The Journal of Asian Finance, Economics and Business

Korea Distribution Science Association (한국유통과학회)
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Job Commitment in FDI Manufacturing Enterprises During the COVID-19 Pandemic: Empirical Evidence from Vietnam

  • LE, Quang Hieu (Faculty of Economics and Business Administration, Hong Duc University) ;
  • LE, Thi Thanh Thuy (Faculty of Economics and Business Administration, Hong Duc University)
  • Received : 2021.12.15
  • Accepted : 2022.03.07
  • Published : 2022.04.30
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Abstract

The purpose of the study is to determine the impact of several factors on employees' job commitment in ten FDI manufacturing businesses in Vietnam's Nghi Son Economic Zone during the COVID-19 Pandemic. The researchers used reliability tests, exploratory factor analysis, confirmatory factor analysis, and structural equation modeling to confirm the relationships between factors when analyzing the effect of variables on job commitment in FDI enterprises. Based on a poll of 481 respondents, the test findings showed that 07 parameters have positive effects on job satisfaction. Professional assurance, compensation, fringe benefits, supervisor, promotion, coworkers, and working conditions all have varying levels of impact. Job satisfaction, in particular, has a significant and positive impact on employees' commitment to their jobs. According to research findings, the COVID-19 pandemic has been and continues to be a unique burden for Vietnamese firms in general and FDI manufacturing enterprises in Nghi Son EZ in particular. As a result, businesses must have appropriate HRM strategies to incentivize employees to recover, stabilize, and develop in the new normal, ensuring employee loyalty to the company.

Keywords

1. Introduction

The world and Vietnam are experiencing unprecedented negative impacts of the COVID-19 pandemic that started in 2019. Until December 31st, 2021, Vietnam has 1, 714, 742 infections, ranking 31 out of 224 countries and territories. The COVID-19 pandemic has caused a lot of turmoil in the Vietnamese labor market, with the millions of job workers negatively affected because of close down, lockdown, alternate work, reduced working hours, reduced income, etc., arising from difficulties in production and business activities of enterprises. Up to now, although Vietnam is controlling the pandemic well, most production and business activities of enterprises, especially Foreign Direct Investment (FDI) manufacturing enterprises in Economic Zones (EZ) that employ thousands of workers, are still struggling with many disadvantages in terms of human resources due to limitations in financial activities and welfare policies, which were seriously affected by the pandemic period. Therefore, the task of retaining and attracting employees to motivate them to work and devote themselves to the recovering of the enterprises becomes even more difficult.

Nghi Son EZ was established in mid-2006 in Thanh Hoa province, the Northern critical economic part of Vietnam, with a focus on heavy and basic industries such as refining, processing, mechanical engineering, ship repairing, building, etc. Up to now, Nghi Son EZ is the key to attracting 52 FDI investors, especially in the manufacturing sector in Thanh Hoa province, to exploit the deep-water seaport area and solve labor, employment, and development problems the local economy. The COVID-19 pandemic is having a very negative impact on the FDI sector here, disrupting the production supply chain and qualified human resources after the temporary shutdown and closure. The unstable supply of human resources leads to the disturbance in production activities of recovering periods. How to create satisfaction and commitment, which would become the willingness to stay and support the existence and development of the organization in the period of the pandemic as a member of it, is a key issue that FDI manufacturing enterprises need to consider to have appropriate human resource management strategies in this period. An increased level of fear of COVID-19 was associated with decreased job satisfaction, increased psychological distress, and increased organizational and professional turnover intentions (Rn et al., 2020; Labrague et al., 2021). In this pandemic of COVID-19, organizations ought to know that engaged employees are the key to success. In this tough time, organizations must keep their personnel satisfied and motivated during pandemic circumstances (Chanana & Sangeeta, 2020).

