The impact of employee perception of internal csr practices on organizational commitment within the banking sector in vietnam

Nội dung text: The impact of employee perception of internal csr practices on organizational commitment within the banking sector in vietnam

1. THE IMPACT OF EMPLOYEE PERCEPTION OF INTERNAL CSR PRACTICES ON ORGANIZATIONAL COMMITMENT WITHIN THE BANKING SECTOR IN VIETNAM Truong Le Hoang Lac Hong University Email: hoangtl@lhu.edu.vn Abstract This study investigates the relationship between perceived internal CSR practices and Organizational Commitment (OC) among employees in the banking sector of Vietnam. Data were collected through a self-administered survey method from 300 employees of major bankings of Vietnam. The findings of the study reveal that perceived internal CSR practices have a significant and strong positive relationship with an organizational commitment among employees. Practices in corporate social responsibility explained 64.8% of the total variation on employee commitment. It is acknowledged that having a particular concern for the welfare of employees will boost the employee's commitment and by extension, their performance and ultimately the growth of the organization. Keywords: affective organizational commitment; banking sector; internal corporate social responsibility. 1. Introduction Firms have come under increasing pressure to pursue socially responsive behavior from a variety of stakeholder groups including shareholders, employees, investors, consumers, and managers (Kapstein, 2001). These strengthened relationships ensure corporations minimum conflicts with stakeholders and maximum loyalty from all stakeholders. As the importance of CSR for enterprises, significant strands of research have investigated whether there are financial payoffs to increased social responsiveness, the influence of perceptions concerning corporate social responsiveness on customers, the attractiveness of social performance to investors, the importance of employees in corporate social responsiveness. Recent studies establish a positive link between employees' perceptions of their companies' corporate social responsibility and their effective organizational commitment (Turker, 2009; Rego, Ribeiro, & Cunha, 2010; Stites & Michael, 2011). The paper makes contributions to the literature basic of investigation the relationship between internal CSR practices in ISO 26000 on Social Responsibility in the maintenance of employees' and affective organizational commitment. Social 102
2. responsibility aims to provide practical guidance related to fulfilling social responsibility, identifying and engaging with stakeholders, and enhancing the credibility of reports and statements on social responsibility for the benefit of all organizations. In the context of internal CSR, ISO 26000 provides a useful guideline for companies to respect and recognize human rights, employment, and employment relationships, conditions of work and social protection, social dialogue, health and safety at work as well as human development. The banking sector is playing a key role in improving the societies through the price and value financial assets, monitoring borrowers, managing financial risks and organizing the payment system in Vietnam. Bankers include social and environmental added value to their business operations and actions by implementing various financial initiatives such as microcredit and microfinance schemes, ethical, social and environmental funds, low-income banking, and removal of barriers to credit access (Prior & Argandoủa, 2009). In this way, banks and financial organizations adopt CSR practices that are claimed to be beneficial for society and sustainable economic development. The banking sector seems to be the most sensitive to the impact of CSR in Vietnam because an outstanding feature of the banking industry is that it is subject to more diverse and complex stakeholders than the most other sectors of the economy. This study investigates the relationship between perceived internal CSR practices and Organizational Commitment (OC) among employees in the banking sector of Vietnam. 2. Review of literature The concept of CSR has evolved from social issues to social responsiveness and has been developed over the decades to social responsibility. McWilliams and Siegel (2001) define CSR as actions that appear to further some social good, beyond the interests of the firm and that which is required by law. Rupp, Ganapathi, Aguilera, and Williams (2006) defined as activities, decisions, or policies, that organizations engage in to effect positive social change and environmental sustainability. into the companies' become a bottom line for most of them. Also, international institutions have developed indicators this direction (Global Reporting Initiative - GRI, UN Global Compact, ISO 26000). CSR has internal and external practices. Internal CSR involves social responsibility practices for employees especially in the area of their safety, health, and well-being, training, and participation in the business, equality of opportunities and work-family relationship (Vives, 2006). In terms of labor practices, ISO 26000 prioritizes the creation of jobs, as well as wages and other compensation paid for work performed as an organization’s most important economic and social impacts. In 103
