The effect of earning, working environment, and promotion opportunities on employees performance, a comparison between the state sector and other sectors in vietnam , luận văn thạc sĩ

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
-------------------------------------

ĐẶNG XUÂN CHƯƠNG

THE EFFECT OF EARNING, WORKING
ENVIRONMENT, AND PROMOTION OPPORTUNITIES ON
EMPLOYEES’ PERFORMANCE: A COMPARISON BETWEEN
THE STATE SECTOR AND OTHER SECTORS IN VIETNAM

MASTER OF BUSINESS (Honours)

Ho Chi Minh City – Year 2012


UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
-------------------------------------

ĐẶNG XUÂN CHƯƠNG

THE EFFECT OF EARNING, WORKING
ENVIRONMENT, AND PROMOTION OPPORTUNITIES ON
EMPLOYEES’ PERFORMANCE: A COMPARISON BETWEEN
THE STATE SECTOR AND OTHER SECTORS IN VIETNAM
ID: MBUS 111006

MASTER OF BUSINESS (Honours)
SUPERVISOR: Dr NGUYỄN ĐÔNG PHONG

Ho Chi Minh City – Year 2012


TABLE OF CONTENTS

Chapter 1 – INTRODUCTION..................................................................................................... 1
1.1. Background of the research............................................................................................. 1
1.2.Research problem, research objective, and research questions ......................................... 3
1.3.Justification for the research................................................................................................... 4
1.4.Methodology.............................................................................................................................. 4
1.5.Outline of the report................................................................................................................. 5
1.6.Definitions/concepts................................................................................................................. 6
1.7.Delimitations of scope and key assumptions....................................................................... 7
1.8.Conclusion................................................................................................................................. 7
Chapter 2 – LITERATURE REVIEW AND HYPOTHESES................................................. 8
2.1 Introduction................................................................................................................................ 8
2.2 Classification models of literature review............................................................................ 8
2.2.1 Earning and employees’ performance................................................................................ 8
2.2.2 Working environment and employees’ performance..................................................... 10
2.2.3 Promotion opportunities and employees’ performance................................................. 12
2.3 Conclusion............................................................................................................................... 15
Chapter 3 – METHODOLOGY.................................................................................................. 16
3.1 Introduction............................................................................................................................. 16
3.2 Research procedure................................................................................................................ 16
3.3 Conclusion............................................................................................................................... 20
Chapter 4 - ANALYSIS OF DATA............................................................................................ 21
4.1 Introduction............................................................................................................................. 21
4.2 Brief description of subjects................................................................................................. 21
4.3 Patterns of data for each research question........................................................................ 22
4.4 Conclusion............................................................................................................................... 37

Chapter 5 – IMPLICATION AND CONCLUSIONS............................................................. 40


5.1 Introduction............................................................................................................................. 40
5.2 Conclusions............................................................................................................................. 40
5.3 Implications............................................................................................................................. 42
5.4 Limitations and recommend for further research.............................................................. 43
REFERENCE................................................................................................................................ 44
ANPPEDIX A.................................................................................................................................. 47
ANPPENDIX B............................................................................................................................... 49
ANPPENDIX C............................................................................................................................... 51


ACKNOWLEDGEMENT
After two years study in International School of Business (ISB) with MBus program,
and the time of doing this thesis, I acknowledge that I was so lucky to be a member of this
program where I had great chances to work with professionals come from both internal and
oversea, those professionals had to equip us – students of ISB not only knowledge, skills and
experience of economy and management, but also provide us valuable information of many
aspects of social life. I also have got a very nice friendship with many interesting members of
the program who have interacted and helped me so much in studying and in many other fields.
Therefore, I would like to express my heartfelt gratitude and deepest appreciation to my
research Supervisor Dr. Nguyen Dong Phong, for his intensive support, valuable guidance and
suggestions; all professionals of the program, and all members of ISB for their enthusiastic
supporters during my whole course and the time of doing this research; my classmates, who
have shared with me both joys and difficulties during the course, encourage me so much in
doing this thesis.


