Tài liệu The relationship of service climate, employee commitment, and life satifaction in banking industry in vietnam

i UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Vuong Thi Thanh Binh THE RELATIONSHIP OF SERVICE CLIMATE, EMPLOYEE COMMITMENT, AND LIFE SATISFACTION IN THE BANKING INDUSTRY IN VIETNAM MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2014 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Vuong Thi Thanh Binh THE RELATIONSHIP OF SERVICE CLIMATE, EMPLOYEE COMMITMENT, AND LIFE SATISFACTION IN THE BANKING INDUSTRY IN VIETNAM ID: 22120119 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. NGUYEN THI MAI TRANG Ho Chi Minh City – Year 2014 i ACKNOWLEDGEMENT Firstly, I would like to express my heartfelt gratitude to my supervisor Dr. Nguyen Thi Mai Trang for her professional guidance, enthusiastic support, valuable advices and instructions as well as the encouragement that I was received from her during the time of doing my research. Secondly, I would like to express my deep gratefulness to Professor Nguyen Dong Phong, Professor Nguyen Dinh Tho and Dr. Tran Ha Minh Quan for their precious time as the members of ISB Research Committee which gave me some useful comments and meaningful suggestions. All of their comments and suggestions were contributed importantly in my completion of this research. Thirdly, I would like to express my sincere thanks to my professors in International Business School (ISB) – University of Economics Ho Chi Minh City for all the knowledge which I were received in the past two-year master course. Finally, I would like to say thank you to my classmates in ISB for their support during the time I studied and wrote the thesis. Moreover, my truly thanks are also sent to my workmates as well as all people who joined in my survey and gave the valuable opinions for my research. ii ABSTRACT This study examines the roles of service climate through its factors: customer orientation, managerial support, and work facilitation affecting on employee commitment. Based on employee commitment created from service climate, it also evaluates the effect of employee commitment on life satisfaction of employees in the banking industry in Vietnam. The test processed in a sample of 140 banking staffs in Ho Chi Minh City and Binh Duong province. Using a seven-point Likert-type scale to measure data together with some methods of data analysis (Cronbach’s Alpha test, Exploratory factor analysis and Multiple regression analysis), the findings confirm that working environment included managerial support merged with work facilitation has the positive effect on employee commitment. From that result, employee commitment also has the positive significant effect on life satisfaction. Extracted from the findings of this research, in order to receive the commitment from employee, the bank must set up good environment for their staffs such as creating good relationship between the managers especially the direct manager and the employee. This is one of the most important conditions to get the employee commitment. Besides, the work facilitation included the workmate relationship and facilities, which the bank provides to employee affect on keeping the commitment of employee. However, the most important thing in this study is having the commitment in job; the employee in the bank will have the life satisfaction. Key words Service climate, Employee commitment, Life satisfaction. iii TABLE OF CONTENTS ACKNOWLEDGEMENT ......................................................................................................i ABSTRACT ........................................................................................................................... ii TABLE OF CONTENTS ..................................................................................................... iii LIST OF FIGURES ..............................................................................................................vi LIST OF TABLES .............................................................................................................. vii CHAPTER 1: INTRODUCTION ......................................................................................... 1 1.1 Research background .................................................................................................... 1 1.2 Research problem ......................................................................................................... 2 1.3 Research objectives ...................................................................................................... 3 1.4 Scopes and research methodology of the thesis ........................................................... 4 1.5 Significance of the study .............................................................................................. 5 1.6 The structure of the study ............................................................................................. 5 CHAPTER 2: LITERATURE REVIEW ............................................................................. 7 2.1 Life satisfaction ............................................................................................................ 7 2.2Service climate............................................................................................................... 7 2.3 Employee commitment ................................................................................................. 9 2.4 Service climate and employee commitment ................................................................. 9 2.5 Employee commitment and life satisfaction .............................................................. 11 2.6 Summary ..................................................................................................................... 12 CHAPTER 3: RESEARCH METHODOLOGY .............................................................. 