Antecedents of organizational commitment and its relationship with turnover intention A study of business employees in pharmaceutical multi - national companies.pdf

MINISTRY OF EDUCATION AND TRAINING NGUYEN TAT THANH UNIVERSITYSTARS" RATING SYSTEM ★ ★★★ I ĐẠI HỌC NGUYỀN TẤT THÀNH NGUYEN TAT THANH UNIVERSITY ANTECEDENTS OF ORGANIZATIONAL COMMITMENT A

MINISTRY OF EDUCATION AND TRAINING NGUYEN TAT THANH UNIVERSITY

STARS"

RATING SYSTEM

★ ★★★ I

ĐẠI HỌC NGUYỀN TẤT THÀNH

NGUYEN TAT THANH UNIVERSITY

ANTECEDENTS OF ORGANIZATIONAL COMMITMENT

AND ITS RELATIONSHIP WITH TURNOVER

INTENTION: A STUDY OF BUSINESS EMPLOYEES

IN PHARMACEUTICAL MULTI-NATIONAL COMPANIES

MASTER OF BUSINESS ADMINISTRATION DISSERTATION

MINISTRY OF EDUCATION AND TRAINING NGUYEN TAT THANH UNIVERSITY

STARS"

RATING SYSTEM

★ ★★★ I

ĐẠI HỌC NGUYỀN TẤT THÀNH

NGUYEN TAT THANH UNIVERSITY

ANTECEDENTS OF ORGANIZATIONAL COMMITMENT

AND ITS RELATIONSHIP WITH TURNOVER

INTENTION: A STUDY OF BUSINESS EMPLOYEES

IN PHARMACEUTICAL MULTI-NATIONAL COMPANIES

Specialization: Business Administration

Specialized code: 8340101

MASTER OF BUSINESS ADMINISTRATION DISSERTATION

SCIENTIFIC ADVISOR: PHD NGUYEN XUAN NHI

A CKNO WLEDGEMENTS

First of all, I want to express my appreciation to PhD Nguyen Xuan Nhi who

is both my Dissertation Advisor and my lecturer providing US the necessary knowledge of research methods in business science During the period

very carefully the course of research methods in class but also inspired and

every questions relating to my dissertation.

knowledge and skills during my MBA course This strong foundation has helped

I also would like to show my gratitude to all my business friends and

Last but not least, I would like to send my sincere gratitude to my family and

my close friends who constantly support and motivate me during this challenging

time.

PLA GIARISM STA TEMENT

has not been before submitted to any educational and research programs or institutions.

I completely aware that if any writing in this dissertation contradicted to the my own above statements, I will be refused by the postgraduate MBA program at the Business Administration Faculty, Nguyen Tat Thanh University.

LIST OF ABBREVIATIONS, ACRONYMS, INITIALISMS

LIST OF TABLES

Intention

variable

LIST OF FIGURES

Figure 5.1a,b SEM analysis results

Figure 1.1a Global Medicine Spending and Growth 2009-2023

Figure 1.1b Pharmerging Markets Historic and Forecast Spending Growth by

Country Figure 1.1c Top pharmaceutical companies in Vietnam market, IỌVIA update

Q4 2019 Figure 1.2 Turnover rate during recent years in Pharmaceuticals MNCs,

Vietnam market Figure 1.5 List of Pharmaceuticals MNCs in Pharma Group, Vietnam market Figure 1.6 Overview of different stages in Qualitative studies

Figure 2.2a Three types of organizational commitment

Figure 2.2b Organizational commitment & Turnover intention

Figure 2.3 A Three-Component Model of Organizational Commitment (Meyer

et al, 2002) Figure 2.4a Research model in Suifan research (2017)

Figure 2.4b Research model in Hendri research (2019)

Figure 2.5a Proposed variables (in red color) included in the research model Figure 2.5b Proposed research model

Figure 4.3.4 CFA Analysis Results

Figure 4.3.5 Analysis results of SEM model

APPENDICES

Purpose - The high turnover rate in pharmaceuticals multi-national companies in Vietnam market in recent years has been received attention from not only human

resources departments but also other commercial managers The purpose of this

research is to investigate the antecedents affecting organizational commitments

Design/methodology/approach - This research used a sample of sales and

pharmaceuticals multi-national companies in Vietnam market Mixed methods of

Findings - Three of fifteen hypotheses are not supported which results in the fact

that the employee voice does not impact on organizational commitment in general Only two normative commitment and continuance commitment have the negative impacts to turnover intention The career development and organizational justice have the biggest impact to normative commitment which also has the biggest impact to turnover intention.