THE EFFECT OF EARNING, WORKING ENVIRONMENT, AND PROMOTION

OPPORTUNITIES ON EMPLOYEES’ PERFORMANCE: A COMPARISON
BETWEEN THE STATE SECTOR AND OTHER SECTORS IN VIETNAM
Abstract
Purpose – This study aims to determine the impact of three independent variables which are
earning, working environment, and promotion opportunities on dependent variable, employees’
performance, and compare those variables affect on performance of employees in state sectors
and other sectors in order to find out differences between two. Design/methodology/approach –
A survey was conducted involving 280 employees working in both government sectors and
other sectors in Ho Chi Minh City. Multiple regression analyses were performed to separately
analyze the effects on employees, employees in state sectors, and employees in other sectors.
The comparison of those effects also did between two groups.
Findings – The results showed that all three determinants which are earning, working
environment and promotion opportunities positively influence employees’ performance. A
comparison of the relative strengths of the effects reveals that in both state sectors and other
sectors Earning has the strongest effect on employees’ performance, and in state sectors it
affects stronger than in other sectors. The second is Promotion opportunities, and it also shows
that in state sectors Promotion opportunities affects stronger on employees’ performance than in
other sectors. The third is Working Environment, but in this case the stronger one belongs to
other sectors, and in state sectors it impacts slightly to employees’ performance.
Keywords: Employee, performance, compare, earning, working environment, promotion
opportunities, state sectors, other sectors.


Chapter 1
INTRODUCTION
1.1.

Background of the research
Each sector/organization has its own asset which contains two main components

– labor and capital. Capital is so important to the success of the sector/organization,
while labor is essential to it. The labor of the organization does everything daily and the
whole existing time of the organization. Without labor nothing is done. However, labor
with their knowledge and skills does not guarantee to the success of the organization;
the vital thing is how this labor demonstrates its knowledge and skills in doing or
performing their works. Employees’ performance is an essential part for the success or
failure of each sector/organization, which is affected by number of factors that come
from both inside and outside of each sector/organization such as leadership, earning,
promotion opportunities, working environment, employee employer relationship,
leadership commitment, employee involvement, and etc. Each economic system
contains a large number of sectors/organizations, and inside each economy there are
some differences such as the difference number of state sectors and other sectors, etc.
Vietnamese is a developing economy which comprises variety kind of sectors such as
foreign sectors, join sectors, private sectors, and public/state sectors. Each kind of those
sectors have contributed fairly to the economy, and they all have been considering be
important to the development of the country. All of those kind sectors could be divided
into two groups which are state sectors and other sectors (foreign sectors, join sectors,
private sectors), in the process of reforming its economic system, the number of
Vietnamese state sector seems to be getting smaller by time while the number of other
sectors has increased, even the state sector continues to hold an important role in
Vietnamese economic system. It is clearly that, in both state and other sectors the main
contribution to the


success of each single sector is the performance of its employees. However, from the
nature of each group, the state sector has some differences with other sectors, therefore
each of them is affected by the same determinants but with different influences, different
levels which should be analyzed and have a comparison. Understanding the main
determinants which affect employees’ performance in each group of sectors and from
that has an adjustment for improving is vital to the success of each sector, its leadership,

and even its employees, especially with Vietnamese economy which is changing so
quickly with plenty of opportunities and challenges.
Market as battlefield, in battlefield as Vladimir Ilyich Lenin said: the winning or
failing on battlefield depend on the emotion of the soldiers who are fighting on that.
Therefore, motivating people is so important which is vital for the success of each
organization in any field, including business. In doing business today, one of the biggest
problems for Vietnamese sectors that have been discussed so much on media is
productivity of Vietnamese labor is low. This problem is agreed by both Vietnamese
government officials and people. And many foreign managers who have worked with
Vietnamese people also reveal that Vietnamese labor is intelligent and has good skills,
but the output is quite low compare to labor of other neighbor countries, this problem
could relate to the motivation aspect that requires reasonable answer and solutions.
Moreover, the fact in Vietnam is that not many managers consider carefully about
factors that motivate their employees in doing works, some of them may know how to
motivate their subordinates but they ignore, some other may not know well about that,
therefore those managers do not adopt any policy to encourage their employees to
perform better. However, since Vietnam joined into World Trade Organization,
especially during economic crises times the competition between Vietnamese products
and foreign ones is so hard in both the quality and the price of each product that require
Vietnamese sectors have to enhance capacity in many aspects that include human
resource, and improving performance of employees is one important factor. By
2


enhancing the productivity of each employee, as a result the quality of products could
improve and price could be reduced that help Vietnamese products have chances to win
in competition.
Understand how factors and each factor affect on performance of employees
and implement reasonable policies to boost productivity are so important to each
managers for his/her sector(s) and for the whole Vietnamese economic system in

competing with foreigners. In this study, earning, working environment and promotion
opportunities will be investigated to find out their effect on employees’ performance and
compare the differences of those effects on state sectors and other sectors. The study
also considers the relation of the three determinants in affecting on performance of
employees.
1.2.

