MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY -----oOo----- Nguyen Thi Tuy An THE IMPACT OF PERCEIVED LEADERSHIP STYLES ON ORGANIZATIONAL COMMITMENT MASTER OF BUSINESS ADMINISTRATION THESIS HO CHI MINH City - 2012 TIEU LUAN MOI download : skknchat@gmail.com MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY -----oOo----- Nguyen Thi Tuy An THE IMPACT OF PERCEIVED LEADERSHIP STYLES ON ORGANIZATIONAL COMMITMENT Major: Business Administration Major code: 60340102 MASTER OF BUSINESS ADMINISTRATION THESIS SUPERVISOR: ASSOC. NGUYEN DINH THO HO CHI MINH City - 2012 TIEU LUAN MOI download : skknchat@gmail.com 1 Contents Acknowledgement. ii List of tables. iii List of figures.
iv CHAPTER I INTRODUCTION .1 Organizational Commitment significance .2 The importance of Leadership Style .3 Current factors affect organizations in Ho Chi Minh City .2 Statement of the Problem .3 Research objective and its significance.4 Extent and methodology of the study.1 Extent of the study .5 Some concepts related to the research.2 Leadership and Leadership Style .6 Organization of the Remainder of the Study. 10 CHAPTER II LITERATURE REVIEW .1 Introduction on Organizational Commitment .2 Introduction on Leadership Style .3 Concept of each element of Organizational Commitment and Leadership Style model. 18 TIEU LUAN MOI download : skknchat@gmail.4 Development of Research Hypotheses.1 Task Orientation and Organizational Commitment .2 Relation Orientation and Organizational Commitment. 20 CHAPTER III METHODOLOGY .1 Description of Instrumentation .1 Organizational Commitment Questionnaire.2 Leadership Style Questionnaire .2 Independent and Dependent Variables .3 Sample and Analysis Procedures.
28 CHAPTER IV ANALYSIS AND FINDINGS .2 Reliability of Scales .3 Exploratory Factor Analysis .4 Descriptive Statistics for Leadership Style and Organizational Commitment Score .1 Organizational Commitment Score .2 Leadership Style Score .5 Relationship between Leadership Styles and Organizational Commitment .1 Regression of Relation Orientation, Task Orientation and Affective Commitment 40 4.2 Regression of Relation Orientation, Task Orientation and Continuance Commitment 45 4.3 Regression of Relation Orientation, Task Orientation and Normative Commitment 48 TIEU LUAN MOI download : skknchat@gmail.com 3 CHAPTER V SUMMARY, CONCLUSIONS AND RECOMMENDATIONS .2 Summary of Findings .1 Organizational Commitment and Leadership Style Scale .2 Organizational Commitment and Leadership Style Score .3 Organizational Commitment and Leadership Style Relation .3 Leadership Styles and Organizational Commitment .5 Limitations and suggestions. 59 APPENDIX 1: LIST OF KEY CONCEPS IN THE STUDY. Leadership and Leadership Style. 69 APPENDIX 3: CHECKING RELIABILITY OF INSTRUMENTS.
Organizational Commitment Scale. Reliability of Organizational Commitment Scale. Leadership Style Scale. 75 TIEU LUAN MOI download : skknchat@gmail.
Reliability of Leadership Style Scale. 75 APPENDIX 4: EXPLORATORY FACTOR ANALYSIS. Multiple regression for Affective Commitment. Multiple regression for Continuance Commitment.
Multiple regression for Normative Commitment. 91 TIEU LUAN MOI download : skknchat@gmail.com i Acknowledgement I would like to thank the following people who helped to make this research possible: Respectful lecturers of University of Economics Ho Chi Minh City for empowering me with considerably useful knowledge during the time I studied in the University. Nguyen Dinh Tho, for supporting and guiding with his patience and competence throughout my dissertation writing. Respondents, for giving their precious time in inputting the questionnaires.
