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The International Journal of Human Resource Management

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Observations on the organizational commitment of Chinese employees: comparative studies of stateowned enterprises and foreign-invested enterprises
Yingyan Wang Available online: 17 Feb 2007

To cite this article: Yingyan Wang (2004): Observations on the organizational commitment of Chinese employees: comparative studies of state-owned enterprises and foreign-invested enterprises, The International Journal of Human Resource Management, 15:4-5, 649-669 To link to this article: http://dx.doi.org/10.1080/0958519042000192889

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Int. J. of Human Resource Management 15:4 June/15:5 August 2004 649 669

Observations on the organizational commitment of Chinese employees: comparative studies of state-owned enterprises and foreign-invested enterprises
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Yingyan Wang
Abstract Although recent research has begun to touch upon the organizational commitment of Chinese employees, most studies have been limited to the transposition of Western methodology to a Chinese context. This paper examines two groups of Chinese employees, those working in state-owned enterprises (SOEs) and those working in foreigninvested enterprises (FIEs), and compares the organizational commitment of each group. In order to reect Chinese characteristics more accurately, the present study used a questionnaire incorporating items drawn from previous Chinese and Western studies. The various multidimensional structures of organizational commitment put forward by both Eastern and Western researchers to date have been re-examined using a sample of 1,232 industrial employees. Results indicate that a ve-factor component model, including affective commitment, active continuance commitment, passive continuance commitment, normative commitment and value commitment, ts the data best. The key ndings of this study are that SOE employees have higher levels of active continuance commitment and passive continuance commitment, and a lower level of value commitment, than employees of FIEs. It can be inferred from these differences that, in contemplating appropriate measures designed to foster the commitment levels of Chinese employees, management should recognize that the measures required to achieve such a goal will vary according to form of economic ownership (SOEs vs. FIEs). Implications for human resource management in both SOEs and FIEs are discussed. Keywords Organizational commitment; foreign-invested enterprises (FIEs); state-owned enterprises (SOEs); multidimensional structure; Chinese employees.

Introduction Organizational commitment has received considerable attention as an important aspect of employee-organization linkages (Mowday et al., 1982). The bearing of organizational commitment on workforce stability and company performance has drawn the attention of both academic researchers and practitioners for decades. However, it is only in recent years that researchers have begun to examine
Yingyan Wang, Graduate School of Economics, Yoshidaryo S27, Kyoto University, Yoshidakonoecho, Sakyo-ku, Kyoto, 606-8315, Japan (tel: 81 75 7531 ext. 3467; e-mail: ellenwang@eco.mbox.media.kyoto-u.ac.jp).
The International Journal of Human Resource Management ISSN 0958-5192 print/ISSN 1466-4399 online q 2004 Taylor & Francis Ltd http://www.tandf.co.uk/journals DOI: 10.1080/0958519042000192889

650 The International Journal of Human Resource Management the organizational commitment of Chinese employees (e.g. Chen and Francesco, 2000; Wong et al., 2001; Chen et al., 2002; Cheng and Stockdale, 2003; Cheng et al., 2003). To date, most researchers who have focused on China have employed methods identical to those used in previous studies of organizational commitment in Western countries. Nevertheless, it goes without saying that in China social systems differ markedly from those found in Western countries, and that social and economic conditions prevailing in China may have an effect on the appropriate multidimensional structure of organizational commitment. In present-day China, business enterprises can be divided into several categories of ownership, including state-owned enterprises (SOEs), foreign-invested enterprises (FIEs), collectively owned enterprises, private enterprises and other variations. In 2001, SOEs and FIEs respectively accounted for 44 per cent and 29 per cent of gross industrial output value (National Bureau of Statistics of China, 2002), and thus together represent a dominant segment of the economy. It has been suggested that Chinese employees organizational commitment differs according to whether the employee is employed by an SOE or an FIE (Chiu, 2002). Understanding the multidimensional structure of Chinese employees organizational commitment, and differences in organizational commitment depending on form of ownership, can be a helpful guide to management within both Chinese native enterprises and foreign multinational companies which have established, or are planning to establish, branches in China. The multidimensional structure of organizational commitment The trend that emerges from more recently available theory is to dene organizational commitment at a multidimensional level, although as yet there is no absolute consensus on its components. The most popular recently cited theory is the three-factor model developed by Meyer and Allen (1991). It was Meyer and Allen who developed the study of organizational commitment by bringing together three components of affective commitment, continuance commitment and normative commitment. Employees with strong affective commitment stay with an organization because they are emotionally attached to the organization. Employees with strong continuance commitment stay with an organization out of necessity, and those with strong normative commitment because they feel obliged to do so. Prior to Meyer and Allens study, most organizational commitment researchers focused on more limited aspects of organizational commitment: for instance, affective orientation (Sheldon, 1971; Buchanan, 1974), cost-based commitment (Becker, 1960; Hrebiniak and Alutto, 1972) or moral responsibility (Wiener, 1982; Marsh and Mannari, 1977). In another vein of study, researchers have suggested different reasonable subdimensions of organizational commitment. In Japan, Sekimoto and Hanada (1987) proposed a four-subdimensional structure, including desire to work, desire to remain, value internalization and utilitarian. In a subsequent study, Japanese researcher Takao (1998) has proved another four-component model (Figure 1), including affective commitment, continuance commitment, normative commitment and value commitment. Another Japanese study undertaken at around the same time conrmed the validity of the same four-component model (Tao, 1997). The same study found that, in a Japanese context, normative commitment is manifested as an acute sensitivity to the views of others. Japan and China not only share the same geographical region, but also have a common cultural heritage forged over a long period of history, so it is likely that China shares some of the same organizational commitment characteristics as those identied in the Japanese studies referred to above.

