Antecedents of employees loyalty to the organization through the mediating role of job satisfaction

The research model included dependent variable "employee loyalty" and mediator variable "employee satisfaction" as well as four independent variables, namely: relationship with immediate

MASTER OF BUSINESS (Honours)

SUPERVISOR: DR PHAM QUOC HUNG

Ho Chi Minh City - Year 2015

Thirdly, I express my gratitude to my colleague at AMECO Ltd, they assumed my work when I must have finished every stage of this research

At last, my sincere thanks owe to my family who supported me both of physical and mental conditions to complete this study

July 01, 2015

Le Anh Hung

ABSTRACT

Labor force is a vital factor to contribute the successful of organization But

retention of loyalty employees are challenging The purpose of the study is to determine the factors impact on the employee loyalty The research model included dependent variable "employee loyalty" and mediator variable "employee satisfaction" as well as four independent variables, namely: relationship with immediate supervisor, supportive

management style, training and honest communication It means that the study carried out

to know how the impact of independent variables on employee loyalty and employee satisfaction Secondly, this study is also find out how the relationship between employee satisfaction and employee loyalty The research used the quantitative approach to collect data Data was collected from 350 employees who worked for five companies at Ho Chi Minh city, Dong Nai province, Vung Tau and Binh Duong Province

In data analysis, the result showed that independent variables has impact on

dependent variable For example: relationship with immediate supervisor, training and honest communication had impact on employee satisfaction Secondly, relationship with immediate supervisor, training and honest communication had impact on employee

loyalty That is a pity, there was not relationship between employee satisfaction and employee loyalty

Moreover, the research had some of hypothesis that satisfied So, the model

research had some change Based on the research result, it will suggest manager

understand the relationship between employer and employee, deeply

KEYWORDS: Relationship with immediate supervisor, supportive management style, training and honest communication, employee satisfaction and employee loyalty

Contents

Acknowledgements i

ABSTRACT ii

LIST OF TABLES v

LIST OF FIGURES v

LIST OF ABBRVATION vii

CHAPTER 1: INTRODUCTION 1

1.1 Background 1

1.2 Statement of the problem 3

1.3 Research objectives 4

1.5 The Scope and Limitation 4

1.6 Chapter Layout 5

1.7 Chapter summary 5

CHAPTER 2: LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENTS 7

2.1 Theoretical background 7

2.1.1 Employee Loyalty 8

2.1.2 Employee satisfaction 9

2.1.3.Factors affecting both employee satisfaction and employee loyalty 10

2.1.4.Impact of Employee satisfaction toward loyalty 15

2.2 Research Model 16

2.3 Chapter summary 18

CHAPTER 3: RESEARCH METHODOLOGY 19

3.1 Research method and procedure 19

3.2 Measurement scales 21

3.2.1 Employee Loyalty 21

3.2.2 Employee Satisfaction 21

3.2.3 Relationship with immediate supervisor 22

3.2.4 Training 23

3.2.5 Supportive management style 24

3.2.6 Honest communication 25

3.3 Main survey 26

3.4 Sampling 27

3.5.Data analysis method 27

3.6.Chapter summary 29

CHAPTER 4: DATA ANALYSIS 29

4.1 Descriptive Analysis 30

4.2 Scale measurement 31

4.3 Correlations coefficient 34

4.4 Confirmatory Factor Analysis (CFA) 35

4.5 Multiple Regression Analysis 37

4.6 Chapter Summary 41

CHAPTER 5: DISCUSSION 42

5.1 Conclusion 42

5.2 Contributions and implications 43

5.3 Limitations 44

5.4 Recommendations for the future research 44

References 45

APPENDICES 53

Appendix 1: English Questionnaire 53

Appendix 2: Vietnamese Questionnaire 54

Appendix 3: Result of the descriptive analysis 55

Appendix 4: Result of the reliability test 58

Appendix 5: Pearson correlation Coefficient 60

Appendix 6: Result of CFA 61

Appendix 7: Result of multiple regression analysis 68

LIST OF TABLES

Table 4.1.1: Gender of respondent 24

Table 3.1: Scales items for employee loyalty 32

Table 3.2: Scales items for employee satisfaction 33

Table 3.3: Scales items for relationship with immediate supervisor 33

Table 3.4: Scales items for training 34

Table 3.5: Scales items for supportive management style 35

Table 3.6: Scales items for honest communication 36

Table 3.7: Main measure of CFA 39

Table 4.1: Characteristic of Sample 42

Table 4.2: Result of reliability test 44

Table 4.3: Pearson correlation Coefficient 45

Table 4.4: Validity and Reliability 47

Table 4.5: Model Summaryb 48

Table 4 6: ANOVAa 48

Table 4.7: Coefficientsa 49

Table 4.8: Model Summaryb 50

Table 4.9: ANOVAa 50

Table 4.10: Coefficientsa 51

LIST OF FIGURES

Figure 2.1: Research Model 29 Figure 3.1: The research process 31 Figure 4.1: Amos Model 46

