(Luận văn) examine the mediating role of organizational citizenship behaviour in the relationship between perceived human resource management practices and intention to leave of employees

MINISTRY OF EDUCATION AND TRANNING

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UNIVERSITY OF ECONOMICS, HO CHI MINH CITY

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LE NGOC LAN

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EXAMINE THE MEDIATING ROLE OF

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ORGANIZATIONAL CITIZENSHIP BEHAVIOUR IN

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THE RELATIONSHIP BETWEEN PERCEIVED

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HUMAN RESOURCE MANAGEMENT PRACTICES

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AND INTENTION TO LEAVE OF EMPLOYEES

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MASTER THESIS IN BUSINESS ADMINISTRATION

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HO CHI MINH CITY – 2013

MINISTRY OF EDUCATION AND TRANNING

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY

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LE NGOC LAN

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EXAMINE THE MEDIATING ROLE OF

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ORGANIZATIONAL CITIZENSHIP BEHAVIOUR IN

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THE RELATIONSHIP BETWEEN PERCEIVED

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HUMAN RESOURCE MANAGEMENT PRACTICES

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AND INTENTION TO LEAVE OF EMPLOYEES

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Subject: Master of Business Administrator

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Code: 06.34.01.02

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MASTER THESIS IN BUSINESS ADMINISTRATION

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Dr. PHAM QUOC HUNG

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SUPERVISOR:

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HO CHI MINH CITY – 2013


ACKNOWLEDGEMENT

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Firstly, I wish to express my deepest gratitude to my supervisor, Dr. Phạm Quốc

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Hùng, for giving me insightful guidance and valuable advice throughout undertaking of this

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study.

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I also thank to all respected lecturers of the eMBA19 course of for their devotions

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during the training, which enrich my knowledge in order to implementing this study

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successfully.

My heartfelt thanks to respondents, who provide me supportive attitude and honest

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answer to make a good and solid database for the analysis.

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Finally, I would like to say thanks to my beloved friend and family members, whom

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have given me much support, encouragement and assistance with this thesis.

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Ho Chi Minh City, September 2013

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Le Ngoc Lan

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COMMITMENT

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I hereby declare that all information in this document has been obtained and

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presented in accordance with academic rules and ethical conduct. I also declare that, as

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required by these rules and conduct, I have fully cited and referenced all material and

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results that are not original to this work.

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Le Ngoc Lan

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TABLE OF CONTENT

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CHAPTER 1 - INTRODUCTION TO THE STUDY ......................................... 10

1.1. Research background ......................................................................................... 10
1.2. Research objective.............................................................................................. 11
1.3. Practical significances of the study .................................................................... 12
1.4. Research scope and approach ............................................................................. 12
1.5. Research structure .............................................................................................. 12
CHAPTER 2 - LITERATURE REVIEW ............................................................ 14
2.1. Human Resource Management .......................................................................... 14
2.1.1 Human Resource Management Pratices ...................................................... 14
2.1.2 Human Resource Management effects on Intention To Leave ................... 15
2.2. Organizational Citizenship Behaviour ............................................................... 15
2.2.1 Definition of OCB ....................................................................................... 15
2.2.2 The important of OCB ................................................................................. 17
2.3. Research model and hypotheses......................................................................... 17
2.3.1 The effects of HRM on OCB ....................................................................... 17
2.3.2 The effect of Retention Oriented Compensation on Intention to Leave ..... 19
2.3.3 The effect of Formalized Training on Intention to Leave ........................... 19
2.3.4 The effect of OCB on intention to leave...................................................... 20
2.3.5 The mediating role of OCB ......................................................................... 20
CHAPTER 3 - RESEARCH METHODOLOGY ............................................... 22
3.1. Research design .................................................................................................. 22
3.2. Research process ................................................................................................ 22
3.3. Questionnaire development ................................................................................ 23
3.4. The pilot study .................................................................................................... 27
3.4.1 Pilot study phase 1 ....................................................................................... 27
3.4.2 Pilot study phase 2 ....................................................................................... 27
3.5. Main study .......................................................................................................... 28
3.5.1 Target population ......................................................................................... 28
3.5.2 Sampling design........................................................................................... 28
3.5.3 Data collection ............................................................................................. 28
3.6. Methods of data analysis .................................................................................... 29