Practical implications - The research results suggest the practical actions increasing the level of career development and organizational justice, in order to

increase the level of normative commitment and to reduce the turnover intention.

Originality/value - The present research is among the first ones to discover the

Keywords Organizational commitment, Turnover intention, Organizational

justice, Organizational learning, Employee voice, Career development

1 INTRODUCTION 4

1.1 Overview of Pharmaceutical MNCs in Vietnam 4

1.2 Problem statement: Turnover rate during recent years 6

1.3 Research objectives 8

1.4 Research questions 8

1.5 Scope of research 8

1.6 Research methodology 9

1.7 Research contributions 10

1.8 Dissertation structure 11

2 LITERATURE REVIEW & RESEARCH MODEL 12

2.1 Conceptual background 12

2.1.1 Dependent variable: Organizational Commitments 12

2.1.2 Outcome variable: TurnoverIntention 13

2.1.3 Independent variables (Antecedents) 13

2.3 Theoreticalbackground 16

2.4 Relevant researches 18

2.5 Research model (Conceptual framework) 23

3 RESEARCH METHODOLOGY 25

3.1 Overview 25

3.2 Research design 25

3.3 Research process 26

3.5 Data collection process 28

3.6 Questionnaire design & Scale development 29

3.7 Statistical data analysis 34

3.7.1 Verificationof scale reliability (Cronbach’s Alpha) 34

3.7.2 Exploratory factor analysis (EFA) 35

3.7.3 Confirmatory FactorAnalysis (CFA) 37

3.7.4 Structural Equation Model(SEM) 38

3.8 Summary 39

4 FINDINGS 39

4.1 Introduction 39

4.2 Qualitative analysis 39

4.2.1 In-depth interview 40

4.2.2 Focus group discussion 46

4.3 Quantitativeanalysis 59

4.3.1 Profile ofrespondents 59

4.3.2 Reliability of the scale 60

4.3.3 Exploratory FactorAnalysis (EFA) 65

4.3.4 Confirmatory Factor Analysis (CFA) 71

4.3.5 Analysis results of linear structural model (SEM) 79

5 RECOMMENDATION 86

5.1 Research objectives 86

5.2 Academic contributions 92

5.3 Managerialcontributions 93

REFERENCES 95

1 INTRODUCTION

1.1 Overview of Pharmaceutical MNCs in Vietnam

The global pharmaceuticalmarket hada value of around 1,200 billion USD in2018

Based on this growth rate, this global value is expected to achieve 1,500 billion USD in

2023 This growth rate is based on the consumption of newly launched medicines indeveloped countries, the expanded access to medicines in pharmergingcountries, and also

Source: IQVIA Market Prognosis Sep 2018; IQV1A Institute Dec 2018

Figure Lia: Global Medicine Spending and Growth 2009-2023

Exceptforthetop three countries with the fastest growth rate inpharmerging market

rate next phase of 2019-2023 (forecast CAGR of5-8%) (Fig 1.1b) This fact can be used

to partially explain why almost all of the top global pharmaceutical multi-nationalcompanies (MNCs) have had the presence in Vietnam pharmaceutical market After the

Based on the data updated from IQVIA Vietnam Q4 2019, the Vietnam

pharmaceutical market has a value ofaround 5 billion USDwith a positive growth rate of13% This turnover contributes 2-3% of the total Vietnam GDP Because the medicineshas

pharmaceutical companies in Vietnam, DuocHau Giang (DHG) isthe only local company

All nine leaders are pharmaceutical MNCs like Sanofi,Novartis, Roche, (Fig 1.1c) All

of the business employees in these pharmaceutical MNCs are university graduated

treatment), treatment guidelines, products, market, competition, business strategies to

activities of pharmaceutical MNCs are often assessed professionally They have long

history of operation and development, with a long-term vision and mission, a very good

system of training, highestquality and efficacy of branded innovative drugs

xXX Total Market Value Ịãtò? 103,299 bn VND Growth:+13% MATYoY

Figure 1.1c: Top pharmaceutical companies in Vietnam market, 1QVIA Update Ọ4 2019

