UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ĐẶNG XUÂN CHƯƠNG THE EFFECT OF EARNING, WORKING ENVIRONMENT, AND PROMOTION OPPORTUNITIES ON EMPLOYEES’ PERFORMANCE: A COMPARISON BETWEEN THE STATE SECTOR AND OTHER SECTORS IN VIETNAM MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2012 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ĐẶNG XUÂN CHƯƠNG THE EFFECT OF EARNING, WORKING ENVIRONMENT, AND PROMOTION OPPORTUNITIES ON EMPLOYEES’ PERFORMANCE: A COMPARISON BETWEEN THE STATE SECTOR AND OTHER SECTORS IN VIETNAM ID: MBUS 111006 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr NGUYỄN ĐÔNG PHONG Ho Chi Minh City – Year 2012 TABLE OF CONTENTS Chapter 1 – INTRODUCTION 1 1.1. Background of the research 1 1.2.Research problem, research objective, and research questions 3 1.3.Justification for the research 4 1.4.Methodology 4 1.5.Outline of the report 5 1.6.Definitions/concepts 6 1.7.Delimitations of scope and key assumptions 7 1.8.Conclusion 7 Chapter 2 – LITERATURE REVIEW AND HYPOTHESES 8 2.1 Introduction 8 2.2 Classification models of literature review 8 2.2.1 Earning and employees’ performance 8 2.2.2 Working environment and employees’ performance 10 2.2.3 Promotion opportunities and employees’ performance 12 2.3 Conclusion 15 Chapter 3 – METHODOLOGY 16 3.1 Introduction 16 3.2 Research procedure 16 3.3 Conclusion 20 Chapter 4 - ANALYSIS OF DATA 21 4.1 Introduction 21 4.2 Brief description of subjects 21 4.3 Patterns of data for each research question 22 4.4 Conclusion 37 Chapter 5 – IMPLICATION AND CONCLUSIONS 40 5.1 Introduction 40 5.2 Conclusions 40 5.3 Implications 42 5.4 Limitations and recommend for further research 43 REFERENCE 44 ANPPEDIX A 47 ANPPENDIX B 49 ANPPENDIX C 51 ACKNOWLEDGEMENT After two years study in International School of Business (ISB) with MBus program, and the time of doing this thesis, I acknowledge that I was so lucky to be a member of this program where I had great chances to work with professionals come from both internal and oversea, those professionals had to equip us – students of ISB not only knowledge, skills and experience of economy and management, but also provide us valuable information of many aspects of social life. I also have got a very nice friendship with many interesting members of the program who have interacted and helped me so much in studying and in many other fields. Therefore, I would like to express my heartfelt gratitude and deepest appreciation to my research Supervisor Dr. Nguyen Dong Phong, for his intensive support, valuable guidance and suggestions; all professionals of the program, and all members of ISB for their enthusiastic supporters during my whole course and the time of doing this research; my classmates, who have shared with me both joys and difficulties during the course, encourage me so much in doing this thesis. THE EFFECT OF EARNING, WORKING ENVIRONMENT, AND PROMOTION OPPORTUNITIES ON EMPLOYEES’ PERFORMANCE: A COMPARISON BETWEEN THE STATE SECTOR AND OTHER SECTORS IN VIETNAM Abstract Purpose – This study aims to determine the impact of three independent variables which are earning, working environment, and promotion opportunities on dependent variable, employees’ performance, and compare those variables affect on performance of employees in state sectors and other sectors in order to find out differences between two. Design/methodology/approach – A survey was conducted involving 280 employees working in both government sectors and other sectors in Ho Chi Minh City. Multiple regression analyses were performed to separately analyze the effects on employees, employees in state sectors, and employees in other sectors. The comparison of those effects also did between two groups. Findings – The results showed that all three determinants which are earning, working environment and promotion opportunities positively influence employees’ performance. A comparison of the relative strengths of the effects reveals that in both state sectors and other sectors Earning has the strongest effect on employees’ performance, and in state sectors it affects stronger than in other sectors. The second is Promotion opportunities, and it also shows that in state sectors Promotion opportunities affects stronger on employees’ performance than in other sectors. The third is Working Environment, but in this case the stronger one belongs to other sectors, and in state sectors it impacts slightly to employees’ performance. Keywords: Employee, performance, compare, earning, working environment, promotion opportunities, state sectors, other sectors. Chapter 1 INTRODUCTION 1.1. Background of the research Each sector/organization has its own asset which contains two main components – labor and capital. Capital is so important to the success of the sector/organization, while labor is essential to it. The labor of the organization does everything daily and the whole existing time of the organization. Without labor nothing is done. However, labor with their knowledge and skills does not guarantee to the success of the organization; the vital thing is how this labor demonstrates its knowledge and skills in doing or performing their works. Employees’ performance is an essential part for the success or failure of each sector/organization, which is affected by number of factors that come from both inside and outside of each sector/organization such as leadership, earning, promotion opportunities, working environment, employee employer relationship, leadership commitment, employee involvement, and etc. Each economic system contains a large number of sectors/organizations, and inside each economy there are some differences such as the difference number of state sectors and other sectors, etc. Vietnamese