Therefore, with the target of assessing the influences of motivational factors on job commitment in FDI manufacturing enterprises at Nghi Son EZ of Vietnam in the context of the COVID-19 pandemic, this article aims at identifying the main motivators of employees’ satisfaction and commitment. Theoretically, research on satisfaction and commitment in the world is abundant, but in the field of FDI firms in EZ in the period of a pandemic is still very little. With a preliminary view on some characteristics and limitations of work commitment in the area, as well as the lack of related studies, this research is necessary, on a practical basis, in the current context of Vietnam.

2. Literature Review and Hypotheses

2.1. Job Satisfaction

The job satisfaction concept has been defined by different researchers worldwide from different perspectives. It is an essential factor of productivity (Lin et al., 2011; Boeve, 2007). Job satisfaction is a positive, happy emotional state through the evaluation of one’s work experience. Job satisfaction can be affected by a lot of factors, such as the relationship between employees and their supervisors, the work environment, and the level of performance of the instructor. Job satisfaction means contentment at work. It is the personal appreciation of the job conditions with the following features: the job itself, the organizational policy and administration, wages, occupational security, etc. (Khalid, 2010).

However, during the COVID-19 pandemic period, the situation of job satisfaction is not as normal. Most countries introduced some form of restriction on their citizens, such as lockdown, social distancing, and the requirement to wear a mask at all times. In this difficult situation, most organizations must transform the way they work. For manufacturing enterprises in EZs, employees sometimes have to work and live on-site, which is a challenge because they face many living and psychological problems caused by the imbalance in life and work (Chanana, 2021). At that time, job satisfaction also poses new challenges with fully equipped working and living conditions on-site or conditions to ensure safety for production. Besides, there are mental motivators for employees to feel less stressed and sure about their job safety, health, and salary. The highly stressful work environment resulted in job dissatisfaction with a tendency to leave the job in the future during the pandemic of COVID-19 (Said & El-Sshafei, 2021). It is the primary responsibility of organizations to take care of their employees’ well-being and properly engage them so that they always feel committed and satisfied.

2.2. Job Commitment

Job commitment is an issue that has received significant attention from researchers. Job commitment is the interconnected power of personal orientation and dedication to the work of an organization. It is defined as a personal attitude that reflects the degree of assimilation and willingness to sacrifice for the organization (Chun et al., 2016). The commitment of employees to the organization has guided the success of organizations. It is also the employees who are loyal to, proud of, and love the organization to help the organization achieve its big busi ness goals by satisfying customers, maintaining productivity and efficiency to achieve financial goals (Do & Le, 2015; Do et al., 2020). There are three components of a commitment to the organization: (1) a great want to be a member of the organization, (2) a desire to achieve the organization’s goals; (3) a willingness to do the best for the organization (Meyer & Allen, 1991). Commitment has a positive influence on job performance, and psychological capital is also related to organizational commitment (Nguyen & Ngo, 2020). Employees whose works are enriched by the organization will show an increased level of organizational commitment. Job enrichment makes employees feel that they have new competencies and skills in completing their work, and it allows them to feel the responsibility and obligation in completing their work.

Motivation is an important predictor of job commitment. Motivational factors lead to positive mental health and challenge people to grow, contribute to the work environment and invest themselves in the organization. Work motivation is also a part of work spirit so that it improves the organizational commitment level of individuals (Tran & Do, 2020; Marta et al., 2021). Work motivation and job satisfaction partially mediate the influence of job enrichment on organizational commitment (Marta et al., 2021). Commitment with the organization is a crucial factor to gain a competitive advantage and guide the success of organizations by satisfying customers, maintaining productivity and efficiency (Do et al., 2020).

Job satisfaction is also able to affect the organizational commitment of employees (Valaei & Rezaei, 2016). Employees who are not satisfied will no longer be committed to the organization and eventually choose to leave or be expelled by the organization (Saha & Kumar, 2018). Scientific literature rightly admits three dimensions of organizational commitment are the most strongly correlated with job satisfaction (Meyer et al., 2002).

