Employee Commitment in Vietnam: a case study within a large technology company



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Employee Commitment in Vietnam: A case study within a large technology company

Melanie Powell1 and Linh Le2



  1. University of Derby, Derby Business School, Senior Lecturer in Economics

  2. University of Derby, Derby Business School, MSc student

University of Derby, Derby Business School, Kedleston Road, Derby, DE22 1GB

Tel: 01332 591432 e-mail: m.j.powell@derby.ac.uk

Stream 5

Working Paper

Abstract

Purpose: This paper aims to extend knowledge of the importance of the cultural dimension in Asian organisational commitment and to identify some initial evidence of factors affecting employee commitment in Vietnam.

Methodology: This paper examines the literature on organisational commitment and examines how cultural differences in organisational commitment in Asian contexts. It applies a five-component model of organisational commitment based on Wang (2004). Data was collected using an electronic questionnaire format in one global high technology telecommunications company in Vietnam. Hypotheses are drawn from the literature and tested using the sample data with Anova and correlation.

Findings: This paper supports the use of the five-component model the Vietnam cultural context, and supports previous findings that affective, active continuance and value commitment are the most important components in the Asian context. It also finds evidence that HRM practice at the organisational and manger level significantly increase commitment.

Research Limitations: The study is small and focused on one company.

Practical Implications: The results suggest large global companies entering Vietnam should focus organisational HRM practice on active continuance and value commitment.

Originality: This is the first study to consider the five-component model in a Vietnamese context.

Keywords: Organisational commitment, cross-cultural, Vietnam, five-factor model.

Introduction

There is an established literature on the nature of organisational commitment, factors affecting commitment and the relationship between increased commitment and positive organisational outcomes. HRM practice is seen as a key factor in developing organisational commitment and supporting positive outcomes. However, the main models are derived from Western culture and practice. Cross cultural studies in China, Japan and Korea have shown evidence of cultural differences in commitment and understanding these differences and their impact of HRM practice is increasingly important in the globalised economy. Vietnam is one of the fastest growing economies in South East Asia, attracting foreign direct investment and multinationals with established HR practice (World Bank, 2013), yet relatively little is known about employee commitment in Vietnam. This research is an initial exploration of the nature of commitment within a large multinational technology company in Vietnam.



Literature Review

Commitment is widely defined as the extent of an individual’s loyalty and attachment to an organisation, linked to the degree of effort an individual will exert to support of the organisation’s goals (Ashraf et al., 2012: Redman and Snape, 2005; Tella et al., 2007). The widely-used three-component commitment model of Meyer and Allen (1991) is based on the earlier work of Becker (1960), Porter et al. (1974) and Mowday et al. (1979). The model identifies organisational commitment through attachment or involvement (affective commitment), through the cost of stopping involvement (continuance commitment) and through a degree of obligation (normative commitment).

Many studies show that employee commitment is closely connected to organisational benefits with positive influences on productivity, quality and competitiveness, and that commitment is linked to HR practice (Ashraf et al. 2012; Fiorito et al. 2007). Cooper-Hakim and Viswesvaran, (2005) and Meyer et al, (2002) show committed employees are less likely to quit their jobs, less likely to be absent, more likely to engage and have higher levels of satisfaction. Loi et al., (2006) suggest effective HR practice indicates concern for the employee which raises affective commitment. Coyle-Shapiro and Conway (2005) argue that trust, fairness and delivering promises are the factors through which HR practice affects continuance commitment but increasing trust can also raise attachment and hence affective commitment (Michaelis et al, 2009). Where HR practice establishes high quality exchange relationships in the work experience, employees reciprocate in a positive and beneficial way (Gould-Williams and Davies, 2005). HR practice can increase the perceived level of organisational support which positively affects commitment (Allen et al. 2003).

Empirical evidence suggests work experience factors such as level and fairness of reward distribution, clarity of employee’s role, freedom from conflict, job challenge, opportunity for promotion, supervision consideration, and participation in decision making, all affect affective and continuance commitment. (Ito and Brotheridge, 2005; Parish et al. (2008). Older, female, married and longer tenure workers have higher levels of affective commitment (Peterson, 2004; Salami, 2008; Sulliman and Iles, 2000), but the evidence is inconsistent (Meyer and Maltin, 2010).

