EFFECT OF HUMAN RESOURCE MANAGEMENT PRACTICE ON COMPETITIVE ADVANTAGE AND BUSINESS RESULTS OF ENTERPRISES

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY PHAM HUNG DUC EFFECT OF HUMAN RESOURCE MANAGEMENT PRACTICE ON COMPETITIVE ADVANTAGE AND BUSINESS RESULTS OF ENTERPRISES: CASE STUDY ON VNPTs IN PROVINCES AND CITIES Major Code : Business Administration : 9340101 DOCTORAL THESIS SCIENTIFIC INSTRUCTOR: ASSOC.PROF.DR TRAN HA MINH QUAN Ho Chi Minh City- 2020 -2- The work was completed at: University of Economics Ho Chi Minh City The scientific instructor: Assoc.Prof Dr Tran Ha Minh Quan Reviewer1: Reviewer 2: Reviewer 3: The thesis will be defended in front of the university-level doctoral thesis assessment committee, held at: University of Economics Ho Chi Minh City At hour day month year Thesis can be found at the library: LIST OF PUBLISHED RESEARCH WORKS RELATED TO THE THESIS Articles published in scientific journals: -3- Pham Hung Duc (2019) Current situation and solutions for human resource of tourism in Dong Nai Province in the integration period Journal of transportation science and technology, 34 (11) Pham Hung Duc (2019) Current situation and solutions for developing human resource of telecommunications (VNPT) in Dong Nai Province Journal of Economics Technology, Binh Duong Economics and Technology University, 36 (12) Pham Hung Duc (2020) Impact of human resource management practices on enterprises' competitive advantage and business performance - A case study of Vietnam Post and Telecommunications Group enterprises Management Science Letters, 10 (4), 721-732 (SCOPUS Q2) CHAPTER 1: INTRODUCTION OF THESIS 1.1 Rationale of research issue From practical needs: For the telecommunications service sector, the development of the information technology industry in the context of globalization and integration and especially the fourth industrial revolution (Industrial -4revolution 4.0) has made the field of telecommunications and information technology become an important economic sector in all countries On the other hand, competition in the context of integration has made human resource become the most important resources, deciding the competitive advantage of an enterprise Therefore, the need for research on the human resource management practice as the basis for the completion of the human resource management regime in enterprises, especially in the field of telecommunications and information technology service has been receiving great attention from administrators and researchers However, as mentioned above, there will not be sufficient scientific basis and therefore it will not make much sense if the completion of the human resource management regime is not linked to the competitive advantage and business results of enterprises According to experts and leaders in the post and telecommunications industry, they all agree that under current conditions with the process of deep integration into the global economy and increasing competition, especially in the digital economy, the business environment is constantly changing, “the challenge of environmental change requires flexibility and adaptability from the labor force Therefore, the labor force must simultaneously and quickly respond to the requirement of learning and applying new skills, implementing new technology, or reorganizing work” (Snow and Snell, 1992) Therefore, in general, the human resource management practice in enterprises, especially enterprises operating in fields subject to the pressure of science and technology change such as post and telecommunications, in addition to functional activities, need to lead and encourage employees to innovate and create, and through activities encourage employees to propose new ideas; promote initiatives, improve techniques, renovate working methods; diversify horizontal and vertical activities to increase adaptability to the specific requirements of the business environment such as: assigning new tasks; alternation of employees and work, etc It means that leading and encouraging necessary change in the components of the human resource management practice Furthermore, in terms of logic, the higher the employee is encouraged to change, the more effective their work is and therefore the more efficient the organization will be Research by Tran Kim Dung et al (2010) in the Vietnamese market also verified that the component of encouraging change (innovation) was positively related to the human resource management practice From the theoretical gap through a review of relevant researches: Applying resource-based theory, researches in the world have integrated the theory of human resource management at the micro level, and at the same time have proved that human resource is an important potential source of a sustained competitive advantage of an enterprise and in practice, human resource management is a sufficient condition to help enterprise to achieve and maintain the sustained competitive advantage However, the researches mentioned above still have some gaps Then, this thesis is done to fill the research gaps of the above researches New point 1: Many researches have considered the role of the human resource management practice, but they are still limited, they have not