Organizational response to COVID-19 pandamic affects perceived job security and enhances organizational commitment (Filimonau et al., 2020). Job stress is also observed to have a direct negative impact on commitment (Zandi et al., 2020). At the time of the coronavirus outbreak, the healthcare workers in Babol had very positive and high organizational and social commitments (Aghalari et al., 2021). The level of piety, resilience and a great sense of responsibility determine the commitment of an employee to the organization where he works (Athar, 2020).

2.3. Hypotheses

(i) Supervisor: is a person responsible for operating, managing, assigning work, organizing training, supervising, and developing the staff. According to Talukder (2019), direct supervisors are seen as the path leading to employee satisfaction in the organization. The attitude of supervisors, along with their understanding of employees will have a positive impact on organizational commitment, especially during difficult epidemic times.

H1: Supervisor positively affects the employee’s satisfaction with the enterprises.

(ii) Salary: is considered a retention factor affecting job satisfaction (Fletcher & Williams, 2006). It is a fundamental factor in ensuring the daily lives of workers and their families in the field of human resource management (Freund, 2005), especially in the context of the COVID-19 pandemic in the economy of developing countries such as Vietnam. The higher the wage policy is, the higher the satisfaction of the employees is.

H2: Salary positively affects the employee’s satisfaction with the enterprises.

(iii) Working condition: includes the physical and psychological environment. According to Armstrong and Taylor (2017), when the organization has a good working condition, the employee’s satisfaction is higher. Hanaysha (2016) showed the same view about the relationship between working conditions and employees’ satisfaction and commitment to the organization.

H3: Working condition positively affects the employee’s satisfaction with the enterprises.

(iv) Promotion: this is considered a career development opportunity. Promotion at work means that superiors recognize the employee’s work capacity and striving. When the organization provides promotion opportunities makes employees feel that the organization has highly valued them and this increases their satisfaction with the organization (Kumaran & Sivasubramanian, 2013; Suma & Lesha, 2013).

H4: Promotion positively affects the employee’s satisfaction with the enterprises.

(v) Fringe benefits: is considered one of the most important elements of labor compensation (Artz, 2010). A welfare policy is linked to the commitment of employees because benefits influence job satisfaction, including social welfare components, sick and maternity leave, payment procedures, and holidays.

H5: Fringe benefits positively affects the employee’s satisfaction with the enterprises.

(vi) Colleagues: colleague relation aids retention and improves the work climate. Saiti (2007), in his study, argues that collaboration among co-workers will establish a relationship in harmonious work among them, which is an important element in achieving effectiveness through sharing, mutual understanding, and sympathy among individuals, creating better conditions to complete their work and increase their satisfaction.

H6: Colleagues positively affects the employee’s satisfaction with the enterprises.

(vii) Profession assurance: Employees enjoy their job during the COVID-19 pandemic when their job security is guaranteed, all facilities are fulfilled, a happy atmosphere is provided, and a suitable workload is given (Hidayat et al., 2021). In the pandemic of COVID-19, organizations should know that professional assurances are the key to success in this tough time. Companies must keep their personnel satisfied and motivated during pandemic circumstances (Chanana & Sangeeta, 2020).

H7: Profession assurance positively affects the employee’s satisfaction with the enterprises.

(viii) Job satisfaction: According to Rifai (2005), job satisfaction has a significant impact on the development of emotional commitment. It has a specific effect on the behavior of organizational citizenship. Thus, job satisfaction is a potent mediator in the relationship between employability and emotional organizational commitment (Yousaf & Sanders, 2012).

H8: Job satisfaction positively affects the employee’s commitment to the enterprises.

The research framework is displayed in Figure 1.

OTGHEU_2022_v9n4_163_f0001.png 이미지

Figure 1: Research Model

3. Research Methods

The surveyed samples are employees of 10 foreign invested enterprises, including 5 FDI enterprises and 5 joint-venture enterprises. Enterprises are operating in the manufacturing sector and operating since 2008 up to now. The sample of the survey is described in Table 1. The study did not survey laborers who are supervisors.

