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Job satisfaction, productivity and organizational commitment

- Result of leadership in Vietnam –

Table of Content

Chapter 1. Introduction .............................................................................................. 5

1.1 Rationale for chosen topic ............................................................................... 5

1.2 Research Objective .......................................................................................... 6

1.3 Research Question ........................................................................................... 7

1.4 Research Significance ...................................................................................... 7

1.5 Research Structure ........................................................................................... 7

Chapter 2. Literature Review ..................................................................................... 9

2.1 Leadership ....................................................................................................... 9

2.1.1 Definition ................................................................................................. 9

2.1.2 Leadership and Management ................................................................. 10

2.1.3 Transformational leadership ................................................................... 12

2.2 Job Satisfaction and Organizational Loyalty ................................................. 19

2.2.1 Job Satisfaction ...................................................................................... 19

2.2.2 Organizational loyalty ............................................................................ 21

2.3 Leadership and Job Satisfaction, Organizational Loyalty ............................. 22

2.4 Summary ........................................................................................................ 25

Chapter 3. Methodology .......................................................................................... 26

3.1 Research design ............................................................................................. 26

3.2 Sampling method ........................................................................................... 28

3.3 Research model .............................................................................................. 29

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3.4 Summary ........................................................................................................ 35

Chapter 4. Results and Discussion ........................................................................... 37

4.1 Sample description ........................................................................................ 37

4.2 Transformational leaderships effects on employee satisfaction and loyalty . 38

4.2.1 Model 1 .................................................................................................. 39

4.2.2 Model 2 .................................................................................................. 42

4.2.3 Model 3 .................................................................................................. 44

4.2.4 Model 4 .................................................................................................. 46

4.2.5 Model 5 .................................................................................................. 48

4.2.6 Analysis on differences between employee satisfaction and loyalty ..... 50

4.3 Summary ........................................................................................................ 51

Chapter 5. Conclusion and Recommendation .......................................................... 54

5.1 Conclusion ..................................................................................................... 54

5.2 Recommendations ......................................................................................... 55

5.3 Research contributions .................................................................................. 55

5.4 Research limitations ...................................................................................... 56

5.5 Further research ............................................................................................. 57

Reference..................................................................................................................... 58

Appendix: Learning Statement ................................................................................... 67

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Chapter 1. Introduction

1.1 Rationale for chosen topic

Leadership plays an important role in business performance, success or failure of the

enterprise. In organizational behaviour, leadership is one of the factors affecting

employee loyalty. In literature review, there have been many researches on this topic, in

which the study of impact of transformational leadership on job satisfaction and

employee loyalty has been focused, (Podsakoff et al., 1996; Tschannen-Moran, 2003;

Judge and Piccolo, 2004; Liu et al., 2010; Top et al., 2012; Kim et al., 2012; Mohamad,

2012) and meta analysis when examining impacts of leadership attraction to the

organizational coherence and job satisfaction of the followers (Griffin, 2004; Boal and

Schultz, 2007; Michel, 2007). However, there have not been many studies on impacts of

transformational leadership on job satisfaction and employee loyalty in Vietnam.

Meanwhile the fact that employees resign and switch to another company is increasing.

Reports of labour force use in Ishizuka (2013), on the average, in every three new

recruits, two out of them work there before and move to another company, the average

labour fluctuation ratio 40-50%. Ratio of resignation and job transfer is very high, an

average of 18-20% (Arnold, 2013). Survey of 208 enterprises in 2005 with 35,000

participants reported that the resignation ratio of the production workers, office staff is

23% (Truong and Van Der Heijden, 2009). The study of Nguyen and Bryant (2004)

showed that the employee loyalty is relatively low, of which only 38% of staff will stay

with the company when they are offered a more interesting job. Moreover, study of

Aselstine and Alletson (2006) argues that the key principle to create engagement in the

21st century is the transformational leadership. And when employees are increasingly

engaged, job transfer, interest in other jobs, actively looking for new jobs, planning to

leave the current job or plan to retire earlier is getting low. And the recent survey by

Towers Watson in the first 6 months of 2011 with 167 enterprises shows that despite the

highest raise in current salary in Vietnam in the region, ratio of employee’s resignation

is high up to 17. 8%, which is 2 % higher than 2010 (Towers Watson, 2011). Therefore,

the study of “job satisfaction, productivity and organizational commitment: the result of

leadership in Vietnam” is conducted with the hope that research results will show the

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importance of transformational leadership on employee satisfaction and loyalty. From

which leaders can improve their leadership style to increase employee’s satisfaction and

loyalty.

1.2 Research Objective

The dissertation has the following objectives:

Measuring the impact of transformational leadership (in the comprehensive

leadership model by Bass) on the employee’s job satisfaction.

Measuring the impact of transformational leadership (in the comprehensive

leadership model by Bass) on the employee loyalty to the organization.

Measuring the impact of satisfaction on loyalty

Measuring the impact of gender in leadership on employee satisfaction and

loyalty.

Comparing the differences about employee satisfaction and loyalty between the

state-owned form and non-state owned form.

1.3 Research Question

For these objectives above, there are guidance questions as follows:

Within Vietnam’s conditions, how consistent is the scale of transformational

leadership (in leadership theory of Bass)?

How does transformational leadership (in the leadership theory of Bass)

influence the employee satisfaction and loyalty?

Is there any difference in gender of leaders affecting the employee satisfaction

and loyalty?

How does satisfaction affect loyalty?

Is there any difference in employee satisfaction and loyalty between the state-

owned form and non-state owned form?

1.4 Research Significance

The study helps adjust and test the scale of transformational leadership (in the

comprehensive model of leadership by Bass) in the context of Vietnam. In practice, the

study provides judgments, evaluation of employees about leadership, satisfaction and

loyalty. Thereby leaders can improve their leadership style enhancing employee

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satisfaction and loyalty to keep talented people and build the stable, loyal and productive

human resource.

1.5 Research Structure

The structure of the study is as follows:

Chapter 1: Introduction: This section presents an overview of research, objectives,

methods, objects and scope, practical meaning and structure of the research report. In

summary, rationale, objectives, how to conduct and benefits of the study are presented.

Chapter 2: Literature Review: Theory related to transformational leadership,

satisfaction and loyalty: in this part, theory related to leadership, satisfaction, loyalty,

and the relationship among them are presented and analyzed. Based on that, the model

and hypotheses for study are built.

Chapter 3: Research Methodology: In this section, ways and methods of conducting

research are presented, scale is adjusted and tested, model is built, new hypotheses and

how to build sample.

Chapter 4: Results and Discussion: Data is analyzed, presenting analyses to test

model and hypotheses.

Chapter 5: Conclusions and Recommendation: Findings in the study are discussed

and reviewed; a number of proposals are suggested to develop transformational

leadership to enhance employee satisfaction and loyalty.

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