The Impacts of Organizational Culture on Organizational Commitment: Evidence from Vietnamese Garment Companies

Abstract

The purpose of the study is to determine how organizational culture affects employees' organizational commitment in Vietnamese clothing enterprises. Quantitative research through a questionnaire survey was applied in this research. A Survey of employees of Vietnamese garment companies in Hanoi was conducted from May 2021 to August 2021. The questionnaire was built from reference to previous studies and transferred to Google form. 315 returned questionnaires were usable. The statistical software SPSS 20.0 was used to test the reliability of the scale (Cronbach alpha), exploratory factor analysis (EFA), and regression analysis. The Organizational culture is constructed by 8 components including Organizational Communication, Training and development, Reward and Recognition, Teamwork orientation, Decision-making, Innovation and risk-taking, Direction and future planning, and Leader behavior. Organizational commitment is constructed by 3 components such as affective commitment, continuance commitment and normative commitment. Findings show that organizational culture has a strong impact on organizational commitment in Vietnamese garment companies. Research provides recommendations on developing a good organizational culture through forming suitable leadership, effective organizational communication, training and development, reward and recognition, and a clear direction and future planning to enhance employee commitment to the organization and increase the garment company's performance in the future.

1. Introduction

Organizational culture is an area of interest to many scholars (Diana, 2021; Huynh, 2022; Paais and Pattiruhu, 2020). Denison (1990) introduced the DOCS model, and Schein (2004) developed a 3-level organizational culture model. Cameron and Quinn (2011) classified culture into family culture, hierarchical culture, competitive culture, and creative culture. They also built an OCAI toolkit that identifies six elements constituting organizational culture.

Many studies show the influence of organizational culture on business performance by increasing employee commitment to the organization. Recardo and Jolly (1997) and Meyer and Allen (1991) examined the influence of organizational culture on organizational commitment. Lam and Vinh (2012) confirmed that organizational culture affects the commitment and loyalty of employees in hightech companies. Syed (2012) confirmed that improving organizational culture is essential to increase the commitment of faculty and staff to the university.

A few previous studies showed that organizational culture positively affects the affective commitment, normative commitment, and continuance commitment of employees in Vietnamese enterprises (Anh, 2019). Huong (2020) and Dan (2020) confirmed that corporate culture has a positive effect on employee engagement in Vietnamese enterprises. However, there are very few studies on the impact of organizational culture on employees’ commitment to the organization in garment enterprises in Vietnam.

The textile and garment industry is an important industry that brings high export turnover to Vietnam and also has a large labor force. According to the Ministry of Industry and Trade (MOIT), Vietnamese Textile and garment export turnover in 2021 reached about US$39 billion, with a target of US$43 billion in 2022. Currently, the textile and garment industry has more than 2.5 million workers, most of them are unskilled. According to Vietnam Textile and Apparel Association (VITAS), the total number of enterprises in the textile and garment industry in 2021 is about 6,000. 70% of them are garment companies. In recent years, due to epidemics and social distancing, workers quit their jobs and did not return to business. This created a scarcity of human resources for the textile and garment industry. As a result, it is very necessary to study the impact of organizational culture on the commitment of employees in Vietnamese garment companies.

The main objective of this study is to investigate the influence of organizational culture on organizational commitment in garment companies in Vietnam. Some recommendations are also provided to help Vietnamese garment companies to develop a good organizational culture to enhance the commitment of employees to the organization. Due to the time constraint, the research focuses on studying the impact of organizational culture and organizational commitment of garment companies in Hanoi.

2. Literature Review

2.1. Organizational Culture

The concept of traditional organizational culture is diverse and reflects the novelty and research direction. According to Recardo and Jolly (1997), organizational culture is the foundation for the individual behavior and activities in the organization, and for increasing the values of the organization. Positive-oriented organizational culture helps individuals align towards positive cultural expressions and to help the organization in achieving high efficiency and effectiveness. According to Schein (2004), organizational culture is a collection of common concepts that members of an organization learn in the process of solving internal problems and dealing with problems in the business environment. Organizational culture is expressed through the concepts of practical activities and goals that the organization toward better values (Maister and Van, 2005). Maister and Van (2005) emphasized that organizational culture was measured by the training and development, coaching, compensation, and empowerment of employees in decision-making components and had a positive impact on organizational commitment. Robbin and Judge 2013 argued that organizational culture establishes a system of values that are accepted and promoted by employees in the organization and behaves according to those values. This concept emphasizes the value of behavior and management practices that guide the organization’s activities.

