The effects of leadership behaviors on employee loyalty through the mediation of job satisfaction

Target population of this research was employees of tourism sector in HCMC. This target population is the entire set of units for which the research data to be used. It can also be inference involving in research work. The goal of using a target population is to conduct a high percentage to sum up exactly result. The online structured questionnaires were conveniently delivered to 748 employees who are working in hotels, restaurants, bars, clubs, travel agencies, tourist transportation companies, and tourist attractions.

The Effects of Leadership Behaviors on Employee Loyalty through the Mediation of Job Satisfaction – An Empirical Study of Tourism Sector in Ho Chi Minh City, Vietnam

The Conceptual Research Model

In order to obtain all the objectives and further analyses, this study hypothesizes that:

H1.1: Task-oriented leadership directly affects employee job satisfaction

H1.2: Relation-oriented leadership directly affects employee job satisfaction

H1.3: Change-oriented leadership directly affects employee job satisfaction

H1.4: Ethical leadership directly affects employee job satisfaction

H1.5: Participative leadership directly affects employee job satisfaction

H1.6: Autocratic leadership directly affects employee job satisfaction

H2.1: The effect of task-oriented leadership on employee loyalty is mediated by job satisfaction

H2.2: The effect of relation-oriented leadership on employee loyalty is mediated by job satisfaction

H2.3: The effect of change-oriented leadership on employee loyalty is mediated by job satisfaction

H2.4: The effect of ethics-oriented leadership on employee loyalty is mediated by job satisfaction

H2.5: The effect of participative leadership on employee loyalty is mediated by job satisfaction

H2.6: The effect of Autocratic leadership on employee loyalty is mediated by job satisfaction

Task Oriented

Leadership

Autocratic

Leadership

Ethics Oriented

Leadership

Relation Oriented

Leadership

Employee Job Satisfaction

Employee Loyalty

Change Oriented

Leadership

Participative

Leadership

H 1

H 2

METHODOLOGY

Target population of this research was employees of tourism sector in HCMC This target population is the entire set of units for which the research data to be used It can also be inference involving in research work The goal of using a target population is to conduct a high percentage to sum up exactly result The online structured questionnaires were conveniently delivered to 748 employees who are working in hotels, restaurants, bars, clubs, travel agencies, tourist transportation companies, and tourist attractions

According to Gorsuch (1983), a minimum subject to item ratio of at least 5:1 in Exploration Factors Analysis (EFA), but they also have stringent guidelines for when this ratio is acceptable, and they both noted that higher ratios are generally better Based on the number of items used to measure dependent variables: employee loyalty (6 items) and employee job satisfaction (10 items) and independent variables of ethical leadership, autocratic leadership, task-oriented leadership, change-oriented leadership, relation-oriented leadership, and participative leadership (42 items) of the research model of this study, the ratio applied for EFA of dependent variables was 47:1 and the ratio for EFA of independent variables was 18:1 Statistically, these ratios promise a better reliability and validity of variables of this research

Questionnaire design and data collection

The online structured questionnaire design was basing on measured variables derived from the literature reviews for six independent variables and two dependent variables Most questions were set as statements with five-point Likert scale, ranging from 1 is “strongly disagreed” to 5 is “strongly agreed” The final questionnaire was completed and sent directly

to employees who are working in tourism sector in HCMC with directions and precise contents to help them provide answers correctly

Factor Analysis and Reliability

Factor analysis is used to decrease a large number of variables to minimize set of underlying factors that summarize the essential information contained in the variables (Coakes, Steed, and Ong, 2008)

In this study, this technique is used to identify the relationship among item and factor to find out what factor of leasership behavior affect employee loyalty through case of tourism industry in Ho Chi Minh city, Viet Nam.

In statistics, research has several different reliability coefficients to investigate degree of confident of collected data Shortly, it measures the consistency of scores over time or across testers The most popular one is Cronbach’s alpha, which is based on the average correlation of items within a test (standardized items) and average covariance among the items (not standardized items) Since Cronbach’s alpha can be interpreted as a correlation coefficient, it ranges in value from 0 to 1 (Coakes, Steed, and Ong, 2008) According to Zikmund (2010), coefficient Cronbach’s alpha

interprets the value of scales.