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Figure 1 Summary of dimensions of commitment along two axes (four sub-dimensions)

In China, Ling et al. (2001) once proposed a ve-factor model (Figure 2), including affective commitment, normative commitment, ideal commitment, economic commitment and opportunity commitment. Although the concept of ideal commitment in a Chinese context may imply that communist ideals have an effect on the organizational commitment of Chinese employees, in actual fact its true meaning corresponds to a large extent with continuance commitment, as presented by Western researchers, in that it reects the reasons why an employee stays with a company. In Ling et al.s studies, it was implied that a unique Chinese organizational commitment structure may exist, and that some differences can be put down to Chinese cultural inuences. Research carried out in a number of different countries suggests that, particularly where the sample group is drawn exclusively or predominantly from residents of a single country, any study into the multidimensional structure of organizational commitment should remain sensitive to the special characteristics of the sample group, including national traits attributable to cultural factors. Several factors may contribute to a better understanding of organizational commitment in Chinese settings. First, because harmony and loyalty are among the key characteristics of Chinese thought (Warner and Zhu, 2002), the psychological aspect of organizational commitment should be regarded as an operative concept in explaining Chinese employee-employer linkages more so than the weight accorded to this factor in recently cited Western theory. Second, with the launching of economic reforms beginning in 1978, the Chinese economy has moved quickly from a centrally planned economy to a marked-oriented one. Prior to this period

Figure 2 Summary of dimensions of commitment along two axes (ve sub-dimensions)

652 The International Journal of Human Resource Management of reform, at a time when the Chinese government emphasized party allegiance and the relationship of an individual with the communist state (194979), organizational commitment could have been explained reasonably in an abstract or broad way. However, as a market economy requires closer co-operation of an individual with his or her employer, individual commitment to ones employer becomes more important. Third, in a Chinese context, the model of employee employer linkages presented by organizational commitment theory should be expanded to include the traditional kinship system of traditional Chinese culture, whereby relationships (guanxi) with powerful leaders were considered to be an important determinant in the path of an individual career (Warner and Zhu, 2002). A fair recognition of Chinese SOEs and FIEs Chinese enterprises have undergone signicant changes since the implementation of reform policies from the late 1970s. Chinas Open Door policy led to a massive inux of foreign investment (Warner, 1996). At present, enterprises with differing forms of economic ownership coexist and represent a distinct competitive environment. However, it should be noted that the inuence of government reform policies on enterprises with different forms of ownership will vary. In the case of SOEs, there is a marked divergence between rapid growth enterprises and non-performing enterprises. Economically sound SOEs, for instance Haier group and Legend group, have already adopted modern technology, performed well in the domestic market or gained core competitive advantages (Feng, 2001). By contrast, non-performing SOEs have laid off millions of workers, and the re-employment of those workers has quickly become one of the most widely discussed social issues in everyday conversation (Lei, 1998). This and other structural unemployment issues, such as the existence of large numbers of individuals who formally retain SOE employee status but no longer actually work for, or are paid by, the SOE concerned, and the existence of large numbers whose working hours have been reduced to part-time hours, have become serious problems for SOEs (Xiao, 1998). In comparison with SOEs, FIEs have experienced relatively stable development. Some FIEs were originally established as pilot programmes in coastal areas in the late 1970s, and were viewed as an efcient way to take advantage of foreign capital. Since then, FIEs have become widespread throughout China, and, after rapid growth in the number of FIEs during the 1980s and 1990s, numbers have recently levelled off. FIEs have boosted Chinese exports, accelerated the development of Chinese fundamental and basic industries and increased Chinese foreign currency reserves (Chen, 1997). The gross value of FIEs in coastal areas such as Guangdong province is now higher than that of
Table 1 Results of a survey (July 2002) conducted in four foreign-invested enterprises in Guangdong province (n 1,1061,161 due to missing data) Agree 1 2 3 4 I admire those working in FIEs. I admire those working in SOEs. If I change my job I would like to work in an SOE. If I change my job I would like to work in an FIE. 42.4% 55.4% 30.6% 16.6% Neither agree nor disagree 19.6% 20.2% 57.0% 60.9% Disagree 38.0% 24.4% 12.4% 22.5% n 1,161 1,108 1,106 1,108