My family, for encouraging me all the time. Even I have tried my best to complete the thesis, however, human errors might be found. Therefore, all inputs, ideas, and comments would be greatly appreciated. Nguyen Thi Tuy An Ho Chi Minh, November 2012 TIEU LUAN MOI download : skknchat@gmail.com ii Declaration Student number: 7701080001 I would like to declare that this dissertation, “The impact of perceived leadership styles on organizational commitment”, was accomplished based on my recent independent and serious studies and has not been previously, in its entirety or in part, submitted at any university in order to obtain academic qualifications, the data was collected in reality, and all used sources were indicated and acknowledged by means of complete bibliography.
Nguyen Thi Tuy An TIEU LUAN MOI download : skknchat@gmail.com iii List of tables Table 2. 1 Four periods of the development of Organizational Commitment. 2 Different points of Leadership Style Approach. 1 Surveyed items used in the study for independent variables.
2 Surveyed items used in the study for dependent variables. 2 Reliability of Organizational Commitment Scale. 3 Reliability of Leadership Style Scale. 4 Factor Analysis of Organizational Commitment and Leadership Style.
5 Organizational Commitment Descriptive Statistics. 6 Leadership Style Descriptive Statistics. 7 Correlation between Leadership Styles and Organizational Commitment. 8 Overall relationship between Leadership Styles and Affective Commitment 1.
9 Overall relationship between Leadership Styles and Affective Commitment 2. 10 Relationship of each Leadership Style and Affective Commitment. 11 Overall Relationship between Leadership Styles and Continuance Commitment 1. 12 Overall Relationship between Leadership Styles and Continuance Commitment 2.
13 Relationship of each Leadership Style and Continuance Commitment. 14 Overall Relationship between Leadership Styles and Normative Commitment 1. 15 Overall Relationship between Leadership Styles and Normative Commitment 2. 16 Relationship of each Leadership Style and Normative Commitment.
49 List of figures Figure 2. 52 TIEU LUAN MOI download : skknchat@gmail.com iv Abstract The purpose of research was to explore the impact of perceived leadership styles on organizational commitment. The population was the employees working in Ho Chi Minh City. The used methods were qualitative and quantitative one based on two instruments of Organizational Commitment Questionnaire (Meyer and Allen, 2004) and Leadership Style Questionnaire (Northouse, 2010).
From this study, we could find that: The organizational commitment in Ho Chi Minh City was at moderate level. The leadership style used by most leaders in Ho Chi Minh City was at moderate range of task and relation orientation. There was a statistically significant relationship between organizational commitment of the employees and their perception of supervisors’ leadership styles. TIEU LUAN MOI download : skknchat@gmail.com 1 CHAPTER I INTRODUCTION This chapter will present the background of Organizational Commitment and Leadership Style in Ho Chi Minh City recently.
Problem statement, objective, significance, extent and methods of the research and some key concepts used in the study will also be presented.1 Organizational Commitment significance Organizational commitment is important in human resource management and organizational achievement because of the following reasons: Firstly, organizational commitment affects the employees’ intention to stay or leave and cost of maintaining workforce of organizations. By improving organizational commitment, an organization could have “an 87% reduction in employees’ probability of departure (Corporate Leadership Council, 2004, p.4)” and avoid the cost “estimated 100% to 150% of the departing worker’s annual salary (Mayfield and Mayfield, 2002, p.” Secondly, if the organizational commitment is low, along with the possibility of high turnover rate and huge expense as above mentioned, organizations could be at risk of leaking customers’ or technology’s information which is extremely critical in current competitive environment. Last but not least, committed employees provide high quality during their performance. Corporate Leadership Council (2004, p.4) found that “By increasing employees’ engagement levels, organizations can expect an increase TIEU LUAN MOI download : skknchat@gmail.com 2 in performance of up to 20 percentile points.” In brief, organizational commitment could be considered as a predictor of turnover, replacement cost, information security and job performance of an organization.2 The importance of Leadership Style The first role of a leader is to lead and the leadership style does matter since it influences her/his organization in every stage of its development.