3.6.1 Data cleaning ............................................................................................... 29
3.6.2 Reliability .................................................................................................... 29
3.6.3 Confirmatory factor analysis ....................................................................... 30
3.6.4 Analysis of Variance (one-way and two-way ANOVA) ............................. 31
3.6.5 Multiple regression analysis ........................................................................ 31
3.6.6 Testing mediation with regression analysis ................................................. 32
CHAPTER 4 - DATA ANALYSIS ....................................................................... 35
4.2. Data cleaning ...................................................................................................... 35
4.3. Profiles of qualified respondents ........................................................................ 35
4.4. Normality analysis.............................................................................................. 37
4.5. Reliability of the measurements ......................................................................... 37
4.6. Confirmatory factor analysis .............................................................................. 38

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4.7. Hypotheses testing.............................................................................................. 43
4.7.1 Correlation analysis ..................................................................................... 43
4.7.2 Testing residuals of dependent variable ...................................................... 45
4.7.3 Effect of Perceived HRM Practices (Retention-oriented Compensation and
Formalized Training) on Organizational Citizenship Behaviour (H1 & H2) ........... 45
4.7.4 Effect of Perceived HRM Practices (Retention-oriented Compensation,
Formalized Training) and Organizational Citizenship Behaviour on Employees’
Intention to Leave (H3, H4 & H5) ............................................................................ 46

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4.7.4.1 Effect of Perceived HRM Practices (Retention-oriented Compensation and
Formalized Training) on Employees’ Intention to Leave (H3 & H4) ................................. 46

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4.7.4.2 Effect of Organizational Citizenship Behaviour on Employees’ Intention to Leave
(H5) ...................................................................................................................................... 47

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4.7.5 The mediating effect of Organizational Citizenship Behaviour on the
relationship between Perceived HRM Practices and Employees’ Intention to Leave
(H6 & H7) ................................................................................................................. 47
CHAPTER 5 - DISCUSSION ............................................................................... 52
5.1. Discussion of findings ........................................................................................ 52
5.2. Contribution of the current study ....................................................................... 53
5.3. Practical implications ......................................................................................... 53
5.4. Limitation and further research .......................................................................... 54

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LIST OF FIGURE

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Figure 2-1: Partial model by Nishii and Wright, 2004 .......................................... 14
Figure 2-2: Hypothesized Research Model ............................................................ 21
Figure 3-1: Research process ................................................................................. 23
Figure 3-2: Mediating model ................................................................................. 33
Figure 4-1: Hypothesized model. ........................................................................... 38
Figure 4-2: Modified model. .................................................................................. 42

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LIST OF TABLE

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Table 3-1: Measurement scales of independent variables ..................................... 24
Table 3-2: Measurement scales of dependent variable .......................................... 26
Table 3-3: Assessing Fit Indices ............................................................................ 31
Table 4-1: Variables included in the Analysis ....................................................... 35
Table 4-2: Socio-demographic Characteristics of The Qualified Samples ............ 36
Table 4-3: Summary of Cronbach Alpha Measures across Variables ................... 37
Table 4-4: Assessing Fit Indices – Hypothesized Model ....................................... 40
Table 4-5: Standardized Regression Weights – Hypothesized Model ................... 41
Table 4-6: Assessing Fit Indices – Modified Model .............................................. 43
Table 4-7: Descriptive Statistics and Correlations ................................................. 44
Table 4-8: Model Summary of H6 ......................................................................... 49
Table 4-9: Coefficients of H6 hierarchical regression ........................................... 50
Table 5-1: Research Purposes, Hypotheses and Results ........................................ 52

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ABSTRACT
This study seeks to investigate the mediating role of organizational

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citizenship behavior on the relationship between perceived HRM practices and

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employees’ intention to leave.

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The study was conducted in Ho Chi Minh City, Vietnam with the sample of

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182 employees.

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The results showed that Organizational Citizenship Behaviour mediates the

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relationship between retention-oriented compensation and employees’ intention to

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leave. In addition, the study also finds that there are no relationship between

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formalized training and organizational citizenship behavior; hence, organizational

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citizenship behavior does not mediate the relationship between formalized training

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and employees’ intention to leave
suggest

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findings

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These

that

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practitioners

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monitoring

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organizational citizenship behavior to better predict employees’ intention to leave,

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in order to make timely adjustment on retention-oriented compensation system.