2.2. Organizational Commitment

Organizational commitment is broadly defined as “the strength based on the relationship of an individual’s engagement and involvement in the organization” and is a factor creating the connection between employees and the organization. This linkage helps the organization to achieve success (Mowday et al., 1979; Meyer et al., 2002, Diana, 2021). Organizational commitment is seen as a psychological state that binds employees to their organization. Meyer and Allen (1991, 1997) suggested that commitment in the relationship between employees and their organization can be grouped into three broad themes: commitment is related to emotional orientation to the organization (defined as affective commitment), awareness of the costs associated with leaving the business (defined as continuance commitment), and the ethical obligation to stay in the business (known as normative commitment).

2.3. Influence of Organizational Culture on Organizational Commitment

Many studies have shown that organizational culture has a positive effect on employee commitment. Organizations with a strong culture of growth have more opportunities to attract good employees who accept challenges together and dedicate themselves to a long-term goal. Recardo and Jolly (1997) and Meyer and Allen (1991, 1997) examined how organizational culture affects employee commitment to the organization. In their research, organizational culture was measured by organizational communication, training, and development, rewards, and recognition, the effectiveness of decision-making, innovation and risk-taking, direction and future planning, teamwork orientation, fairness, and consistency in governance policies. Lam and Vinh (2012) showed that organizational culture has the strongest impact on the commitment and loyalty of each employee in an information technology company. The study of Pham (2012) also showed that organizational culture is one of 7 factors affecting employee satisfaction and engagement in the organization. Syed (2012) in a study on the commitment of lecturers at universities in Pakistan also showed that organizational culture has a positive effect on affective commitment, continuance commitment, and normative commitment.

Anh (2019) showed that corporate culture has a positive influence on affective commitment, continuance commitment, and normative commitment of employees in Vietnamese enterprises. Huong (2020) studied the relationship between senior management’s commitment, human resource management activities, and employees’ commitment at Vietnamese garment companies. In her research, training, and development, reward and recognition, and top management’s commitment showed positively affect employees’ normative commitment, affective commitment, and continuance commitment. Dan (2020) proved the constitutive elements of organizational culture included organizational communication, training and development; reward and recognition, teamwork orientation, future orientation, innovation and risk-taking, decision making and leadership behavior positively influence employee engagement in the organization through their effort, pride, and loyalty.

3. Research Model and Methods

3.1. Research Model and Hypothesis

Based on reviewing the previous studies of Recardo and Jolly (1997), Meyer and Allen (1991, 1997), Syed (2012), Robbin and Judge (2013), Yadollah (2017), Wambui and Gichanga (2018), Anh (2019), and Dan (2020), the author proposes a research model to study the influence of organizational culture (independent variable) on organizational commitment (dependent variable) in garment companies (see Figure 1).

Figure 1: Research Model

In the research model, the independent variable of organizational culture is constituted of the following variables: (1) organizational communication, (2) training and development, (3) reward and recognition, (4) teamwork orientation, (5) decision-making, (6) innovation and risktaking, (7) direction and future planning, (8) leadership. The dependent variable is expressed in affective commitment, continuance commitment, and normative commitment.

The study proposes following hypotheses to identify the influence of organizational culture on organizational commitments.

Schein (2004), Agwu (2013), Syed (2012), and Anh (2019) showed that organizational culture has a strong impact on employees’ attitudes, behaviors, and commitment. This research proposes the following hypothesis:

H1: Organization culture has a positive influence on the overall organizational commitment

Organizational communication is defined as the communication between co-workers, staff, and managers in an organization (Van Riel, 1995). Communication within the organization was confirmed as an important factor for staff to recognize the value of organizational development and the relationship between communication and organizational culture has been defined (Welch, 2011; De Ridder, 2004, May et al., 2004; Robbins and Judge, 2013). As a result, the research proposes the following hypothesis.