is a developing economy which comprises variety kind of sectors such as foreign sectors, join sectors, private sectors, and public/state sectors. Each kind of those sectors have contributed fairly to the economy, and they all have been considering be important to the development of the country. All of those kind sectors could be divided into two groups which are state sectors and other sectors (foreign sectors, join sectors, private sectors), in the process of reforming its economic system, the number of Vietnamese state sector seems to be getting smaller by time while the number of other sectors has increased, even the state sector continues to hold an important role in Vietnamese economic system. It is clearly that, in both state and other sectors the main contribution to the 2 success of each single sector is the performance of its employees. However, from the nature of each group, the state sector has some differences with other sectors, therefore each of them is affected by the same determinants but with different influences, different levels which should be analyzed and have a comparison. Understanding the main determinants which affect employees’ performance in each group of sectors and from that has an adjustment for improving is vital to the success of each sector, its leadership, and even its employees, especially with Vietnamese economy which is changing so quickly with plenty of opportunities and challenges. Market as battlefield, in battlefield as Vladimir Ilyich Lenin said: the winning or failing on battlefield depend on the emotion of the soldiers who are fighting on that. Therefore, motivating people is so important which is vital for the success of each organization in any field, including business. In doing business today, one of the biggest problems for Vietnamese sectors that have been discussed so much on media is productivity of Vietnamese labor is low. This problem is agreed by both Vietnamese government officials and people. And many foreign managers who have worked with Vietnamese people also reveal that Vietnamese labor is intelligent and has good skills, but the output is quite low compare to labor of other neighbor countries, this problem could relate to the motivation aspect that requires reasonable answer and solutions. Moreover, the fact in Vietnam is that not many managers consider carefully about factors that motivate their employees in doing works, some of them may know how to motivate their subordinates but they ignore, some other may not know well about that, therefore those managers do not adopt any policy to encourage their employees to perform better. However, since Vietnam joined into World Trade Organization, especially during economic crises times the competition between Vietnamese products and foreign ones is so hard in both the quality and the price of each product that require Vietnamese sectors have to enhance capacity in many aspects that include human resource, and improving performance of employees is one important factor. By 3 enhancing the productivity of each employee, as a result the quality of products could improve and price could be reduced that help Vietnamese products have chances to win in competition. Understand how factors and each factor affect on performance of employees and implement reasonable policies to boost productivity are so important to each managers for his/her sector(s) and for the whole Vietnamese economic system in competing with foreigners. In this study, earning, working environment and promotion opportunities will be investigated to find out their effect on employees’ performance and compare the differences of those effects on state sectors and other sectors. The study also considers the relation of the three determinants in affecting on performance of employees. 1.2. Research problem, research objective, and research questions Research problem How do earning, working environment, and promotion opportunities affect on employees’ performance? What are the differences of those impacts on the state sector compare to other sectors in Vietnamese economic system? Research objective Objectives of this research are to determine how earning, working environment, and promotion opportunities affect on employees’ performance, compare and discuss what those determinants impact differently on the state sector and other sectors in Vietnamese economic system. Research questions How do earning, working environment, and promotion opportunities affect employees’ performance? How do earning, working environment, and promotion opportunities affect employees’ performance differently between the state sector and other sectors in Vietnamese economic system? 4 There has had number of studies about determinants affect on employees’ performance worldwide such as Workplace Environment and Its Impact on Employees’ Performance (Nowier Mohammed Al-Anzi, 2009); Earnings, and Performance-Related Pay (Alison L. Booth and Jeff Frank, 1999); Effects of Wage and Promotion Incentives on the Motivation Levels of Japanese Employees (Kiyoshi Takahashi, 2006); Workplace Environment and Its Impact on Organizational Performance in Public Sector Organizations (Chandrasekar, 2011); Impact of Workplace Quality on Employee’s Productivity: case study of a bank in turkey (Demet Leblebici, 2012) etc. Even those, in Vietnam it seems that has not had any study that compared how those determinants impact the performance of employees between state sectors and other sectors, therefore this research will look at some previous research about earning, working environment, and promotion opportunities affect employees’ performance, analyze the effect of those determinants on performance of employees in Vietnam context and has a comparison and discussion in order to distinguish differences of how those factors affect on state sectors and other sectors. Finding out those differences is considered as the thesis’ contribution to the literature and practice. 