13 3.1 Research process ......................................................................................................... 13 3.2 Measurement scale...................................................................................................... 16 3.3 Questionnaire design .................................................................................................. 18 3.3.1Qualitative research ............................................................................................... 19 3.3.2 Quantitative research ............................................................................................ 20 3.4 Data collection method ............................................................................................... 20 3.5 Sampling design.......................................................................................................... 20 3.5.1 Population ............................................................................................................. 20 iv 3.5.2 Sample size ........................................................................................................... 21 3.6 Data analysis method .................................................................................................. 22 3.6.1 Data code .............................................................................................................. 23 3.6.2 Cronbach’s alpha .................................................................................................. 23 3.6.3 Exploratory factor analysis (EFA) ........................................................................ 23 3.6.4 Multiple regression analysis ................................................................................. 24 3.7 Summary ..................................................................................................................... 24 CHAPTER 4: DATA ANALYSIS AND DATA RESULTS ............................................. 25 4.1 Sample characteristics ................................................................................................ 25 4.2 Data analysis process .................................................................................................. 27 4.2.1 Scale Validity and Reliability ............................................................................... 28 4.2.2 Exploratory Factor Analysis(EFA) ....................................................................... 29 4.2.2.1 Exploratory Factor Analysis (EFA) for independent variables ...................... 29 4.2.2.2 Exploratory Factor Analysis (EFA) for dependent variables ......................... 32 4.2.3 Multiple Regression Analysis ............................................................................... 34 4.2.3.1 Multiple Regression analysis to evaluate the effect of customer orientation, working environment on the employee commitment ................................................. 35 4.2.3.1.1 Correlation analysis ................................................................................... 36 4.2.3.1.2 Test of assumptions: .................................................................................. 36 4.2.3.1.3 Regression analysis .................................................................................... 38 4.2.3.2 Bivariate Regression analysis to evaluate the effect of employee commitment on life satisfaction ....................................................................................................... 39 4.2.3.2.1 Test of assumptions ................................................................................... 40 4.2.3.2.2 Regression analysis .................................................................................... 40 4.2.3.3 Summary the result of multiple regressions and linking to the situation in banking industry in Vietnam ....................................................................................... 42 4.3 Summary ..................................................................................................................... 43 CHAPTER 5: CONCLUSIONS, IMPLICATIONS, AND LIMITATIONS .................. 45 5.1 Conclusion .................................................................................................................. 45 v 5.2 Managerial implications ............................................................................................. 46 5.2.1 Customer orientation has not a significant positive effect on employee commitment. .................................................................................................................. 46 5.2.2 Working environment has a positive effect on employee commitment. .............. 46 5.2.3 Employee commitment has a positive effect on life satisfaction. ........................ 47 5.3 Limitations and future research .................................................................................. 49 References ............................................................................................................................. 51 Appendix A: In-depth Interview’ refinement measurement scale ................................... 58 Appendix B: Questionnaire (English Version) ................................................................. 61 Appendix C: Total Variance Explained........................................................................... 71 Appendix D:Testing assumptions of multiple linear regression ...................................... 73 Appendix E:Testing assumptions of simple linear regression ......................................... 