Overall, affective commitment is widely found to be the most dominant factor in organisational commitment. As the underlying model and much of the evidential support is derived from Western culture and organisational practice, more recent analysis has focused on the applicability of the model in other cultural settings. Cross cultural studies show evidence of cultural differences in commitment levels between Western and Asian employees and the differential impact of high commitment HR practice in multinational firms (Andreassi et al. 2014; Kooiji et al., 2010). Using the three dimension model of Myer and Allen (1991) and the cultural dimensions model of Hofstede (1980), collectivism and power distance have been shown to be related to affective, continuance and normative commitment levels (Fischer and Mansell, 2009; Froese, F. and Peltokorpi, V. (2011). Most studies of commitment in collectivist and high power-distant cultures have focused on China, Japan and Korea.

Fischer and Mansell (2009) argue that affective commitment is higher in collectivistic culture because loyalty and attachment to the organisational group is stronger. The provision of workplace benefits and retirement funds may increase affective commitment more in individualist compared to collectivist cultures as individual focused attachment is more important in the former. (Aub’e et al., 2007). Employees in individualist cultures are more likely to pursue personal goals where there is a conflict between their own goals and the group’s goals (Gelade et al., 2008) and focus on cost/benefit calculations, so HRM practice aimed at reducing conflict may also have more effect on continuance commitment in individualist cultures. Fischer and Mansell (2009) suggest that relationships in collectivist cultures are determined by moral obligations within the family or wider community and the normative nature of relationships increases normative commitment to the organisation. In individualist cultures, mutual obligations and duties are weaker, making normative commitment less important (Belias and Koustelios, 2014). Family pressure, loyalty and respect for leaders are other factors that may increase the importance of normative commitment in collectivist cultures (Meyer and Allen, 1991; Meyer and Parfyonova, 2010).

The Meyer and Allen (1991) model has been extended to examine whether different aspects of continuance commitment should be separated, including the lack of employment choices and loss of employer benefits, but the empirical results generally support the three component model. (Chen & Francesco 2003; Hackett et al. 1994; Jaros, 1997; Tayyab, 2007). However, Wang (2004) argues that value commitment derived from Mayer & Schoorman (1992) is important in Chinese collectivist culture where employees are more likely to accept organisational goals to support the employer-employee relationship. Value commitment assesses the willingness of an employee to exert effort for the organisation. Wang (2004) also argues that continuance commitment should be separated into an active element, e.g. desire to stay because of on-the-job training, and a passive element, e.g. desire to stay because of family commitments or no better job. In collectivist cultures, employees consider opportunities for personal development more than losing benefits in the decision to stay. Wang (2004) incorporates these into a five component model for use in collectivist cultures and found the model more appropriate for both state-owned and foreign owned organisations in the Guangdong region of China.

Wong and Tong (2014) compare Wang’s five component model against the Meyer and Allen three component model using confirmatory factor analysis on a large sample of ICT professionals in Hong Kong. Wong and Tong (2014), find the five component model is a better model in Hong Kong’s ITC sector environment and suggest that the geographical closeness of Hong Kong and Guangdong may lead to similar cultural values. Like Wang (2004), they find that value, affective and active continuance commitment are the strongest components of organisational commitment, and find passive continuance and normative commitment the weakest components (Wang 2004).

Wong and Tong (2014) found no effect of demographic variables on affective commitment. Gender had no effect on other commitment measures, but tenure with the organisation was positively correlated with both active and passive continuance as well as normative commitment. Workers with longer tenure are more likely to be offered high value training and promotion increasing active continuance commitment, as well as have higher fringe benefits increasing passive continuance commitment, and their level of obligation to the organisation is higher. They found age had a significant positive correlation with passive continuance and normative commitment which might relate to industry specific experience, retirement funds and fewer alternatives for older workers. Marriage had a significant negative effect on active continuance and value commitment and a positive effect on passive continuance suggesting married employees might be more concerned with stability rather than work benefit, experience or values of the organisation.