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SOEs (National Bureau of Statistics of China, 2002), and they make a signicant contribution to Chinas economy and stability of employment. Although enterprises with other forms of ownership may also have experienced rapid development, the present study will focus on the two largest forms of economic ownership in terms of gross output of industrial value. Previous studies suggested that state and non-state workers differed in their commitment and that non-state enterprise employees were proven to have the more positive perceptions of their organizations when compared with their state counterparts (Chiu, 2002). However, in a recent survey conducted in four FIEs in Guangdong province, 30.6 per cent said they would rather work in an SOE and only 12.4 per cent said they would not work in an SOE if they changed their jobs. It should be noted from the results that SOEs still appeal to many employees, and that a fair comparison is necessary when considering employees level of organizational commitment in organizations with differing forms of economic ownership. Hypotheses In a comparative study of co-operative and private sectors, it has been proven that form of ownership is signicantly related to organizational commitment (Wetzel and Gallagher, 1990). Some studies have also examined the effect of antecedent variables, such as demographic factors, organizational features and work attitudes, on affective commitment (e.g. Meyer and Allen, 1991). Modern-day Chinese enterprises not only differ by form of economic ownership, but also display marked differences in terms of average wages, average workforce age, employment policies and organizational characteristics. All these factors might inuence levels of different sub-dimensions of organizational commitment. Accordingly, features of SOEs and FIEs are examined here based on the multi-dimensional nature of organizational commitment. To date, most comparative research into organizational commitment has applied a one-dimensional comparison (e.g. Al-Meer, 1989; Agarwal et al., 1999; Goulet and Frank, 2002) using items drawn exclusively from the organizational commitment questionnaire (OCQ) (Porter et al., 1974; Mowday et al., 1979), which was designed to reect only the affective sub-dimension. The lack of comprehensive comparative studies should be noted. In the present study, each of the components discussed below has been drawn from previous research in both Eastern and Western countries. Conrmative factor analyses will be used in order to demonstrate the validity of the structure prior to demonstration of the hypotheses. Emotional attachment to the organization, i.e. affective commitment, has been acknowledged by many researchers who have studied organizational commitment. Many foreign multinational companies have invested in China, and top-level posts (CEO, CFO etc.) are normally lled by executives dispatched by parent companies. To Chinese employees, these executives can appear impersonal and interested only in achieving the nancial targets set by their parent companies. To most lower-rank employees, it is difcult to build a rapport with, show emotional afnity with or even trust their China-based foreign executives. Accordingly, working in these enterprises is viewed as being somewhat akin to working directly for foreign investors. In addition, employee behaviour is usually strictly constrained by company rules. At the same time, despite a relatively strict working environment in many FIEs, foreign investors have begun to enhance employee communications. For instance, some supervisors dispatched from parent companies have begun to study Chinese language in order to communicate with their subordinates. Company-organized parties and sports

654 The International Journal of Human Resource Management meetings have become more frequent. These are good ways to foster employees emotional attachment. Compared with those working in FIEs, employees of SOEs enjoy a more relaxed working environment and even work in an expansive mood because of less stringent responsibilities. However, other studies have recognized that some factors, such as the increase in managerial power secured by government reforms, have greatly diminished workers right and independence, and may lead to a less positive view of life working for an SOE (Chiu, 2002). Consequently, considering that both SOE and FIE employees emotional attachment to their respective employers appears to be in a state of ux, it is difcult to predict which set of employees would have a higher level of affective commitment. H1: Employees of SOEs are likely to be characterized by the same level of affective commitment as those of FIEs.

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Continuance commitment is another sub-dimension on which most researchers agree. McGee and Ford (1987) have suggested the existence of two sub-dimensions of continuance commitment: high-sacrice commitment and low-alternative commitment. High-sacrice commitment suggests that individuals develop an attachment to the organization because of the benets which would be forgone upon departure; lowalternatives commitment represents the attachment formed because of the lack of viable job alternatives. Contemplating the meaning of continuance commitment, i.e. the employees awareness that costs are associated with leaving the organization (Meyer and Allen, 1991, 1997), it should be noted that the ideal commitment sub-dimension demonstrated by Ling et al.s ve-factor model, can also be regarded as a form of continuance commitment. However, ideal commitment is different from the traditional high-sacrice/low-alternative formula in that ideal commitment represents a more active type of motivation associated with leaving, or staying with, the organization. It can be associated with a feeling of individual achievement, such as awareness of an opportunity to improve oneself by undergoing on-the-job training, and also in terms of promotion opportunities. Consequently, in this study, the concept identied in previous Chinese research will be called active continuance commitment, and, in order to distinguish it from other forms of continuance commitment, traditional continuance commitment in this study is referred to as passive continuance commitment. In contrast with active continuance commitment, passive continuance commitment suggests an employee has to remain with his company due to passive factors, that is to say, in order to stay above the poverty line the individual has no choice other than to work for the present enterprise. Moreover, passive continuance commitment reects an individuals lack of job alternatives, and therefore also corresponds to the traditional concept of lowalternative commitment. In 2000, the average salary of employees in foreign-invested units was 1.5 times that of employees in state-owned units (National Bureau of Statistics of China, 2001). This reects stronger nancial incentives in FIEs. Moreover, relatively complete merit-rating systems and fringe benets are a feature of FIEs. Accordingly, those who contribute a lot to the company are likely to be appraised highly. Some FIEs, in particular Japanese and American enterprises, send Chinese employees to foreign countries to gain on-the-job training. By contrast with FIEs, in most SOEs merit-rating systems are uncertain and promotion procedures are

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unclear (Jiang, 2001). This kind of ambiguous system would harm employees motivation. H2: Employees of FIEs are more likely to be characterized by a higher level of active continuance commitment than those of SOEs.