77 vi LIST OF FIGURES Figure 2.1: Research Model ...................................................................................................11 Figure 3.1 Research Process ..................................................................................................15 Figure 4.1: Adjusted Research Model. ...................................................................................34 vii LIST OF TABLES Table 3.1 Measurement scale of the research ........................................................................17 Table 3.2: The result of collecting questionnaire ...................................................................22 Table 4.1: Sample Characteristics ..........................................................................................27 Table 4.2: Scale validity and Reliability ................................................................................28 Table 4.3: KMO and Bartlett's Test .......................................................................................29 Table 4.4: Rotated Component Matrix...................................................................................30 Table 4.5: KMO and Bartlett's Test .......................................................................................32 Table 4.6: Component Matrix ................................................................................................32 Table 4.7: KMO and Bartlett's Test .......................................................................................33 Table 4.8:Component Matrix .................................................................................................33 Table 4.9: Correlations ...........................................................................................................36 Table 4.10: Model Summary..................................................................................................38 Table 4.11: Anova ..................................................................................................................39 Table 4.12: Coefficients .........................................................................................................39 Table 4.13: Model Summary..................................................................................................40 Table 4.14: Anova ..................................................................................................................41 Table 4.15: Coefficients .........................................................................................................41 Table 4.16: Summary of hypotheses testing result ................................................................42 1 CHAPTER 1: INTRODUCTION 1.1 Research background According to Krau and Oswald, one of the highest human and societal goals is enhancement the quality of life (as cited in Frank and Enkawa, 2009) and life satisfaction is the final goal of the human being. Every year, Organization for Economic Co-operation and Development (OECD) does the survey with 36 members including countries, which have the highest income in the world and choose some countries have the happiest life all over the world. Beside some ratio to survey such as health, education, environment quality…it also has the ratio of life satisfaction in their survey (Thu Hang, 2014).The large part of the developed countries has the high satisfaction level to their lives and the frequently survey about life satisfaction express that life satisfaction is important in developed country. In Vietnam, life satisfaction seems not to be paid attention in the past because Vietnam is still the developing country (Ready and Dinh,2008), so the economy is not strong and rich enough to enjoy the life.Vietnamese still have the quotation that “eating for being full and wearing for being warm” and they do not have the concept of life satisfaction.In the past ten years, Vietnam is rarely to survey about life satisfaction in our lives because it is hard to find out the information about life satisfaction of Vietnamese in the magazines or newspapers. However, some recent years, life satisfaction starts to be known in the communication media in Vietnam.According to Linh San (2014), Business Insider, a prestige magazine of United States of American(USA) is ranked Vietnam in number 16 of the top 20 the most valuable places to live all over the world. In addition to, the newest declaration of Pew, a research center in Washington D.C, say that 60 percentage of Vietnamese has the high life satisfaction just after Mexican and USA (Tra My, 2014).Besides, the survey about the happy level of youth also conducts in Vietnam by Hilton Worldwide, Vietnam is ranked number eleven, and the rank is higher than some 2 countries in the same area such as Indonesia and Philippines. It shows that Vietnamese begin to know and pay more attention to life satisfaction. 1.2 Research problem In some previous research, there are many studies about life satisfaction. There is the research about the relationship between organization support, work-family conflict and the job-life satisfaction in the University (Dixon and Sagas, 2007) or the other research about the relative contributions of ethnicity, socioeconomic status, health, and social relationships to life satisfaction in United States (Barger et al., 2009). On other hand, the research of the role of personality in life satisfaction also process by Baudin et al. (2011).It also has the researcher provide the study of the role of work on life (Streimikiene and Grundey, 2009) or the effects of consumption and work satisfaction on the life of Professional (Hampton et at.,2013). Cheng and Chan (2006) have the research about the life satisfaction in later life of the gender and widowhood such as how men and women examine life satisfaction differently in the context of relationship of each other. Frank and Enkawa (2009) process the research of whether economic growth enhances life satisfaction of the people. The most of previous research show that among those factors making life satisfaction, work plays