LIST OF ABBRVATION

WTO : WORRLD TRADE ORGANNIZATION

APEC : ASIA-PACIFIC ECONOMIC COOPERATION

AFTA : ASEAN FREE TRADE AREA

ASEM : THE ASIA-EUROPE MEETING

VAM : VIET NAM ASSOCIATION OF MECHANICAL INDUSTRY

CFA : CONFIRMATORY FACTOR ANALYSIS

CHAPTER 1: INTRODUCTION

1.1 Background

In the 21 century, the countries undergo many huge problems in the world One of them was financial issue Caudron (as cited in Kelli, 2001) agreed that there have been many companies that are downsizing due to slow periods in recent years Viet Nam is also affected more or less Simultaneously ,Viet Nam is affected by financial crisis storm and Economic recession from 2008 It took many people to lose job, companies were bankruptcy In 2012, there were 54.261 dissolution enterprises (Xuan Than, 2013), it increased 60.737 by 2013 ( Thanh Trung, 2014) It jumped 67.823 enterprise in 2014 (Trung Ninh, 2014)

Viet Nam Joins the WTO and APEC which made trade more dynamic Thus, it excited domestic firms more and more interested Enterprise want to improve their

competitiveness in order to occupy the market Enterprise should update many things to respond real situation For example management systems, business strategy, human resource management, financial management, internal controls Tran Van Hung

(2011a) stated that Conditions created a competitive advantage that was investment and development of human resources with high quality

Thereby, this study only focused on human resource management field Human management is an important aspect of organizational processes A well-managed

business organization normally considers the employees as the primary source of

productivity gains These organizations consider employees rather than capital as the core foundation of the business and contributors to develop firm To ensure the achievement

of firm goals, the organization creates an atmosphere of commitment and cooperation for its employees through policies that facilitate employee satisfaction Satisfaction of human

resource finds close links to highly motivated employees Motivating employees and developing loyalty or commitment to increase productivity and reduce turnover rates

Frederick F (2001) referred that "Loyalty is the key to success in today's

economy"(p 01).Loyalty will be defined as the tendency of an employee to continue working for the same employer Nighat Naeem (2013) stated that" Employee satisfaction

is one of the main and important issues of all time Employees are the key player in organization so their commitment with organization is very important"(p 01)

To get more achieving in the world market and domestic market is becoming an difficult more than it has been ever Hence, maintaining the stable labor force is very important of enterprise which is also unvalued asset."Employees are more loyal and productive when they are satisfied" ( Hunter & Tietyen, as cited in Bulent Aydin & Adnan Cevlan, 2008, p.4) The purpose of this study is to examine the relationship

between employee loyalty and employee satisfaction The study also find out the impact

of other factor toward employee loyalty with employee satisfaction Such as relationship with immediately supervisor, training program, supportive management style and honest communication

The research only discover in Engineering company because there are following reason Firstly, mechanical engineering is one in eight key industry at Vietnam

Engineering industrial is a brand of economic that has particularly important position for the development of the economy because it is a produce industry which creates

machinery and equipment supply for the other industry In fact, the world does not has any country to implement the successful of industrialization and modernization process

so that does not has a strong mechanical industry, the development of mechanical

industry is both foundation and driving for the development of the different professions

in society, it also has a positive impact on the services sector through the development of the distribution network Secondly, researcher want to interest in mechanical engineering Because researcher passion this field so long

1.2 Statement of the problem

Viet Nam is entering the economic integration process Viet nam joined some economic organization Such as WTO, AFTA, ASEM, APEC So the enterprise had not only opportunities but also challenges The mechanical engineering was belong to important development program of government which did not avoid difficult and challenges Next, I list some following difficult For example: lack of capital, model equipment, high qualified manpower