Research problem, research objective, and research questions

Research problem
How do earning, working environment, and promotion opportunities affect on
employees’ performance? What are the differences of those impacts on the state sector
compare to other sectors in Vietnamese economic system?
Research objective
Objectives of this research are to determine how earning, working environment,
and promotion opportunities affect on employees’ performance, compare and discuss
what those determinants impact differently on the state sector and other sectors in
Vietnamese economic system.
Research questions
How do earning, working environment, and promotion opportunities affect
employees’ performance?
How do earning, working environment, and promotion opportunities affect
employees’ performance differently between the state sector and other sectors in
Vietnamese economic system?
3


There has had number of studies about determinants affect on employees’
performance worldwide such as Workplace Environment and Its Impact on Employees’
Performance (Nowier Mohammed Al-Anzi, 2009); Earnings, and Performance-Related

Pay (Alison L. Booth and Jeff Frank, 1999); Effects of Wage and Promotion Incentives
on the Motivation Levels of Japanese Employees (Kiyoshi Takahashi, 2006); Workplace
Environment and Its Impact on Organizational Performance in Public Sector
Organizations (Chandrasekar, 2011); Impact of Workplace Quality on Employee’s
Productivity: case study of a bank in turkey (Demet Leblebici, 2012) etc. Even those, in
Vietnam it seems that has not had any study that compared how those determinants
impact the performance of employees between state sectors and other sectors, therefore
this research will look at some previous research about earning, working environment,
and promotion opportunities affect employees’ performance, analyze the effect of those
determinants on performance of employees in Vietnam context and has a comparison
and discussion in order to distinguish differences of how those factors affect on state
sectors and other sectors. Finding out those differences is considered as the thesis’
contribution to the literature and practice.
1.3.

Justification for the research
All sectors/organizations are formed by employees, and those people decide the

success or failure of the organization which they belong to by their own performance.
Understanding well main determinants in general and earning, working environment,
promotion opportunities in specific affect on employees’ performance and recognize
how those determinants affect on state sectors and other sectors differently in
Vietnamese economic system could be very helpful for leaders/managers, and even
employees in each kind of sector to create attributions which are suitable to each sector
to improve performance of their employees, to enhance efficiency and effectiveness of
their firms. Those are main reasons for doing this research.
1.4.

Methodology
4

This research will use quantitative approach. The data will collect by surveying
employees from state sectors and other sectors in Ho Chi Minh City use questionnaire
printed in papers and email.
Sample:
The sample for surveying was 280 employees.
Questionnaires: The participants completed a questionnaire with 20 questions;
the questions were designed to survey about three determinants that are earning,
working environment, and promotion opportunities affect employees’
performance.
Procedure: the participants were informed about the questionnaires. The
questionnaires were provided to participants by printed papers or emails.
Data analysis
The information from survey was analyzed determinants affect employees’
performance in both state sectors and other sectors, and compared to find out the
differences between two groups about how employees’ performance is influenced by
three determinants.
1.5.

Outline of the report
In this research, the introduction is expressed in chapter 1 where an overview of

the study is delivered. Available literature relates to earning, working environment, and
promotional opportunities affect on employees’ performance are presented in Chapter 2
where hypothesizes and conceptual model are also introduced. Chapter 3 provides an in
depth discussion of the research methodology used to investigate the research problem.
The design for the sample selection and size, research instruments used, procedures
followed and the statistical techniques used to analyze the data is also highlighted.
Chapter 4 focuses on data analysis and the findings that became apparent from the

research study. The discussion of the results that were obtained in chapter 5 where
conclusions are drawn based on the obtained results and the possible practical
5


implications

of

the

research

findings.

The

conclusion

comes

with

some

recommendations for further researches.
1.6.