H2: Organizational communication has a positive influence on organizational commitment

H2a: Organizational communication has a positive influence on affective commitment

H2b: Organizational communication has a positive influence on continuance commitment

H2c: Organizational communication has a positive influence on normative commitment

Training and development were considered as one aspect of organizational culture to attract employment commitment (Heyes and Stuart, 1996; Barlett, 2001). McCabe and Garavan (2008), Anh (2019), and Dan (2020) identified the positive relationship between training and development and organizational commitment. The following hypothesis is developed:

H3: Training and development in the organization has a positive influence on organizational commitment

H3a: Training and development in the organization has a positive influence on affective commitment

H3b: Training and development in the organization has a positive influence on continuance commitment

H3c: Training and development in the organization has a positive influence on normative commitment

Several researchers have shown a positive relationship between reward and recognition in organizational commitment (Allen, 2014; Allen and Meyer, 1990). Positive and valuable rewards and recognition have an impact on the sustainable commitment of employees (Chew and Chan, 2008; Kassicieh and Yourstone, 1998). As a result, the following hypothesis is proposed:

H4: Reward and recognition have a positive influence on organizational commitment

H4a: Reward and recognition have a positive influence on affective commitment

H4b: Reward and recognition have a positive influence on continuance commitment

H4c: Reward and recognition have a positive influence on normative commitment

Teamwork orientation has a positive impact on organizational commitment (Sheridan, 1992; Karia and Asaari, 2006). The staff who has high teamwork skills has a high level of organizational commitment (Park et al., 2005; Powell and Meyer, 2004; Dan, 2020). Therefore, the following hypothesis is proposed:

H5: Teamwork orientation has a positive influence on organizational commitment

H5a: Teamwork orientation has a positive influence on affective commitment

H5b: Teamwork orientation has a positive influence on continuance commitment

H5c: Teamwork orientation has a positive influence on normative commitment

Direction and future planning is a document that identified the direction and aspiration of managers and helps the organization sustainably develop. If the organization develops a clear and good plan orientation, the employees recognize how they should contribute to the implement the tasks and help an organization achieve its strategic goals. Employees also feel safe and stay longer with the organization (Robbins and Judge, 2013; Dan, 2020; Anh, 2019). As a result, the following hypothesis is developed:

H6: Direction and future planning in the organization have a positive influence on organizational commitment

H6a: Direction and future planning in the organization have a positive influence on affective commitment

H6b: Direction and future planning in the organization have a positive influence on continuance commitment

H6c: Direction and future planning in the organization have a positive influence on normative commitment

Harrison et al. (2000) and Thomas and Mueller (2000) confirm the positive impact of innovation and risk-taking on organizational commitment. The organization’s cultural emphasis on innovation creates a positive response from employees and increases organizational commitment (Gichohi, 2014; Nienaber, 2017). As a result, this research proposes the following hypothesis:

H7: Innovation and risk-taking have a positive influence on organizational commitment.

H7a: Innovation and risk-taking have a positive influence on affective commitment

H7b: Innovation and risk-taking have a positive influence on continuance commitment

H7c: Innovation and risk-taking have a positive influence on normative commitment

Decision-making is the selection of optimal solutions to a specific problem. According to Yukl (2006), when employees have involved in decision-making or when there is high employee empowerment that stimulates or motivates employees to work better. Scott-Ladd et al. (2006) confirmed that decision-making has a position relationship with organizational commitment, employee efforts, and self-control. The following hypothesis is developed:

H8: Decision-making has a positive influence on organizational commitment.

H8a: Decision-making has a positive influence on affective commitment

H8b: Decision-making has a positive influence on continuance commitment

H8c: Decision-making has a positive influence on normative commitment

Leaders develop long-term strategies, motivate and inspire employees, empower employees, and have a positive influence on their organization’s commitments (Ogbonna and Haris, 2000; Dan, 2020). Based on that the following hypothesis is developed:

H9: Leadership has a positive influence on organizational commitment.

H9a: Leadership has a positive influence on affective commitment

H9b: Leadership has a positive influence on continuance commitment

H9c: Leadership has a positive influence on normative commitment

3.2. Data Collection and Research Methods

The research used both primary and secondary data. Secondary data was collected through reports from MOIT, VITAS, General Statistical Office, etc. Primary data was collected through a questionnaire survey. The questionnaire was built from reference to previous studies by Meyer and Allen (1991) and Recardo and Jolly (1997). The author transfers questionnaires in Google form and sent the link to human resources managers of 150 garment companies in Hanoi. Questionnaires were sent to employees by email to garment companies in Hanoi from May 2021 to August 2021. The number of questionnaires distributed was 450. There were 341 returned questionnaires, among those 26 questionnaires had major errors and were removed. 315 valid questionnaires are usable. The sample size of 315 is acceptable for this research according to the Rule of Thumb (Van Belle, 2008). The scale to conduct the survey is a 5-point Likert scale (1 is strong disagreement, 2 disagreement, 3 neutral, 4 agreement and 5 is strong agreement) and at the same time, tests the reliability of each scale. The author used the statistical software SPSS 20.0 to test the reliability of the scale (Cronbach alpha), exploratory factor analysis (EFA), and regression analysis. The data processing process includes data cleaning and encryption, the reliability of the scale, and regression analysis.