3. the context of internal CSR, ISO 26000 provides a useful guideline for companies to respect and recognize human rights, employment, and employment relationships, conditions of work and social protection, social dialogue, health and safety at work as well as human development. Organizational commitment has three major components: (i) a strong belief in the organization and acceptance of the organizations' goals, (ii) a willingness to exert considerable effort on behalf of the organization, and (iii) a definite desire to maintain organizational membership (Mowday, Steers & Porter, 1979). Allen and Meyer (1990) distinguish between three forms of organisational commitment: affective commitment which denotes “an emotional attachment to, identification with, and involvement in the organisation”, continuance commitment which reflects “the perceived costs associated with leaving the organisation” and normative commitment “which reflects a perceived obligation to remain in the organisation”. Studies show that each of these forms of commitment is associated with labour turnover and intentions to leave the organisation but suggest that a stronger relationship exists between affective commitment and a range of desirable employee outcomes which include: attendance, job performance, stress, health and work-nonwork conflict (Meyer, Stanley, Herscovitch, & Topolnytsky, 2002). Since CSR forms an integral part of an employee's work experience employee perceptions of a firm's ethics, values, and social responsiveness are likely to play a significant role in shaping effective commitment. Maignan, Ferrell, & Hult (1999) indicated that market-oriented and humanistic cultures lead to proactive corporate citizenship, which will result in improved levels of employee commitment. Peterson (2004) showed a direct link between employee perceptions of corporate citizenship and OC. He also found that belief in the importance of the social responsibility of businesses by the employees resulted in a stronger relationship between corporate citizenship and OC. Rupp, Ganapathi, Aguilera, and Williams (2006) argued that the social performance of an employer can encourage employees away from counterproductive behaviors, such as rule-breaking, daydreaming on the job, damaging property, theft, and padding expense accounts. Ubius and Alas (2012) indicated that the top managers value the welfare of the local community and nation, ethics and the economic effectiveness of their company can positively influence their employees' motivation and OC. Rego, Ribeiro, and Cunha (2010) investigated that perceptions of discretionary corporate citizenship toward employees were significantly better predictors of an effective commitment than our perceptions of economic, ethical, and discretionary corporate citizenship toward the community. Turker (2009) showed the significant relationship between CSR to social and non-social stakeholders, employees, and customers were significant predictors of 104
4. OC. Rettab, Brik, and Mellahi (2009) conducted a research to examine the link between CSR activities and three measures of organizational performance: financial performance, employee commitment, and corporate reputation. The results show that CSR has a positive relationship with employee commitment. When employees feel that the organization is committed to them, they tend to develop a sense of duty toward the organization and are willing to reciprocate with more cooperative and supportive actions, and with the greater level of commitment. Based on the research cited above, this study hypothesizes that: H1: Employment and employment relationships will be positively related to affective commitment. H2: Conditions of work and social protection will be positively related to affective commitment. H3: Social dialogue will be positively related to affective commitment. H4: Health and safety at work will be positively related to affective commitment. H5: Human development and training in the workplace will be positively related to affective commitment. 3. Methodology There are 32 items to measure the variables of the research model (see Table 2). All items are measured by 5-point Likert scales, which were 5 – strongly agree, 4 – agree, 3 – not sure, 2 – disagree and 1 – strongly disagree base on ISO 26000 guidance on internal CSR for an employee. According to Hair, Black, Babin, and Anderson (2010), the sample size used in the exploratory factor analysis was determined by the minimum (min = 50) and the number of variables included in the model. The proportion of samples compared to an analytical variable was 5/1 or 10/1, which included 32 observations and therefore the sample size is at least 32*5 = 160 observations. Green (1991) suggesting that in the regression model the minimum sample size was determined by the empirical formula 50 + 8*independent variables in the model. This study has 08 independent variables so the sample size is at least 50 + 8*5 = 90 observations. The sample for the study included 300 employees, selected based on convenient sampling in major banks in Ho Chi Minh City, Vietnam. The survey was administered to all employees of the organization and was carried out in 2018. The survey was conducted by the self-administered method, and employees were 105