Two exploratory factory analyses, which used the principal component extraction method and Varimax rotation of 16 items of the dependent variables of employee loyalty and employee

job satisfactionand 42 items of the independent variables of leadership styles Prior to conducting the factor analysis with the SPSS, the data was screened by examining the descriptive statistics on each item, inter-item correlations, and possible univariate and multivariate assumption violations From this initial assessment, all variables found to be continuous, variable pairs appeared to be bivariate normally distributed, and all cases were independent of one another For this study, the exploratory factor analysis (EFA) procedure was applied twice; once for the dependent variables and again for the group of six independent variables The Kaiser-Meyer-Olkin measure of sampling adequacy was 945 for the dependent variables and 960 for the independent variables (according to Pallant, 2005, to

be significant, the value has to be 60 or above), indicating that the present data was suitable for principal components analysis Similarly, Bartlett’s test of sphericity (Bartlett, 1954) was significant (p<.001), indicating sufficient correlation between the variables to proceed with the analysis Using the Kaiser-Guttman’s retention criterion of Eigenvalues greater than 1.0, a two-factor solution provided the clearest extraction for the dependent variables, including 15 items (Guttman, 1954; Kaiser, 1974) The two factors of the dependent variables accounted for 59% of the total variance and the Cronbach’s coefficients were 910 for employee job satisfaction and 859 employee loyalty, indicating good reliability

Table1: Summary of Dependent Variables with Reliability Coefficients

Items

Cronbach’s Alpha (N=748)

For the group of independent variables, five out of six factors were extracted which respectively corresponded to the concepts of ethical leadership, autocratic leadership, task-oriented leadership, change-task-oriented leadership, and participative leadership of the research model All items of relation-oriented leadership were loading below the cut point of 50 so researcher decided to exclude these low loading items The Eigenvalues of five extracted factors were greater than one and the total variance explained was 65% of the total variance satisfying the requirement of being greater than 50% Moreover, each factor generated from the exploratory analysis had the high value of Cronbach’s Alpha (ranging from 853 to 925), which implied the high reliability of the measurement scale for assessing the independent variables

Table 2: Summary of Independent Variables with Reliability Coefficients

f Items

Cronbach’s Alpha (N= 748)

RESEARCH FINDINGS

Profile of Employees Involved in the Study

There were totally 748 employees working in Tourism Sector in HCM City participated in

this research through completing the questionnaires

The structure of the study subjects are shown by the following synthesis table:

Gender

Job position

Marriage

status

Worked for this company

Age

Working field

Education

level

Factors AffectingEmployee Loyalty

a) Correlations between variables

Table 3: Pearson Correlations between Variables of the Research Model

1 ETLEAD .539* 1.000

2 AUTOLE -.130* -.259* 1.000

3 TASKOLE .543* .690* -.130* 1.000

4 PARLEAD .533* .745* -.281* .650* 1.000

5 CHANGOLE .529* .743* -.191* .685* .651* 1.000

6 EMJOSA .658* .680* -.129* .617* .600* .620*

Note: * Significant level at p < 05

In order to find out which factors had relationship with the variable of leadership and

employee loyalty, jop sastisfaction, pearson correlations were conducted The table 3 show that there were significant relationgships betwween the moderating variable of EMJOSA and the independent variables: ETLEAD (r=.680,p<.05), AUTOLE (r=-.129,p<.05), TASKOLE (r=.617,p<.05), PARLEAD (r=.600, p<.05) and CHANGOLE (r=.620,p<.05) This means that the more value of leadership behaviors would improve employee job satisfaction In the table 3, we also see the relationships between the dependent variable of EMPLOY and the independent variables: ETLEAD (r=.539, p<.05), AUTOLE (r =-.130,p<.05), TASKOLE (r=.543, p<0.05), PARLEAD (r=.533,p<.05) and CHANGOLE (r=.529, p<.05)

Beside that, table 3 indicated that there was positive correlation between EMLOY and EMJOSA (r=.658,p<.05) From this, the meaning is that higher employee job satisfaction would lead to higher employee loyalty

b) Direct and Indirect effects of Leadership Behaviors on Employee Loyalty

Table 4: Effect Coefficients between IVs and EMJOSA.

Variables UnstandardizedCoefficients t-value Sig.

Note: Dependent Variable: EMJOSA: Employee Job Satisfaction

- Predictors: ETLEAD, AUTOLE, TASKOLE, PARLEAD, CHANGOLE

- ANOVA: F (5, 742) =162.837, Sig =000, p < 05

- Model summary: R2= 523

The result in table 4, there are all 5 independent variables affect directly on the EMJOSA: ETLEAD (β = 345, sig.<.05), AUTOLE(β = 040, sig.<.05),TASKOLE(β = 199, sig.<.05),PARLEAD(β = 122, sig.<.05) and CHANGOLE(β = 345, sig.<.05)

Table 5: Effect Coefficients between IVs and EMLOY.

Variables UnstandardizedCoefficients t-value Sig.