4. Results

4.1. Sample Characteristics

Most of the respondents are female occupying about 82% and males occupy 18%. The respondents aged from 25 to under 40 accounts for the biggest share of 65% than those aged under 25 (18.2%). The staff who graduated from college, vocational school and high school is 72.3%, those who graduated from university is 21%, and those who graduated from post-graduate is 6.7%. The staff who have working experience of fewer than 5 years is 64.7%, from 5–10 years is 27% and more than 10 years is 10.3%. The respondents who have an average monthly salary of less than USD435 is 69.8%, from USD435-USD650 26.2 %, and more than USD650 4%. The respondents who work at garment plants occupy 42.5%, sales and marketing departments occupy 9%, the logistics department occupy 33%, and other departments occupy 15.5% (see Table 1).

Table 1: Respondents’ Characteristics (n = 315)

4.2. The Reliability Coefficient of the Scale

Table 2 shows the reliability of the independent and dependent variables of the research model. All variables meet the requirement of reliability with Cronbach’s Alpha >=0.6. Among independent variables, the direction and future planning variable have the highest value of Cronbach’s Alpha of 0.932, then the innovation and risks taking variable (0.921), the organizational communication have reliability of 0.910. The training and development variable has a reliability of 0.778 (>0.6).

Table 2: Reliability of the Scale

In depend on a variable, the normative commitment, continuance commitment, and normative commitment variable have reliability of 0.925, 0.901, and 0.875 (>0.6) respectively.

4.3. Factor Analysis (EFA)

To identify the influence of organizational culture on organizational commitment, the EFA analysis is applied in this research. 40 observed variables are proposed to measure the dependent variable of organizational culture. After conducting the reliability test and using rotated matrix analysis, the results show that all 40 variables are significant (Cronbach Alpha value > 0.6) and are converted into 8 factors (see Table 3).

Table 3: Rotated Matrix of Factors of Organizational Culture

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 8 iterations.

The analysis results show that there are 8 significant factors with total variance extracted = 84.5% > 50%. Considering the KMO value = 0.845 > 0.5, factor analysis is suitable (see Table 4).

Table 4: KMO and Bartlett’s Test

The independent variable of organizational commitment is measured by 3 components: affective commitment, continuance commitment, and normative commitment with 18 observed variables. Conducting the reliable test by rotated matrix analysis shows that all 18 observed variables are significant with the Cronbach Alpha value >0.6 and are converted into 3 factors (see Table 5).

Table 5: Rotated Matrix of Factors of Organizational Commitment

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 3 iterations.

The analysis results show that there are 3 significant factors with total variance extract = 76.8 > 50%. As a result, the factor analysis is suitable to apply (see Table 6).

Table 6: KMO and Bartlett’s Test

4.4. Regression Analysis

Results of regression analysis show the influence of organizational culture on overall organizational commitment and the organizational culture on each component of organizational commitment in Vietnamese garment companies.

Table 7 shows the significant influence of organizational culture on overall organizational commitment with adjusted R square = 0.785; F = 118.263, p < 0.001. It means that 78.5% of the change in organizational commitment value is explained by the change in organizational culture value. Among the organizational culture components, leadership and organizational communication have the largest impact on organizational commitment with β = 0.302 and 0.225 respectively. Following, innovation risks taking, reward and recognition, decision-making, and training and development have a big impact on organizational commitment. Teamwork has the least impact on organizational commitment. The regression result in Table 7 confirms that Hypothesis 1 is fully supported.

Table 7: Regression Analysis Result of Organizational Culture and Organizational Commitment

Notes: *p-value < 0.1; **p-value < 0.05; ***p-value < 0.001. Significant at the 0.05 level.

The regression results in Table 8 show that some organizational culture measurements have different impacts on the organizational commitment components: affective commitment, continuance commitment, and normative commitment as follows:

Table 8: Regression Analysis Result of Organizational Culture and Organizational Commitment Aspects

Notes: *p-value < 0.1; **p-value < 0.05; ***p-value < 0.001. Significant at the 0.05 level.

• The organizational communication has a positive impact on continuance commitment and normative commitment with the β = 0.176 and 0.198 respectively at p < 0.001 but it does not have an impact on the continuance commitment (β = 0.235, p > 0.01). Hypothesis 2a and 2c are supported. Therefore, Hypothesis 2 is supported partly.