Definitions/concepts

Definition of employee
Employee” (The Legal Dictionary) a person who has agreed by contract to
perform specified services for another, the employer, in exchange for money/benefits.
Definition of performance
“Performance” (Business Dictionary) the accomplishment of a given task
measured against preset known standards of accuracy, completeness, cost, and speed. In
a contract, performance is deemed to be the fulfillment of an obligation, in a manner that
releases the performer from all liabilities under the contract.
Definition of earning
Earning is mentioned here should understand as earning of each employee. The
definition of earning as defined in Oxford dictionary is the money that you earn for the
work that you do. Earning can be the salary or wage, or benefits that you get from your
employer/company/organization.
Definition of working environment
Business dictionary defined work environment as Location where a task is
completed. When pertaining to a place of employment, the work environment involves
the physical geographical location as well as the immediate surroundings of the
workplace, such as a construction site or office building. Typically involves other factors
relating to the place of employment, such as the quality of the air, noise level, and
additional perks and benefits of employment such as free child care or unlimited coffee,
or adequate parking.
When look at working environment should consider about its culture aspect as
whether it is a creative or conventional environment which is very important to
productivity of its staff.
6


Definition of promotion
“Promotion” (Investoperdia dictionary) in terms of a career, a promotion refers
to the advancement of an employee's rank or position in a hierarchical structure. Job

promotions usually include a new job title, a greater number of responsibilities and a
pay increase. They might also include an expansion of benefits and managerial authority
over other employees. Job promotions are usually base on performance or tenure.

1.7.

Delimitations of scope and key assumptions
This research undertakes in Vietnam which should be considered as a particular

economy - developing economy with the speed of changing so fast in component, etc,
therefore the result of this research may not appreciate with other economy. The sample
of surveying is quite small within several provinces and cities, so the result may not
totally relevant to the whole country, etc.
1.8.

Conclusion
In this chapter the overview of the research was provided. Research objective,

research questions were introduced. The justification for the research was expressed.
The way of collecting data and the method of analyzing data were emphasized, and key
terms were defined. The chapter concludes with delimitations of the research.

7


Chapter 2
LITERATURE REVIEW, HYPOTHESES
2.1.

Introduction

There are number of determinants affect employees’ performance that has

demonstrated in many studies worldwide. Those determinants include from both internal
and external of each sector/organization, and each individual employee, those could be
tangible or intangible. Each determinant could have positive or negative effect on
performance of employees with different levels depend on each specific situation, each
firm, and each kind of organization. This study only looks at three determinants which
have considering in previous studies to have a general knowledge about their effect on
employees’ performance and from that find out hypothesizes to build a model for
analyzing. Those three determinants are earning, working environment, and promotion
opportunities.
2.2.

Classification models of literature review
Author of this study has been searching many articles to find out determinants

affect on employees’ performance, and from the searching there was rarely researches
look at more than three determinants affect employees’ performance at one time, most of
them just look at one or two determinants, and there was not any research compare
differences of determinants on state sectors and other sectors in Vietnamese economic
system. Therefore, this section will look at previous studies about earning, working
environment, and promotion opportunities affect on employees’ performance to see how
each single factor impacts on the performance of employees, and finding hypothesizes
for analyzing and comparing.
2.2.1. Earning and employees’ performance
8


In general, most people work for benefits which contain variety of both
intangible and tangible things. Among those benefits income is one main one which is

considered importance by many employees in both state and other sectors. There are
many firms have used payment as an incentive to encourage performance of employees
that lead to higher productivity of each individual employee and the whole organization.
A popular instrument is performance related pay (PRP), which may stimulate
labor productivity for two reasons. “First, in situations of asymmetric information about
worker’s abilities or effort a PRP-scheme can be used to induce workers to exert the
right amount of effort. Second, when hiring new workers, piece rates can be used as a
screening mechanism to encourage only the most able workers to apply”. (Gielen,
Kerkhofs, Van Ours, 2009). As a result, payment could encourage employees work
harder, and perform better to increase productivity of each employee and the whole
organization.
Normally, people in society come to work for benefits which combine two main
reasons, firstly they work for payments, and secondly they work for joy. There are not
many people who work without benefits. In most cases payments, especially extra
payments can affect the effort of employees in doing their jobs which induce higher
performance that lead to more productivity of each individual and the whole
organization. Individuals will exert effort if they expect it will result in an outcome that
they value (Van Eerde and Thierry, 1996). In the case of performance-related pay,
employees will work harder if they value monetary rewards and believe that those
awards will results from their increased efforts. Reinforcement theory posits a direct
relationship between a desired target behavior and its consequences. It suggests that pay
can be used to create consequences for desired behaviors such as performance that will
reinforce the behaviors (Perry, Mesch, and Paarlberg, 2006). However, payments are not
always work well in all situations, it affects differently in different
9