an important role among them. Job satisfaction is found in many research being the factor affect life satisfaction, however, the effect of employee commitment on life satisfaction does not find out in the previous research. Besides, many researches investigate about the factors affect employee commitment. McGuire and McLaren (2009) process the research about the impact of physical environment on employee commitment in call centers. Fedor et al. (2006) make research about the effects of organizational changes on employee commitment. There are the research about the effect of service climate on employee commitment of He et al. (2011); Little and Dean (2006). However, the effect of service climate on employee commitment find out in service sector of call center and hospital. It does not find out the research of the effect of service climate on employee commitment in the banking industry. 3 In Vietnam, there are many research about life satisfaction of Vietnamese about many aspects of life satisfaction such as the satisfaction about the family relationship, individual life, family facilities, life condition, etc. (Hoang Ba Thinh, 2012). Besides, it also has the research about the life satisfaction of Vietnamese people from the occupations, jobs and living standard (Nguyen Thi Van Hanh, 2013). It means that some people in Vietnam begin to think of life satisfaction as well as the factors effect on life satisfaction. However, it does not find out the research about life satisfaction of employee in service sections, especially the banking industry in Vietnam. In terms of previous research, related to banking industry in Vietnam, there just have research about the factors influencing to the job satisfaction of the commercial banks’staff (Phan Thi Minh Ly, 2011).Other research concentrates on the employee satisfaction of banking staff (Nguyen Thi Thuy Quynh, 2012) but it does not study the life satisfaction of banking staff. Schneider et al. (as cited in Little and Dean, 2006) say that service climate was significantly related to each of three predictors: customer orientation, managerial practices and customer feedback. Customer feedback considers as one aspect of customer orientation (He et al., 2011). Therefore, in order to fulfill the gap of effect of service climate on the employee commitment in the banking industry; and in an effort to identify the key factors of service climate influence on employee commitment, the research considers the concepts of customer orientation, managerial support and work facilitation, three factors of service climate, to employee commitment in banking industry. Moreover, the relationship of employee commitment and life satisfaction of employee in banking industry are also investigated in this research. That is the reason in my study, I concentrate on the service climate which the bank creates to get employee commitment and from that employee commitment, how it effect to life satisfaction of employee. 1.3 Research objectives Based on the research background and research gap, the overall objective of this study is to examine the relationship between service climate through its three factors: customer orientation, managerial support, and work facilitation, and employee commitment 4 as well as the effect of employee commitment on life satisfaction of employee in the banking industry in Vietnam. In specific, this research has the purpose of investigating: 1. The effect of customer orientation on the employee commitment in the banking industry. 2. The effect of managerial support on the employee commitment in the banking industry. 3. The effect of work facilitation on the employee commitment in the banking industry. 4. Under the effect of service climate on employee commitment – the influence of employee commitment to life satisfaction of employee in the banking industry. 1.4 Scopes and research methodology of the thesis By using the service climate to evaluate the employee commitment and thank to this employee commitment, it measures the life satisfaction that is the reason why the field of research is the service industry. Banking is one of service sectors in service industry chosen joining this survey, especially the banking industry in Vietnam. Through some dimensions of service climate are customer orientation, managerial support, and work facilitation, effect to employee commitment – to draw the relationship between employee commitment and life satisfaction. Examining the relationship of three independent variables of service climate, employee commitment and life satisfaction, the author uses the scale of previous research – structured questionnaire – to collect data from employees in some other bank in Ho Chi Minh City (HCMC) such as Taipei Fubon Commercial Bank HCMC Branch, Huanan Commercial Bank HCMC Branch, Far East National Bank HCMC Branch, The Bank of Tokyo-Mitsubishi HCMC Branch, Agricultural Bank of Vietnam Cho Lon Branch and one bank in Binh Duong province is Taipei Fubon Commercial Bank Binh Duong Branch. The constructs were measured by using established scales. Using a seven-point Likert-type scale to measure the survey. 5 1.5 Significance of the study After this study, it is hopeful that its finding will contribute in bankers’ knowledge about employee commitment as well as some factors effect on it. From that, the manager of the bank knows the way to hold the commitment of their employee based on the knowledge about what thing is important to create the commitment of the employee in banks’ working environment. Besides, through this study, Vietnamese bankers know more clearly about the concept of life satisfaction as well as how employee commitment effect on life satisfaction in order to make the life of bank’s employee more satisfied. 