Wong and Tong (2014) examine other studies which find the three component model a better fit for organisational commitment in Pakistan, (Tayyab, 2007) and Turkey, (Wasti, 2005) suggesting this may be due to differences between Asian and near Asian cultures and the extent to which business in these areas are operating in high-valued competitive and globalised markets. They conclude that where value commitment is important, strategy development should be transparent and more clearly linked to employee needs.

This research aims to extend knowledge of the importance of the cultural dimension in Asian employee commitment and to identify some initial evidence of factors affecting employee commitment in Vietnam. Vietnam is located in South East Asia and has a population of 89.71 million people with the total GDP is around USD 171.4 billion (World Bank, 2010). It is one of the fastest growing economies in the region and a destination for foreign investment. Many established global companies have move their production to Vietnam rather than China in recent years (World Bank, 2010). As an advancing Asian economy, with the characteristics of a collectivist and high power-distance culture, value commitment within the five component model may be important in assessing commitment and developing HRM practice in global companies within Vietnam.

Methodology

The data was collected via an anonymous questionnaire delivered in electronic format to 100 male and 100 female employees drawn from graduate educated employees in administration, management and technical jobs in a major global Vietnamese telecommunications company. The respondents were all working in the capital city branch in Vietnam. The company has 25,000 employees working across Vietnam, Cambodia, Laos, Haiti, Mozambique and Peru with a developed HR function. The sample contains employees in a high technology sector in a major city competing in high valued, globalised industry. In the Wong and Tang (2014) study, 97.4% of the sample had professional diplomas, bachelor or masters degrees. Our sample was equally stratified by gender to increase the proportion of female respondents to further examine the effect of gender on commitment. Wong and Tong (2014) found no effect of gender, but the percentage of females in their sample (18.7%) was small. The questionnaire was translated into Vietnamese but an English version was available.

The five commitment variables were measured using mean scores over questions based on the questionnaire in Wang (2004). Each question has a five-point Likert scales with ‘1’ equal to strongly disagree and ‘5’ equal to strongly agree. In addition to demographic questions, respondents were asked to rate factors affecting their personal level of overall commitment to the organisation using five-point Likert scales. Similar attitudinal questions were asked on whether different demographic factors affected commitment to work in Vietnam more generally.

The hypotheses to be tested from these variables are:

H1: Affective, value and active continuance commitment are the strongest components of commitment in a high technology sector in Vietnam.

H2: Demographic factors are not associated with affective commitment in a high technology sector in Vietnam.

H3: Gender has no effect on organisational commitment in a high technology sector in Vietnam

H4: Tenure, age and marriage have a positive effect on passive continuance commitment in a high technology sector in Vietnam.

H5: Marriage has a negative effect on active continuance and value commitment in a high technology sector in Vietnam.

To assess the potential route through which HRM policy could affect commitment within the organisation, respondents were asked to rate the organisation’s achievement over five factors associated with HRM policy. These factors were the level of conflict, the fairness of wages and appraisal, and levels training and promotion, support for employees, and inspiring leadership within the organisation. All questions used a five-point Likert scale with ‘1’ equal to strongly disagree and ‘5’ equal to strongly agree. The mean score of the five questions for each respondent was used to measure the HRM practice effect. Kooij et al., (2010) argue that HRM practice should be assessed using employee perceptions rather than written policies. The specific impact of manager/supervisor effectiveness was measured using three questions on manager effect on clarity of roles, understanding employee needs and encouraging team decision making in the organisation. Again, all questions used a five-point Likert scale and the mean score was used to measure manager effect.

The hypotheses to be tested from these variables are:

H6: The level of commitment is positively associated with employee perception of lack of conflict, fairness, training and promotion, support and leadership in a high technology sector in Vietnam.

H7: The level of commitment is positively associated with employee perception of manager/supervisor effect on clarity of roles, understanding employee needs and supporting team decision making in a high technology sector in Vietnam.

The data were analysed within SPSS using descriptive statistics, mean score tests for hypotheses 1-5 and correlation analysis for hypotheses 6 and 7.