Employees with a high level of passive continuance commitment either recognize the costs associated with leaving the organization or have to stay with the company due to a lack of job alternatives. Differences between SOEs and FIEs in this respect can be explained partly by the differing competitive environments faced by employees in SOEs and FIEs. Restrictive SOE employment requirements may also contribute to a higher level of passive continuance commitment on the part of SOE employees. Chinese rms typically employ an idiosyncratic system of performance appraisal and an indirect style of communication, as individual employees try to minimize the loss of face and preserve harmonious relations (Ahlstrom et al., 2001). The potential political repercussions of job losses, as well as direct intervention by local authorities, continue to hinder the freedom of enterprise management to adjust employment levels in the interests of efciency and productivity (Sheehan and Morris, 2000). In such circumstances, employees in SOEs have become accustomed to a relaxed environment, and lack a competitive instinct. They prefer to remain in the comparative comfort of an SOE working environment and thereby avoid the more stringent working practices commonly found in FIEs. Government employment restrictions also contribute to SOE workforce inexibility. In China, each citizen is required to register his ofcial place of residence with the local government. Residence registration was initially used to control population ows, and has been modied to allow some rural residents to enter cites and urban residents to move between cities (China Business Review, 2001). Nevertheless, the system remains inexible. For instance, an individual who wishes to pursue working opportunities away from the town or city in which he is ofcially registered will nd it difcult to change his ofcially recognized place of residence. Without local residence registration, even if an individual is working in a particular Chinese city, his status is merely that of a guest worker and he cannot receive much in the way of social welfare. Any individual who moves from one part of China to another will nd it far more difcult to secure a position in an SOE than in an FIE. The limitations of the local residence registration system require that SOEs abide by annual new employee quotas set in advance by the government. Whenever a new employee from another city or region is hired in SOE, the enterprise has to ask for the permission of the superior government department responsible for human resource distribution in order to get residence registration. Only those with strong personal contacts are likely to obtain such permission, and the process takes time. These circumstances contribute to the reluctance of SOE employees to move to a position in a new locality. Thus, giving up the stable environment of a job in an SOE is regarded as a huge loss. By contrast, manual workers in FIEs are usually guest workers from other districts. Most of them have residence registration in their home towns and, after a period of work, they are supposed to return home. These workers travel to the cities without any expectation of obtaining urban residence registration, so it is easy for them to leave one FIE for another. Furthermore, in FIEs, the lowest-ranking employees covering several percent of the total workforce are commonly red by the enterprise to make way for more highly motivated individuals. Similarly, some employees will initially treat a new FIE employment contract as a trial period, and stay only if satised. As soon as they

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656 The International Journal of Human Resource Management nd the company is not to their liking, they will leave without hesitation. In particular, manual workers have a strong tendency to act in this way. In towns or cities with a high concentration of FIEs, there are usually recruitment advertisements at the entrance to the company premises. Large numbers of workers from local districts wait at the company entrance, hoping to be interviewed. In this way, new workers are employed and those who cannot meet the enterprises demands are forced to leave. Thus, considering the different costs associated with leaving SOEs and FIEs, and differing job prospects, it can be concluded that the passive continuance commitment of employees working in FIEs is not likely to be as high as that of employees from SOEs.

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H3:

Employees of SOEs are more likely to be characterized by a higher level of passive continuance commitment than those of FIEs.

Normative commitment represents a sense of obligation to remain with the organization. Employees with a high level of normative commitment feel a moral obligation to remain with the organization. Researchers have suggested that various factors may contribute towards a high level of normative commitment. For instance, an individuals tendency to demonstrate normative commitment may be the result of pressures formed during the individuals early socialization (Wiener, 1982), or may be the result of a particular kind of investment that the organization makes in the employee (Scholl, 1981). In the case of FIEs, where most employees are expected to return to their home towns after a period of work, maintaining a stable workforce of highly qualied employees has become a serious problem. On the other hand, SOEs have traditionally provided a variety of basic benets such as family accommodation and nursery school facilities for those families whose parents are too busy to take care of their children. Most employees live near the company premises with their families. However, nowadays SOEs are faced with the pressures arising from excessive employment and huge debts because of inefcient production and competition from other types of enterprises (Zhu, 1995). Therefore, it is hard for employees to maintain their loyalty while faced with the constant fear of being laid off. H4: Employees of SOEs are likely to be characterized by the same level of normative commitment as those of FIEs.

Although the most popular three-factor model of organizational commitment does not encompass the value component as a dependent factor, some researchers have proved its validity. Value commitment refers to an employees feelings of value congruence with the organization and a willingness to exert considerable effort on behalf of the organization. Some might argue that affective commitment is similar to value commitment, but they are not identical. A long period of continuous employment might engender emotional attachment to a company, but will not guarantee hard work. In analysing the role of affective commitment of Chinese employees, Chen and Francesco (2003) suggested that affective commitment might in fact reect more of an emotional attachment to the people within the organization rather than to the organization itself. It is implied in this viewpoint that, aside from affective commitment, a more appropriate sub-dimension to measure employees efforts for the company should be cited. FIEs and joint ventures normally set clear business objectives and train their employees to work for the common goal. In the same organizations it is also common practice both to dene clear individual responsibilities and to adopt an ability-based

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appraisal system to improve motivation. For instance, levels of pay, merit-rating systems and fringe benets are determined according to individual performance. In this way, the company links individual performance to broad company objectives. Moreover, under-performing employees, whose contribution to the organization is perceived to be low, are frequently dismissed and, as a result, comparatively high-performance or highability employees, who focus on company values, remain. Before Chinese government reform policies were implemented, SOEs merely followed the decisions of their superior government departments. Now, although political inuence remains, the situation has changed to some extent and top SOE supervisors have more leeway in setting company goals. However, poor internal communication practices within SOEs mean that organizational objectives are not normally conveyed to ordinary employees. Therefore, SOE employees do not consciously strive to achieve common organizational goals, and are not normally aware of company plans. In these circumstances, it is very difcult for rank-and-le employees to feel value congruence with the company. Furthermore, those employees whose conduct leads to deleterious consequences for the company are not likely be red and, similarly, recruitment of highly motivated employees is not easily achieved given the employment restrictions faced by SOEs. It can be hypothesized from above that employees in SOEs are not as likely to share organizational values as those in FIEs. H5: Employees of FIEs are more likely to be characterized by a higher level of value commitment than those of SOEs.