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KEYWORDS: Organizational Citizenship Behaviour, Perceived HRM

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practices, Retention-Oriented Compensation, Formalized Training,

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Employees’ Intention to Leave.

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CHAPTER 1 INTRODUCTION TO THE STUDY

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1.1. Research background

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Employees are extremely crucial to the organization since their value to the

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organization is essentially intangible and not easily replicated (Meaghan & Nick

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2002). And employee’s intention to leave remains one of the most widely

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researched topics in organizational analyses due to its significant effects on

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organizations (DeMicco & Giridharan 1987; Dyke & Strick 1990; Cantrell &
Saranakhsh 1991; Denvir & Mcmahon 1992) (as cited in Mahmud, 2011).

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Muhammad et al. (2011) noted that there is a positive relationship between

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HRM practices with employee retention. However, there are very few studies

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investigated how human resource management practices effects on the intention to

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leave of employees, and how employees react on that.

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In the past decades, OCB has received much attention from researcher. In

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relatively uncomplicated production environments, the extra efforts on the part of

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the employee may seem minor, but a growing number of jobs is becoming more

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complicated, consisting of large numbers of unstructured tasks, so more discretion is

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with the employee, and thus the difference between a good performer and a bad

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performer becomes increasingly large (Hunter et al., 1990). Despite such an

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important role of OCB, it is surprising to note that past studies often seem to ignore

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how employees’ behavioural reactions affect the relationships between HRM

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2003; Morrison 1996).

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practices and employee’s intention to leave (Guest, Michie, Conway and Sheehan

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Organizations need employees who anticipate and monitor rapid changes in

involved in their behavioural process to help explain the HRM-performance
relationship (Lam et al, 2009).
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the employees’ organizational citizenship behaviour (OCB), in particular, is

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effectiveness (Organ, Podsakoff and MacKenzie 2006). Therefore, it is argued that

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the business, and figure out how to deal with these changes to sustain or enhance


Lam et al. (2009) have conducted a study to understand the mediating role of
Organizational Citizenship Behaviour (OCB) in the relationship between perceived

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human resource management practice and employees’ intention to leave. The

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study’s result provide a strong indication that the effects of HRM practices (i.e.,

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retention-oriented compensation and formalized training in this study) on intention

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to leave (the universalistic proposition) might not be so simple, meaning there might

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be some behavioral facts mediating the relationship (Lam et al, 2009). The result

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may help managers with a more effective strategy in retaining people with the

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organization. However, that study has been conducted in a joint-venture of Japan-

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China which might not be appropriate in Vietnam context. Moreover, the sample

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coverage of the study is limited in one company which is not diversified enough to

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reflect the mediating role of OCB on the relationship between perceived human

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resource management practices and employees’ intention to leave.

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Hence, this study aims to investigate the mediating role of OCB on the

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relationship between the perceived human resource management practice and

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employees’ intention to leave in Vietnam context.

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1.2. Research objective

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The purpose of this study is to examine the mediating role of organizational

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citizenship behavior on the relationship between perceived human resource

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management practices and the intention to leave of employees. Accordingly, the

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study aims at answering the question as below:

Whether Organizational Citizenship Behavior mediates the relationship of

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perceived human resource management and employee intention to leave in

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organization in Vietnam?

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1.3. Practical significances of the study
The practical relevance of this study is that it gives insight in how perceived

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HRM practice affects employees’ intention to leave that are becoming increasingly

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important for organizations.

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The results of the study are meaningful for implementation HRM to lower

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the intention to leave. Manager would have a clearer direction to use HRM as a

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powerful tool in control employee’s intention to leave.

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1.4. Research scope and approach

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This study is conducted in Ho Chi Minh City, which is the biggest city in

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Vietnam.

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Ho Chi Minh City is chosen for the study for its diversified workforce who

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comes from different organizational, that provides a diversity perceived human

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resource practices . This chosen also make the study feasible (with time and

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resource limited) for online survey method.

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The target of this study are those who working for the organization for at

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least 6 months. This timeframe is to ensure that respondents have time to digest the

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organizational perceived human resource practices and there is enough time for their

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management practice and their intention to leave.

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organizational behavior to impact on the relationship between human resource

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The study includes 2 phases. First is the pilot to check the comprehension of
the questionnaire and to examine the measurement scales. The main phase is

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1.5. Research structure

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conducted later to test the hypothesis and confirm the research model.