1.6 The structure of the study This thesis consists of five chapters. Chapter 1: Introduction In this chapter, the author introduces the research background of the study, research problem, research objectives, research methodology and scopes, the significance of the study and the structure of the study. Chapter 2: Literature review and hypotheses In this chapter, the fundamental theories and definition of each concept in the study are explained based on quoting or paraphrasing the same concepts in some previous research by the author. Besides, the research model together with hypotheses of this study are also presented by the author in this part. Chapter 3: Research Methodology This chapter discusses about the research design, measures of the constructs together with the measurement scales of this study. Research process is also mentioned in this chapter. The method of data analysis with Cronbach’s alpha, Exploratory factor analysis (EFA) and Multiple regression analysis is introduced. Chapter 4: Data analysis and data results 6 The author presents the characteristics of the collected samples as well as the result of the research after analyzing the samples with data analysis method mentioned in chapter 3. From that result, the author draws the conclusions for the proposedhypotheses in chapter 2. Chapter 5: Conclusions, implications and limitations In this chapter, the author confirms the supported hypotheses based on the results of the research in the chapter 4. Based on those supported hypotheses, the author suggests the contribution of the study in management theory and practice and draws the limitation of the study for future research. 7 CHAPTER 2: LITERATURE REVIEW In this chapter, the author presents the literature related to service climate as well as the literature of three factors standing for service climate: customer orientation, managerial support, and work facilitation. Besides, the overview of literature about employee commitment and life satisfaction is also introduced by the author. Based on the literature review about the concepts, the author develops the hypothesis from the relationship between service climate and employee commitment through the relationship of customer orientation, managerial support and work facilitation to employee commitment. 2.1 Life satisfaction According to Henrich and Herschbach, life satisfaction is defined as the subjectively perceived quality of life based on individual preferences and reported satisfaction in various life domains (as cited in Besier and Goldbeck, 2012). Rode (2004) said life satisfaction refers to the cognitive element of the subjective well-being of employees. Judge et al., (2001) defined life satisfaction as an individual’s conscious, cognitive appraisal of the quality of his or her life and Lent et al. (2009) said life satisfaction is a lasting indicator towards the employee’s triumphant adjustment to changes in life (as cited in Mafini, 2014). It may be described as an emotional reaction of an individual to life consisting of worktime, spare time, and time after work as well as expressing individual’s satisfaction about life (Heller et al., 2002). Shichman and Cooper (as cited in Wang et al., 2008) stated that living better, enjoying life and having a high quality of life is life satisfaction. 2.2Service climate Service climate is defined as “the shared perceptions of employees concerning the practices, procedures, and kinds of behaviors that get rewarded and supported with respect to customer service and service quality” (Schneider et al., 1998, p.151). Little and Dean (2006) said, “the service climate communicates a message to employees about what is valued by the organization, and the attitudes and behaviors that are desired and will be rewarded”. Mechinda and Patterson (2011) showed that service climate is a specific subset 8 of organizational climate such as the perceptions of employees about what is important in their organization. Schneider and Bowen (as cited in Johnson, 1996) stated that creating a climate service starts from identifying the needs and expects of the market for service quality. This involves measuring customer expectations and satisfaction, sharing the data with affected employees, and generating goals and plans to ensure improvement in service delivery. Schneider and Bowen (1993) argued that service climate might include some practices, which encourage offering high quality service and creating supportive conditions, such as efforts toward removing obstacles to work, and other HR policies. In addition, Shainesh and Sharma (as cited in He et al., 2011) suggested other facets of service climate, including customer orientation, managerial practices and customer feedback. Schneider (as cited in Carrasco et al., 2012) showed that customer feedback refers to the request and use of feedback by customers, customer orientation describes efforts to meet customer needs or expectations for service quality. He et al. (2011) stated, “Customer feedback may be considered as one aspect of customer orientation and climate service is proposed to have three major components in their research, including customer orientation, managerial support and work facilitation”. Little and Dean (2006) in their research, the dimensions of service climate are consist of organizational customer orientation, managerial practices, customer feedback and human resource management. According to Shainesh and Sharma (as cited in He et al., 2011), customer orientation mean creating systems to act on the information about customers which includes the component of customer feedback. So that, in this study, the author chooses the components to measure the service climate are customer orientation, managerial and work facilitation. Customer orientation is defined as the importance that service providers place on their customers’ needs and expectations relating to a firm’s service offerings (Kelly, as cited in Scotti et al., 2007).Saxe and Weitz (as cited in Dimitriades, 2007) said that customer orientation has been defined as the satisfaction of customer needs at the level of the 9 employee-customer interaction. In addition, customer orientation means placing a high priority on customer interests (Day, as cited in He et al., 2011). He et al. (2011) quoted that “managerial support means actions taken by an employee’s immediate manager in a manner that supports and rewards delivery of quality service. Work facilitation means all working conditions that support delivery of quality service, such as general HR practices, guidance, and cooperation among workmates”. Three components such as customer orientation, managerial support, and work facilitation use to measure the service climate in this research. He et al.