1.2 Problem statement: Turnover rate during recent years

Pharmaceuticals MNCs invested a lot in people and training in order to have high

actions as soon as possible in order to maintain the most important resource for the

Figure 1.2: Turnover rate during recent years in Pharmaceuticals MNCs, Vietnam market

The companies with high turnover rates will face many disadvantages As

Marketing staff with high performance, the company has to invest many things on them

loses all customers’ relationships relating to that staff as well, which will result in losing

business strategies andtactics secrets whenthe businessstaffsmove to rival companies In

their ownbutalso the advantages of transferring to otherrival companies

This research is important in the current situation ofrecent yearhigh turnover rateamong pharmaceutical MNCs Based on this research’s findings, Human Resource

antecedents affecting theirbusiness staffs’ organization commitment Then they can have

the proper planning of human resource strategies and tactics in order to increase theorganizational commitment and also to reduce the turnover intention Especially in the

material powers, the manpower will certainly become the most important resource of theorganization, which will createacompetitiveadvantagefor the organization It is extremely

crucial to not only attract and recruit talents but also increase their staffs’ organizational commitment

1.3 Research objectives

• Determining factors affecting organizational commitment and relationship with

• Determining to what extent these factors affect organizational commitment

• Providing Human Resource Directors implications of strategies and tactics toincreaseorganizational commitment and reduceturnover intention

1.4 Research questions

To achieve the above research objectives, we propose the following detailed

research questions:

• What antecedents affect organizational commitment and relationship with turnover

• To what extentdo these antecedents affect organizational commitment?

1.5 Scope of research

This research will mainly focus on the topic of organizational commitment and

independent variables (IVs) Organizational commitment is dependent variable (DV).The restturnover intention is an outcome variable

The subjects who will respond to the questionnaire are business employees frompharmaceutical MNCs, including Sales or Marketing staffand managers PharmaceuticalMNCs are the companies included inthe Pharma Group (Fig 1.5).

This research will focus mainly on the two locations of Hochiminh City and Hanoi

because these two locations have occupied up tomore than 50% ofthe contribution to the

• Allergan • Johnson & Johnson

> Astellas > Merck KGAA

> AstraZeneca • Merck sharp & Dohme

PharmaGroupn > Bayer Vietnam Ltd.

> Boehringer Ingelheim

> Novartis Vietnam Co., Ltd

> Novo Nordisk Pharma

> Daiichi Sankyo • Pfizer Pharma Group - the Pharmaceutical Sector Committee of EuroCham - represents the

voice of the international research based pharmaceutical industry in Vietnam Pharma

• DKSH Vietnam Co Ltd • Pierre Fabre S.A.

Group currently has 23 members who all share the vision of creating sustainable > Ferring Pharmaceuticals > Sanofi-Aventis Vietnam

access to high quality, safe and innovative medicines for Vietnamese patients. • Gedeon RichterPlc. > Servier (Vietnam) CompanyLimited

Pharma Group operates under the management of an Executive Board with 8 members • GlaxoSmithKline Pte Ltd • Takeda Pharmaceuticals

and has Director, who is in charge of its daily operations Furthermore, Pharma > Hoffman-La RocheLtd. • Zuellig Pharma VietnamLtd.

Group has a number of Working Groups all working towards achieving the above

https://www.curochamvn.orR/Scctor.Commiltccs/Pharmaccuticals

Figure 1.5: List of Pharmaceuticals MNCs in Pharma Group, Vietnam market

1.6 Research methodology

qualitative study willhavein-depth interviews anda focus group discussion (Fig 1.6).The

and the group discussionwill help to validate the questionnaireswhich will be used in thenext quantitativephase

Listening to tape Producing a transcript

_1 _

Producing case report Producing summary display

Figure 1.6: Overview of different stages in Qualitative studies

The second phase of quantitative will help to determine to what extent eachantecedents affect organizational commitment and also to determine the relationshipbetween organizational commitment and turnover intention This quantitative study will

1.7 Research contributions

commitment, especially among the business employees of pharmaceutical MNCs

overall organizational commitment & reduce the turnover intention (managerialcontribution).