Method Participants This paper and its ndings are based on a survey conducted in Guangdong province in July 2002. The reason for selecting Guangdong province is that Guangdong was one of the rst provinces in China to establish special economic zones, designed to facilitate FIEs, in the 1980s. Because of its geographical proximity to Hong Kong, Guangdong province was chosen as one of the key areas to encourage an inow of foreign capital. Guangdongs comparatively market-oriented economy has also been a catalyst for the reform of its SOEs. Questionnaires and in-person interviews were used in the present study. Considering the possible low ratio of respondents in random mail questionnaires, the presidents of seven selected industrial companies were rst interviewed in order to request the co-operation of their employees. On gaining their permission to conduct surveys within their companies, employees were selected randomly and questionnaires were distributed in envelopes. For the purpose of secrecy and to respect privacy, respondents were asked not to write any characters other than circling appropriate options in the questionnaires, and to seal off envelopes before handing them in. Furthermore, although a summary report of each company was submitted at the request of each president, details of individual questionnaires were not divulged to the company. After collecting the questionnaires, several employees were selected randomly from each company to be interviewed and asked some questions regarding their companies and working environments. In all, the employees of seven companies co-operated with the investigation. Finally, 1,460 questionnaires were distributed and 1,359 questionnaires were collected. Excluding those questionnaires with a high number of invalid answers, 1,232 questionnaires were selected as the basis of this study. The seven enterprises whose

658 The International Journal of Human Resource Management employees participated in the study include three SOEs and four FIEs. Although detailed nancial statements were not examined, none of the enterprises included in this study faced nancial difculties. All participants were formal Chinese employees. The nal 1,232 questionnaires include 294 males and 938 females; 1,161 questionnaires come from FIE employees and the remaining seventy-one from SOE employees; 363 participants were under the age of 20, 759 were in their 20s, 60 in their 30s, 40 in their 40s, 7 in their 50s and 3 in their 60s. There were 993 manual workers and 239 nonmanual workers; 1,056 were non-managerial employees and 176 were managers.

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Antecedent variables Antecedent variables were designed to be consistent with previous research and were adapted to the extent necessary given the scope of the present study. Demographic variables, such as age and tenure, have been proven to be antecedent variables of affective commitment in a study using introductory psychology students and university employees as a sample (Meyer and Allen, 1984), but this conclusion was not conrmed in a study using a food service organizations employees as a sample (Meyer et al., 1989). The present study includes seven antecedent variables. Form of economic ownership (with SOEs and FIEs coded as 0 and 1, respectively) is considered to be the most critical antecedent variable to prove the hypotheses. Age (1 10 19; 2 20 9; 3 30 9: 4 409; 5 509; 6 609), gender (with male and female coded as 0 and 1), status (with non-managerial and managerial coded as 0 and 1, respectively) and job role (with manual workers coded as 0 and non-manual workers coded as 1) are demographic characteristics. Instead of asking for specic salaries, payment satisfaction was measured by asking respondents Are you satised with current salary?, using a 5-point scale with anchors labelled (1) disagree; (2) moderately disagree; (3) neither agree nor disagree; (4) moderately agree; (5) agree. Moreover, as supervisory commitment has been proven to be a critical factor in Chinese management (Chen et al., 2002; Cheng et al., 2003), supervisory satisfaction is also measured using the same method as used for payment satisfaction to see if it has any antecedent relationship with organizational commitment. Organizational commitment Given the possibility of a unique organizational commitment structure due to the inuence of cultural factors and disagreements over particular sub-dimension denitions among different researchers, it was considered necessary to re-examine the components of Chinese employees organizational commitment. For this study, an organizational commitment questionnaire designed specically for Chinese employees was distributed. In the questionnaire, the items included in the OCQ and those, from Ling et al.s research, which were considered to reect special Chinese characteristics are cited. Conrmatory factor analysis method has been used.
Affective commitment In this study, three items quoted from the OCQ (the word organization is changed to company) are used to measure affective commitment: I am extremely glad that I chose this company to work for over others I was considering at the time I joined; I talk up this company to my friends as a great company to work for; I am proud to tell others that I am part of this company. The original alpha was .71. Continuance commitment

All eight items cited were from Ling et al.s scales, which represent Chinese characteristics. Five active continuance commitment items are: I work for the company because it provides me with many OJB training

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opportunities; I work for the company because it is a good chance to realize my goals; I work for the company because I can make full use of what I have learned here; I work for the company because of the challenging job; I work for the company because there are many opportunities for promotion. Three passive continuance commitment items are: I work for the company because I cannot nd a better one; I cannot quit the job arbitrarily because I have to support my family; I work for the company because I do not want to lose my fringe benets. The original alphas of overall, active and passive continuance commitment were .73, .79 and .63, respectively.