For example, Pham Thi Dieu Hien, the leader of BiAnFishco, bought two Rolls Royce motor cars just in the purpose of building the brand name for her company and the current failure of this organization was attached with her style. Mai Kieu Lien, the Chief Executive Officer of Vinamilk, is another example. Under her leading way, her group becomes one of Vietnam's most profitable and respected brand-name across Asia and as a result, Forbes listed her in the top 50 Asia Power Businesswomen (Forbes, 2012). Undeniably, every organization needs a leader and Inyang (2009, p.68) stated that “Leadership is the most important single factor in determining business success.” Being reflected in every single activity of that organization, the leadership style hence goes along with its reputation: Through her/his proper leading style, leader helps the organization to maximize efficiency and to achieve setting goals.
Under her/his wise leading style, leader initiates structure for working, motivates employees, provides instructions, creates confidence, and builds morale and working environment. TIEU LUAN MOI download : skknchat@gmail.3 Current factors affect organizations in Ho Chi Minh City Ho Chi Minh City is the largest economic center of Vietnam. Its Provincial Competitiveness Index (PCI) is ranked 20 (PCI, 2012), meaning it has acceptable indicator of entry cost, land access and tenure, transparency, time costs, informal charge, pro-activity, business support services, labor training, and legal institutions. With such index, it is easy to explain the large number of enterprises and employees operating in this city.
However, enterprises in Ho Chi city do not easily run today due to recent challenges listed as following: Since 2011, under the affect of gloomy global economy and the disadvantages due to high inflation, bad debts, liquidity shortage, and foreign balance deficit… enterprises in Ho Chi Minh City have been undergoing an incredibly tough period. As consequence, until June 2012, nation-widely, there are 23,689 enterprises cease operating (General Statistics Office, 2012). According to Tax Department (2012, as cited in VCCI, 2012), in Ho Chi Minh City, in the first two months of 2012, there were more than 3.100 enterprises declaring bankruptcy. A survey conducted by Vietnam WVB Financial Intelligence Services showed that generally, Business Confidence Index (BCI) sharply dropped from 123 points in the 3rd quarter in 2011 to 116 points in the first quarter of 2012 (Saigon Times, 2012).
This survey also revealed that mainly, enterprises faced the extreme difficulty in gaining access to capital. In order to contend, the survivals are encouraged to cut cost, restructure and or join the wave of mergers and acquisitions. TIEU LUAN MOI download : skknchat@gmail.com 4 The Government has been processing wider economy reform. It also maintains strict fiscal and monetary policies to control inflation.
As result of the Governmental effort in administering macroeconomics, in last March, Bloomberg listed Vietnam in top 50 best countries for business ranking (Bloomberg, 2012). Also, in 06 June 2012, “Standard & Poor's revised the outlook on Vietnam to stable from negative and affirmed the 'BB-' long-term and 'B' short-term sovereign credit ratings for our country (Government Web Portal, 2012).2 Statement of the Problem 1.1 Employees’ commitment Through many years of struggling against employees’ jumping, organizations have well acknowledged the risk of shifting employees and role of employees’ commitment in current competitive environment. In this regard, they start paying attention into their salary scheme as well as their benefit and training policies. Gradually, employee’s engagement programs have become priorities in Human Resource activities of some organizations and the concept of “employees as assets” has been formed.
However, regardless of such great effort of organizations, according to the survey of Towers Watson, in Vietnam, the employees’ intention to stay with organization was just at low level of 54%. This meant there was great potential for employees to leave their organizations (Ruge, 2011) and they often resigned after every Lunar New Year. Even this tendency has decreased in 2012 and the turnover ratio is forecasted to reduce this year, still “the fact that employee turnover always TIEU LUAN MOI download : skknchat@gmail.com 5 stays at a two-digit level has sparked great concern for managers (Nghia, 2012).” Meanwhile, based on the information of Center of Forecasting Manpower Needs and Labor Market Information Ho Chi Minh City, in the end of this year, organizations in Ho Chi Minh City will need the labor market to provide 135. In that event, surely, organizational commitment will continue to remain as a difficult problem for enterprises to solve.