researched into depth and comprehensively considered (measured) the role of the human resource management practice (components of the human resource management -5practice) Therefore, the first new point of the thesis is to consider and verify the components of measurement of the human resource management practice New point 2: The relationship between the human resource management practice, the competitive advantage of human resource and business results of enterprises has not been verified from previous researches New point 3: Researches on the human resource management practice have been mainly done in developed markets, and limited in transition markets like Vietnam, especially in the post and telecommunications industry 1.2 Objectives of the research General objective: The thesis aims to measure the effect of human resource management practice on the competitive advantage and business results of VNPTs in the provinces and cities directly under Vietnam Posts and Telecommunications Group Based on the research results, the thesis introduces governance implications to increase the competitive advantage and business results of VNPTs Specific objective: To achieve the general objective, the research needs to implement the following specific objectives: Objective 1: determine the components of the human resource management practice; competitive advantage on human resource and business results of enterprises - Case study on VNPTs in provinces and cities under Vietnam Posts and Telecommunications Group Objective 2: adjust the scale of components of the human resource management practice; competitive advantage on human resource and business results of VNPTs in provinces and cities under the Vietnam Posts and Telecommunications Group Objective 3: build and verify scale model and theoretical model of the relationship between the human resource management practice, competitive advantage on human resource and business results of enterprises - Case study on VNPTs in provinces and cities under the Vietnam Posts and Telecommunications Group, on that basis, locate the intensity of the interaction between these factors and propose recommendations to complete the human resource management practice to contribute to improving the competitive advantage and business results of VNPTs in provinces and cities under the Vietnam Posts and Telecommunications Group 1.3 Methodologies of the research 1.3.1 Qualitative research method Qualitative research is carried out by group discussion technique, with the participation of a group of lecturers specialized in the human resource management and a group of specialists of human resource management department who are currently working at VNPT Dong Nai and some other provinces, cities, to explore, adjust and supplement the components of the human resource management practice; competitive -6advantage from the human resource management practice and business results of telecom enterprises with variables of observing and measuring the components of these concepts (chapter 3) 1.3.2 Quantitative research method Quantitative research (chapter and chapter 4) is carried out to confirm the values and reliability of the scale of components of the human resource management practice; competitive advantage from the human resource management practice and business results of VNPTs in provinces and cities; verify research models and research hypotheses; check whether there are differences in the effects of the human resource management practice on competitive advantage and business results of VNPTs in provinces and cities 1.4 Object and scope of the research The research object of the thesis is: the human resource management practice; competitive advantage based on human resource theory and business results of VNPTs in terms of the human resource management practice and competitive advantage of human resource The unit analyzed is VNPTs in provinces and cities directly under the Vietnam Posts and Telecommunications Group Respondents surveyed are department heads; Officers and workers directly working at VNPTs in provinces and cities Minimum defined number of respondents for each region is 30 (to ensure that the minimum sample size of an analyzed unit is large enough to be considered a normal distribution) 1.6 Meaning of the thesis 1.6.1 Practical meaning The research will help the human resource managers to have a more overview of the effect of the human resource management practice on competitive advantage and business results of telecommunications enterprises in Vietnam Therefore, this research will lay the basis for developing human resource development strategies, policies on the human resource management practice in telecommunications enterprises in Vietnam 1.6.2 Theoretical meaning The research is the summarization and systematization of theories about the human resource management and competitive advantage; researches on the human resource management practice in the relationship with competitive advantage and business results of enterprises Therefore, the author hopes that the research will contribute to form a theoretical framework to deploy other researches on topics related to the human resource management practice, competitive advantage of human resource and business