST OF TABLES LIST OF APPENDIX ABSTRACT 1.1 Background to the research 10 1.1.1 The importance of small and medium sized companies 10 1.1.2 The facts of labor force in SMEs and problem statement 10 1.2 Research objective 12 1.3 Scope of the study 12 1.4 Significances of the study: 12 1.5 Structure of the study 13 CHAPTER 2: LITERATURE REVIEW .14 2.1 Chapter introduction 14 2.2 Relative concepts and definition 14 2.2.1.Small and medium companies 14 2.2.2 Core employees 15 2.2.3 Core employee retention 15 2.3 Review of previous study 17 2.3.1 Organizational commitment 18 2.3.2 Training 19 2.3.3 Leadership 19 2.3.4.Working environment 20 2.3.5 Remuneration and reward 21 2.3.6 Organizational culture and policies 22 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 3.3.7 Intention to stay 22 2.4 Proposal research hypotheses 23 2.5 Chapter conclusion 24 CHAPTER 3: METHODOLOGY 25 3.1 Research process 25 3.2 Questionnaire design .26 3.2.1 Measure of variable 26 3.2.2 Draft questionnaire 30 3.3 Pilot study 30 3.4 Main survey 31 3.4.1 Sample method 31 3.4.2 Sample size 31 3.5 Data analysis technique 32 3.5.1 Recoding data 32 3.5.2 Testing of Reliability 32 3.5.3 Exploratory factor analysis (EFA) 33 3.5 Hypotheses testing: Multiple Regression Analysis 33 3.7 Chapter conclusion 34 CHAPTER 4: DATA ANALYSIS 35 4.1 Sample description and data clearance 35 4.2 Demography Sampling 35 4.4 Testing of Reliability 36 Exploratory factor analysis (EFA) .37 4.7 Chapter conclusion 43 5.1 Finding and discussion 45 5.2 Limitation 46 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 5.3 Suggestion for future Research .47 APPENDIX .55 APPENDIX 1.1: QUESTIONAIRE (English version) 55 APPENDIX 1.2: QUESTIONAIRE (Vietnamese version) 59 APPENDIX 4.1 CODING 62 Appendix 4.2 Demography 65 Appendix 4.3: Testing of reliability variables .65 Appendix 4.4 EFA for all independent variables .67 Appendix 4.4 EFA for all independent variables (The first time in times) 67 Appendix 4.4.2: EFA with all independent variable (the second time in times) 68 Appendix 4.4 EFA for all independent variables (The third time in times) 70 Appendix 4.4 EFA for all independent variables (The fourth time in times) 71 Appendix 4.5 Regression, model Independent variables: Training, leadership, remuneration and company policies; dependent variable: Commitment .73 Appendix 4.6 Regression, model Independent variables: Organizational Commitment; dependent variable: intention to stay 76 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENTS First at all, I would like to express my sincere gratitude to my supervisors, Dr Nguyen Thi Nguyet Que for her continuous support of my thesis I would like to take this opportunity to thank leaders, teachers and staffs in ISB who help me usefully all the subjects of my master course My sincere thanks also goes to the friends and colleagues who participated in the initial trial survey stages that led to the development of the final survey questionnaire and their support over the time when I am busy to study I would like to thank my Mummy, my sisters, brothers and my special friend who is my moral support in all my studying period Last at all, I would like to present the achievement to my Dad's soul who spent all the life for my family Ho Chi Minh City, December 28, 2012 Huynh Thien Hai LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Name of configure Figure 2.1 proposal research hypothesis Figure 3.1 Research Design Process Page 24 26 44 Figure 4.1 Final model LIST OF TABLES Table name Page Table 2.1 Classification of SMEs in Vietnam 16 Table 3.1 Measurement of training and career development 27 Table 3.2 Measurement of leadership Table 3.3 Measurement of working environment Table 3.4 Measurement of remuneration and rewards Table 3.5 Measurement of company policies Table 3.6 Measurement of organizational commitment Table 3.7 Measurement of intention to stay Table 3.8: Cronbach’s alpha reliability coefficient 27 28 29 29 30 30 33 Table 4.1 Sample Demography Table 4.2: Cronbach’s alpha reliability