According to Doanh nghiep co khi va doi song magazine, Mr Nguyen Van Thu who is president of VAMI he said that the criterions to develop mechanical engineering, firstly, reducing the lack of capital Secondly, increasing the qualified staff Lastly, government has appropriate policies (Hoang Son, 2014) Tran Anh Tuan was deputy president of Trung tam du bao nguon nhan luc va thi truong lao dong TpHCM who talked about the candidate registered to study the social and technical sector less than economic sector So, this lead to lack the human resource in this sector (Hội thảo tập huấn nghiệp

vụ tư vấn hướng nghiệp và tuyển sinh ĐH – CĐ, 2013).Tran Van Hung (2011b) said that the high quality workforce will continue to be a shortage and scarcity in some areas such

as mechanical engineering, automation, atomic physics, the international trade business, accounting and auditing, bank

Initially, human resources was the main problem in many field that included mechanical engineering Secondly, labor force supplied low quantity and quality Thirdly, skilled employees had low quantity if they would have low loyalty, they can give up present job to find out new job in high benefit Hence, to investigate factors affecting towards employee loyalty and satisfaction which is necessary It suggest manager know how to understand employee and how to retain stable workforce The matters will contribute the development during the economic integration with industrialization and

modernization Hereby, this study want to investigate factors affecting towards employee loyalty and satisfaction in the mechanical engineering

communication and employee satisfaction

2 To evaluate the relationship between employee satisfaction and employee

loyalty

3 To investigate factors impact towards employee satisfaction Such as

relationship with immediately supervisor, training, supported management style, honest communication 1.4.Significance

It is very essentials to do this research because it give many benefit Firstly, this study tried to find the factors impacted on employee loyalty and employee satisfaction Secondly, these results help manager know how to improve a satisfaction and loyalty their employee In addition, this is basic research in order to do more survey in future At last, this study is fulfilled in economic integration so it becomes more important because

of retaining and developing human resource is very crucial matter

1.5 The Scope and Limitation

The study only survey employees who are working for engineering company In addition, the study will use quantitative method to collect and process the data

The limitation of this study is a sample size which is collected some organizations

in Binh Duong, Dong Nai, Vung Tau province and Ho Chi Minh City Thus the reality of results will change if the survey is done in widen places

1.6 Chapter Layout

This research was written in five chapters below:

Chapter 1: Introduction: This part gave an overall review of entire research; a brief background of the research Another item had the problem statement and the research objectives

Chapter 2: Literature Review: This chapter is heavily which contain the reviews of the various literature and previous studies It related to this research topic It contains the discussion of the various articles, journals and research studies One will divide into four parts which are theoretical background of the conceptual framework, hypothesis

development and research model

Chapter 3: Research Methodology: This chapter focus on discussion of research method where it describe the procedure of how the research carry out in terms of the research design and setting, data collection method, sampling design, measurement scales and data analysis method

Chapter 4: Data Result: This part includes the overall result and analysis of

questionnaire The result will be present in chart and table

Chapter 5: Conclusion: This chapter will not only discuss the overall of descriptive and analyses from previous chapter, but also suggest the major finding Lastly, the

limitation of study and recommendation will be presented for future research

1.7 Chapter summary

This Chapter constructed in seven part Namely research background, research problems, research objectives , research contributions, the scope and limitation, research

structure and chapter summary A research background and problem statement help readers to understand and to get basic knowledge about the research Secondly, the research objectives and research questions determine purpose of study Next, the scope and limitation specify area to find out finally, the research chapter gave structure of the research The next chapter is the literature and studies review

CHAPTER 2: LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENTS

This chapter provides literature review where it used to the theories and the

information Text was extracted from journals, articles, newspapers that mentioned each factor in the model In short, this information of chapter is all secondary sources This chapter divide into two parts which are theoretical background and research model

2.1 Theoretical background

Employee loyalty is a matter which has wide interest by people who manage in organization and people who study them Engaging employees do the better jobs which is essential for success organization in long term Employee loyalty always identify through satisfaction factor Up to now, Employee satisfaction has closely related with more

organization

In 1944 Abraham Maslow ,who was an American psychologist , wrote a " theory

of human motivation" It included five level from low to high stage For employee

satisfaction in the workplace , some scholars have adopted Maslow's theory and used his notion of need fulfillment to measure this factor

There are many study which reflects many aspect of employee loyalty Here, research gives some relevant research