• The training and development, reward and recognition, direction and future planning, teamwork, and leadership have a positive influence on affective commitment, continuance commitment, and normative commitment at p < 0.01. Therefore Hypotheses 3, 4, 5, 6, and 9 are fully supported.

• The innovation and risk-taking have a positive impact on continuance commitment with the β = 0.112 and 0.254 at p < 0.001 but it does not have an impact on the affective commitment (β = 0.135, p > 0.01) and normative commitment (β = 0.254 at p > 0.01). Hypothesis 7b is supported. Therefore, Hypothesis 7 is supported partly.

• The decision-making has no impact on affective commitment, and normative commitment with β = 0.113 and 0.085 respectively at p > 0.01, but it has a positive impact on the continuance commitment with β = 0.134 at p < 0.001. Hypothesis 8b is supported. Therefore, Hypothesis 8 is partly supported.

5. Discussion and Conclusion

The influence of organizational culture on organizational commitment in Vietnamese garment companies was examined in this study via regression analysis. The findings revealed that the model represented a valid approach for generating insights that could better inform understanding of the components underlying organizational culture and organizational commitment. According to the model’s findings, organizational culture and overall organizational commitment are positively correlated in the Vietnamese garment sector. These findings are consistent with other research on organizational culture and organizational commitment (Syed 2012; Robbin & Judge, 2013, Wambui & Gichanga, 2018; Anh, 2019; Huong, 2020; Dan, 2020).

Organizational culture was measured by 8 constructs: organizational communication, training and development, reward and recognition, direction and future planning, teamwork orientation, innovation and risk-taking, decision-making, and leadership. Findings are comparable to those of Robbin & Judge (2013), Yadollah (2017), Wambui and Gichanga (2018), Anh (2019), Dan (2020) and Paais and Pattiruhu (2020). There were positive influences of organizational communication, training and development, reward and recognition, direction and future planning, teamwork, innovation and risk-taking, decision-making, and leadership on organizational commitment. The leadership factor has the biggest influence on organizational commitment (β = 0.302) and the teamwork factor has the least impact on organizational commitment (β = 0.103).

Organizational commitment was measured by 3 components: affective commitment, continuance commitment, and normative commitment. The findings are consistent with Robbin and Judge (2013), Yadollah (2017), Wambui and Gichanga (2018), Anh (2019), and Huong (2020).

In conclusion, findings show that training and development, reward and recognition, direction and future planning, teamwork, and leadership have a significant influence on organizational commitment: affective commitment, normative commitment, and continuance commitment. Organizational communication has a big impact on continuance and normative commitment and has no impact on affective commitment while innovation and risk-taking and decision-making have an impact on continuance commitment only. In the garment industry, most employees have an educational level of high school or vocation, it is important to have clear and frequent communication from managers to employees, communication among co-workers, or within a team to make sure that everything is in order and met requirements.

To strengthen the organizational commitment of employees at Vietnamese garment companies, there are some recommendations as follows:

• Leaders and managers need to maintain and develop a corporate culture in line with the overall development of the business. Company leaders and managers should motivate employees not only when they perform excellently but also when they have not completed their work. Leaders should recognize differences and respond to differences to engage employees and be consistent between words and actions, be fair to create trust for employees.

• It is necessary to build an effective internal communication system to help leaders and managers clearly articulate the company’s vision, mission, and development strategy, thereby helping employees understand the values and vision of the company; the importance of their contributions to the development of the business in the future, thereby stay longer at the company. The official communication channels such as quarterly meetings, annual reports, and e-news should be organized and operated in a friendly.

• Garment enterprises should train employees to help them update their skills and knowledge so that they can successfully apply technical changes in the industry. It is necessary to review and re-evaluate the company’s training program to identify training needs, strengths, and weaknesses from which to build appropriate training programs and have a long-term training plan. Garment companies should develop training programs for different audiences: middle managers, junior managers, or talent enhancement training programs for young employees such as enhancing capacity for potential middle managers, Strengthening capacity for the next generation of leaders, and Young Talent programs, etc. As a result, the employees will be developed for future careers and feel safe to stay longer with the company.

• The garment industry has a work-pressure industry, so companies should have a clear and fair salary and bonus policy, have reward programs, and praise employees who have done well and excellent jobs. The employees will be more satisfied with their jobs and will have a better commitment to their companies.

• Leaders of enterprises need to have a vision and develop an orientation for the organization, communicate a clear vision and strategy to members so that employees can understand, be proud and wholeheartedly perform their work and have a long-term relationship with the company.