coefficient of variable Table 4.3: Pattern matrix in the last time (the fourth time) of regression analysis Table 4.4 Correlations model Table 4.5 Model Summaryb model Table 4.6 ANOVA of model Table 4.7 Coefficientsa of medel Table 4.8 Model Summaryb model Table 4.9 Coefficientsa of model Table 5.1 Questionnaire for organizational polices 37 37 37 40 40 41 41 43 43 46 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF APPENDIX Appendix name Page APPENDIX 1.1: ENGLISH QUESTIONAIRE 55 APPENDIX 1.2: VIETNAMESE QUESTIONAIRE 50 APPENDIX 4.1 CODING 62 Appendix 4.2 Demography 65 Appendix 4.3: Testing of reliability of variables 65 Appendix 4.4 EFA for all independent variables Appendix 4.4 EFA for all independent variables (The first time in times) Appendix 4.4.2: EFA with all independent variable (the second time in times) Appendix 4.4 EFA for all independent variables (The third time in times) Appendix 4.4 EFA for all independent variables (The fourth time in times) Appendix 4.5.Correlation bivariable model Appendix 4.5.Correlation bivariable model 67 67 68 70 71 73 76 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF ABBREVIATION SME Small and medium sized company SMEs Small and medium sized companies HCMC Hochiminh City VCCI Vietnam Chamber of Commerce and Industry HR Human resource VND Vietnam Dong WTO the World Trade Organization WB World Bank LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT Employee retention especially core employees is one of the most important ongoing practices of human resource management Employee’s turnover is a major HR organizational threat The problem is being faced by different organizations of almost all the countries Organizations are trying different plans to get maximum output from employees Core employee retention is one of the main factors that could help in achieving the required results There are many theories for retention employees but there is not any closed research for SME employees in HCMC This study elaborates the retention of core employees; its benefits and factors that may help to retain the best employees of the organization Questions with five-point Likert scale are used to the research for investigating needs of core employees Base on the result of investigation, the most affective factors among of factors: training-career path; leadership; working environment ; remuneration-rewards and organizational culture-policies will be recognized Intermediary variable is organizational commitment that is used in the research The research findings prove significant relationship of training-career path; leadership; working environment; remuneration-rewards and organizational culture-policies that influence the staying decision of core employee This study will help SMEs in HCMC to find out various HR policies and to revise their current policies for further improvements LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 64 32 Pol22 Policies 22 "Progress towards meeting planned objectives is periodically reviewed" 33 Pol23 Policies 23 "The organizational structure facilitates the way we things." 34 Pol24 Policies 24 " This organization has a defined vision/mission to meet its goals" COMMITMENT 35 Com25 Commitment 25 "I feel a strong sense of belonging to this organization" 36 Com26 Commitment 26 "I could just as well working for a different organization if the type of work was similar (negative) " Com27 Commitment 27 "I find it difficult to agree with this organization's policies (negative) Com28 Commitment 28 "This organisation really inspires the very best in me in the way of job performance" Com29 Commitment 29 "My values and this organisation's values are very similar" Com30 Commitment 30 "There is little to be gained by sticking with this organization indefinitely (negative) " Com31 Commitment 31 "I am willing to put in a great deal more effort than normally expected to help this organisation be successful" Com32 Commitment 32 "I am proud to tell others that I am part of this organization" 37 38 39 40 41 42 43 Com33 