Corporate social responsibility, employee commitment and organizational performance in banking industry in thai nguyen province

CORPORATE SOCIAL RESPONSIBILITY, EMPLOYEE COMMITMENT AND ORGANIZATIONAL PERFORMANCE IN BANKING INDUSTRY IN THAI NGUYEN PROVINCE A DISSERTATION PAPER Presented to School of Graduate Studies Central Philippine University, Philippines In Collaboration with Thai Nguyen University, Vietnam In Partial Fulfillment Of the Requirements for the Degree DOCTOR OF MANAGEMENT NGUYEN HONG HAI JUNE 2020 NGUYEN HONG HAI MARCH 2020 i ACKNOWLEDGEMENT The author wishes to convey the gratitude to the following persons who wholeheartedly devoted and helped make this piece of work a reality: To Assciate Prof Nguyen Thi Gam and Dr Rene Vencer for their advices, guidance, supervision, suggestions and precious time in enthusiastically reading and checking the manuscript, providing the author useful materials; To the leadership of International Cooperation Center for Training and Study Abroad and their staff for their enthusiasm to support executive for the participants completed the study program; To Thai Nguyen University of Economics and Business Administration and Central Philippine University for the help that I receive to finish my dissertation; To my family and friends for their love and support in one way or another, and to all who have contributed to make this study a success NGUYEN HONG HAI ii LỜI CẢM ƠN Tác giả muốn bày tỏ lời cảm ơn chân thành tới người toàn tâm toàn ý giúp đỡ tác giả hồn thành cơng trình Xin cảm ơn PGS TS Nguyễn Thị Gấm TS Rene Vencer hướng dẫn, hỗ trợ, gợi ý nhiệt trình đọc thảo hỗ trợ tài liệu cho tác giả; Xin cảm ơn lãnh đạo nhân viên Trung tâm Hợp tác quốc tế Đào tạo Du học nhiệt tình giúp đỡ tác giả việc hoàn thành chương trinh đào tạo; Xin cảm ơn Trường ĐH Kinh tế Quản trị Kinh doanh Đại học Central Philipine tron việc hỗ trợ tác giá hoàn thành Luận án này; Xin gửi lời cảm ơn chân thành đến gia đình bạn bè giúp đỡ, hỗ trợ động viện tác giả để tác giả có thẻ vượt qua khó khan mà hoàn thành luận án NGUYỄN HỒNG HẢI iii DECLARATION I certify that this is my own research The data stated in the thesis is true, all citations are indicated origin The research results of the dissertation were published in the scientific journal not identical with any other works The author of the thesis NGUYEN HONG HAI iv LỜI CẢM ĐOAN Tôi cam kết nghiên cứu riêng Các liệu nêu luận án trung thực, tất trích dẫn định nguồn gốc Các kết nghiên cứu luận án cơng bố tạp chí khoa học khơng giống với cơng trình khác Tác giả luận án NGUYỄN HỒNG HẢI v TABLE OF CONTENTS ACKNOWLEDGEMENT i LỜI CẢM ƠN ii DECLARATION iii LỜI CẢM ĐOAN iv TABLE OF CONTENTS v LIST OF TABLES viii LIST OF FIGURES x CHAPTER I THE PROBLEM AND ITS SETTING 1.1 Background and Rationale of the Study 1.2 Objectives .3 1.3 Hypotheses 1.4 Theoretical Framework 1.4.1 Stakeholder Theory 1.4.2 Process Theories 1.4.3 Expectancy Theory 1.4.4 Equity Theory 1.5 Conceptual Framework 11 1.6 The Operational Definitions .14 1.6.1 Corporate Social Responsibility 14 1.6.2 Employee Commitment 16 1.6.3 Organizational Performance 18 1.7 Significance of the Study 19 1.8 Scope and Delimitation 19 1.9 Organization of the Dissertation 20 vi CHAPTER II LITERATURE REVIEW 21 2.1 Related Literature Review 21 2.1.1 Corporate Social Responsibility 21 2.1.2 Employee Commitment 28 2.1.3 Organizational Performance 35 2.1.4 Corporate Social Responsibility and Employee Commitment 40 2.1.5 Corporate Social Responsibility, Employee Commitment and Organizational Performance 45 2.2 Empirical related studies 50 2.2.1 Identification of Gaps in Current Literature 58 2.2.2 Summary of the chapter 59 CHAPTER III METHODOLOGY 60 3.1 Research Design 60 3.2 Population, Sample Size and Sampling Technique 62 3.3 Research Instruments 63 3.4 Data Gathering Procedures 65 3.5 Data Processing and Data Analysis 67 3.5.1 Descriptive Statistics 67 3.5.2 Purification Process 67 3.5.3 Testing the Hypothesizes 72 3.6 Results of Scale Purification 72 3.6.1 The Scale Purification for Corporate Social Responsibility 73 3.6.2 The Scale Purification for Employee’s Commitment 76 3.6.3 The Scale Purification for Employee’s Perception about Organizational Performance 79 3.6.4 Scale Purification after Exploratory Factor Analysis 80 vii CHAPTER IV DATA PRESENTATION, ANALYSIS AND INTERPRETATION 81 4.1 Measurement Model 81 4.1.1 CFA for Corporate Social Responsibility to Society Scale 81 4.1.2 CFA for Corporate Social Responsibility to Environment 82 4.1.3 CFA for Employee’s Affective Commitment 83 4.1.4 CFA for Employee’s Affective Commitment 85 4.1.5 CFA for Employee’s Normative Commitment 86 4.1.6 CFA for Organizational Performance 88 4.2 Convergent and Discriminant Validity of Scale 90 4.3 Hypothesis Testing .92 CHAPTER V.SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 97 5.1 Summary 97 5.2 Findings 98 5.3 Conclusion 100 5.4 Recommendation 102 5.4.1 Completing the system of