Table 1: Sample of Survey

OTGHEU_2022_v9n4_163_t0001.png 이미지

Based on the study of Hair et al. (1998) for the expected sample size, the minimum sample size is at least 5 times the total number of variables. The model with the number of observed variables is 44 observable variables. According to the ratio of 10 × q (q is the number of observed variables in the model), the minimum number of observations required for analysis is 10 × 44 = 440. The number of votes used is 500; the number of votes collected is 485. The number of actual survey votes which is satisfactory without illegal votes is 481, which ensures the representation of the study. The method delivered questionnaires is the convenient sampling method, based on the list of employees taken from the administrative organization of the companies. In addition, the number of responses collected must be balanced according to the labor rate of the enterprise. The questionnaire was designed based on the 5-Likert scale (ranging from Strongly Disagree to Strongly Agree). Data collected after being encrypted was cleaned and tested by SPSS and AMOS 22.

Aimen et al. (2013) proposed that many dimensions were being used to explain the elements influencing job satisfaction and commitment; though the dimensions differ among organizations; the variations are not obvious.

The study of job satisfaction and commitment is complex as it considers people’s opinions and feelings; therefore, in this study, the researcher uses the models proposed by some researchers such as Maslow’s needs hierarchy theory, Herzberg’s motivation-hygiene theory, Parasuraman’s satisfaction theory (Tai & Chuang, 2014) and the adjusted for Vietnam’s conditions. The scales were modified and supplemented to suit research purposes referenced from other researchers in this field (Table 2).

Table 2: Scale Development Source

OTGHEU_2022_v9n4_163_t0002.png 이미지

4. Results and Discussion

4.1. Descriptive Analysis

The 10 enterprises were chosen because of the reasons: (1) They are all manufacturing enterprises and have common characteristics and similar human resource structure and management style; (2) they are FDI companies at Nghi Son EZ; (3) operating for at least 3 years (HRM policies have been clearly formed and developed). These 10 businesses almost went into operation from 2008 to 2018 with diversified investment capital from 1 million USD to 9 billion USD.

The basic information describing the respondents by nationality, gender, monthly income, education levels, and marital status are presented in Table 3. The majority of employees are Vietnamese (77.1%). The number of employees by gender is similar with an income of less than 10 million mainly. Workers with a bachelor’s degree (53.4%) accounted for a higher proportion of the two groups of workers with a university or graduate degree.

Table 3: Characteristics of the Respondents

OTGHEU_2022_v9n4_163_t0003.png 이미지

Descriptive statistics of the average response value according to the scales from employees are shown in Table 4. Accordingly, the average values fluctuate in the range from 3.25 to 3.98, representing the different levels of assessment. In general, employees do not highly appreciate the motivational policies of FDI enterprises in the Nghi Son economic zone during the recent COVID-19 epidemic.

Table 4: Results of Cronbach’s Alpha Test

OTGHEU_2022_v9n4_163_t0004.png 이미지

4.2. Cronbach’s Alpha Reliability

Table 4 also shows the reliability test of the scale. The result shows that the scales both have a reasonably strong Cronbach’s Alpha coefficient with the Corrected item - Total correlation is all more than 0.3. Thus, the proposed items measure the same concepts, and the scales are reliable for use in the next steps.

4.3. Factor Analysis (EFA & CFA)

After testing Cronbach’s Alpha reliability for scales, the next step is to analyze the EFA discovery factor. No variables were excluded because the Factor loadings are more than 0.5. The results showed that KMO is 0.811 (0.5 ≦ KMO ≦ 1); Bartlett’s Test is at a significance level. This means that the analysis is consistent perfectly. Factor loadings are both greater than 0.5 with Eigenvalue >1; it explains 68.68% (>50%). The observed variables are grouped as the first scale.

The results of confirmatory factor analysis (CFA) indicates that Chi-square =2446.183; df =1097 (p = 0.000 < 0.05); Chi-square /df = 2.229 (<3) ; TLI = 0.903; CFI = 0.911 (TLI, CFI > 0.9); GFI = 0.863 > 0.8 and RMSEA = 0.042 < 0.08. Thus, the conclusion is that the model is consistent with the actual data.