Results and Discussion

The response rate was 50 percent and 100 usable questionnaires were completed. The demographic distribution of the sample is shown in Table 1. All respondents were graduates and 40% had post graduate qualifications. 52% of respondents were female, 82% were younger than 34 years, 37% were married. Only 14% had worked for the company for 5 years or more, 47% had tenure of 2 years but less than 5 years, and 39% had tenure less than 2 years.



Table 1. Sample Demographics

Variable

%

Male

48

Female

52

Single

63

Married

37

UG Degree

60

Post Graduate Degree

40

18-24 years old

36

25-34 years old

46

35-44 years old

8

45> years old

10

<2 years at company

39

2<5 years at company

47

5 > years at company

14

The level of organisational commitment across the five components is shown by the mean scores in Table 2. Affective commitment is the strongest component overall, followed by active continuance and value components. There is an overall similarity to that found by Wang (2004) and Wong and Tong (2014) but value commitment was not the strongest component. However, normative and passive continuance commitment have the smallest scores as in the other studies. The variation of scores around the mean is largest for normative commitment (27%) and smallest for value commitment (10%) suggesting high similarity of perceptions around value commitment but far less similarity for normative commitment. Whilst all the skew values are small, the normative commitment skew is the largest positive showing the majority of values were below the mean. As respondents measure of value commitment is more consistent than their measure of normative commitment, it indicates that the drivers of value commitment are likely to be internal to the organisation rather than externally accepted cultural factors. Using Friedman’s two way analysis of variance by ranks shows that the distributions across the components are not the same, p=0.000. The evidence supports H1, that affective, value and active continuance commitment are the strongest components of organisational commitment in the high technology sector in Vietnam.

Table 2. Importance of Components of Commitment

Commitment Component

Median

Mean

Standard. Deviation/

Mean

Pearson Skew

Affective

3.67

3.63

0.17

-0.48

Active Continuance

3.67

3.57

0.13

-0.62

Passive Continuance

3.33

3.32

0.15

0.00

Normative

3.33

2.70

0.27

0.46

Value

3.67

3.55

0.10

0.14
















Table 3 shows the mean score differences and the significant results of Anova analysis on the commitment components by demographic factors. Unlike Wong and Tong (2014), but predicted from other studies, we find a positive significant association for female gender for affective commitment. Females have higher scores than males for affective commitment, but no other demographic factor significantly affected affective commitment in this cultural setting. This sample captured a wider group of highly qualified female employees which may explain the finding. Whilst H2 and H3 are rejected, the results suggest the only demographic association with affective commitment in this high technology sector in Vietnam is gender. The only significant affect of age was on active continuance commitment, rather than the hypothesised passive continuance commitment, Employees over 35 years old had higher active continuance commitment scores. Whilst H4 and H5 are rejected, the results suggest the effect of age is through active rather than passive continuance. The difference may indicate that older higher skilled employees in the telecommunications sector are in short supply in Vietnam and this group have more alternative opportunities, and if so, they may be offered better extensive training and promotion increasing active continuance commitment. The significant positive effect of tenure on active continuance commitment was also found in Wong and Tong (2014) but no effect was found on other components. Younger workers with more tenure may also attract more training and promotion opportunities increasing active continuance commitment.



Table 3. Significant Effect of Demographic Factors.


Between Group Anova

Mean Scores

Degrees of freedom

F

Probability

Affective Commitment by Gender

Male 3.49

Female 3.77




1

5.67

.019

Active Continuance Commitment by Age (Years)

18-24 3.61

25-34 3.44

35-44 3.75

45> 3.87


3

3.06

.032

Active Continuance by Tenure (Years)

< 2 3.63

2>5 3.45


5<10 3.81

10> 3.83


3

2.76

.047

To examine the route through which HRM practice at both the organisational level and at the manager/supervisor level is associated with commitment components, correlation analysis was used. Table 4 shows the results across the two HRM practice measures and the five components of commitment.