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research objectives, research scope and approach.

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Chapter 1: Introduction. This chapter provides the research background,

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The study includes 5 chapters:


Chapter 2: Literature review. This chapter provides theoretical and empirical
background behind the hypothesized research model.

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Chapter 3: Research methodology. This chapter details the methodologies

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used to conduct this research.

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Chapter 4: Data analysis. This chapter is conducted based on the collected

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data to test the hypothesis and answer research questions.

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Chapter 5: Discussion. In this chapter, the author discusses the results;

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provide practical implication, and possible direction for future research.

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CHAPTER 2 LITERATURE REVIEW

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This chapter covers a review of relevant literature regarding the construct of

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proposed model. The author reviews the literature of OCB, HRM, and employee

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retention.

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2.1. Human Resource Management

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Human resource management is critically important because employees are

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often viewed as invaluable assets of organizations (Redman and Wilkinson 2001).

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Employees’ intention to leave has received much attention from human resource

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management practices.

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2.1.1 Human Resource Management Pratices

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Nishii and Wright (2004) also investigated the relation between HR practices

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and firm performance. They distinguish five levels; part of the model is described

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below:

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Figure 2-1: Partial model by Nishii and Wright, 2004

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practices

practices

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Employees’

Organization

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Perceived HR

performance

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Actual HR

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Intended HR

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Nishii and Wright (2008) (cited in Karina, 2009) refer the conceptualization

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of employees’ perceptions of HRM as perceived HR practices, and further specified

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depends on the employee’s individual interpretation of the practices

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these as employee perceptions and experiences. The response to HR practices

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HRM practices typically include providing extensive training and

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development opportunities, designing fair job and performance appraisal processes,

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developing incentive pay systems and so forth (Koch and McGrath 1996).

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2.1.2 Human Resource Management effects on Intention To Leave
The direct effect of HRM, such as selection, training, compensation, and

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performance management, on employees’ intention to leave has been demonstrated

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by much research. For example, as cited in Lam et al. , 2009, Park, Ofori-Dankwa

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and Bishop (1994) suggested that attractive pay can discourage employees’

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intention to leave an organization. Shaw, Delery, Jenkins and Gupta’s study (1998)

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echoes Park et al.’s (1994) findings, with data from 277 organizations in the

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trucking industry. They posited that the use of three sophisticated HRM practices,

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namely high pay, attractive benefits, and electronic monitoring, resulted in a lower
employee attrition rate. Likewise, Rahim, Magner, Antonioni and Rahman (2001)

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discovered the role of employees’ understanding that distributive justice’s

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relationship on merit pay reduces intention to leave.

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However, researchers seem to neglect examining how these effects work.

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Guest et al. (2003) argued that HRM indeed has its roots in organizational

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psychology and is built on behavioural theories such as the theories of commitment

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and motivation. These theories indicate some relationship between HRM practices

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and employees’ intention to leave. Some researchers (e.g., Morrison 1996; Boselie

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and Wiele van der 2002; Guest et al. 2003) have suggested that research should

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examine the extent of the effects of employees’ attitudes and behaviours on the

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relationship between HRM and intention to leave. Nonetheless, little work has been

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done to explore the details of the behavioural mediating effects engaged in this

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2.2.1 Definition of OCB

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2.2. Organizational Citizenship Behaviour

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relationship.

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Organizational Citizenship Behaviors (OCBs) is described in 1988 by Organ

research, it has tended to be conceptualized in terms of positive contributions to the
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organization” (p.4). Since Organ introduced the concept of OCB into organizational

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reward system and that in aggregate promote the effective functioning of the

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as “discretionary behaviors, not directly or explicitly recognized by the formal


colleagues and to the organization, which implies an active positive contribution.
Besides, it is widely accepted among contemporary organizational behavior

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theorists, that organizational citizenship behaviors have an accumulative positive

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effect on organizational functioning (Wagner & Rush, 2000)

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In attempting to further define organizational citizenship behavior, Organ

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(1988) highlights five specific categories of discretionary behavior.

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• Altruism (e.g., helping new colleagues and freely giving time to others) is

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typically directed toward other individuals but contributes to group efficiency by

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enhancing individuals’ performance.

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• Conscientiousness (e.g., efficient use of time and going beyond minimum

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expectations) enhances the efficiency of both an individual and the group.