organizations,

and

the

amount

of

payment

and

the

increased

level

of

performance/productivity are not parallel together, therefore using incentive to improve
performance in which situations with suitable methods and reasonable amount should be
considered carefully. Gielen et al (2009) also stated that despite the potentially positive
productivity effects, PRP may not always increase productivity. In case of teamwork,
individual performance is difficult to measure, hence there is an incentive to free-ride. In
such a case, group-based incentive schemes may have little effect on individual
productivity. Additionally, perverse incentives may arise in case of multitasking. When
employees are required to perform several tasks, they will focus only on those activities
being rewarded and neglecting other activities. Therefore it is not always clear that the
introduction of a PRP scheme will indeed increase productivity.
Employees with stable jobs consider the importance of increasing wage

differently compare to those with short-term, transitional career goals. Wage increase
acts as a short-term incentive when employment relationships are unstable and uncertain
(Kiyosh Takahashi, 2006). Therefore, the effect of earning/wage on performance of
employees in state sectors could be different with employees work in other sectors
because people work in other sectors change their jobs more frequent than those in state
sectors.
Hypotheses H1: There is a positive impact of earning on employees’
performance.
2.2.2 Working environment and employees’ performance
People in daily lives and doing business always adhere with both natural and
social environments. In working place people adhere to the environment surrounding
them which definitely affects to their productivity or performance. Workplace
environment includes both physical and behavioral components which have both
10


positive and negative impact to productivity or performance of employees. The
employee’s workplace environment that most impacts on the level of employee’s
motivation and subsequent performance. How well they engage with the organization,
especially with their immediate environment, influences to a great extent their error rate,
level of innovation and collaboration with other employees, absenteeism and, ultimately,
how long they stay in the job (Nowier Mohammed Al-Anzi et al, 2009). There are
number factors of workplace that affect employee’s performance such as interesting
work which employees enjoy their working, opportunity to develop special abilities that
give employees to express and maximize their capacity, adequate information, enough
authority, sufficient help and equipment, friendly and helpful co-workers, opportunity to
see results of work, competent supervision, clearly defined responsibilities are
considered to be the job factors that motivates employees performance (Chandrasekar,
2011).
The physical layout of the workspace, furniture, noise, lighting, temperature,

overall comfort, physical security, the quality of air, informal and formal meeting areas,
quiet areas, privacy, personal storage, work areas, etc, all have effect on performance of
employees. A good workplace normally enhances employee’s productivity, and vice
versa. Therefore, improving the working environment can reduce complaints and
absenteeism while increasing performance of employees. “Quality of the physical
workplace environment may have a strong influence on a company’s ability to recruit
and retain talented people. The behavioral factors in workplace environment may be
considered keys affecting employee’s performance which may include engagement,
productivity, morale, comfort level, etc. It is accepted that better workplace environment
motivates employees and produces better results. People working under inconvenient
conditions may end up with low performance and face occupational health diseases
causing high absenteeism and turnover” (Demet Leblebici, 2012). Working in a
harmony environment where employees are friendly,
11


employers are supportive and treat everyone equally, and all members are ready to help
and interact with each other, enthusiasm for other and sharing knowledge, experience,
information to each other that definitely result in improving performance of each
individual and the whole organization, and vice verse. Haynes (2008, in Demet
Leblebici, 2012) explains the behavioral components of the office environment that have
the greatest impact on office productivity. In all of the work patterns, it was found that
interaction was perceived to be the component to have the most positive effect on
productivity, and distraction was perceived to have the most negative.
In short, it is widely accepted that both physical and behavioral factors have
great impact on employees’ performance or productivity.
Hypotheses H2: There is a positive impact of working environment on
employees’ performance.
2.2.3

Promotion opportunities and employees’ performance
Promotion is one kind of benefits which is considered as a reward for someone

when he/she works well and has enough ability to hole a more important position in a
hierarchy of an organization, and getting to higher positions could match target of many
employees and satisfy their desire. It is the recognition of employee efforts and his/her
commitment to work. Getting higher and higher promotion is the ultimate desire of each
person working in any sort of organizations. (Bilal Jamil Naintara Sarfaraz Raja, 2011).
Normally, people consider promotions as good opportunities for themselves
which could give them more benefits in both intangible and tangible, both financed and
unfinanced. By getting to higher positions they could have more chances to express and
develop their capability which will in turn to give them more motivation to perform
better. Promotions can be used as one kind of compensations to motive employees. The
effect of promotions may differ in different organizations and
12


