Luận văn thạc sĩ UEH relationships between leadership styles and employee turnover intertion in the

RELATIONSHIPS BETWEEN LEADERSHIP STYLES AND EMPLOYEE TURNOVER

INTENTION IN THE VIETNAMESE HIGHTECH INDUSTRY

Huỳnh Anh Nhy

MBUS 2.4

2011

[email protected]

At

University of Economics Ho Chi Minh City– International School Business

Dr. Nguyen Thi Nguyet Que

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ACKNOWLEDGEMENT

Frist and foremost I offer my sincerest gratitude to my supervisor, Dr. Nguyen Thi Nguyet Que,

who has supported me through my thesis with her patience and knowledge. Without her support,

this study would not been completed.

I would like to express appreciations to my friends who support me in discussing initial

questionnaire and sending the final ones to survey target.

Last but not least, I would like to thank my parents, and family members for their profound

supporting, love and caring about me throughout my studies.

Huynh Anh Nhy

2013, November 15

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ABSTRACT

Vietnamese high tech industry is the important part of Vietnam GDP as well as export-shared in

the world. Unfortunately, this industry is facing with highest employee turnover rate in 2008 –

2012 period. Therefore identifying the root cause of employee turnover in this industry is

important. Much empirical studies about employee turnover intention was found out the

influences of leadership styles (transformational, transactional and laissez-faire leadership) on

employee turnover intention. This research was relied on questionnaire survey to discuss whether

there are any relationships between leadership styles and employee turnover intention as well as

strength of each relationship is. As result, there are only four relationships of one dimension of

transformational leadership – individualized consideration and three dimensions of transactional

leadership – contingent reward, management by exception (active), management by exception

(passive) with employee turnover intention, whilst idealized influence, inspirational motivation,

intellectual stimulation and laissez-faire do not significant relate to employee turnover intention.

Therefore, leaders in related industry should focus on negative relationships between

individualized consideration and contingent reward and positive relationships between

management by exception in active and passive to reduce harmful factor of their business.

Keywords: Leadership; Employee turnover intention; Transformation; Transactional; Laissez￾faire; Idealized Influence; Inspirational Motivation; Intellectual Stimulation; Individualized

Consideration; Contingent Reward; Management by Exception; Relationship.

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TABLE OF CONTENTS

ACKNOWLEDGEMENT ............................................................................................................... i

ABSTRACT .................................................................................................................................... ii

TABLE OF CONTENTS ............................................................................................................... iii

LIST OF TABLES ........................................................................................................................ vii

LIST OF FIGURES ....................................................................................................................... ix

CHAPTER 1: INTRODUCTION ................................................................................................... 1

1.1 Introduction ........................................................................................................................ 1

1.2 Background of study and problem statement ................................................................. 1

1.3 Research objective and question ...................................................................................... 5

1.4 Scope and Significant of this study ................................................................................... 6

1.5 Structure of this study ....................................................................................................... 7

CHAPTER 2: LITERATURE REVIEW ........................................................................................ 8

2.1 Introduction ........................................................................................................................ 8

2.2 Leadership overall ............................................................................................................. 8

2.3 Transformational leadership .......................................................................................... 10

2.3.1 Idealized influence (I.I): ....................................................................................... 11

2.3.2 Inspirational motivation (I.M) ............................................................................. 12

2.3.3 Intellectual stimulation (I.S) ................................................................................ 12

2.3.4 Individualized consideration (I.C) ....................................................................... 13

2.4 Transactional leadership ................................................................................................. 13

2.4.1 Contingent rewards (C.R) .................................................................................... 14

2.4.2 Management by exception (M.E)......................................................................... 15

2.5 Laissez-faire leadership ................................................................................................... 15

2.6 Employee turnover intention (T.I): ................................................................................ 16

2.7 Relationship between leadership styles and turnover intention .................................. 17

2.7.1 Transformational leadership and employee turnover intention ...................... 17

2.7.1.1 Idealized influence and employee turnover intention .................................... 18

2.7.1.2 Inspirational motivation and employee turnover intention .......................... 18

2.7.1.3 Intellectual stimulation and employee turnover intention ............................ 19

2.7.1.4 Individualized consideration and employee turnover intention ................... 19

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2.7.2 Transactional leadership and employee turnover intention ............................. 20

2.7.2.1 Contingent rewards and employee turnover intention .................................. 21

2.7.2.2 Management by exception and employee turnover intention ....................... 22

2.7.3 Laissez-faire leadership and employee turnover intention ............................... 22

2.8 Research model ................................................................................................................ 23

2.9 Conclusion ........................................................................................................................ 23

CHAPTER 3: RESEARCH METHODOLOGY .......................................................................... 25

3.1 Introduction ...................................................................................................................... 25

3.2 Research Design ............................................................................................................... 25

3.3 Research sample size and description ............................................................................ 26

3.3.1 Research sampling ................................................................................................ 26

3.3.2 Sample description ................................................................................................ 27

3.4 Initial Questionnaire ........................................................................................................ 28

3.5 Pilot test............................................................................................................................. 31

3.6 Final questionnaire .......................................................................................................... 31

3.7 Data analysis techniques ................................................................................................. 32