Note: Dependent Variable: EMLOY: Employee Loyalty

- Predictors: ETLEAD, AUTOLE, TASKOLE, PARLEAD, CHANGOLE, EMJOSA

- ANOVA: F (6, 741) =113.074, Sig =000, p < 05

- Model summary: R2= 478

The result in table 5, there were3 independent variables affect directly on the EMPLOY: TASKOLE (β = .138, sig.<.05), PARLEAD (β = .133, sig.<.05) and CHANGOLE (β = 087, sig.<.05) In addition, EMJOSA provided the direct effect on the EMLOY with (β = 470, sig.<.05)

Indirect Effects of Leadership Behavior on Employee Loyalty.

Figure 1 Path coefficients of hypothesis testing Note: All coefficients in the model were significant at the 005 level.

The total effect of independent variables on EMPLOY could be dividee into direct effects and indirect effects The direct effects of all independent variables on mediator as well

as dependent variable were the unstandardized coefficients and were considerd as the path coefficients in the path model The indirect effects of independent variables on the dependent varialbe through the mediating variable of EMJOSA were the total products of the effecs of those independent variables on the EMJOSA and the effects of the EMJOSA on the dependent variable of EMPLOY

The result of this study showed that Employee Loyalty was affected directly by three independent variables Beside that, all independent variables of leadership through the mediating variable of EMJOSA had inderect effects on EMPLOY as shown in Figure 1 and Table 6

d) Significant of the Indirect Effects

Table VI showed the results of the bootstrapping method recommended by Preacher and Hayes (2008) to test the significance of indirect effects or mediations The output provided the bootstrapped confidence intervals (at the 95%) If there is a zero (0) lies within the interval range between the lower boundary (LL) and the upper boundary (UL), then we can conclude that, with 95% confidence, there is no mediation or indirect effect On the other

Task-Oriented

Leadership

Autocratic Leadership

Change-Oriented

Leadeship

Employee Job Satisfaction

Employee Loyalty

Participative Leadership

.470

.087 133

.199

.345 040

.122

.155

hand, if zero does not occur between the LL and the UL, then we can conclude that, with 95% confidence, the mediation or indirect effect is significant (Preacher and Hayes, 2004)

As can be seen in the output of Table V, the indirect effects of ETLEAD, AUTOLE, TASKOLE, PARLED and CHANGOLE were estimated to lie between 1224 (LL) and 2045 (UL), 0033 (LL) and 0353 (UL), 0605 (LL) and 1273 (UL), 0266 (LL) and 0890 (UL), 0404 (LL) and 1067 (UL), respectively Therefore, it was concluded thatthe indirect effects

of ETLEAD, AUTOLE, TASKOLE, PARLED and CHANGOLE on EMLOY were significantly, thus the mediation of EMJOSA in this study was true

Table 6: Direct, Indirect, and Total Causal Effects

Direct Indirect Total

5 CHANGOLE 087 073 160 0404 1067

DISCUSSIONS AND RECOMMENDATIONS

a) Practical Recommendations and Contributions to Companies in Tourism Sector

in HCM City

Firstly, due to all of the results above, this study concluded that employee job satisfation

was the most important factor that effected to employee Loyalty in tourism sector in Ho Chi Minh City From this result, any enterprises in tourism sector need interest in the satisfaction

of employees to strengthen their loyalty to your company On a monthly basis, the Company has regular monthly survey of internal secret companies to understand the aspirations, the satisfaction of employees for leadership on different aspects From the regular survey, the company leadership adjustments in behavior, corporate culture to increasingly facilitate the development of employees and thereby improve their loyalty to enterprise

Secondly, the task-oriented Leadership also has the next biggest impact on employee

loyalty This impact includes direct impacts and indirect through the empoyee job satisfaction Thus, the leader in every company needs to have qualifications orientation, leading to its employees Besides that, leaders also need to complete the mission to strengthen trust, satisfaction of employees Through it, they have a long-term commitment to the company

Thirdly, besides the two factors mentioned above, several factors also have a major

impact on employee loyalty, in a way that directly and indirectly through satisfaction The factors may include participative and change- oriented leadership From the results of that study, the leaders of companies of tourism sector in HCM City also needs the participation, sticking closely to the work of each employee Besides, each of the leaders themselves also need frequent adjustments, changing to more environmentally appropriate personnel within

the companies Thereby, each company's employees are also more satisfaction in relation to leadership and engagement with their workplaces

b) Applied Implications

Through the study, the authors evaluated these factors in relationship management with the greatest impact on the loyalty of employees in the tourism sector in Ho Chi Minh City From that analysis, leading travel companies in HCM City can adjust their own behavior, to improve the working environment in order to create long-term adherence to the staff with the company The characteristics of the tourism sector, each employee become a logo to promote the image of the company to the customer The retention of experienced staff in the field of tourism is an important factor for the development of the company

Thus, research findings have contributed to the travel companies in HCM City in improving the relationship of leadership to create trust and loyalty of staff.The research also areapplied

in other tourist cities such as Hanoi, Da Nang, Nha Trang as well as in Vietnam