Firstly, Turkyilmaz et al (2011a) wrote in" Empirical study of public sector

employee loyalty and satisfaction" It measured loyalty variable by satisfaction which was affected empowerment and participation, working conditions, reward and

recognition, teamwork, training and individual development Secondly, Edward (1975) showed that " factor affecting employee loyalty by which used model including job satisfaction, Internal forces and external forces" (p 1) Finally, Mohd et al (2009) found that " an empirical investigation into the influences of psychological empowerment and

overall job satisfaction on employee loyalty: the case of Malaysian front office

receptionists" (p 1).which suggested the model include employee psychological

empowerment and job satisfaction also affect on employee loyalty

On this study has significant differences that is dependent variable will affect independent variables It will present below:

This section shows in three parts Firstly, the definition of employee satisfaction with employee loyalty was introduced Next, the factors impact both employee loyalty and employee satisfaction Finally, representing the relationship between employee

satisfaction and employee loyalty

2.1.1 Employee Loyalty

Loyalty is a feeling which orientation of employees want to relate with future direction and development of the company In practice It sometimes happens that an individual, who is satisfied with his or her work, will not belong to the organization or team Because of his or her characteristic

"Many firm perceive employees as an asset of the company and employee loyalty has become as important of an issue as customer loyalty in business industry Even though companies have been striving to provide better support or opportunities to employees , they have been faced with difficulty in keeping employees in

organization"(Voyles, as cited in Lee, 2000a, p 32)

Drizin and schneider (2004) stated that loyalty employees tended to commit and stay in the organization and were willing to help the company irrespective of their job assignments and descriptions (as cited in Lee, 2000b) Organizational loyalty of

employees could be defined as " the relative strength of an individual's identification with

and involvement in a particular organization" ( Wu and Norman, as cited in Turkyilmaz

"Employee satisfaction is the terminology used to describe whether employees are happy, contended and fulfilling their desires and needs at work Many measures support that employee satisfaction is a factor in employee motivation, employee goal achievement and positive employee morale in the work place"( Heathfieth,

M, as cited in Sageer et al, 2012a, p 01 )

Cranny, Smith and Stone (1992) defined that "employee satisfaction as the

combination of a affective reactions to the differential perceptions of what he/she wants

to receive compared with he/she actually receives"(as cited in Sageer et al, 2012b, p 01) Moyes, Shao and Newsome (2008) defined that " the employee satisfaction may be described as how pleased an employee to with his or her position of employment" (as cited in Sageer et al, 2012c, p 01)

2.1.3 Factors affecting both employee satisfaction and employee loyalty

2.1.3.1 Relationship with immediate supervisor

"Immediate supervisors act as advocates for employees, gathering and distributing the resources needed by the employees for them to be able to do a good job and providing positive encouragement for a job well done" (Chandrasekar, 2011, p 6) kee et al

(2012a) defined that the relationship with supervisor can be formed through two way communication The supervisor plays an important role in relationship, because they monitor the employee’s performance and lead them toward goal achievement

To evaluate the impact of relationship with immediate supervisor into employee satisfaction and employee loyalty The previous researchers gave many theory to support this matter Ami et al (2012) stated that " I will give many factor affecting the employee satisfaction such as Relationship with immediate supervisor" (p, 3) Sageer et al, (2012d) showed that variables on which employee satisfaction depends promotion and career development, relationship with immediately supervisor

In another definition, a good relationship between worker and their immediate supervisor is very important since both work in the same organization and share the same workplace (sturgeon, as cited in kee et al, 2012b) Kee Hui Poo et at, (2012c) showed that there is positive relationship between relationship with supervisor and employee loyalty

Therefore I suggested two hypothesis that relate with purpose of thesis below H1: Relationship with immediate supervisor has a positive impact on employee

satisfaction

H2: Relationship with immediate supervisor has a positive impact on employee loyalty

2.1.3.2 Training

Noe (2002) defined that training as planned activities to increase the job

knowledge and skills or to modify the attitudes and behaviors of employees in order to

make them consistent with the goals of the organization and the requirements of the job Employee training provides opportunities to employees widen their knowledge and

abilities for more efficient teamwork and achieve individual development (Jun et al., 2006)