Commitment 33 "I really care about the future of this organization" INTENTION TO STAY 44 Int34 Intention 34 "I plan to work at my present job for as long as possible" 45 Int35 Intention 35 " I will most certainly look for a new job in the near future (negative) " 46 Int36 Intention 36 "I plan to stay in this job for at least two to three years" 47 Int37 Intention 34 "I would hate to quit this job" LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 65 Appendix 4.2 Demography Frequency AREA FIELD EDU GENDER MARRIED STATUS Technical Trading Banking Others High school College Bachelor Upper Bachelor Male Female Single Married Percent 78 108 28 121 88 97 136 14 198 137 190 145 23.3 32.2 8.4 36.1 26.3 29.0 40.6 4.2 59.1 40.9 56.7 43.3 Valid Percent 23.3 32.2 8.4 36.1 26.3 29.0 40.6 4.2 59.1 40.9 56.7 43.3 Cumulative Percent 23.3 55.5 63.9 100.0 26.3 55.2 95.8 100.0 59.1 100.0 56.7 100.0 Appendix 4.3: Testing of reliability variables Group Times Item-Total Statistics Cronbach's Variable Alpha Training 1st time/1 834 Leader 1st time/1 893 Environment 1st time/1 821 TRA 01 TRA 02 TRA 03 LEA 04 LEA 05 LEA 06 LEA 07 LEA 08 LEA 09 LEA 10 LEA 11 ENV 12 ENV 13 ENV 14 ENV 15 REM 16 Corrected Cronbach's Item-Total Alpha if Item Correlation Deleted 673 792 760 706 655 810 653 881 759 870 719 875 678 878 545 891 662 880 678 878 679 878 659 769 712 745 587 804 629 782 667 822 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 66 Remunerations 1st time/1 & rewards 852 Organizational 1st time/1 Policies 866 Commitment 797 1st time/2 2nd time/2 812 Intention 1st time/3 606 2nd time/3 606 2nd time/3 685 REM 17 REM 18 REM 19 REM 20 POL 21 POL 22 POL 23 POL 24 COM 25 COM 26 COM27 COM 28 COM 29 COM30 COM 31 COM 32 COM 33 COM 25 COM 26 COM27 COM 28 COM 29 COM 31 COM 32 COM 33 INT 34 INT35 INT 36 INT 37 INT 34 INT35 INT 36 INT 37 INT 34 INT 36 INT 37 708 630 733 590 763 752 712 639 617 367 317 492 593 276 611 638 614 629 343 218 542 641 656 661 643 524 181 424 449 524 181 424 449 442 547 509 810 832 803 841 808 813 831 859 760 792 803 776 763 812 762 758 761 776 817 842 788 774 773 772 774 430 685 507 485 430 685 507 485 661 529 578 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 67 Appendix 4.4 EFA for all independent variables Appendix 4.4 EFA for all independent variables (The first time in times) Total Variance Explained The first time in times Initial Eigenvalues Extraction Sums of Squared Loadings Factor Total Rotation Sums of Squared Loadingsa Total % of Cumulative Total % of Cumulative Variance % Variance % 10.800 45.002 45.002 10.399 43.330 43.330 7.662 1.591 6.627 51.629 1.250 5.209 48.539 8.329 1.414 5.893 57.522 1.038 4.327 52.865 6.392 1.273 5.303 62.825 867 3.614 56.479 6.666 1.023 4.264 67.089 685 2.856 59.335 4.607 905 3.773 70.862 815 3.396 74.258 664 2.766 77.024 599 2.494 79.518 10 529 2.203 81.721 11 498 2.075 83.796 12 456 1.899 85.694 13 432 1.800 87.495 14 390 1.625 89.119 15 375 1.564 90.683 16 335 1.397 92.080 17 311 1.295 93.375 18 277 1.153 94.528 19 268 1.117 95.645 20 248 1.034 96.679 21 227 944 97.624 22 205 852 98.476 23 200 835 99.311 24 165 689 100.000 Extraction Method: Principal Axis Factoring a When factors are correlated, sums of squared loadings cannot be added to obtain a total variance LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 68 Pattern Matrix The first time in times Factor TRA 01 825 TRA 02 856 TRA 03 756 LEA 04 366 277 LEA 05 545 LEA 06 586 LEA 07 260 LEA 08 405 -.294 LEA 09 607 LEA 10 605 LEA 11 721 ENV 12 313 457 ENV 13 277 503 ENV 14 356 258 ENV 15 221 537 REM 16 741 REM 17 849 REM 18 555 REM 19 749 REM 20 -.273 377 525 POL 21 253 821 POL 22 347 786 POL 23 566 POL 24 -.251 634 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization a Rotation converged in iterations 798 569 248 -.242 232 Appendix 4.4.2: EFA with all independent variable (the second time in times) Total Variance Explained the second time in times Initial Eigenvalues Extraction Sums of Squared Loadings Factor Total % of Cumulative Total Variance % % of Cumulative