1.3. Justification for the research All sectors/organizations are formed by employees, and those people decide the success or failure of the organization which they belong to by their own performance. Understanding well main determinants in general and earning, working environment, promotion opportunities in specific affect on employees’ performance and recognize how those determinants affect on state sectors and other sectors differently in Vietnamese economic system could be very helpful for leaders/managers, and even employees in each kind of sector to create attributions which are suitable to each sector to improve performance of their employees, to enhance efficiency and effectiveness of their firms. Those are main reasons for doing this research. 1.4. Methodology [...]... using Cronbach’s Alpha and Coefficient: This was tested the Cronbach’s Alpha of each scale of each factor as well as the beta of the factor loading in the model Cronbach’s Alpha coefficient is a statistical test of correlation of the questions in the scale relative to each other So, with this method of analysis can remove inappropriate variables and limit junk variables in the research process and assess... 30) of randomly selected employees who are working in Ho Chi Minh City Statistical Methods Mean comparisons was used to determine whether there was a significant difference between the impact of those determinants on employees’ performance and different impact on state employees and other employees 18 Using the SPSS to analyzing the data and make the data analyzing: 1- Testing reliability of scales... independent factors on dependent factor between the state sector and other sectors To test the role of the important factors in assessing the relationship between earning factors, working environment, and promotion opportunities, and employees' performance, we run the regression Analysis is done by the method 19 enter The variables included in the same time to select based on the selection criteria variables... Regression analysis There are three hypotheses that include Earning, Working Environment, and Promotion Opportunities that affect Employee’s performance Linear Regression will be used to analyze and evaluate these 3 variables in order to find out relationship between dependent variable - Employees’ performance with independent variables (Earning, Working Environment, and Promotion Opportunities) The Enter... earning, working environment, and promotion opportunities affect employees’ performance  Procedure: the participants were informed about the questionnaires The questionnaires were provided to participants by printed papers or emails Data analysis The information from survey was analyzed determinants affect employees’ performance in both state sectors and other sectors, and compared to find out the differences... instruments adopted and statistical techniques (SPSS) employed to test the research hypotheses with three steps: Factors analyzing and scale reliability; Correlation analysis; Multiple regression analyses Finally, the comparison about the effects of independent variables on dependent variable between state sectors and other sectors was done in order to find out differences 20 Chapter 4 ANALYSIS OF DATA 4.1 Introduction... company, Saigon Leather Joint - Stock company, Saigon Beverages Joint Stock company, Saigon Fishing Net Joint Stock company, Saigon Investment Consulting company, and etc In the next section information of analyzing data for each hypothesis will be presented 4.3 Patterns of data for each research question 4.3.1 Preliminary evaluation scale with Cronbach’s Alpha 4.3.1.1 Testing the reliability of independent... impacts between the state and other sectors Sample Before doing an official survey, a pilot test was conducted with 30 employees in both state sectors and other sectors The survey was conducted from May to November 2012 The population for this study comprised employees in both state sectors/ organizations and other sectors/ organizations in Ho Chi Minh City A total 280 questionnaires were administered... there was rarely researches look at more than three determinants affect employees’ performance at one time, most of them just look at one or two determinants, and there was not any research compare differences of determinants on state sectors and other sectors in Vietnamese economic system Therefore, this section will look at previous studies about earning, working environment, and promotion opportunities. .. absenteeism and turnover” (Demet Leblebici, 2012) Working in a harmony environment where employees are friendly, 11 employers are supportive and treat everyone equally, and all members are ready to help and interact with each other, enthusiasm for other and sharing knowledge, experience, information to each other that definitely result in improving performance of each individual and the whole organization, and . relative strengths of the effects reveals that in both state sectors and other sectors Earning has the strongest effect on employees’ performance, and in state sectors it affects stronger than. employees’ performance and compare the differences of those effects on state sectors and other sectors. The study also considers the relation of the three determinants in affecting on performance of. about earning, working environment, and promotion opportunities affect employees’ performance, analyze the effect of those determinants on performance of employees in Vietnam context and has a comparison