Training has impact the aspects of life So, it was researched very deep to apply this study suggest several theory about training which has impact into both employee satisfaction and employee loyalty When workers receive self-development training, the level of their job satisfaction is higher than those without such training (Chang et al., 2010) Also, Herzberg (1968) found that employee job satisfaction is influenced when they have an opportunity for advancement of individual competencies through various training programs When employees attended to training programs, they gain self-

confidence of making their jobs, they perceive career development opportunities and they think that their companies make investment in them (Jun et al., 2006) As result of this positive situations, employee satisfaction increases gradually

Martensen and Gronholt (2001) found that through various training program has a positive influence on employee satisfaction (as cited in Turkyilmazet al., 2011c)

Bradley, Petrescu and Simmons (2004) explain that creating on- going learning as well as training in workplace has a highly significant effect on job satisfaction (as cited in

Boyad, 2012a)

Bariha Batool said that Employee training remains one of the widely driven forces toward job satisfaction (2012a, p 2) Higher degree of training increases employee

satisfaction and loyalty towards the firm and decreases the chances of employee

termination and lay-offs (Choo and Bowley, as cited in Batool et al, 2012b) Solomon (1992) described factors that can influence employee loyalty and retention such as a training opportunities to learn more knowledge and skills (as cited in Lee, S S 2008c)

Training, employee empowerment and rewards leads to high performance work practices at workplace and help retain employees (Osman M Karatepe 2013) This leads

to the following hypotheses

H3: Training has a positive impact on employee satisfaction

H4: Training has a positive impact on employee loyalty

2.1.3.3 Supportive management style

On the research paper "A relational study on service climate, supportive

management, work effort, job satisfaction and employee service quality in the context of real estate sector of Bangladesh" Alamgir (2011)found that Supportive management refers to managers‟ concerns and support for subordinates‟ work and represents the degree to which they create a facilitative climate of support, trust, and helpfulness According to Muller et al (2009), Supportive leadership is defined as "attitudes,

communication, behaviours and actions by managers and supervisors that enable staff to feel supported thereby to work effectively, productively and appropriately".(p 5).So Supportive management refer to manager who concern and support for subordinates Support is a form which work will instruct gradually until somebody can do it

themselves and add activities to help employee in everyday life

As supervisor take care to help and support the contact employees and are

concerned about their needs, these employees will feel more satisfied (Griffin, Patterson

& West, 2001) Such supervisor supportive behavior has been found to be related to employee job satisfaction The previous research examined the relationships between supervisor support and job satisfaction and reported a positive relationship between supervisor support and job satisfaction (Chang et al., 2010)

Organizational commitment has been defined as the relative strength of an

employee's identification and involvement with a particular organization (Steers, 1977)

In the other journal " A path analytic study of the antecedents of organizational

commitment of IS managers", Tu et al (2001) referred that theories about organizational Commitment and supportive managerial Namely: Organizational

Commitment: the degree of an individual's willingness to stay or propensity to leave his

or her organization It includes a strong belief in and acceptance of the organization's goals and values, a willingness to exert considerable effort on behalf of the organization, and a definite and strong desire to maintain membership in the organization (Mowday et al., 1982) longitudinal study by Majchrzak and Cotton (1988) also verified that

supportive managerial environment has significant positive impact on

individuals' organizational commitment

In the other results, Thoits ( as cited Alamgir, 2011) said that a supportive

environment such as boss support would commitment, reduce turnover intentions, and enhance performance Supportive management style: Employee empowerment practices positively affect employee satisfaction ( Voisard, 2008; Dewettinck et al., 2003;

Halvorsen, 2005; Kirkmanad Rosen, 1999 as cited in Boyad, 2012b) Roehling et al (2001) revealed that supervisor support has highly influence in employee loyalty

Therefore, I can hypothesize that:

H5: Supportive management style has a positive impact on employee satisfaction

H6: Supportive management style has a positive impact on employee loyalty

2.1.3.4 Honest communication

Previous researchers explained definition of communication follow Such as: A popular view of communication is that it is the process by which information about policies, procedures, finance and customer feedback is conveyed to

others in organizations.(Vandenberg et al ,as cited Bambacas, M., & Patrickson, M 2008) Ronald Gross said that Communication is the lifeblood of any organization, big or small (as cited Wessel, H (2003) Williams, B L (2006) defined that Communication plays a major role in helping managers acquire, retain, and use knowledge in the

workplace, which in turn assists them in accomplishing their various work-related goals