Variance % Rotation Sums of Squared Loadingsa Total LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 69 10.320 44.869 44.869 9.922 43.137 43.137 7.088 1.580 6.871 51.740 1.237 5.380 48.517 7.981 1.407 6.116 57.856 1.038 4.513 53.030 6.195 1.257 5.466 63.322 855 3.717 56.747 6.192 1.022 4.444 67.766 683 2.968 59.715 4.548 876 3.810 71.577 746 3.245 74.822 610 2.652 77.474 597 2.595 80.069 10 526 2.285 82.354 11 482 2.095 84.449 12 452 1.967 86.416 13 432 1.878 88.294 14 382 1.661 89.955 15 356 1.547 91.502 16 326 1.418 92.920 17 295 1.283 94.204 18 275 1.198 95.401 19 250 1.087 96.489 20 228 993 97.482 21 209 909 98.391 22 201 874 99.264 23 169 736 100.000 Extraction Method: Principal Axis Factoring a When factors are correlated, sums of squared loadings cannot be added to obtain a total variance Pattern Matrixa the second time in times Factor TRA 01 843 TRA 02 845 TRA 03 730 LEA 05 494 LEA 06 553 LEA 07 245 LEA 08 404 -.303 LEA 09 599 LEA 10 593 LEA 11 728 ENV 12 329 440 803 577 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 70 ENV 13 291 489 -.207 ENV 14 373 241 ENV 15 224 532 REM 16 735 REM 17 858 REM 18 559 REM 19 752 REM 20 -.261 377 508 248 POL 21 240 830 -.242 POL 22 332 792 POL 23 560 POL 24 -.251 626 235 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization a Rotation converged in 10 iterations Appendix 4.4 EFA for all independent variables (The third time in times) Total Variance Explained The third time in times Initial Eigen values Extraction Sums of Squared Loadings Factor Total 10 11 12 13 14 15 16 17 18 9.074 1.484 1.365 1.220 995 677 604 581 509 485 456 403 358 322 316 268 241 230 % of Cumulative Total % of Cumulative Variance % Variance % 45.369 45.369 8.659 43.295 43.295 7.420 52.789 1.040 5.201 48.496 6.826 59.615 1.006 5.032 53.529 6.099 65.714 820 4.100 57.628 4.973 70.687 3.387 74.074 3.019 77.093 2.905 79.998 2.545 82.543 2.426 84.969 2.279 87.247 2.015 89.262 1.792 91.055 1.610 92.665 1.582 94.247 1.341 95.588 1.204 96.791 1.148 97.940 Rotation Sums of Squared Loadingsa Total 7.022 6.859 6.273 5.433 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 71 19 225 1.127 99.067 20 187 933 100.000 Extraction Method: Principal Axis Factoring a When factors are correlated, sums of squared loadings cannot be added to obtain a total variance Pattern Matrixa The third time in times Factor TRA 01 863 TRA 02 846 TRA 03 677 LEA 05 567 LEA 06 656 LEA 07 634 LEA 08 694 LEA 09 706 LEA 10 672 LEA 11 766 ENV 15 228 446 REM 16 699 REM 17 873 REM 18 610 REM 19 755 REM 20 448 481 POL 21 835 POL 22 848 POL 23 642 POL 24 201 663 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization a Rotation converged in iterations Appendix 4.4 EFA for all independent variables (The fourth time in times) Variance Explained The fourth time in times Initial Eigenvalues Extraction Sums of Squared Loadings Factor Total % of Variance Cumulative % Total % of Variance Cumulative % Rotation Sums of Squared Loadingsa Total LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 72 8.658 45.570 45.570 8.248 43.411 43.411 6.756 1.444 7.600 53.170 1.019 5.364 48.775 6.680 1.310 6.895 60.064 973 5.120 53.895 5.972 1.209 6.365 66.430 803 4.226 58.122 5.276 881 4.635 71.065 677 3.563 74.629 601 3.161 77.790 571 3.003 80.793 498 2.621 83.415 10 465 2.446 85.861 11 450 2.368 88.229 12 364 1.918 90.147 13 358 1.883 92.030 14 317 1.671 93.701 15 298 1.568 95.269 16 241 1.267 96.536 17 233 1.224 97.760 18 228 1.200 98.960 19 198 1.040 100.000 Extraction Method: Principal Axis Factoring a When factors are correlated, sums of squared loadings cannot be added to obtain a total variance Pattern Matrixa The fourth time in times Factor TRA 01 839 TRA 02 848 TRA 03 713 LEA 05 500 LEA 06 604 LEA 07 760 LEA 08 828 -.246 LEA 09 664 LEA 10 594 LEA 11 681 ENV 15 472 REM 16 736 REM 17 958 REM 18 601 REM 19 780 POL 21 903 POL 22 921 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 73 POL 23 623 POL 24 565 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization a Rotation converged in iterations