regulatory documents, guiding the implementation of CSR 102 5.4.2 Enhance the application of standards related to CSR 103 5.4.3 Training, raising awareness and ability of employees on CSR at banks 103 5.4.4 Establishment of funds for CSR programs 104 5.5 Limitations of the study and scope for future research 104 REFERENCES 105 APPENDIX 109 viii LIST OF TABLES Table 1.1 The Scale for Measure Social Responsibility for Society 15 Table 1.2 The Scale for Measure Social Responsibility for Environment 15 Table 1.3 The Scale for Measure Affective Commitment 16 Table 1.4 The Scale for Measure Continuance Commitment 17 Table 1.5 The Scale for Measure Affective Commitment 17 Table 1.6 The Scale for Organizational Performance 18 Table 3.1 Number of Respondents for each Bank Branch 66 Table 3.2 Exploratory Factor Analysis of SRS for Society Scale 74 Table 3.3 Item-Total Statistics of SRS for Society 74 Table 3.4 Exploratory Factor Analysis of Social Responsibility for Environment Scale75 Table 3.5 Item-Total Statistics for Social Responsibility for Environment Scale 75 Table 3.6 Exploratory Factor Analysis of Affective Commitment Scale 76 Table 3.7 Item-Total Statistics for Affective Commitment Scale 77 Table 3.8 Exploratory Factor Analysis of Continuance Commitment Scale 77 Table 3.9 Item-Total Statistics Continuance Commitment Scale 78 Table 3.10 Exploratory Factor Analysis of Normative Commitment Scale 78 Table 3.11 Item-Total Statistics Normative Commitment Scale 79 Table 3.12 Exploratory Factor Analysis of Organizational Performance Scale 79 Table 3.13 Item-Total Statistics Organizational Performance Scale 80 Table 3.14 Number of Item after Exploratory Factor Analysis 80 Table 4.1 Confirmatory Factor Analysis Results for Social Responsibility for Society Scale 82 Table 4.2 Confirmatory Factor Analysis Results for Social Responsibility for Society Scale 83 ix Table 4.3 Confirmatory Factor Analysis Results for EAC Scale 84 Table 4.4 Confirmatory Factor Analysis Results for ECC Scale 86 Table 4.5 Confirmatory Factor Analysis Results for ENC Scale 87 Table 4.6 Confirmatory Factor Analysis Results for OP Scale 88 Table 4.7 Final Measurement Model Results 90 Table 4.8 Construct Correlation Matrix 92 Table 4.9 Summary of Hypothesis-Testing Results 95 99 the company This results in lower employee turnover and higher productivity In addition to that, employee commitment is critical to maintain quality program success When employees perceive that company pays attention to community or employees’ families, they may think that they should try the best to contribute to company’s images Employees’ commitment could not be so high if they not see the organization’s responsibility Corporate Social Responsibility relates to employee’s job satisfaction When employees satisfy with jobs, they tend to work for company for long time and try to provide best ability to serve customers CSR can attract talent, increase commitment, encourage organization citizenship behavior, or decrease turnover, then firms that engage in CSR should perform better than those that not Committed employees give a big contribution to organizations because they perform and behave on achieving organizations’ goals Performance of an organizational system is a complex relationship involving seven performance criteria that must be followed: effectiveness, efficiency, quality, productivity, quality of work, innovation and profitability 2) Results in banking industry in Thai Nguyen show that corporate social responsibility for society has the positive effect on employee’s affective commitment It means that when employees perceive highly the responsibility of banks, they feel more comfortable with jobs and they seem to commit to work for banks for long time This result shows that the affective component of employees’ commitment to the organization was linked to turnover and on the job behavior 3) The results from data analysis also show that there is a positive 100 relationship between employees’ perception of corporate social responsibility for environment and employee’s affective commitment The employees’ involvement in CSR activities build the under-standing of employees about company’s CSR initiatives and employees are more concerned to such organizations 4) The findings also show that there is a positive relationship between employees’ perception of corporate social responsibility for society and employee’s continuance commitment In addition to that, there is a positive relationship between employees’ perception of corporate social responsibility for society and employee’s normative commitment It also show that the perceptions of employees’ regarding CSR activities and actually involvement effect the employees’ reactions and it has an effect on employee commitment 5.3 Conclusion A number of banks were involved in dealing with employees’ commitment and organizational performance and are currently struggling to find ways to increase the employees’ commitment and improve organizational performance Results reported in the present study have several practical recommendations for banks in Thai Nguyen province By empirically testing the effect of perception of corporate social responsibility, banks in Thai Nguyen can improve the employees’ commitment 1) The literature emphasizes the influence of corporate social responsibility on employees, such as commitment, and service performance suggests that corporate social responsibility is even more important today than it was in the past Globalization, increased competition, various workforce developments and 101 technological change have created a greater need for strategy innovation, coordination and integration across organisational units in order to improve efficiency and effectively manage workforce Corporate social responsibility will become even more important and critical for future organisations Corporate social responsibility will become one of major components of the management process 2) Organizations practice CSR to appease stake holders, to retain employees and to motivate customers to buy products and services Employee commitment linked between employees and organization plays important role Higher employee commitment leads to higher productivity and lower turnover CSR can attract talent, increase commitment and resulted in better achieving organization’s goals The process of moral decision-making, the process of perception, deliberation and responsiveness, and the development of proper relationships with the primary stakeholders: employees, customers, suppliers 3) Higher CSR an organization practice in a bank in particular or in an organization in general leads to higher employee’s affective commitment Furthermore, higher social relationship among employees leads to higher employee commitment The results from this study also show that corporate associations include perceptions, inferences or beliefs about a company: a person’s knowledge of his or her behaviors with respect to the company; information about the company’s prior actions; moods and emotions experienced by the person with respect to the company; and overall and specific evaluations of the company and its perceived attributes 4) The higher an organization in general or a bank in particular practices in 102 corporate social responsibility for environment the higher employee affective commitment they have In other word, the higher awareness of the employees on CSR for environment will lead to the higher employee affective commitment to the banks 5) Higher awareness of employees in corporate social responsibility for society leads to higher employee continuance commitment and higher employee awareness in corporate social responsibility for society results in higher employee normative commitment 5.4 Recommendation The results of this thesis suggest that banks interested in retaining their most valuable assets - the employees The findings derived from various banks in Thai Nguyen revealed that the corporate social responsibility has positive effect on employees’ commitment To achieve the best ability of employees in serving customers, banks should pay attention to social relationships The resource based on view of the firm felt that the competitive advantage of a firm depends upon the interplay of its human, organizational and physical resources over time Traditionally, resources are likely to lead to competitive advantage when they are valuable, rare, inimitable and the organization must be organized to deploy these resources effectively The “dynamic capabilities” approach represents the dynamic aspects of the resources 5.4.1 Completing the system of regulatory documents, guiding the implementation of CSR The bank's code of conduct needs to be supplemented and improved more 103 closely in terms and rules in it Thus, the new code of conduct promotes a great role in the right direction for CSR activities of the banks In parallel with the completion of the bank’s regulation, it is also necessary to develop and develop a guideline for implementing its details throughout the entire bank so that it is detailed and clearly understood Thus, the views, policies and methods of implementing CSR are implemented correctly and effectively In addition, banks should further improve the system of legal documents including: general legal documents; regulations applicable in the banks 5.4.2 Enhance the application of standards related to CSR The banks need to promote better implementation of CSR standards that the banks has achieved as "ISO 9000" on building a healthy, safe and efficient working environment; "Banks needs to pay more attention to apply other CSR standards such as ISO 9000 as a standard of quality management system, ISO 26000 is a guideline for social responsibility Increasing the application of standards related to CSR will help banks receive more trust from the community and society 5.4.3 Training, raising awareness