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Normative commitment Three items are used to measure the normative commitment with an original alpha of .61. These three items are: I consider it my obligation to work for the same company all the while; I would like lifetime employment if possible; I would do any job as long as I work here. Value commitment

Four items, two from the OCQ and two from Ling et al., are used to measure value commitment. The items from the OCQ are: I am willing to put in a great deal of effort beyond that normally expected in order to help this company to be successful; I really care about the fate of this company. The items from Ling et al. are: This company really inspires me to do my job to the very best of my abilities; One should work with utmost efforts for the company. The original alpha was .81. In order to compare the validity of each multi-dimensional structure, three conrmatory factor analysis models are established, respectively representing the A-N-C, A-N-C-V and A-N-Ca-Cp-V structures (A: affective commitment; N: normative commitment; C: continuance commitment; Ca: active continuance commitment; Cp: passive continuance commitment; V: value commitment). Table 2 provides the results of the conrmatory factor analyses. Among the three estimated models, the ve-factor model of model 3 shows the best t indices. Another recent study into Chinese employees commitment reported that, although a ve-factor oblique model, including both substantive and method factors, ts the data best, the three-component models were not appreciably worse (Cheng and Stockdale, 2003). However, in the present study, the ve-factor model (model 3) is much better than the other two models. Generally speaking, a GFI of more than 0.9 is considered a reasonably good t. Although the GFIs of model 1 (.909) and model 2 (.907) are barely more than 0.9, the AGFIs (.871 and .877, respectively) are below 0.9. In contrast with Model 1 and Model 2, both the GFI (.956) and the AGFI (.940) of model 3 are much higher than 0.9. Consequently, it is quite reasonable to compare the relative organizational commitment of SOEs and FIEs using these ve sub-dimensions (Figure 3), viewing organizational commitment as a ve-factor sub-dimensional structure, including affective commitment, active continuance commitment, passive continuance commitment, normative commitment and value commitment.

Table 2 Conrmatory factor analysis results (maximum likelihood, n 1,232) Model 1 2 3 A-C-N A-C-N-V A-Ca-Cp-N-V GFI .909 .907 .956 AGFI .871 .877 .940 CFI .852 .875 .944 NFI .839 .858 .927

x2
725 948 491

df 74 129 125

RMR .128 .112 .077

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Figure 3 Structure of organizational commitment in the present study

Results With 1,161 employees from FIEs, but only seventy-one employees from SOEs, the proportion of the data was not good. In order to reach a comparatively good balance, 100 employees from FIEs were randomly selected from the rst-step interview. As shown in Table 3, the results show that, while SOE and FIE employees have the same level of affective commitment, the two groups differ when measured according to the other four sub-dimensions of organizational commitment. SOE employees had higher levels of continuance and normative commitment, and a lower level of value commitment, than FIE employees. Examination of the age and place variables shows statistically signicant differences between the two groups. In order to study the relationships between form of economic ownership and organizational commitment, demographic characteristics will serve as control variables because they have been proven to be antecedent variables of organizational commitment. Correlations Correlations are computed for all the antecedent variables and different organizational commitment components. These values are shown in Table 4. According to the general
Table 3 Comparison of SOEs and FIEs SOEs (n = 71) Antecedent variables Age** Gender Status Job role** Payment satisfaction Supervisor satisfaction Organizational commitment Affective commitment Active continuance commitment* Passive continuance commitment** Normative commitment** Value commitment**
Notes *Group difference is statistically signicant at p.05. **Group difference is statistically signicant at p , .01.

FIEs (n = 100) 1.92 0.40 0.27 0.38 3.29 3.17 3.36 2.82 2.75 2.55 4.62

3.24 0.31 0.25 0.59 3.32 3.37 3.24 3.18 3.61 3.01 4.28

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Table 4 Means, standard deviation and intercorrelations among study variables (n 171) Mean 3.312 2.968 .393** .064 .412** .406** .266** .383** .094 2.154* .126 .058 2.191* 2.393** 2 .228** .272** .136 3.109 2.743 4.481 0.585 0.989 0.620 0.494 1.077 0.981 0.923 SD 1 2 3 4 5 6 7 8 9 10 11

1 2

4 5 6

7 8 9 10 11 12

Affective commitment Active continuance commitment Passive continuance commitment Normative commitment Value commitment Form of economic ownership Age Gender Status Job role Payment satisfaction Supervisor satisfaction 2.468 0.363 0.263 0.468 3.304 3.251 1.019 .002 .096 .362** .245** 2.093 0.482 2 .021 2.154* 2.163* 2 .070 .141 0.442 .000 .127 2.098 2 .095 .029 0.500 2 .179* .070 2.033 2 .159* 2.094 1.256 .416** .149 .300** .251** .206** 1.415 .251** .248** .046 .211** .249** 2 .640** .092 2 .216** .018 .052 2.009 2 .209** .018 .195* 2 .013 .049 .060 2 .069 .065 .029 .132 .078 .138 2.134 2059

.231**

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Notes *p.05; **p.01.

