UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Than Thi Thanh Thuyen ORGANIZATIONAL CITIZENSHIP BEHAVIOR AND EMPLOYEE TURNOVER INTENTION: AN EMPIRICAL STUDY IN PHARMACEUTICAL COMPANIES IN HO CHI MINH CITY MASTER OF BUSINESS (Honours) Ho Chi Minh City – 2017 1 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Than Thi Thanh Thuyen ORGANIZATIONAL CITIZENSHIP BEHAVIOR AND EMPLOYEE TURNOVER INTENTION: AN EMPIRICAL STUDY IN PHARMACEUTICAL COMPANIES IN HO CHI MINH CITY ID: 22140053 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. TRAN HA MINH QUAN Dr. NGUYEN THI NGUYET QUE Ho Chi Minh City – 2017 2 TIEU LUAN MOI download : skknchat@gmail.com Acknowledgment I would like to express my deep gratitude to my supervisor Dr. Tran Ha Minh Quan and Dr.
Nguyen Thi Nguỵet Que for their precious guidance, valuable suggestions and advice as well as their immense knowledge to support me throughout the process. In addition, I would like to thank my family, my friends and my colleagues for their constant encouragement and immediate helps without which the study would not have been possible. 3 TIEU LUAN MOI download : skknchat@gmail.com Abstract The study investigates the influence of relations-oriented leadership behavior, perception of fairness and intrinsic motivation on organization citizenship behavior (OCB) and the influence of OCB on employee turnover intention in the context of Vietnam pharmaceutical industry. The model was tested with a sample of 312 employees working for pharmaceutical companies in Ho Chi Minh City.
The result reveals a good fit between collected data and measurement scales which were introduced and developed in the Western contexts. The findings show that relations-oriented leadership behavior, perception of fairness and intrinsic motivation has positive impacts on OCB, and OCB has a negative impact on employee turnover intention. The discovery highlights the importance of documenting factors affecting OCB in reducing employee turnover intention towards organization as well as draws the management attention to their recruiting, training and long term development policies. Key words: Organizational Citizenship Behavior, turnover intention, relations-oriented leadership behavior, perception of fairness, intrinsic motivation 4 TIEU LUAN MOI download : skknchat@gmail.com Table of contents Acknowledgement Abstract Table of Contents 1.
Research questions and research objectives. Theoretical Background and Hypotheses. Organizational citizenship behavior. Employee turnover intention.
Relations-oriented leadership behavior. Perception of fairness. OCB and employee turnover intention. Procedure and Sample.
Structural Equation Modeling (SEM). Conclusion, implications and limitation. Limitations and directions for future research. 46 5 TIEU LUAN MOI download : skknchat@gmail.
67 Appendix 1- Questionnaire – English. 67 Appendix 2 - Questionnaire – Vietnamese. 73 Appendix 3- Description of study sample. 78 Appendix 4- Reliability analysis - relations-oriented leadership behavior.
81 Appendix 5- Reliability analysis - Perception of fairness. 82 Appendix 6- Reliability analysis – Intrinsic motivation. 83 Appendix 7- Reliability analysis – Organizational Citizenship Behavior. 84 Appendix 8- Reliability analysis – Turnover intention.
85 Appendix 9- Exploratory Factor Analysis (EFA). 86 Appendix 10 – Confirmatory Factor Analysis (CFA). 91 Appendix 11- Structural Equation Modeling (SEM). 97 6 TIEU LUAN MOI download : skknchat@gmail.com List of figures Figure 1.
CFA measurement model. SEM measurement model. 378 7 TIEU LUAN MOI download : skknchat@gmail.com List of tables Table 1. Source of data collection.
Overall reliability of the constructs and standardized loadings of indicators. EFA results for measurement scales. Fit indices for the test model result (CFA). Fit indices for the test model result (SEM).
Standardized structural paths in the model. 40 8 TIEU LUAN MOI download : skknchat@gmail. Research background Employee is considered as one of the most valuable assets and this becomes competitive advantage of every organization in modern economy (Verma & Dewe, 2008). According to Dobre (2012), human capital has a direct relationship to organizational performance in terms of company’s profit and targets.