5. encouraged to complete the survey during work time. Table 1 presents descriptive statistics of demographic characteristics. Table 1. Descriptive of demographic characteristics Demographic characteristics Percentage Gender Male 45 Female 55 Age Less than 25 years 25 26 - 30 year 30 More than 30 years 45 Level of education Not complete bachelor 5 Bachelor and others 95 Management level Nonmanagement 75 Lower level managers 25 Job tenure 0-5 years 40 6-10 years 45 More than 10 years 15 4. Results and discussion Reliability and Validity The reliability and validity of indicators in the model are tested by the system of criteria. As can be seen from Table 2, the lowest Cronbach’s alpha value is 0.807, exceeding the cut value of 0.70 recommended (Hair, Black, Babin & Anderson, 2010). Convergent validity was estimated by factor loading. The value of Kaiser- Mayer-Olkin (KMO) was 0.868 (between 0.5 and 1.0) which means that data is significant for conducting a factor analysis. All loadings of variables are higher than the 0.50 (see Table 2). According to Hair, Black, Babin, and Anderson (2010), loadings ± 0.50 or greater are considered practically significant. 106
6. Table 2. Results of factor analysis and reliability tests Factor Items Question loading Conditions of work and social protection (Cronbach's Alpha = 0.831) CS1 I am completely satisfied with income policies. .751 CS2I am completely satisfied with reward policy. .722 CS3 Enterprises ensure social insurance and health insurance premiums .709 and various forms of support for illness and maternity CS4 Enterprises have organized sightseeing and vacation activities .650 periodically for employees .641 CS5 Managers have behaved properly to employees Employment and employment relationships (Cronbach's Alpha = 0.807) ER1Enterprises always comply with Labor Law and regulations .755 state for employees ER2Enterprises ensure equal opportunity for promoting equality for employees .748 ER3You found a distinction between men and women and discrimination .707 area/domain in the enterprise ER4 Enterprises implement the regime of confidentiality of personal .666 information for employees ER5 The union works effectively and has a clear role in the enterprise. .665 Social dialogue (Cronbach's Alpha = 0.887) SD1Enterprise listen and receive suggestions and suggestions of employee .826 SD2Enterprise are always willing to accept responsibility before the .794 community when problems occur SD3Enterprise receive and handle complaints promptly workers' complaints .752 SD4Rules, policies, and methods of employee evaluation of the enterprise are .731 clearly public SD5 Enterprise regularly participate in charity activities, support the community .715 Health and safety at work (Cronbach's Alpha = 0.851) HE1At work, I have the equipment and tools needed to work smoothly. .837 HE2The workplace in the organization is comfortable and friendly. .749 HE3I work in a comfortable, clean and airy workplace. .738 HE4 Employees in the enterprise get a health check periodically and have a .726 medical room in the enterprise 107
7. HE5 At work, the organization provides an environment I can focus on working. .713 Human development and training (Cronbach's Alpha = 0.864) HT1 I am completely satisfied with the training and development policies of .787 the organization. HT2 I am supported on training time to improve my skills. .758 HT3 I have always created opportunities for advancement, personal .729 development by the organization. HT4 The direct manager plays an important role in digging to create and .683 develop employees HT5 I am well aware of the policies to be trained and developed. .626 Organizational Commitment (Cronbach's Alpha = 0.882) OC1 I intend to make a long-term commitment to the organization. .781 OC2 I feel proud to be working in the organization. .764 OC3 I will stick with the same organization, although there are other places .732 where the offer is relatively attractive. OC4 I will encourage acquaintances to work in this organization. .717 OC5 I am pleased to have chosen this organization to work. .702 OC6 I am willing to sacrifice personal rights when needed to help the .670 organization/work group. OC7 I am willing to do my best to improve my skills so that I can contribute .660 more to the organization. Hypothesis Testing The correlation coefficients between the independent variables are generally low and the variance inflation factors do not exceed four suggesting that multicollinearity is unlikely to prove a significant problem (Hair, Black, Babin & Anderson, 2010). All of the hypothesized correlations are significantly different from zero and have the anticipated sign. The relationship between affective commitment and corporate social responsibility is estimated using OLS and the results are shown in Table 3. The results of the regression analysis reveal that CSR practices have a significant positive relationship with OC. The t statistics and p values present that Employment and employment relationships, Conditions of work, Social dialogue, Health and safety at work, and Human development and training in the workplace have a significant relationship with OC. As anticipated a positive and significant relationship was found 108