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• Sportsmanship (e.g., avoids complaining and whining) improves the

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amount of time spent on constructive endeavors in the organization.

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• Courtesy (e.g., advance notices, reminders, and communicating appropriate

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information) helps prevent problems and facilitates constructive use of time.

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• Civic Virtue (e.g., serving on committees and voluntarily attending

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functions) promotes the interests of the organization.

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Obviously, supervisors cannot demand or force their subordinates to perform

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OCB. Similarly, the employees do not or cannot expect any kind of formal rewards

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for these discretionary behaviors. However, as Organ (1997) noted, the supervisors

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do regularly take into account and reward OCB exhibited by the subordinates both

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directly and indirectly (e.g. preferential treatment, performance ratings, promotions,

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etc). Another important assertion, especially in Organ's (1988) founding work on

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OCB, is that these behaviors are often internally motivated, arising from within and

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sustained by an individual's intrinsic need for a sense of achievement, competence,

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Farh et. al. (1997) shown sthat there are two types of citizenship behaviors
exist in the OCB measures: (1) active positive contributions or commissions (e.g.,
helping others) and (2) avoiding engaging in behaviors that are harmful to others or
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belonging or affiliation.


to one’s organization (e.g., not abusing others’ rights). This latter behavior that
tends to be labeled as omission is a passive behavior that is based on the moral rule

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“Do no harm,” or more specifically “Do no harm through action” (Baron, 1998)

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2.2.2 The important of OCB

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Organ (1988) argued that OCB is held to be vital to the survival of an

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organization. Organ further elaborated that organizational citizenship behavior can

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maximize the efficiency and productivity of both the employee and the organization

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that ultimately contribute to the effective functioning of an organization. Besides,

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Katz stated that an organization which depends solely upon its blueprints of

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prescribed behavior is a very fragile social system” (1964, p.132). In 1966, Katz and

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Kahn stressed that organizational well-functioning heavily depends on extra-role
behaviors, therefore managers need employees who do more than what is described

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in the work contract (cited in Funda, 2010).

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Organizations need employees who anticipate and monitor rapid changes in

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the business, and figure out how to deal with these changes to sustain or enhance

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effectiveness (Organ, Podsakoff and MacKenzie 2006)

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2.3.1 The effects of HRM on OCB

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2.3. Research model and hypotheses

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Some empirical researches on the relationship between HRM practices and

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employees’ intention to leave have shown that two major HRM practices are
associated with intention to leave: compensation and training (Schnake and Dumler

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1997; Shaw et al. 1998; Ngo, Turban, Lau and Lui 1998) (cited in Lam et al., 2009).

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In 1986, Tajfel and Turner 1986 states that employees strive for a sense of self and

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invaluable employees are fairly rewarded and are well invested in for career

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concept and social identity, can provide such feelings by demonstrating that

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social identity. Compensation and training, which enhance an individual’s self-

development (Lam et al., 2009). Moreover, according to Blau (1964), if employees
enjoy benefits supported by their organizations, they may develop a sense of

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obligation to the organizations, which in turn would lead to reciprocation through
extra-role behaviours that would benefit the organizations.

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The negative relationship between attractive compensation and employees’

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intention to leave have been supported by many empirical researches (Park et al.

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1994; Rahim et al. 2001; Shaw et al. 1998). High pay is also identified as the

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strongest predictor of employees’ intention to leave by Shaw et al. (1998).

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However, finding out how compensation systems are tightly linked to

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employees’ intention to leave if the relationship appears to be mediated by OCB is

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remained for further investigating. For those reasoning, this study aims at answering

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whether retention-oriented compensation and formalized training increase

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employees’ engagement in OCB.

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The litterature reveals that little research has been conducted to posit the

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relationship among HRM practices, OCB, and intention to leave.