(2011) recognized that “customer orientation is the basic component of service climate which determines the direction and guideline of serviceand managerial support and work facilitation are the two “wheels” of the carriage, to realize quality service”. 2.3 Employee commitment Herscovitch and Meyer (2002) defined commitment of workers when they recognize the goals and objectives of the organization and try to make effort and to work harder to help it prosper. In addition, Bateman and Strasser (1984) described commitment relating employees’ devotion and faithfulness to readiness to exert effort on behalf of the organization and the desire to maintain membership. El-Kassar et al. (2011) recognized that normative commitment is an emotional obligation towards the organization of the employees who accept about their responsibility towards the organization. Employee commitment is defined as “the psychological attachment felt by a person for the organization. Committed individuals believe in, and accept, organizational goals and values. They want to remain in the organization and commit themselves to provide quality service on behalf of the organization” (Chen, as cited in He et al., 2011). 2.4 Service climate and employee commitment Banking industry is the service industry, so customer is the most of their concerns in bank’s business. All their products of service concentrate on their customer satisfaction. Mechinda and Patterson (2011) said, “Consumers are better served if service organizations are structured to meet and satisfy the needs of their employees”. It means that customer will 10 be served well when the organization meets the needs of their employee. Tsai et al. (2008) said if in the service organization, employee can perceive a superior service climate, then they show the service behavior which the organization desires. So that, building the good service climate for employee plays the important role to lead to customer satisfaction as well as job satisfaction. From above literature, it shows that there is the relationship of customer orientation to the employee commitment in the service sector, especially in the banking industry. And the hypothesis is set up base on the relationship of customer orientation and employee commitment. H1. Customer orientation (CO) has a positive effect on employee commitment (EC). According to Ready and Dinh (2008, p.11) “Vietnamese students are indicating that it is very important to them to receive feedback from their supervisor and organization for the contributions they are making”. The Vietnamese students after graduated, they will become the employee which may be work in the bank or in another field of the Vietnamese economy. With the recognition of Ready and Dinh (2008), it shows that the reaction of the supervisor as well as the manager in workplace has the effect to the employee. From this concept, the relationship between managerial support and employee commitment is set up. H2. Managerial support (MS) has a positive effect on employee commitment (EC). The previous literature mentions service climate is measured by customer orientation, managerial support, and work facilitation. Service climate is the environment for employee to work with high commitment and the work facilitation being all working conditions that support delivery of quality service, such as general HR practices, guidance, and cooperation among workmates. Mottaz (1988) says that employees who got the supportive and friendly relationship with their co-workers and supervisors has a strong, positive commitment to their organization. Basing on this, the hypothesis is made to evaluate the effect of work facilitation to employee commitment. H3. Work facilitation (WF) has a positive effect on employee commitment (EC). 11 2.5 Employee commitment and life satisfaction According to the literature, employee commitment is the desire to be a part of the organization; it is the commitment of the employee to provide the quality service on behalf of the organization to the customer. By the way trying one’s best to provide the high quality service to the customer in order to make the organization prospective, employee can be had the strong connection to this organization. Especially in the banking industry, providing the good service for the customer is the final target in business of all the banks in Vietnam. Based on the employee commitment with the bank, this employee gives us the signal that someone feels satisfied with the current job. Ofovwe et al. (2013) say people who are satisfied with their job will have the tendency to be satisfied with life. Therefore, through the job satisfaction, we can see the link from employee commitment to life satisfaction. Therefore, the hypothesis to express this relationship of two factors is created. H4. Employee commitment (EC) has a significant positive effect on life satisfaction(LS). Basing on four hypotheses setting up, the research model for this study is drawn. Customer Orientation Managerial Support H2 Employee Commitment Working Faciliation Figure 2.1: Research Model H4 Life Satisfaction