3.7.1 Data coding and entering to SPSS software ....................................................... 32

3.7.2 Test reliability of measurement scales with Cronbanch’s alpha analysis ....... 32

3.7.3 Test relationship among factors with Exploratory Factor Analysis ................ 33

3.7.4 Regression analysis to see the impact of independent variables to dependent

variables. ............................................................................................................................... 34

3.8 Summary ........................................................................................................................... 35

CHAPTER 4: DATA ANALYSIS ............................................................................................... 36

4.1 Introduction ...................................................................................................................... 36

4.2 Descriptive Analysis ......................................................................................................... 36

4.3 Reliability (Cronbach’s alpha)........................................................................................ 37

4.3.1 Reliability of transformational leadership style subscales ................................ 38

4.3.1.1 Reliability of Idealized Influence ..................................................................... 38

4.3.1.2 Reliability of Inspirational Motivation ............................................................ 39

4.3.1.3 Reliability of Intellectual Stimulation ............................................................. 39

4.3.1.4 Reliability of Individualized Consideration .................................................... 40

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4.3.2 Reliability of Transactional Leadership style sub-variance .............................. 40

4.3.2.1 Reliability of Contingent Reward .................................................................... 40

4.3.2.2 Reliability of Managing Exception – Active ................................................... 41

4.3.2.3 Reliability of Managing Exception – Passive .................................................. 41

4.3.3 Reliability of Laissez-Faire Leadership .............................................................. 42

4.3.4 Reliability of Employee Turnover Intention ...................................................... 42

4.4 Exploratory Factor Analysis (EFA) ............................................................................... 43

4.4.1 EFA for independence factors: Leadership Styles ............................................. 43

4.4.2 EFA for dependence factor: Employee Turnover Intention ............................. 46

4.5 The Correlation Analysis (Hypothesis testing).............................................................. 47

4.5.1 Assumptions Testing ............................................................................................. 48

4.5.2 Hypothesis testing ................................................................................................. 50

4.5.2.1 Hypothesis 1 testing ........................................................................................... 51

4.5.2.2 Hypothesis 2 testing ........................................................................................... 51

4.5.2.3 Hypothesis 3 testing ........................................................................................... 52

4.6 Conclusion ........................................................................................................................ 53

CHAPTER 5: DISCUSSION, RECOMMENDATION AND CONCLUSION ........................... 54

5.1 Introduction ...................................................................................................................... 54

5.2 Research finding discussion ............................................................................................ 54

5.3 Implication for practice and recommendations for further research ......................... 57

5.3.1 Implication for practice ............................................................................................... 57

5.3.1.1 Reducing employee turnover intention through negative relationship with

Individual Consideration and Contingent Reward .......................................................... 58

5.3.1.2 Reducing employee turnover intention through reducing the positive related

with Management by Exception ......................................................................................... 59

5.3.2 Recommendations for further research ..................................................................... 59

5.4 Research limition ............................................................................................................. 60

5.5 Conclusion ........................................................................................................................ 60

REFFERENCE ............................................................................................................................. 61

APPENDIX A - SURVEY QUESTIONNAIRE ....................................................................... 67

APPENDIX B – DESCRIPTIONS OF SAMPLE ........................................................................ 71

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APPENDIX C – RESEARCH RESULTS .................................................................................... 72

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LIST OF TABLES

Table 1 – Vietnam Merchandise Export ......................................................................................... 2

Table 2 – Leadership theories ......................................................................................................... 9

Table 3 – Demographic Information ............................................................................................. 28

Table 4 – Initial questionnaire and its coding in data analysis of transformational leadership .... 29

Table 5 – Initial questionnaire and its coding in data analysis of transactional leadership .......... 30

Table 6 – Initial questionnaire and its coding in data analysis of laissez-faire leadership and

employee turnover intention ......................................................................................................... 30

Table 7 – Sample sizes, mean scores, standard deviations of leadership style and employee

turnover intention .......................................................................................................................... 36

Table 8 – Cronbach’s alpha of Idealized Influence ...................................................................... 38

Table 9 – Reliability of Inspirational Motivation ......................................................................... 39

Table 10 – Reliability of Intellectual Stimulation ......................................................................... 40

Table 11 – Reliability of Individualized Consideration ................................................................ 40

Table 12 – Reliability of Contingent Reward ............................................................................... 41

Table 13 – Reliability of ME Active ............................................................................................. 41

Table 14 – Reliability of ME Passive ........................................................................................... 42

Table 15 – Reliability of Laissez-Fair .......................................................................................... 42

Table 16 – Reliability of Employee Turnover Intention ............................................................... 43

Table 17 – KMO and Bartlett’s Test ............................................................................................. 43

Table 18 – EFA of 31 measurement items .................................................................................... 45

Table 19 – EFA of 30 items .......................................................................................................... 46

Table 20 – Principal Axis Factoring of Employee Turnover Intention ........................................ 47

Table 21 – Factor Matrix of Turnover Intention ........................................................................... 47

Table 22 – Model Summary ......................................................................................................... 49

Table 23 – ANOVA Result ........................................................................................................... 49

Table 24 – Coefficients Result ...................................................................................................... 50

Table 25 – Hypotheses results ...................................................................................................... 52

Table 25 – Descriptive of transformational leadership ................................................................. 72

Table 26 – Descriptive of transactional leadership ....................................................................... 73

Table 27 – Descriptive of laissez-faire ......................................................................................... 73

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