In the other definition, Internal communication is operationally defined as the exchange of information both informal and formal between management and employees within the organization Communications are operationally defined as technology and systems used for sending and receiving messages Communications may include

newsletter, circulation materials, surveys, emails, suggestion boxes etc Organizational communication focuses on connecting individual employees, groups and organization as

a whole to facilitate realization of common interest and spontaneous cooperation (A.S Hatch 1964) According to De Ridder (2004), 0rganisational communication is

instrumental in facilitating supportive employees Finally, newspaper was" Open and honest communication job coach" which defined that honest communication is formed of open communication in which everyone provide input and get feedback more effectively and efficiently (2007)

Thus, Organization communication connects individual employees, group and organization In life, one is a heart of every relationship and the honest and open

communication is the way that people can create and maintain relationships In the

workplace, everyone do not only work but also another activities Specific,

communication which helps people discuss about work, change their experience it creates relationship together So, communication has a signification factor to build the cultural of organization

Boyad et al (2012c) stated that honest communication is one factor that impact to employee satisfaction Morrall (1999b) said that honest communication is an essential factor between employee and employer and it is critical in building loyalty

The part of honest communication is critical to building cultural and loyalty So, I give some assumption below

H7: Honest communication has a positive impact on employee satisfaction

H8: Honest communication has a positive impact on employee loyalty

2.1.4 Impact of Employee satisfaction toward loyalty

Allen and Grisaffe (2001) demonstrated that "Loyalty is a psychological state and

it characterizes the relationship of an employee with the organization for which they work and that has implication for their decision to remain with the organization"(as cited

in Turkyilmaz et al., 2011d, p 8)

In another definition, Mathieu and Zajac (1990) found that " loyalty means as attachment to the organization that may be considered an emotional response, especially when an employee believes strongly in organization goals and values has a strong desire

to maintain membership of the organization"(as cited in Turkyilmaz et al., 2011e, p 8)

Thus, Loyalty is characterized of employee who believe and maintain with

organization

Organizational loyalty of employees could be defined as " the relative strength of

an individual's identification with and involvement in a particular organization" ( Wu and Norman, as cited in Turkyilmaz et al., 2011f, p 8)

Martensen and Gronhodt (2001) demonstrated that employee satisfaction is

positively related to employees' loyalty to their companies (as cited in Turkyilmaz et al., 2011g)

In other definition, Al Aemeri (2000) and Fang (2001) reported that a strong relationship between organizational loyalty of employees and employee job satisfaction (as cited in Turkyilmazet al., 2011h)

Turkyilmaz et al (2011i) showed that there are impact and strong relationship between employee satisfaction and employee loyalty (p, 9) Wu and Norman( 2006) showed that Low job satisfaction leads to low loyalty organization (as cited in

Turkyilmaz et al., 2011j)

According to the previous study I am confident to give assumption attachment

H9: Employee satisfaction has a positive impact on employee loyalty

H3: Training has a positive impact on employee satisfaction

H4: Training has a positive impact on employee loyalty

H5: Supportive management style has a positive impact on employee satisfaction

H6: Supportive management style has a positive impact on employee loyalty

H7: Honest communication has a positive impact on employee satisfaction

H8: Honest communication has a positive impact on employee loyalty

H9: Employee satisfaction has a positive impact on employee loyalty

In summary, this chapter presents literature review of each concept each factor,

including independent variables, mediating variable and dependent variable, and six

hypotheses for whole

The model of this study is represented as below:

Figure 2.1: Research Model

Employee Loyalty Employee Satisfaction

CHAPTER 3: RESEARCH METHODOLOGY

In chapter 2.it was presented the detail of basic theory for this study This chapter describes how the research is carried out in terms of research method and procedure, measurement scale, main survey, data processing and methods of data analysis

3.1 Research method and procedure

To evaluate research objectives, this study follows quantitative research

method.The quantitative approach was used to confirm the collecting data process Paper questionnaire was choice to survey This leads to research procedure below:

Figure 3.1: The research process

3.2 Measurement scales

3.2.1 Employee Loyalty

Employee loyalty measures the loyalty level of employee in organization Hence, the scale of measurement ought to have items to evaluate this meaning All item was applied for measurement employee loyalty that based on "a study of employee

satisfaction and its effects toward loyalty in hotel industry" of Chan et al (2012) The responses on all items are recorded by using a five-point Likert scale, ranging from

"Strongly disagree'' (equaled"1") to "Strongly Agree" (equaled"5")