Other studies found that maintaining a stable labor force is an optimal way to obtain effective cost management and enhance quality of service in a firm (Jago & Deery, 2002) as well as achieve sustainable economic development of a nation (Bousrih, 2013). However, keeping well trained and skilled employees is getting more difficult for any organization (Wiggins, 1998) and it is becoming an important challenge for the firms (Reda & Dyer, 2010) as employee will switch to the next job if they are not satisfied with the current employer or the job and employer will be left with no good employees in organization (Laddha, Singh, Gabbad & Gidwani, 2012). Furthermore, employer has to suffer many losses such as investment in recruitment, selection, training and promotion is wasted (Abrams, Ando & Hinkle, 1997), negative influences on work flow, quantity and quality of production as well (Guthrie, 2000) if valued workers leave. So, keeping suitable and well-trained employees are becoming the priority in every organization (Mitchell, Holtom & Lee, 2001).
There are many reasons why people leave organizations: family matter, unfair treatment observation (Mitchell et al., 2001), salary level, job satisfaction (Lee, Huang & Zhao, 2012), excess workloads, poor colleague relationships (Conklin & Desselle, 2007), 9 TIEU LUAN MOI download : skknchat@gmail.com perceived organizational support, or employment external opportunities perception (Hofaidhllaoui & Chhinzer, 2014). Another factor that can be taken into consideration is discretionary work behavior, or Organizational Citizenship Behavior (OCB). OCB is defined as employee’s willingness to contribute extra efforts for the achievement of organizational outcomes, willingness to help coworkers, or willingness to obey extra rules (Katz, as cited in Jahangir, Akbar & Haq, 2014) and it is not in formal reward system of organization (Teh, Boerhannoeddin & Ismail, 2012; Konovsky & Pugh, 1994). If employee has high OCB, their turnover intention is likely to reduce so OCB can be considered as one of the important impacts on employee turnover intention.
Research problem Organizational Citizenship Behavior (OCB) has been studied widely over many years by many researchers. Its outcomes are also stated including increased employees’ satisfaction (Aamir & Zafar, 2006), enhanced employees retention (Podsakoff & Mackenzi, as cited in Chahal & Mehta, 2011) which means reduced turnover (Aamir & Zafar, 2006). Studies have shown that organizations with high OCB levels can have positive outcomes such as lower levels of turnover and higher levels of efficiency (Podsakoff, Whiting, Podsakoff & Blume, 2009). The benefits of OCB can be great, and the antecedents of OCB haven been studied widely so that managers can provide an appropriate environment to foster OCB’s in their employees (Lilly, 2015).
Impacts of OCB on employee turnover intention have been widely studied in terms of job 10 TIEU LUAN MOI download : skknchat@gmail.com satisfaction (Bolon, 1997; Alotaibi, 2001; Lee et al., 2012; Hofaidhllaoui & Chhinzer, 2014), organizational commitment (Bolon, 1997; Alotaibi, 2001; Lee et al., 2012; Conklin & Desselle, 2007), organizational support (Kamani & Namdari, 2012; Pohl, Battistelli & Librecht, 2013) or leadership style (Jiao, Richards & Zhang, 2011; Suliman & Obaidli, 2013; Lilly, 2015; Shah, Hamid, Memon & Mirani, 2016) but the main field of investigation is in hotel (Lee et al., 2012), engineer (Hofaidhllaoui & Chhinzer, 2014) telecom (Ibrahim & Aslinda, 2014), hospital (Pohl et al., 2013) or finance - banking industry (Jiao et al., 2011; Kamani & Namdari, 2012; Suliman & Obaidli, 2013; Shah et al. Whereas in Vietnam, turnover rate in pharmaceutical companies is still increasing year by year and it continues to be in top three out of 15 industries, even though salary is increased (Towers Watson Vietnam ,2014; Talentnet – Mercer Total Remuneration Survey, 2015). According to Towers Watson Vietnam (2014), its Total Rewards Survey 2014 highlighted that the general industry average staff turnover rate in Vietnam is at 12.7%, higher than the median of 11%. By sector, the survey showed that the pharmaceutical industry is the highest not only in terms of overall salary increases with 11.2%, but also in terms of staff turnover rate at 15.