1.8 Dissertation structure

• Chapter 1: INTRODUCTION

and questions This chapter also states the scope of research, research methodology

as well as expected researchcontributions

• Chapter 2: LITERATURE REVIEW & RESEARCH MODEL

Chapter two will clarify the conceptual background, including organizationalcommitments, turnover intention, and other independent variables like

organisational justice, organizational learning, employee voice, and career

analysis

• Chapter4: FINDINGS

phase (both in-depth interviews and focus group discussion) but also quantitative

2 LITERATURE REVIEW & RESEARCH MODEL

2.1 Conceptual background

2.1.1 Dependent variable: Organizational Commitments

Organizational commitment is broadly defined as an individual employees' strong

commitment, (employees' emotional connection to the organization); (2) continuance,

(perceived costs related to exit from the organization); and (3) normative commitment,

(moral duty to stay in the organization) (Meyer, 1991) Organizational commitment isdefined as the desire on the part ofan employee to remain a member When the level oforganizational commitment is high, there is a higher opportunity for a member to beretained a member of that organization When the level of that is low, there is a risk of

illustration forthe three dimensions of organizational commitment (Fig 2.2a)

Figure 2.2a: Three types of organizational commitment

Affective Commitment (AC)

emotional attachment to, and

involvement with, that

organization

A desire to remain a member of

an organization because of an awareness of the costs associated with leaving it

A desire to remain a member of

an organization due to a feeling of obligation

Staying with the organization

Staying with the organization because that member need to

Staying with the organization because that member ought to

2.1.2 Outcome variable: Turnover Intention

Turnover intention refers to the employees' voluntary retraction from theorganization and profession, and this concept is also conceived to be a conscious anddeliberate willfulness toleavethe organization Thisturnoverintention is usually measured

Turnover intention refers to the employees' voluntary retraction from the organization and

Figure 2.2b: Organizational commitment & Turnover intention

2.1.3 Independent variables (Antecedents)

Organizational Justice

organizational justice The employees can have the feeling that they are fairly rewarded

and also fairly treated in exchange because their company and managers have

justice(Park,2016) In the dimension of distributive justice, the employees will receive the

2010)

The third dimension of organizational justice explains the fair treatment that

employees receive during the decision-making and resource allocation process This is

interpersonaljustice and informationaljustice In contrast, interpersonal justice relates to

providing employees candid and honest explanations (Cheung, 2013)

Organizational Learning

learning have differentfeatures (Li, 2014) Exploratory learning refers to theunderstanding

skills familiar with the firms’ currentexperiences

Organizational learning is the capability “within an organization to maintain or

dissemination to others of what has been acquired by some), and knowledge utilization

(integration of learning so that it is assimilated and broadly available and can begeneralized to new situations)” (Victor Garcia-Morales, 2012) Organizational learning isthe process by which the organization increases the knowledge created by individuals in

anorganized way and transforms this knowledge into part of the organization's knowledge

organization creates knowledge, which expands in a constant dynamic between the tacit

knowledge and the increaseinthe organization's capability enable organizationallearning.Organizational learning involves cognitive and behavioral change More than ever,organizational learning has become a need rather than choice Inability to learn is thereason most firms disappear before forty years have passed (Argyris and Schon, 1996;Senge, 1990)

Employee Voice

Employee voice as an organizational process can be defined as set ofrules orprocedures that allow individuals affected by adecision to present informationrelevant to

employees to put forward their ideas and opinions, and the extent to which influence is

outcome of decisions (Famdale, 2011)

Career Development

a continuous procedure for building up one’s mission of career in relation to his

leaders having experience in implementing organizational strategies of organization The

theories in shapingup their careers (Feldman, 1992)

2.3 Theoretical background

employees They ran a meta-analysis to verify the previous three-component model oforganizational commitment and also to define not only the antecedents but alsoconsequences and correlates relatingto this model (Fig 2.3)

0 or (-)

Figure 2.3: A Three-Component Model of Organizational Commitment (Meyer et al, 2002)

to organization but also the identification with and the involvement in organization The

otherdimension of continuancecommitment(CC)relates to the costs thatanemployee can

the third dimension of normative commitment (NC), which can be understood as an

In general, therearethree types ordimensions of organizational commitment which

combine to create an overall senseofpsychological attachment to the company Ofcourse,different people may weigh the three types differently Some employees may be very

evaluating their overall desire to stay Other employees may be more emotional and