Table 4 Correlation of Commitment Components against HRM practice measures

Pearson Correlation Coefficient

Affective

Active Continuance

Passive Continuance

Normative

Value

HRM practice at organisational level

-0.127 p=0.210

0.633** p=0.000

0.313** p=0.002

0.301** p=0.002

0.598** p=0.000

HRM practice at manager/supervisor level

-0.013 p=0.900

0.327** p=0.001

0.067 p=0.510

0.083 p=0.410

0.295** p=0.003




Significant at the 0.05 level (2-tailed).*

Significant at the 0.01 level (2-tailed).**

The results in Table 4 show no linear association between perceived HRM practices at the organisational or manager/supervisor level on affective commitment contradicting the suggested route by Loi, (2006). H6 is supported in all components except affective commitment. Given the organisation has high income benefit provision and is employing staff in a collectivist culture, the lack of effect on affective commitment may result from individual focused attachment being less important as suggested by Aub’e et al., (2007). However, there is significant positive effect of both routes on active continuance commitment supporting Coyle-Shapiro and Conway (2005). The positive significant effect of HRM practice at the organisational level supports their view that higher levels of training and promotion may raise active continuance commitment strongly in a collectivist culture, whilst higher fringe benefits may raise the perceived cost of leaving, raising passive continuance commitment.

The positive significant effect of organisation wide HRM practice on both normative and value commitment may be driven by perceptions of fairness and inspirational leadership in the organisation rather than promotion and training. It seems likely that managerial/supervisory effect is significant and positive for value commitment as it relates to the desire to make effort for the organisation (monitored by managers) as well as accepting organisational values, whereas normative commitment is dominated more by external factors.

Employee perceptions of what affects their general commitment to the organisation in this study are shown in Table 5. The values are the percentage that agreed or strongly agreed that the level of the factor affected their commitment to the organisation. The largest percentage of agreement was on opportunities for promotion; being trusted in their job; level of benefits, bonus, leave and work/life balance; fairness in wages, benefits and performance appraisal; clarity of roles and responsibilities; degree of personal effort/investment and levels of participation in decision making. The smallest percentage of agreement was on family pressure; duty to repay investment in the individual; moral obligation; and attachment to leaders. These are in line with the findings on the importance of affective, value and active continuance in the study.



Table 5 Perceived factors affecting commitment

Perceived Factor

%

Perceived Factor

%

Opportunities for promotion/training

88

Sense of belonging to a team

70

Fairness in wages, benefits, performance appraisal

85

Freedom from conflict

67

Being trusted in the organisation

81

Fear of losing benefits

61

Benefits, bonus, leave, work-life balance

81

Attachment to leaders

51

Personal effort/investment in the job

76

Duty to repay company investment

44

Clarity of roles/responsibility

76

Moral obligation

39

Levels of participation in decision making

76

Family pressure

25

Conclusions

The analysis in this study provides further evidence that the five-component model of organisational commitment may be more relevant in Asian cultures. The evidence supports the five-component model in a major Vietnamese city using a globally competitive company, in a sector where employees have high and transferable technology skills and employers provide high-commitment HRM practices. Affective, active continuance and value commitment are the strongest components in this type of cultural environment and passive continuance and normative commitment the weakest components. Only gender, age and job tenure were found to be significant demographic factors affecting commitment in the anticipated direction. Whilst this is a limited study, it indicates that Vietnam’s cultural environment may affect organisational commitment in a similar way to China.

The study also suggests that organisation wide HRM practice may significantly raise commitment in all components except affective commitment in Vietnam. Also, that HRM practice at the manager/supervisor level can significantly raise both active continuance and value commitment, which are important overall in this cultural environment. Hence organisations entering Vietnam, particularly in high technology sectors, should focus HRM practice on active continuance and value commitment.

Whilst there is no evidence here to suggest HRM practice influences the level of affective commitment, this is a small study and the perceived factors included only two questions linked to affective commitment.

The study results are limited by the small size of the sample and the focus on one high technology company and the lack of comparative analysis. Future research should test the three and five-factor models in other Vietnamese high technology sectors and other industrial and professional sectors and explore further, the link between HRM practice and affective commitment.

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