Appendix 4.5 Regression, model Independent variables: Training, leadership, remuneration and company policies; dependent variable: Commitment Pearson Correlation Sig (1-tailed) Model 1: Correlations COM TRA LEADER COM 1.000 439 635 TRA 439 1.000 521 LEADER 635 521 1.000 REM 600 529 667 POL 686 494 603 COM 000 000 TRA 000 000 LEADER 000 000 REM 000 000 000 POL 000 000 000 REM 600 529 667 1.000 600 000 000 000 000 POL 686 494 603 600 1.000 000 000 000 000 Model 1: Model Summary b Model R R Adjusted Std Error Change Statistics Square R of the R F df1 df2 Sig F Square Estimate Square Change Change Change a 749 561 556 2.80282 561 105.525 330 000 a Predictors: (Constant), POL, TRA, LEADER, REM b Dependent Variable: COM Model 1: ANOVAa Model Sum of Df Mean Square F Sig Squares Regression 3315.937 828.984 105.525 000b Residual 2592.422 330 7.856 Total 5908.358 334 a Dependent Variable: COM b Predictors: (Constant), POL, TRA, LEADER, REM LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 74 Model Coefficients a Model Unstandardized Standardized t Sig Collinearity Coefficients Coefficients Statistics B Std Beta Tolerance VIF Error (Constant) 6.151 1.057 5.818 000 TRA 004 089 002 047 963 646 1.549 LEADER 259 051 268 5.045 000 472 2.116 REM 208 067 166 3.123 002 470 2.126 POL 651 076 424 8.591 000 546 1.831 a Dependent Variable: COM Model 1: Collinearity Diagnostics a Model Dimension Eigenvalue Condition Variance Proportions Index (Constant) TRA LEADER REM POL 4.942 1.000 00 00 00 00 00 018 16.461 34 30 02 08 33 017 17.102 57 67 01 00 00 013 19.222 04 02 10 42 66 009 22.988 06 00 87 50 01 a Dependent Variable: COM Model 1: Residuals Statistics a Minimum Maximum Mean Std Deviation N Predicted Value 16.5801 33.4782 26.3731 3.15087 335 Residual -9.24474 16.76302 00000 2.78599 335 Std Predicted Value -3.108 2.255 000 1.000 335 Std Residual -3.298 5.981 000 994 335 a Dependent Variable: COM LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 75 Charts LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 76 Appendix 4.6 Regression, model Independent variables: Organizational Commitment; dependent variable: intention to stay Model 2: Model Summaryb Model R R Adjusted Std Error Change Statistics Square R Square of the R Square F df1 df2 Sig F Estimate Change Change Change a 621 385 383 1.83378 385 208.607 333 000 a Predictors: (Constant), COM b Dependent Variable: INT LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 77 Model 2: Model Sum of Squares Regression 701.496 Residual 1119.800 Total 1821.296 a Dependent Variable: INT b Predictors: (Constant), COM ANOVAa df Mean Square 333 334 F 701.496 208.607 3.363 Sig .000b Model 2: Coefficientsa Model Unstandardized Standardized t Sig Collinearity Coefficients Coefficients Statistics B Std Beta Tolerance VIF Error (Constant) 2.074 637 3.255 001 COM 345 024 621 14.443 000 1.000 1.000 a Dependent Variable: INT Model 2: Collinearity Diagnosticsa Model Dimension Eigenvalue Condition Variance Proportions Index (Constant) COM 1.988 1.000 01 01 012 12.639 99 99 a Dependent Variable: INT Model 2: Residuals Statistics a Minimum Maximum Mean Std Deviation Predicted Value 6.2086 14.1338 11.1612 1.44924 Residual -6.99891 3.65652 00000 1.83104 Std Predicted Value -3.417 2.051 000 1.000 Std Residual -3.817 1.994 000 999 a Dependent Variable: INT N 335 335 335 335 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 78 Charts LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ... will investigates what factors influencing the intention to stay of core employees and measure how deep the influencing factors effect organizational commitment and intention to stay of core employees. ..UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Huỳnh Thiên Hải FACTORS INFLUENCING ORGANIZATIONAL COMMITMENT AND INTENTION TO STAY OF CORE EMPLOYEES IN SMALL. .. Chapter introduction There are many previous study for the factors that influencing organizational commitment and intention to stay of core employee in the world In this chapter, the definition of core