661

662 The International Journal of Human Resource Management rule of thumb, the correlations of the data should not exceed .75 (Tsui et al., 1995). The highest correlation in the present sample was between age and tenure at r :640 and it does not present a serious multicollinearity problem. Form of economic ownership is negatively related to passive continuance commitment (r 2:393; p , .01) such that SOE employees demonstrated a higher level of commitment than FIE employees. A positive relationship between form of economic ownership and value commitment (r :272; p , .01) shows that FIE employees have a stronger sense of value congruence with the company. Moreover, no statistically signicant relationship is found between form of economic ownership and affective commitment. These results are consistent with hypotheses 1, 3 and 5. Although the negative relationship shown between normative commitment and form of ownership (r 2:228; p , .01) suggests a higher normative commitment of SOEs, it may be the result of a higher average age in SOEs. However, a negative relationship (r 2:191; p , .05), suggesting a higher level of active commitment in SOEs, is not consistent with hypothesis 2. Hierarchical multiple regression analyses A two-step hierarchical multiple regression was conducted to determine whether or not different forms of economic ownership have an effect on organizational commitment after controlling for the combined effects of demographic characteristics, payment satisfaction and supervisor satisfaction. In the rst step, six control variables (age, gender, status, place, payment satisfaction and supervisor satisfaction) were entered; in the second step, form of economic ownership was entered. The results of hierarchical multiple regression analyses are shown in Table 5. For all of the regressions on
Table 5 Hierarchical multiple regression analyses (n 171) Variables Affective commitment Form of economic ownership Payment satisfaction Supervisor satisfaction Active continuance commitment Form of economic ownership Gender Supervisor satisfaction Passive continuance commitment Form of economic ownership Payment satisfaction Normative commitment Form of economic ownership Payment satisfaction Supervisor satisfaction Value commitment Form of economic ownership Supervisor satisfaction

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ba

DR 2
.187 2.003

R2 .215

F 7.508**

df 170

.369 .167 2 .209 2 .185 .211 2 .289 .311

5.113** 2.329* 2 2.123* 2 2.430* 2.799** 2 3.231** 4.519** .109 .020 .145 3.956** 170

.259 .042 .150 .009

.290

9.495**

170

.185

5.271**

170

.199 .154 .375 .231

2.691** 2.089* 3.926** 3.146** .157 .074 .192 5.535** 170

Notes Only statistically signicant values are noted. *p.05; **p.01. a The bs shown here are standardized regression coefcients.

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commitment, the signicance of the ANOVAs reached the p , .01 level. Form of economic ownership is demonstrated to be a signicant predictor of active continuance commitment (b 2:209; t 22:123; p , .05), passive continuance commitment (b 2:289; t 23:3231; p , .01) and value commitment (b :375; t 3:926; p , .01). These results indicate that SOEs have a higher level of passive commitment and a lower level of value commitment than FIEs do and support hypotheses 3 and 5, but again, consistent with the result of correlations, hypothesis 2 is not supported. Form of economic ownership is not a predictor of affective commitment DR 2:004; and, consistent with the intercorrelations, hypothesis 1 is supported, i.e. no difference in affective commitment between SOEs and FIEs is conrmed. With respect to normative commitment, b was not statistically signicant and, therefore, hypothesis 4, i.e. that SOEs and FIEs have the same level of normative commitment, was supported. Covariance structural analysis Covariance structural analysis is used to re-conrm the model. Because the sample is only 171 and not over 1,000, both GFI and chi-square are normally important indices for model ts. The model shows a considerably good tness of 0.98 and chi-square of 23 (df 15). This is considered a reasonably good t model. The result of the covariance structural analysis is shown in Table 6. The relationships between form of economic ownership and each sub-dimension of organizational commitment are consistent with the results of multiple regression analyses. While negative path coefcients suggest that active continuance and passive continuance commitment levels in SOEs are higher than those in FIEs, the positive path coefcient suggests that value commitment is higher in FIEs. Discussion Considering the results of correlation, multiple regression analyses and covariance structural analysis, hypotheses 1, 3, 4 and 5 are supported and hypothesis 2 has not been supported. With respect to the reasons why the results do not support hypothesis 2, further consideration is required. A higher level of active continuance commitment has been hypothesized in FIEs; however, it is likely to correspond to the situation of only a small number of elite employees working in FIEs. They will be given preferential treatment over other employees. To most rank-and-le employees, although periodic pay rises are expected, promotion and on-the-job training opportunities are limited. Employers will regard most rank-and-le employees as the dispensable employees who may be red at any time if necessary. Most manual workers from local districts, who expect to go back to their home towns, do not feel long-term active continuance commitment. On the contrary, in SOEs, although average salary is lower than in FIEs, most employees work for the company in the expectation of lifetime employment and there may be long-term developmental opportunities available to them. Therefore, although the active continuance commitment of a small number of FIE employees may be much higher than levels measured in typical SOE employees, the average score of FIE employees is lower than that of SOE employees. For state-owned enterprises In initial studies into organizational commitment, researchers expected that the exploration of organizational commitment would help to explain the reasons for

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Table 6 Standardized path coefcients for covariance structural model (n 171) Df 15 .013 2 .034 2 .043 2 .094 .370** .171* 2 .102 2 .185* .086 .082 .118 .211** .144 2.121 2.118 2.018 .313** 2.036 .128 2.018 2.118 2.141 .200** .155* Form of economic ownership Age Gender Status Job role Payment satisfaction Supervisor satisfaction .068 2 .207* 2.290** 2.158 Affective commitment Active continuance commitment Passive continuance commitment Normative commitment Value commitment .373** .152 .125 2 .027 2 .007 .143* .231**

GFI

NFI

x2

0.98

0.95

23

664 The International Journal of Human Resource Management

Notes *p , .05; **p , .01.