results of enterprises The research develops of scale system and research models on the relationship between the human resource management practice, competitive advantage from a perspective of the human resource management practice and business results of enterprises Therefore, it will contribute to the development of theory and -7contribute to the missing scale system, especially the scale system in developing countries to establish the system of equal measurement value as stated by Craig & Douglas (2000) The research uses a combination of modern techniques and methods in qualitative and quantitative research such as Focus Group, Cronbach Alpha analysis, EFA, CFA, SEM structural equation modeling, bootstrap testing, etc Therefore, this research will be a reference source of methodology, research model design and research data processing, etc for researchers, students in the field of management in general, of human resource management in particular -8- CHAPTER 2: THEORETICAL BASIS AND RESEARCH MODEL 2.1 Competition theory Competitive advantage is the implementation of a business strategy that a competitor fails to implement to facilitate cost reduction, exploit market opportunities or disable competitive threats (Barney, 1991) The first model of the competitive pressure approach was widely disseminated by Porter (1980) According to Peteraf and Barney (2003), an enterprise achieved competitive advantage will create higher economic value than its competitors Competitive advantage is related to the economic value created from exploiting the ability of an enterprise to use resources, operational efficiency related to the economic value from commercialization Thus, an enterprise with high competitive advantage will create higher operating efficiency than its competitors 2.2 Resource basis view of the firm Resource basic view of the firm of Wernerfelt (1984) focuses on the competition analysis based on internal resources Barney (1991) classified resources into three categories: physical capital (Williamson, 1975), human capital (Beckei; 1964), and organizational capital (Tdmei; 1987) Barney (1991) examined the relationship between firm resource and sustained competitive advantage However, RBV theory did not fully explain how and why enterprises gain competitive advantage in a rapidly changing and unpredictable business environment 2.3 Theory dynamic capabilities The theory dynamic capabilities of Teece et al (1997) was found on the basis of the RBV theory applied in fast changing market (dynamic market) Teece et al (1997) defined dynamic capabilities as the ability to integrate, build, and reformat internal and external capabilities in response to the rapidly changing environment Dynamic capabilities reflect an organization's ability to achieve new innovation to create a competitive advantage in the market (Leonard-Barton, 1992) Dynamic capabilities of an enterprise are difficult to copy and replace Therefore, dynamic capabilities are the basis to create a competitive advantage and improve business performance (Barney, 1986; Eisenhardt and Martin, 2000) 2.6 Research model and hypotheses Components of human resource management practice: functional activities (second level concept includes: work identification; recruitment; training; work evaluation; salary, bonus; career planning and promotion), participation of staff, activities of teams and groups, administrative activities and lead, encouragement of change Components of competitive advantage: quality of human resource and behavior of human resource -9- Work Recruitment Human resource quality Human resource behavior Participation Team- Group Human resource management practice Training Competitive advantage Function Evaluation Salary- bonus Change Administration Promotion Business results Figure 2.1 Proposed research model Summary of research hypotheses: Hypothesis H1: Human resource management practice has a positive effect on the competitive advantage of human resource of VNPTs in provinces and cities Hypothesis H2: Human resource management practice has a positive effect on the business results of VNPTs in provinces and cities Hypothesis H3: Competitive advantage of human resource has a positive effect on the business results of VNPTs in provinces and cities Kết hoạt động DNKN -10- CHAPTER 3: RESEARCH DESIGN 3.1 Research process This research is conducted in two main phases: (1) preliminary research by preliminary qualitative and quantitative methods, (2) official research by quantitative method Preliminary research: Preliminary qualitative research: From the research objective, the thesis summarizes the theoretical basis (background theory, research concept and previous researches) On that basis, research model, hypotheses and observed variables of the scale of research concepts are formed Through the expert method in the form of face-to-face interview, the research model is evaluated to standardize the theoretical model, new factors appear and the scale will be adjusted/ supplemented to be clear, consistent with research context Preliminary quantitative research: The scale is used for interview test with samples of 135 VNPT enterprises according to convenience sampling method to verify the reliability of Cronbach's Alpha