The importance ofthe threecommitment types also may vary over thecourse of a career

In order to define theantecedentsforeachdimension oforganizational commitment,

experiences, and altematives/investments Working experiences were found to be moststrongly correlated with affective commitment As defined in this meta-analytic research,

ambiguity, role conflict, and organizational justice On the other hand, continuance

normative commitment did not have any unique antecedents The affective commitment

commitment

consequences All of three organizational commitment’s dimensions were related

consequence For the other two kinds of consequences, it was found that affective

organizational citizenship behavior, and also performance) but also employee-relevants(employee health and well-being) Normativecommitment correlated with thesetwo latter

consequences butnot as strongly as affectivecommitment Continuance commitment was

2.4 Relevant researches

There are quite few researches focusing on organizational commitment in the

in Pakistan This research has not focused on the relationship between organizational

Labrague et al (2018)distributed a questionnaire to 200 nurses in 9rural hospitals

in Philippines, then received 166 responses (83% response rate), in order to investigatethe

was acquired in this study, andthe author utilizedtwo standardized instruments, which areOrganizational Commitment Questionnaire (OCQ) andTurnoverIntention Inventory Scale

organizational commitment (3.13) and undecidedlevel (2.42) ofleaving or not It was also

Comments for research of Labrague et al (2018):

• The keyfinding is the inverse relationship between organizational commitmentand

turnoverintention

resources enhancement, or career opportunities provided to enhance the nurses’organizational commitment, but they have not studied the antecedents affecting

organizational commitment

Suifan et al (2017) distributed and then received 323 responded questionnaires(81% response rate) from airlines employees in Jordan (a developing country) Thisresearchaims to discover the effect oforganizational justice on turnover intention,and also

onthis aboverelationship As illustrated in Fig 2.4a, there are total seven hypotheses which

are tested by multiple regression analysis The results led to the acceptance of all

hypotheses and revealed thatthe relationship between organizationaljustice and turnover

relationship is fully mediated by job satisfaction but only partially mediated by

organizational commitment

Comments for research of Suifan et al (2017):

• There are positive relationships between organizational justice and organizational

described in the last part of 2.3

relate to the environment of healthcare orpharmaceuticals

Hendri (2019) made a research ontheemployeepopulation(classIII-IV,population

PTPNs in Indonesia) in West Kalimantan in order to find out the effect of organizational

learning to job satisfaction, organizational commitment, and employee performance This

on employee performance (Fig 2.4b) The key finding is that organizational learning has

an effect on job satisfaction and organizational commitment but not on employeeperformance This finding is consistent with Robbin's (1996) study because it is not avery

Comments for research of Hendri et al (2019):

• This research has found out the positive relationship between organizational

learningandorganizationalcommitment Thisresearch is also conducted inthe field

• The relationship between these above two constructs needs to be also tested in thepharmaceutical environment

Farndale et al (2011) conducted a study on 2,291 employees in organizations with

significant and major organizational change to investigate the relationship between

organizationalcommitment.The questionnaire was distributed by theChangeManagementConsortium (CMC), which is a collaboration of practitioners and academics in the United

(financial), EngineerCo (manufacturer), CommsCo (communication agency), The keyfinding is thatemployee voice has apositive relationship with organizational commitment, and this relationshipis mediated by trust in senior management.

Comments for research of Farndale et al (2011):

• Hypothesis 1 is confirmed, which means there is a significant positive relationship

Younis et al (2013) distributed 220 questionnaires to employees at AbbottLaboratories United Kingdom and retrieved 102 responses (42.7%responserate), in order

successionplanning, andorganizational commitment Thefindings come to the conclusion

International Journal of Scientific and Research Publications, which is not ranked in

In sum-up, there are key studies (Table 2.4) thathave investigated the relationship

commitment Although these studies showed the positive relationships between eachindependent variables with organizational commitment separately, the author suggests

MNCs,especially afterhaving the results of in-depthinterviews (part 4.2.1) A recent study

conducted intheVietnamese pharmaceutical enterprises (Nguyen Thi Hoai, 2020) showedthatcorporate social responsibility (CSR) has an impactonorganizational commitment but

results

Table 2.4: Relevant researches on Organizational Commitment & Turnover Intention

Organizational Justice

Organizational Learning Employee Voice

Career Development

Organizational Commitment

Turnover Intention

Note (Others)