4.4. Structural Equation Modeling - SEM

The SEM result indicated that df = 1040 and Chi-square = 1546.144 at significant level, Chi-square/ df =1.486 (<3); CFI = 0.923 and TLI = 0.919 (>0.9); GFI = 0.875 (> 0.8) and RMSEA = 0.045 (<0.08). Thus, the conclusion is that the model is consistent with the actual data.

Hypotheses are accepted (p–value < 0.05) (Table 5). It means that all 7 proposed factors have a positive relationship with job satisfaction and job satisfaction has positive relationship with job commitment. Profession assurance (β = 0.241) has strongest impact on job satisfaction of employees during COVID-19 period, followed by salary (β = 0.197), fringe benefits (β = 0.171), supervisor (β = 0.146), promotion (β = 0.140), colleagues (β = 0.138) and working condition (β = 0.081). Moreover, job satisfaction has a strongly positive influence on commitment of employees (strongly estimate with β = 0.310).

Table 5: Results of the Testing Relationship Between Factor at Final SEM

OTGHEU_2022_v9n4_163_t0005.png 이미지

4.5. Discussion

Organizations are increasingly relying on the workforce as the effect of the global COVID -19 pandemic on firms. In the near future, it continues to put pressure on the availability of locally skilled labor. Developing a coherent human resource policy for motivating employees is a challenge facing business leaders, including FDI manufacturing leaders in Nghi Son EZ of Vietnam.

The findings from the research indicated that professional assurance and 6 other factors (including salary, fringe benefits, supervisors, colleagues, promotion, and finally, work condition) have a strongly positive relationship with job satisfaction; in which professional assurance has the strongest impact. The research results also pointed out that there is a statistically significant correlation between job satisfaction and job commitment of the employees. This is consistent with the results of previous researchers such as Teck-Hong and Waheed (2011), Duong (2013), Tai and Chuang (2014), Chanana and Sangeeta (2020), Chanana (2021), etc. This is completely consistent with the current reality when affirming an important role in specific actions of enterprises to ensure safety and stability for employees in the changing conditions of employment, health, and safety. Therefore, the research results suggest that any businesses need to have long-term solutions in terms of human resources to ensure basic services for employees, especially the disease control system medical care to avoid risks. It is also necessary to prepare reasonable and safe production plans when F0 appears in employees; to have a policy to support F0 employees; create peace of mind and motivation at work; create a mechanism to attract local workers for more stability in the context of the COVID -19 pandemic. In the new conditions when we both have to live and work between pandemic conditions and find ways to control them, businesses need to boldly step up investment to improve the welfare system and working conditions for their human resource such as wages, income, and other advantages for employees in EZs, industrial parks and export processing zones to maintain a safe labor supply. It is firmly believed that, with the determination of the government of Vietnam and the consensus of domestic enterprises as well as FDI enterprises, the labor and employment situation in the coming time will be significantly improved.

5. Conclusion

For the first time in Vietnam’s history, the labor force is already in the cities but still insists on returning to their countryside despite the enterprise’s efforts to keep workers. The recent COVID-19 pandemic has made businesses pay more attention to external impacts on business activities, including mental and psychological consequences of employees, which is a serious issue. Due to the impact of the pandemic, many workers and employees suffer from mental trauma, which will leave long-term sequelae, requiring a lot of time to overcome. Therefore, supporting employees is also supporting the growth engine of the business itself.

Research cannot avoid inherent limitations due to objective and subjective factors. To begin with, it is limited to ten selected firms in the Nghi Son EZ, meaning that the findings may not be applicable to the rest of Vietnam. Second, while this study focused on the psychological and environmental elements that affect employees and organizations, job satisfaction and commitment may be influenced by other macro factors such as state policy, laws, sector status, or demographic considerations. Further research on a broader scale is needed to ensure consistency and representation, as well as to help provide solutions on a larger scale.

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