Table 3.1: Scales items for employee loyalty

1 I am willing to continue my employment in this

Chan et al (2012)

2 I am willing to stay with this organization even if

3.2.2 Employee Satisfaction

Employee satisfaction was measured three items, All of them was cited in Yuval Dan Alexander (2003) The responses are recorded by using five point likert scale It separated following three styles

1 SF1 measured from "very satisfied " (equaled"1") to "very dissatisfied" (equaled "5'')

2 SF2 measured from "one of the best " (equaled"1") to "one of the worst" (equaled "5'')

3 SF3 measured from "Strongly disagree'' (equaled"1") to "Strongly Agree"(equaled

"5'')

Table 3.2: Scales items for employee satisfaction

5 Considering everything, how satisfied are you with

Dan Alexander.(2003)

7 Even if you were offered a comparable position with

similar pay and benefits at another company You

would not leave not this company

SF3

3.2.3 Relationship with immediate supervisor

Relationship with immediate supervisor was mentioned in chapter 2 It is used by four items and was cited in Boyad et al ( 2012) The items was coded by using a five point likert scale, ranging from "Strongly disagree'' (equaled"1") to "Strongly Agree" (equaled"5")

Table 3.3: Scales items for relationship with immediate supervisor

Boyad et al (2012)

9 My supervisor asks me for my input to help make

3.2.4 Training

This variable is measured by twelve items After, discussing with supervisor, the researcher decided to remove one question because it did not is inappropriate Thus, the questionnaire of training is used to measure by eleven items and was cited in Ameeq et al.(2013).The items was coded by using a five point likert scale, ranging from "Strongly disagree'' (equaled"1") to "Strongly Agree" (equaled"5")

Table 3.4: Scales items for training

12 Our organization conducts extensive training programs

Ameeq et al.(2013)

13 Employees in each job will normally go through training

15 There are formal training programs to teach new

16 I believe my promotion is a result of induction of the TRA5

training program?

17 I believe that my set targets and objective are attained

18 I believe that my pay scale has increased as a result of

19 I believe that more career paths will emerge and more

opportunities will come my way after participating in the

training programs?

TRA8

20 Training has helped me in improving my overall required

21 In our organization, training motivates employees to be

22 My career path is more in shape due to my participation

3.2.5 Supportive management style

Four items are used to measure supportive management style It based on the research of Boyad et al ( 2012) Items was ranged from "Strongly disagree'' (equaled"1")

to "Strongly Agree" (equaled"5") of five point likert scale

Table 3.5: Scales items for supportive management style

23 My supervisor is flexible about how is accomplish

Boyad et al (2012)

24 My supervisor is supportive of my ideas and ways

25 My supervisor gives me the authority to do my job

26 I can trust my supervisor to back you up on

3.2.6 Honest communication

Honest communication is also measured by four items It was cited in Boyad et al (2012) Items are used five point likert scale and are coded from "Strongly disagree'' (equaled"1") to "Strongly Agree" (equaled"5")

Table 3.6: Scales items for honest communication

27 I am kept well informed about my work group’s

Boyad et al (2012)

28 I am kept well informed by upper management on

30 There is good communication between people in

3.3 Main survey

This study was employed the quantitative approach Sample was collected by using convenience sample Convenience sampling is the sampling by obtaining people or units that are conveniently available (Zikmund et al.,as cited in Chan Yoo Sin et al, 2011) The survey was conducted by following process

Step 1: Question design

Data was collected from Vietnamese environment So, the questionnaire was

translated into Vietnamese language Questionnaire included two parts The first part includes the background information such as age, gender, employee’s position, year working experience The second part will be designed to see the items that related

observation variables

Step 2: Defining the sample size of the study

Roscoe (as cited in Chan Yoo Sin et al 2011) based on the law of thumb, the most rational of sample size was more than 30 but less than 500 respondents Because the data analysis process will do Amos software to predict So, sample size will choice about 350 respondent belong to five companies

Step 3: delivering the questionnaire to the interviewees

Because this study conducts to select sample by convenience sampling So the researcher delivered the questionnaire to direct interviewees by paper questionnaire Step 4: Collecting and checking the questionnaire

When researcher received questionnaire, questionnaire need to check rationality Firstly, the researcher revised the questionnaire that was answered fulfillment, Secondly, there were to check the same answer for every questionnaire and each of one