Hendri

• Employee performance

• Job satisfaction

Famdalc et

• Line Mgr relationship

Employee-• Trust in Senior Mgm

Gaps for the relevant researches:

• Therelationship of thoseantecedentswithorganizational commitments has not been

studied in the field of pharmaceuticals MNCs before, especially in the Vietnam

In general, employee loyalty is more interested in, and the concept of organizational

2.5 Research model (Conceptual framework)

Based on the theoreticalbackground described in part of 2.3 above, it is very clearforthe relationship between organizational commitment and turnover intention, as wellasthe relationship between organizational justice and organizational commitments In this

(organizational learning, employee voice, and career development) as the antecedents oforganizational commitment

0 or (-)

Figure 2.5a: Proposed variables (in red color) included in the research model

environment of pharmaceuticals MNCs are university graduated pharmacists and doctors

need to studymore

As they also have ahighlevel of education with ahigh level of working motivation,they usually have the need to speak up, providing continuous feedbacks for the

opportunities for internal promotion, they will do their best not only for the job

Table 2.5: Hypotheses Summary

Hypotheses Illa Organizational Justice —► Affective Commitment

Hlb Organizational Justice —► Continuance Commitment

Hlc Organizational Justice —► Nonnative Commitment

H2a Organizational Learning —> Affective Commitment

H2b Organizational Learning - ► Continuance Commitment

H2c Organizational Learning —► Nonnative Commitment

H3a Employee Voice 1 > Affective Commitment

H3b Employee Voice —► Continuance Commitment

H3c Employee Voice —► Nonnative Commitment

H4a Career Development —■► Affective Commitment

H4b Career Development —► Continuance Commitment

H4c Career Development —* Nonnative Commitment

Hypotheses H5 Affective Commitment —► Turnover Intention

H6 Continuance Commitment —► Turnover Intention

H7 Nonnative Commitment —► Turnover Intention

3 RESEARCH METHODOLOGY

3.1 Overview

questionnaire design, and scales development will be described Finally, methods for

3.2 Research design

According to Collis & Hussey (2003), the two mostcommon research methods arequantitative and qualitative research methods In other to achieve the research objectives,

qualitative method is used in order to explore the factors affecting the organizational

through the focus group discussion

The quantitative data of this study is obtained through the survey method and

adopted for the reason that surveys allow the researcher to approach a large number of

constrain with the intention to decrease prejudice of researchers and its effectiveness inhypotheses testing To be more specific, this study aims to access the particularhypotheses

the quantitative study in order to collectdata and to testthe hypotheses

3.3 Research process

Through collecting data of turnover rate in pharmaceuticals multi-nationalcompanies, the problem statement is considered as the starting pointof this research After

organizational commitment and also the recent researches will be thoroughly discussed.Before providing the research model and building the first scale development, qualitativeresearch is conducted to collect and explore the factors affecting the organizational commitment

Before moving to the final questionnaire and then distributing it to the sample,

thegroup discussion Aftersendingthe questionnaire tothe sample and receiving back their

tools

The final stage will be presenting the results, then giving the managerialrecommendations

*Focus group discussion

Conclusions & Recommendations

Figure 3.3: Research Process

3.4 Population and sample

marketing positionsof pharmaceutical multi-national companies in Vietnam Respondentsshould meet the following requirements:

• They are currently working as sales or marketers in multi-national pharmaceuticalcompanies

• They have atleast two years of working experience after university graduation

technique has been recommended when the researchers have easy access to the researchpopulation (Given,2008)

3.5 Data collection process

After determining the sample, a questionnaire was used to obtain the data for thereason that the result of the questionnaire could directly furtherpromote the consistency and reliabilityresults and enable the researcher to collecta sufficient amount of data in a

limited timing period, finance resources and require less time for data being processed

is distributed to the targeted employees who show theirwillingness to join the survey by

research objectives of the author

The author used mostly Vietnamese language for the survey instruments and

their discomfort, In some real cases, the respondents asked the authorto let themhave a

look at the original scale, English versions, for a better understanding of the observed

into the native language, Vietnamese

3.6 Questionnaire design & Scale development

Details of Measurement Items (1)

Variables Dimensions Coded Sub-dimensions

I really feel as if this organization’s problems are my own

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