employees’ age. Moreover, each employee considers differently about promotions, some
may consider it as the highest target which they must try their best to achieve and some
may not be so curious about that, therefore the effect of promotions to employees’
performance differently depend on each individual, the level of employees, the age of
employees and each kind of organizations, and so on.
Getting higher position is not only considered as one kind of benefits, but also
requires the employee more responsibility to his/her organization. If the employee is
working hard, addressing all tasks expected and performing beyond expectations, they
are deserved to get promotion, and therefore the employer may give the employee a
promotion as a sign of excellence. The promotion may indicate that the employee is
ready for more responsibility in the company and is mature enough to play a larger role
in the business. A promotion may not be the result of any positive employee
performance review, as the employer may not have that option each time. (Mary Jane,

n.d)

from

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appraisal.html
Promotion incentive could inspire workers, especially who has abilities try their
best to develop their knowledge and skills, to contribute more for their organization, and
as a result this incentive benefits both employees and the organization. More talented
workers are usually more productive higher up in organizational hierarchies (Ministry of
Business Innovation & Management, n.d). Promotions assign workers to jobs better
suiting their abilities and quickly move up talented workers (Gibbons, 1997). These are
other purposes of promotions. They can be used to reward past employee efforts,
promote investments in specific human capital and lower job turnover (Lazear, E, 1998).
Motivating employees by promotion has adopted worldwide and it is considered
as the simplest form of incentive pay - a promotions ladder (Savych, 2005). This
13


requires recruits to accept lower paid port-of-entry jobs. This early period of
employment is a screening process. Good performance leads to promotion. According to
Savych (2005) when promotion ladders are used as deferred compensation, almost all
junior workers who prove themselves are promoted. The prospect of promotion
encourages the good workers to stay and invest in specific human capital. Job seekers
will self-select by limiting their applications to the type of jobs where they expect to
succeed and be promoted out of the less well paid port-of-entry jobs.
In some cases, promotion opportunities could motivate employees better than
wages/income, especially in competitive environment. The prestige of higher positions
rather than higher wages stimulates employees to work hard to win the competition
(Kiyoshi Takahashi, 2006). Promotion should be considered as a long-term incentive

that is more effective on employees with stable jobs than those who change jobs
frequently. In Vietnamese society, especially in government organizations promotion
opportunities could be considered so important by many employees, because most jobs
in state sectors could consider as stable ones.
Hypotheses H3: There is a positive impact of promotion opportunities on
employees’ performance.
From three determinants above the model of the research was created as below.
All of those determinants have positive effect to employees’ performance. However,
there was no information which shows how strong of each element affect the
performance and the relationship among those determinants in affecting employees’
productivity, and the difference of those effects to employees of state sectors and other
sectors. Therefore, it is necessary to conduct a survey and run regression as follow
chapters in order to find out that information to help author of the research and readers
understand clearly about those problems and apply to reality.

14


WORKING
ENVIRONMENT

+H2
EMPLOYEES’
PERFORMANCE

PROMOTION

+H1

EARNING

+H3

OPPORTUNITIES

2.3

Conclusion
In this chapter an overview of the literature from variety of previous researches

about three determinants affect on employees’ performance which are earning, working
environment, and promotion opportunities were introduced and discussed. From those
three determinants a model which comprises three hypotheses was built. Those
hypotheses are: Hypotheses H1: There is a positive impact of earning on employees’
performance; Hypotheses H2: There is a positive impact of working environment on
employees’ performance; Hypotheses H3: There is a positive impact of promotion
opportunities on employees’ performance.

15


Chapter 3
METHODOLOGY
3.1

Introduction
This chapter will highlight how the research problem will be solved. How the

participants will be selected and the procedure followed to gather the data. Moreover,
the measuring instruments to gather the data will be discussed. This chapter will

conclude with the statistical techniques utilized for the data analysis.
3.2

Research procedure
In this research, quantitative approach is used, the study employs the following

research methodology to investigate the impact of earning, working environment, and
promotion opportunities on performance of employees in Vietnamese context and
compare those impacts between the state and other sectors.
Sample
Before doing an official survey, a pilot test was conducted with 30 employees in
both state sectors and other sectors
The survey was conducted from May to November 2012. The population for this
study

comprised

employees

in

both

state

sectors/organizations

and

other

sectors/organizations in Ho Chi Minh City. A total 280 questionnaires were administered
to potential respondents chosen from this place. The number of questionnaires was 280
that is not big, but enough, because in each questionnaire have 20 questions, therefore
about 200 is ten times larger than the number of questions, while the minimum
requirement is four to five times. The participants were divided equally into two groups
which included employees in the state sector and other sectors, each group was more
than 100 participants that is five times larger than number of questions in the
questionnaire, it reaches to minimum requirement.
16