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employee performance. Most of them did not succeed in nding any direct or apparent relationship between organizational commitment and performance. As research into this area developed, researchers began to recognize that organizational commitment is not one-dimensional, but consists of several different components, all of which contribute to employee organization linkages. The limitations of initial research into this area have been re-examined and the opinion that different commitment components could inuence consequence variables has been accepted. In the case of SOEs, comparatively high passive continuance commitment and low value commitment are demonstrated. This may be viewed by management in a negative light because continuance commitment has been proven in some cases to be negatively related to performance (Meyer et al., 1989, 1993; Hackett et al.). Stable employment relationships and fringe benets (albeit low) are normally guaranteed, thus leading to an over-burden on enterprises with too many high passive continuance commitment employees. They will not leave the enterprise because they are afraid of losing their present jobs, but at the same time they will not make their utmost efforts to contribute. Over-protection is likely to result in low motivation. Employees have no intention of contributing to the enterprise and are effectively free riders. It is clear that high passive continuance commitment employees with low motivation dissociate themselves from enterprise objectives. Although the existing Chinese social system may make it difcult for individual employers to change the current pattern of excess passive continuance commitment, it may be easier to put into practice strategies aimed at fostering value commitment. Human resource management practices in FIEs set the precedent for SOEs to reform their traditional people management practices (Ding and Akhtar, 2001). It has been argued that, under the new reform measures, SOEs have adjusted their management behaviour and organizational structures and have become commercially oriented, as the government intended (Zhang and Parker, 2002). In their efforts to enhance value commitment, simultaneous realization of company goals and individual goals can be linked. Instead of emphasizing abstract community interests previously propagated by the authorities, a commercially oriented modern company should explicitly state its company goals and values to employees. In addition, the realization of individual goals through hard work for the company should be recognized. Thus, enhancing value commitment benets both the company and the individual. Following government reforms, most large SOEs are undergoing some form of restructuring, such as transformation into public, share-holding companies, or adjustment to contract or leasing management systems (Zhu, 1995). A critical way to improve performance of SOEs is to introduce competition in a fair environment, especially by eliminating local government protections (Zheng, 1998). SOEs enjoy the protection of their status but they are more successful and adopt a more prot-oriented management culture if they operate in internationalized and competitive markets rather than in the strategic low-prot, state-dominated sectors (Huchet and Richet, 2002). For foreign-invested enterprises The results of this study highlight both the strengths and weaknesses of human resource policies commonly adopted by Chinese FIEs. The high level of value commitment measured shows a degree of value congruence between employees and employers, thus suggesting that FIE employees have a strong desire to contribute towards the development of the employer. On the other hand, relatively low active continuance commitment is a relative weakness. Staff retention is crucial to building

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666 The International Journal of Human Resource Management an effective workforce and a thriving business (Melvin, 2001). However, it can be concluded from the results of the present study that relatively low continuance commitment will have a negative inuence on a companys efforts to retain productive employees. Low active continuance commitment is likely to be the result of over-emphasizing elite employees. Imparting a sense of fairness is considered an efcient way to win full employee commitment (Brooks and Zeitz, 1999). Great diversity of treatment, beneting only a small part of the elite, will seem unfair to most ordinary employees. Many FIEs and joint ventures controlled by foreign partners are strongly inuenced by foreign management thought, and put such theories into practice in China. For example, in many Japanese joint ventures, employees are divided between blue-collar and white-collar workers at the time of joining the company and each group undertakes different job training. White-collar workers are usually comparatively highly educated employees and are paid closer attention. Among the same white-collar constituency, some employees with special skills, such as strong foreign language abilities, are regarded as the most precious human resources. They enjoy far higher wages and more favourable conditions than other employees. As a result, most rank-and-le employees will nd that they are not paid much attention by the company. Their active continuance commitment would be low and they are likely to leave the company. Some may argue that in China most manual workers are from local districts and, as they will eventually go back to their home towns after a period of working, they should not be paid much attention at all. However, traditional Chinese culture values loyalty and mutually benecial relationships, and an organization will benet in the long run if it cultivates employees organizational commitment (Wong et al., 2001). Once a high level of organizational commitment is reached, employees will take long-term positive action to assist in organizational development. Conclusions The present study examines the organizational commitment levels of Chinese employees from SOEs and FIEs using a ve-factor component model. Hypotheses are suggested in light of the possible factors that may inuence commitment levels of employees from enterprises with differing forms of ownership, given marked differences in terms of employment policies, organizational characteristics and other demographic features as between SOEs and FIEs. After analysis with hierarchical multiple regression analysis and reconrmation of the results with covariance structural analysis, differences are demonstrated in three sub-dimensions. The key ndings of this study are that SOE employees have higher levels of active continuance commitment and passive continuance commitment, and a lower level of value commitment, than employees of FIEs, while no signicant difference is shown in terms of affective commitment and normative commitment. Consequently, four of the original hypotheses are supported by the analysis. One hypothesis, concerning active continuance commitment, is not supported by the analysis, which indicated a low level of active continuance commitment on the part of FIE employees. The implication here is that this is a result of the preferential treatment of a small number of elite FIE employees and a relative lack of opportunities for rankand-le FIE employees. It can be inferred from these differences that, in contemplating appropriate measures designed to foster the commitment levels of Chinese employees, management should recognize that the measures required to achieve such a goal will vary according to form

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of economic ownership (SOEs vs. FIEs). Implications for human resource management in both SOEs and FIEs are discussed. It is suggested that, in the case of SOEs, although the existing Chinese social system may make it difcult for individual employers to change the current pattern of excessive passive continuance commitment, it may be easier to put into practice strategies aimed at fostering value commitment. For FIEs, human resource management may improve staff retention by implementing policies designed to impart a sense of fairness.

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