8. between employee perceptions of internal CSR practices and affective commitment. The results reveal that 68.4% change in organizational commitment is due to these explanatory variables. The results reveal that employees give weight to CSR practices and employees become more committed if the firm is implementing CSR practices. The positive association between CSR practices and organizational commitment is also well supported by many studies cited in the literature review of this study. Table 3. Results of regression analysis between CSR practices and OC Variables Beta t Sig VIF Constant -.332 -2.021 .044 Conditions of work and social protection .234 5.655 .000 1.786 Employment and employment relationships .217 5.306 .000 1.384 Human development and training .164 3.969 .000 1.797 Social dialogue .223 6.392 .000 1.636 Health and safety at work .244 6.496 .000 1.332 R2 0.689 Adjusted R2 0.684 As Table 3, perceived Conditions of work and social protection has a significant effect on Organization Commitment with a path coefficient of 0.234. perceived Employment and employment relationships have a significant effect on Organizational commitment with a path coefficient of 0.217. Perceived Human development and training has a significant effect on Organizational Commitment with a path coefficient of 0.164. Perceived Social dialogue has a significant effect on Organizational Commitment with a path coefficient of 0.223. The Perceived Health and safety at work has a significant effect on Organizational Commitment with a path coefficient of 0.244. The results for the control variables reveal that there is no relationship between gender, age, level of education, management level, and job tenure and internal CSR practices perception among employees. Employees consider firms' level of corporate social responsibility while searching for new jobs. Moreover, employees also consider the firm's CSR practices for their behavior include satisfaction, trust, commitment, engagement. It is acknowledged that having a particular concern for the welfare of employees will boost the employee's commitment and by extension, their performance and ultimately the growth of the organization. 109
9. 5. Conclusions This study is conducted to investigate the influence of internal corporate social responsibility practices perceptions of employees on their organizational commitment. It is an important study in the context that it provides management insight about employee’s behavior regarding CSR of the banking sector in Vietnam. Data were collected through a self-administered survey method from 300 employees of major bankings of Vietnam. The findings of the study reveal that perceived internal CSR practices include Employment and employment relationships, Conditions of work, Social dialogue, Health and safety at work, and Human development and training in the workplace have a significant and strong positive relationship with an organizational commitment among employees. Practices in corporate social responsibility explained 64.8% of the total variation on employee commitment. Though the author proposes to test the model in the banking sector the author recommends that it is applicable to other similar contexts in Vietnam. References 1. Allen, N. J., & Meyer, J. P. (1990). The measurement and antecedents of affective, continuance and normative commitment to the organization. Journal of occupational psychology, 63(1), 1-18. 1. Hair Jr., J.F., Black, W.C., Babin, B.J. and Anderson, R.E. (2010). Multivariate Data Analysis: A Global Perspective (7th Eds). Upper Saddle River: Pearson Education. 2. Kapstein, E. B. (2001). The corporate ethics crusade. Foreign affairs, 105-119. 3. Maignan, I., Ferrell, O. C., & Hult, G. T. M. (1999). Corporate citizenship: Cultural antecedents and business benefits. Journal of the Academy of Marketing Science, 27(4), 455-469. 4. McWilliams, A., & Siegel, D. (2001). Corporate social responsibility: A theory of the firm perspective. Academy of management review, 26(1), 117-127. 5. Meyer J P, Stanley D J, Herscovitch L., & Topolnytsky L. (2002). Affective, Continuance and Normative Commitment to the Organization: A Meta-analysis of Antecedents, Correlates, and Consequences. Journal of Vocational Behavior, 61, 20-52. 6. Mowday, R. T., Steers, R. M., & Porter, L. W. (1979). The Measurement of Organizational Commitment. Journal of Vocational Behavior, 14, 224-227. 7. Peterson, D. K. (2004). The relationship between perceptions of corporate citizenship and organizational commitment. Business & Society, 43(3), 296–319 110
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