Step 5: Data analysis

Data was analyzed by the SPSS and Amos SPSS software The steps will be

discussed in the section below

company to fill in and collected to send back to researcher There were 350 paper

questionnaires to send However, the number of answer sheet collected by 341 After, clearing data process, the hard copy got appropriate condition by 307 answer sheets

3.5 Data analysis method

The Data analysis process includes following main four steps:

First step is descriptive statistic analysis that will help the researcher know how the characteristic of data through the mean, frequency and standard deviation

Second step is reliability analysis by Cronbach's Alpha figure.Reliability of the measures derived from tests and questionnaires refers to the consistency, stability, and repeatability of a data collection instrument (Crocker &Algina, 1986; Cronbach, 1990; Traub, 1994)

The Cronbach’s Alpha reliability coefficient ranged from 0 to 1 When Cronbach’s Alpha coefficient reached closer to 1.0 George and Mallery (2003) provided that the rules as Cronbach’s Alpha coefficient was greater than 0.9 meaning "excellent"; more than 0.8 meaning "good"; more than 0.7 meaning "acceptable"; more than 0.6 meaning

"questionable"; more than 0.5 meaning "poor"; and less than 0.5 meaning

"unacceptable" It should be noted that an alpha of 0.8 meant probably a reasonable goal

Next step is Confirmatory Factor Analysis (CFA) Sun, J (2005) said that

researchers often use confirmatory factor analysis (CFA) to evaluate and compare the hypothesized factor structure of scores obtained from various measurement instruments

Here are specific measures that can be calculated to determine goodness of fit The metrics that ought to be reported are listed below, along with their acceptable thresholds Goodness of fit is inversely related to sample size and the number of variables in the model Based on theory of Hair et al (2010), Hu and Bentler (1999) the table below show main measure of CFA

Table 3.7: Main measure of CFA

After, calculating the specific measure, there are few measures that need establish the validity and reliability of data through Composite Reliability (CR), Average Variance Extracted (AVE) Therein, CR is greater than 0.7 and AVE is also greater than 0.5

Lastly, researcher use Multiple Regression Analysis that consider the relationship

of variables (Cohen et al 2003) defined that Multiple regression is a flexible method of data analysis that may be appropriate whenever a quantitative variable (the dependent or criterion variable) is to be examined in relationship to any other factors (expressed as independent or predictor variables) Relationships may be nonlinear, independent

variables may be quantitative or qualitative, and one can examine the effects of a single variable or multiple variables with or without the effects of other variables taken into account A equation was used to calculate that is Y = A +B1X1+B2X2+B3X3 + +BnXn

3.6 Chapter summary

This chapter described the step by step of research process, the measurements scale, data collection methods Besides, sampling plan focused on employees working in engineering companies in HCMC, Binh Duong, Dong Nai and Vung Tau Province The convenience samples satisfied the requirements of the research Chapter 3 also presented the step of data analysis In the following chapter will write about the result of data analysis process

CHAPTER 4: DATA ANALYSIS

The Chapter aims to present and discuss about the analyses of data and shows the results by using statistic methods Firstly, descriptive analysis is to confirm sample

demographics Secondly, reliability analysis Cronbach’s Alpha, confirmatory factor analysis (CFA) and multiple regression analysis will conduct to discover the results

At education level, it illustrated that education level in every organization took high rate was university by 30.9 % and under university was 27 % Meanwhile the rate of high school occupied 16%, another rate was intermediate which was 16% Finally, a small rate destined 3.3 % above university Lastly, the table of experience revealed that range from

1 year to under 3 year and from 3 years to under 5 years as well as under 6 months has large proportion than other situation by20.2%, 22.1% and 24.4% This rate reduced 16.3% for form 5 year to under 7 years and only 8.1% of above 7 years So people had experience who stayed 1/5 of force

Table 4.1: Characteristic of Sample

Nunnally and Bernstein (as cited in Nguyễn ĐìnhThọ, 2013) claimed that

Corrected Item-Total Correlation is equal or above 0.3 and Cronbach’s alpha is above 0.6, the scale is acceptable According to the following result of table, initially, variables

had high cronbach's alpha except form Satisfaction Relationship with immediate

supervisor had cronbach's alpha by 0.827 Next, the cronbach's alpha of training was 0.931 Supportive management style, honest communication and loyalty were cronbach's alpha greater than 0.8 Secondly, Corrected Item-Total Correlation of items is greater than 0.3 Finally, all variable was acceptable