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 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 INDEX ACKNOWLEDGEMENTS 5 LIST OF FIGURES 6 LIST OF TABLES 6 LIST OF APPENDIX 7 ABSTRACT 9 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 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. 4. 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 4. 5. Exploratory factor analysis (EFA) 37 4.7. Chapter conclusion 43 5.1. Finding and discussion 45 5.2. Limitation 46 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 .1. EFA for all independent variables (The first time in 4 times) 67 Appendix 4.4.2: EFA with all independent variable (the second time in 4 times) 68 Appendix 4.4 .3. EFA for all independent variables (The third time in 4 times) 70 Appendix 4.4 .4. EFA for all independent variables (The fourth time in 4 times) 71 Appendix 4.5. Regression, model 1. Independent variables: Training, leadership, remuneration and company policies; dependent variable: Commitment 73 Appendix 4.6. Regression, model 2. Independent variables: Organizational Commitment; dependent variable: intention to stay 76 5 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 6 LIST OF FIGURES Name of configure Page Figure 2.1 proposal research hypothesis 24 Figure 3.1 Research Design Process 26 Figure 4.1 Final model 44 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 27 Table 3.3. Measurement of working environment 28 Table 3.4. Measurement of remuneration and rewards 29 Table 3.5. Measurement of company policies 29 Table 3.6. Measurement of organizational commitment 30 Table 3.7. Measurement of intention to stay 30 Table 3.8: Cronbach’s alpha reliability coefficient 33 Table 4.1 Sample Demography 37 Table 4.2: Cronbach’s alpha reliability coefficient of variable 37 Table 4.3: Pattern matrix in the last time (the fourth time) of regression analysis 37 Table 4.4 Correlations model 1 40 Table 4.5 Model Summary b model 1 40 Table 4.6 ANOVA of model 1 41 Table 4.7. Coefficients a of medel 1 41 Table 4.8 Model Summary b model 2 43 Table 4.9. Coefficients a of model 2 43 Table 5.1. Questionnaire for organizational polices 46 7 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 67 Appendix 4.4 .1. EFA for all independent variables (The first time in 4 times) 67 Appendix 4.4.2: EFA with all independent variable (the second time in 4 times) 68 Appendix 4.4 .3. EFA for all independent variables (The third time in 4 times) 70 Appendix 4.4 .4. EFA for all independent variables (The fourth time in 4 times) 71 Appendix 4.5.Correlation bivariable model 1 73 Appendix 4.5.Correlation bivariable model 2 76 8 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 9 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. [...]... objective In the thesis, we will review relevant theories and previous researches on factors that have impact on the intention to stay of core employees stay in SMEs Specially, the study 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 1.3 Scope of the... definition of core employee, SMEs, core employee retention and the factors influencing organizational commitment and intention to stay of core employee are introduced Hypotheses, proposal scales are introduction is also showed in this chapter 2.2 Relative concepts and definition 2.2.1 .Small and medium companies That is synonymous definition between small and medium companies and small and medium sized. .. Purpose of the research investigate and determine the factors the affective staying decision of core employees in SMEs, it will exam the relative between the factors and identify the factors which are strongly affective the organizational commitment and intention to stay of core employees in SMEs The result of this research can be applied to SMEs in HCMC and help SME directors re-construct company and. .. between offering micro finance and employment creation in the small enterprises There are many reasons (or factors) are influencing employee but there is no study that researches what the factors more affect to employee, which factors are influencing organizational commitment and intention to stay of employee in the SMEs Those questions are the problem of labour force in SMEs and that will be answered in. .. employees in HCMC but the study focuses in five factors: training & career path, leadership, working environment remuneration rewards and organizational culture & policies The influencing of the factors to organizational commitment and intention to stay of core employees will be introduced in chapter 4 25 CHAPTER 3: METHODOLOGY Methodologies will be explained in this chapter to collect the data to address... on organizational commitment H 4: Remuneration and rewards has positive impact on organizational commitment H 5: Organizational culture and policies has positive impact on organizational commitment H 6: organizational commitment positively is correlated to intent to stay 2.5 Chapter conclusion Although there are many factors that influence organizational commitment and intention to stay of core employees. .. concept and definition of the study will be explained in this chapter such as small and medium companies, core employees, core employee retention as well as review of previous study about training and Career path; leadership; working environment; remuneration & reward; organizational culture and policies; organizational commitment and intention to stay Proposal research hypotheses will be introduced in. .. Analysis Finding, discussion, limitation and suggestion for future study : This is the result of the study distribution of study for theory and applied, the limitation of the study and suggest to later study 14 CHAPTER 2: LITERATURE REVIEW 2.1 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. .. abbreviation "SME" for small and medium sized companies is used in the European Union and by international organizations such as the WB, and WTO The term "small and medium businesses" (or SMBs) is predominantly used in the USA In most economies, smaller enterprises outnumber large companies by a wide margin SMEs are said to be responsible for driving innovation and competition in many economic sectors Wikipedia... Owner-Director and employees is closed; capital: it's usually from owner's saving or from owner's friends loan; there are not many employees and some of them are owner-family relation, because of small number of employee, factors training and career development in SMEs usually are together so they are combine into unique factor in this study There are several previous research from Eastern countries to . of core employees stay in SMEs. Specially, the study will investigates what factors influencing the intention to stay of core employees and measure how deep the influencing factors effect organizational. 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. 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