Measurement
A questionnaire was designed under the advice of my supervisor and modify
from previous studies. The questionnaire was used in this study employed three scales
designed to measure performance of employees namely earning, working environment,
and promotion opportunities. Questions about these three determinants borrow from
Nguyen (2011), there are four questions for earning determinant:
Presence of salary that reflects my performance
Current income presence of attractive and competitive compensation system
My company has transparent and equitable policy of salary
Presence of salary that encourages better performance
There are six questions for working environment determinant:
My company organizes stable working time
In my workplace, staff is equipped and provided enough equipment for doing
their work
My superiors encourage and help me in doing my work so much
I receive support from colleagues so much
Relationships between colleagues at my workplace are friendly and relaxed
My workplace is safety and convenience

There are five questions for promotion opportunities determinant:
My company has variety training programs to improve ability of employees
I have been trained all skills that need for doing my work
The company has created many opportunities for me to learn and improve
I have many opportunities for promotion
I have equal opportunities of getting promotion with other colleagues with
similar qualification
17


Questions for measuring employees’ performance borrow from Rego and Cunhan
(2008) with five questions:
I believe I am an effective employee
I am happy with the quality of my work output
My manager believes I am an efficient worker
My colleagues believe I am a very productive employee
My performance is better than that of my colleagues with similar qualification
Totally, there are twenty scales in the questionnaire. This questionnaire is
produced in English and Vietnamese versions. In the questionnaires a 5 points Likert
scale was used which range from 1 – strongly disagree to 5- strongly agree. See
appendix A and B at the end of this thesis.
Data Collection
Directly: The instruments used to gather data was hand delivered to the employees
identified for this study. Research assistants were responsible for hand delivering and
collecting the instruments and return to author for coding and analyzing.
Indirectly: Email to the personal email of the participants who accept to take part in this
survey, but they can’t response the questionnaires immediately so that they want to
response by email.
Validation and pilot test of the instrument
To establish the highest degree of reliability, the jury-validated instrument was

pre-tested on a small sample (n = 30) of randomly selected employees who are working
in Ho Chi Minh City.
Statistical Methods
Mean comparisons was used to determine whether there was a significant
difference between the impact of those determinants on employees’ performance and
different impact on state employees and other employees.
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Using the SPSS to analyzing the data and make the data analyzing:
1- Testing reliability of scales by using Cronbach’s Alpha and Coefficient:
This was tested the Cronbach’s Alpha of each scale of each factor as well as the
beta of the factor loading in the model. Cronbach’s Alpha coefficient is a statistical
test of correlation of the questions in the scale relative to each other. So, with this
method of analysis can remove inappropriate variables and limit junk variables in the
research process and assess the reliability of the scale through the Cronbach Alpha
coefficient. Which variables have correlation coefficients of variables (Corrected
Item-Total Correlation) less than 0.3 is disqualified and the scale Cronbach Alpha
coefficient is 0.7 or more is selected.
2-

Exploratory Factor Analysis:
This is in order to explore the relationship between independent variables. Factor

analysis is used when the KMO (Kaiser-Meyer-Olkin) value is greater than 0.7 and it
is inadequate if less than 0.5 (Nancy L, Leech, Karen C. Barret, GeorgeA. Morgan,
2005), the transmission coefficient variables (factors loading) is less than 0.5 or the
difference between the two factors less than 0.3 will be disqualified. Stops
Eigenvalue (representing the variance explained by each factor) greater than 1 and
the total variance extracted (Cumulative% Extraction Sum of Squared loadings)

greater than 50%. Extract method "Principal Axis Factoring" rotation "Varimax" is
used in the factor analysis scale independent variables.
3-

Multiple regression analyses:
This is in order to test the relationship between the independent variables and

dependent variable. Linear Regression was run in order to compare different impact
of independent factors on dependent factor between the state sector and other
sectors. To test the role of the important factors in assessing the relationship between
earning factors, working environment, and promotion opportunities, and employees'
performance, we run the regression. Analysis is done by the method
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