Furthermore, Talentnet – Mercer Total Remuneration Survey (2015) made a survey with participant list of 520 well-established Multinational Corporations and leading local companies from 15 industries. In this year, Pharmaceutical is still in top three industries providing the highest salary increase rate in the market with 10.1% but staff turnover rate is also in top three accounting for 16. It can be seen that employee turnover rate in increasing and becoming big concern for organization, especially in 11 TIEU LUAN MOI download : skknchat@gmail.com pharmaceutical industry where increased salary still cannot reduce high turnover rate. Employee turnover will inflict numerous costs such as losing valuable knowledge and experience; affecting the normal workflow of the companies, the efficiency of business and relationships with suppliers and customers (Mitchell et al.
Consequently, how to explore the OCB factors that can reduce employee turnover intention becomes the big problem for management to face and deal with in order to run the business well. The result of the research is important to bring the awareness to the managers in Pharmaceutical industry in Ho Chi Minh City about antecedents of OCB that affect employee turnover intention. Management can make appropriate policies for employees to reduce their turnover intention and increase their working efficiency. - The research can be useful the reference or guidance for the others to conduct further studies in related topics and other organizations regards to similar problems.
- The research can be believed to add more value to the literature on OCB and employee turnover intention, especially in Vietnam setting. Research questions and research objectives According to the above mentioned research background and research problem, this research aims to investigate the following questions: RQ1: Identify the antecedents of Organizational Citizenship Behavior and how does each antecedent affect Organizational Citizenship Behavior? 12 TIEU LUAN MOI download : skknchat@gmail.com RQ2: How does Organizational Citizenship Behavior affect employees’ turnover intention? The main objectives of this research are to: - Identify factors affecting Organizational Citizenship Behavior including relations- oriented leadership behavior, perception of fairness, intrinsic motivation and the extent to which each factor affects Organizational Citizenship Behavior. - Analyze the impacts of Organizational Citizenship Behavior on employees’ turnover intention 2. Theoretical Background and Hypotheses 2.
Organizational citizenship behavior Organizational citizenship behavior (OCB) can be interpreted within the framework of social exchange theory: employees are willing to perform extra role behaviors to satisfy and reward relationships with specific individuals or groups in the workplace (Cropanzano & Mitchell, 2005). According to Konovsky and Pugh (1994), OCB is “employee behavior that is above and beyond the call of duty and therefore is discretionary” (p. 656) and OCB is not rewarded in organizational formal structure. Lilly (2015) defined OCB as positive employee behavior that is not required for the job in order to help the organization or to protect the organization from arising problems.
Successful organizations will be organizations that have employees willing to go beyond their normal job responsibilities, give their time and energy to complete the 13 TIEU LUAN MOI download : skknchat@gmail.com assigned job successfully, and contribute to organizational smooth operations. As the result, organizations cannot operate well without having good OCB behaved employees and understanding OCB has been a high priority for organizational management (Jahangir et al. Employee turnover intention Turnover intention has been widely studied in academic community. According to Cotton and Tuttle (1986), turnover intention is an individual’s perceived probability of staying or leaving a current organization while Sousa-Poza and Henneberger (2004) stated that “Turnover intention reflects the (subjective) probability that an individual will change his or her job within a certain time period” (p.
113) and Tett and Meyer (1993) defined this term as employee’s willingness to seek for other opportunities in other organizations. Turnover intention has always been an important issue for management for many years and it is a major problem for organizations until now (Chen, Lin & Lien, 2011). Researchers also stated that organizations are giving increased attention to turnover intention problem because they know that it will affect the cost and the performance of organizations.