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Although recent studies have demonstrated that enhanced perceptions of

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justice are positively related to OCB (Williams, Pitre and Zainuba 2002), the same

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studies have also demonstrated that pay-for-performance is negatively related to
OCB (Podsakoff and MacKenzie 1994; Deckop, Mangel and Cirka 1999). These

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findings seem to suggest that equity-based compensation systems discourage the

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engagement in OCB. This paradox reveals the need for further research on the

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relationships among compensation, OCB, and employees’ intention to leave. We

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argue that retention-oriented compensation is likely to increase the engagement of

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OCB. Besides, the study by Tuiji et al. (2007) supported that OCB can be enhanced

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by HRM practices. Therefore, the first hypothesize is stated as following:

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Lu

Hypothesis 1: The use of retention-oriented compensation is positively

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authors propose that formalized training may be directed at encouraging OCB.
Organ et al. (2006) stated that organizations may provide formalized training for

18

y

the organizational performance (Koch and McGrath 1996; Ferratt et al. 2005). The

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As many studies have also supported that effective training would enhance

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va

related to the engagement of OCB.


employees to perform OCB. In addition, training can help employees prepare for
other positions in the organization and increase their abilities to move forward (Noe,

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to

Wilk, Mullen and Wanek 1997). Thus, we suggest that employees should

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voluntarily engage in discretionary behaviour to improve their knowledge, skills,

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ep

and abilities in order to prepare for future promotion. Therefore, the second

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hypothesize is stated as following:

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Hypothesis 2: An emphasis on providing formalized training is positively

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ad

related to the engagement of OCB.

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th

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2.3.2 The effect of Retention Oriented Compensation on Intention to Leave

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pl

According to Steers and porter, the research on compensation clearly shows a

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ua

link between the rewards a company offers and those individuals that are attracted

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by the compensation into working for the firm, and those employees who will

va

n

continue to work for the business (1991). A study by Murphy (2003) also suggested

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ll

that the compensation an organization provides clearly influences the decision

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oi

employees make about the organization and turnover. Moreover, research by Roya

at

nh

et al. (2011) reveal that strategic compensation practices led to perceived fulfillment

z

of psychological contract and the latter, in turn, led to higher affective

z

vb

organizational commitment. Besides, employees with higher levels of affective

ht

organizational commitment who perceived a fulfillment of psychological contract

jm

k

were less likely to leave an organization. That drive to a hypothesis that Retention

l.c

ai

gm

oriented compensation may negatively related to employees’ intention to leave.

employees’ intention to leave.

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a
Lu

2.3.3 The effect of Formalized Training on Intention to Leave

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Hypothesis 3: Retention oriented compensation may negatively related to

addition, acquired skills become outdated as a result of technological and

19

y

education and skills required at the job (De Grip, Heijke, & Willems, 1998). In

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jobs. And training is a way to bridge gaps between skills acquired during initial

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va
Bartel (1995) indicated that training makes workers perform better in their


organizational change; training is an instrument to prevent skills obsolescence
(Bishop, 1997). Trained workers are more versatile in their job (Groot & Maassen

t
to

van den Brink, 2000). All this implies that job training is important for one’s

ng

occupational career; hence, probably impact to employee’s intention to leave. That

hi
ep

drive to a hypothesis that formalized training may negatively related to employees’

do

intention to leave.

w
n

Hypothesis 4: Formalized training may negatively related to employees’

lo

ad

intention to leave.

y
th

ju

2.3.4 The effect of OCB on intention to leave

yi
pl

Chen, Tjosvold and Fang (1998) showed that OCB is negatively related to

al

n

ua

employee turnover. Consistently, research by Dorothea (2012) support that

va

Employee engagement is related positively to OCB. The same study also stated that

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employees who exhibited higher levels of engagement were found to contribute to

fu

ll

their organizations with higher levels of individual OCB. This is probably because

m

oi

OCB signals the employee’s sense of belonging to the organization, as well as his or

nh

her intention to stay in the organization. Moreover, by engaging in OCB, employees

at

z

may also expect that they will be rewarded by being promoted or be given a salary

z

k

jm

This drive to the third hypothesis:

ht

vb

increase. That makes thm less likely to leave the organization (Organ et al. 2006).

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l.c

2.3.5 The mediating role of OCB

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gm

Hypothesis 5: OCB may negatively relate to employees’ intention to leave.

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Lu

Many studies showed that HRM practices may decrease the probability of an

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employee leaving an organization (e.g., Huselid 1995; Huang 1997; Rahim et al.

va

2001; Boselie and Wiele van der 2002). Meanwhile, Organ et al. (2006) indicates

20

y

That drive to a hypothesis that OCB may mediate the relationship between

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re

author noted above, decreases the likelihood of employees leaving the organization.

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that HRM practices encourage employees’ engagement of OCB; and OCB, as the