and analyze the EFA exploratory factor analysis before conducting the official research Official research: In this step, the thesis verifies the appropriateness of the survey data and the value of the scale (Composite Reliability, Convergent validity, unidirectionality, particularity) In addition, the thesis tests the suitability of the research model and initial hypothesis Finally, the thesis uses Bootstrap analysis to verify the reliability of the expected value of sample 3.2 Qualitative research results 3.2.1 Results of the theoretical model adjustment Work Recruitment Human resource qualityHuman resource behavior Participation Team- Group Training Function Human resource management practice Competitive advantage Evaluation Environment Salary- bonus Promotion Business results Figure 3.1 Results of the theoretical model adjustment -113.2.2 Results of scale adjustment From the comments on scale adjustment, the author summarizes supplements and adjusts the scales of research concepts: Table 3.1 Scale measurement Symbol 1st level components 2nd level components Join Team Human resource management practice Competitive advantage Functions Work Recruitment Training Evaluation Salary and bonus 11 Promotion Change Human resource quality Human resource behavior Number of observed variables 4 5 4 5 Business results Source: Results supplemented and adjusted from the original scale Source of scale Tran Kim Dung et al (2010); Singh (2004); Le Chien Thang and Truong Quang (2005) Wright, McMahan and McWilliams (1993) Nguyen Dinh Tho and Nguyen Thi Mai Trang (2009) 3.3 Quantitative research method Data collection method: Sample information is collected by interview technique in three forms: faceto-face interview, e-mail interview and online interview by - Google Dos for staff, employees who are currently working in VNPTs in provinces and cities Sampling method: Due to time constraints, the thesis uses convenience sampling method VNPT enterprises are classified according to the following criteria: Region, gender, age, education, level, position and seniority Data analysis method: Analyzing the reliability of the scale through Cronbach's Alpha coefficients, EFA exploratory factor analysis, Confirmatory Factor Analysis, SEM Structural equation modeling, Multigroup analysis, Bootstrap analysis 3.4 Official research samples The research model (after eliminating five variables in the preliminary research) has 117 parameters that need to be estimated Therefore, according to Bollen's (1989) rule that if there are samples/ parameter to be estimated, the minimum sample size will be 585 This research uses multi-group structure analysis, furthermore, to make the minimum sample size large enough ( n ≥ 30) for each analyzed unit (VNPT regions), the author decides to choose a sample size of 750 However, to achieve a defined sample size in the case samples are insufficient or unsatisfactory due to lack of information or low quality, the author decides -12the number of questionnaires given out to interview VNPT’s staff is 125% of the expected sample size, or 940 The author collected 812 questionnaires (reaching the rate of 86.38%), the number of questionnaires meeting the requirements is 773 (reaching the rate of 82.23% of the questionnaires given out) CHAPTER 4: RESEARCH RESULTS 4.1 Researched sample characteristics Table 4.1 Researched sample characteristics Gender Age Education Position Working years in VNPT Demographic characteristics Male Female Total 20 - 35 36 - 50 Over 50 Total Have not studied college College- University Post graduate Total Director and deputy director Head and deputy head of departments Specialist Officer Worker Total < years – 10 years 10 - 20 years 20 years and upward Total Frequency 434 339 773 299 406 68 773 141 589 43 773 31 116 207 348 71 773 96 154 433 90 773 Frequency (%) 56.1 43.9 100 38.7 52.5 8.8 100 18.2 76.2 5.6 100 4.0 15 26.8 45.0 9.2 100 12.4 19.9 56.0 11.6 100 4.2 Verification of scale reliability with Cronbach's Alpha coefficient Table 4.2 Verification of reliability No Scale Symbol Work identification Recruitment Training Staff evaluation Salary - Bonus Career planning and promotion Participation Activities of teams and groups Working environment Staff quality CV TD DT DG LT TT Number of observed variables 5 4 TG DN MT CL 11 Conbach alpha coefficient Corrected Item Total Correlation 0.880 0.944 0.910 0.911 0.910 0.922 0.701 – 0.758 0.796 – 0.891 0.786 – 0.819 0.700– 0.836 0.772– 0.844 0.758 – 0.867 0.892 0.925 0.766 – 0.810 0.800– 0.878 5 881 0.900 0.502– 0.868 0.680 – 0.791 -1312 13 Staff behavior Business result HV KQ 0.924 0.901 0.787 – 0.863 0.423 – 0.770 -144.3 EFA exploratory factor analysis 4.3.1 Exploratory factor analysis (EFA) for the human resource management practice The KMO index = 0.956 with the sig = 0.000 proves that the analyzed data are suitable for EFA 37 observed variables (after eliminating TT1 and TT2) are extracted into factors such as EFA for the first time at Eigenvalue = 1.001, the total average variance extracted is 71.240%, and the rechecked Cronbach alpha coefficients meet the requirements However, the factor that combines components of career planning - promotion has variable TT4 with an unsatisfactory factor loading (λ = 0.368