and ability of employees on CSR at banks In general, the awareness of CSR of staff at banks is still limited and not synchronized at all levels Therefore, the research team recommends that banks should implement two parallel solutions: Guidance and awareness raising for employees on CSR; Training and improving CSR performance for employees To implement these solutions, banks should step up coordination and coordination Working with reputable CSR research institutes in Vietnam as well as in the world such as UNIDO, ILO, UNEP to provide appropriate solutions and training 104 programs for CSR for their employees 5.4.4 Establishment of funds for CSR programs Although banks have their own funds to implement some CSR-related activities such as Social Welfare Fund, Unemployment Assistance Fund, etc., banks should establish a fund specialized in serving the bank's CSR programs This fund will help the company get a rich, stable, centralized and easy-to-manage budget resource more effective Performance of this specialized Fund helps CSR activities of banks to be implemented more easily and effectively 5.5 Limitations of the study and scope for future research Like 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Boston, MA: Wadsworth https://trove.nla.gov.au/work/6037576 Cengage Learning from 109 APPENDIX QUESTIONNAIRE This questionnaire is used to test the effects of corporate social responsibility on employee commitment and job performance and the propose solutions for banks in Thai Nguyen improve service quality and competitive advantage Please read carefully the questionnaire and circle the most appropriate answers If you have any items confusing, please answer them as best as you can based on your understanding Your responses to these questions will provide valuable data for this research and also provide very real and practical insights into the problems to develop effective solutions for banks in Vietnam Your answers will be kept completely anonymous Thank you for your help! 110 SECTION A ABOUT YOU You are: (Male/ Female ): Age: Work Experience (Years): Position: Organization: SECTION B ABOUT SOCIAL RESPONSIBILITY, EMPLOYEE COMMITMENT AND JOB SATISFACTION Please read the following statements and circle the most appropriate numbers Strongly Strongly Neutral Disagree Agree ↓ ↓ ↓ ↓ ↓ ↓ ↓ Considering the employees is a high priority at my company Considering to the well-being of customers is a high priority at my company Contributing to the well-being of suppliers is a high priority at my company Contributing to the well-being of the community is a high priority at my company Environmental issues are integral to the strategy of my company Addressing environmental issues is integral to the daily operations of my Social Responsibility 111 company My company takes great care that our work does not hurt the environment My company achieves its short-term goals while staying focused on its impact on the environment Strongly Strongly Neutral Disagree Agree ↓ ↓ ↓ ↓ ↓ ↓ ↓ 7 7 7 Employee Commitment I feel myself to be a part of this organization I am quite proud to be able to tell people the company The offer of a little more money with another company would not seriously make me think of changing jobs I would recommend a close friend to join this company To know that my own work has made a contribution to the good of the organization would please me In my work, I like to feel that I am making some contribution, not for myself but for the organization as well 112 I sometimes feel like leaving this company for good 7 I am not willing to more than my job description requires just helping the organization Even if the company were not doing well financially, I would be reluctant to change to another company Strongly Strongly Neutral Disagree Agree ↓ ↓ ↓ ↓ ↓ ↓ ↓ I think my bank works well I think my bank get good result 7 Employee’s Perception of Organizational Performance I can confidently say that customers who my bank serve always happy I can be sure that service quality my bank offer is good 113 Further comments: ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… Thank you for taking the time to complete this questionnaire Once completed please return this questionnaire to: Nguyen Hong Hai Thai Nguyen University of Economics and Business Administration Telephone: 0983847988 E Mail: honghai@tueba.edu.vn ... study examines the impact of corporate social responsibility on employee commitment and organizational performance in perspective of employees in banking industry in Thai Nguyen province More... through affecting employee commitment in banking industry in Thai Nguyen province 4) Propose some managerial implications for bank branches in Thai Nguyen province improve the performance through... employee commitment in banking industry in Thai Nguyen province 4 3) Identify the effect of corporate social responsibility on employee? ??s evaluation about organizational performance in employee? ??s