Performance SOE vs FE China

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Observations on the organizational commitment ofChinese employees: comparative studies of state-owned enterpr ises and foreign-invested enterpr isesYingyan Wang

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Observations on the organizationalcommitment of Chinese employees:comparative studies of state-ownedenterprises and foreign-investedenterprises

Yingyan Wang

Abstract Although recent research has begun to touch upon the organizationalcommitment of Chinese employees, most studies have been limited to the transposition ofWestern methodology to a Chinese context. This paper examines two groups of Chineseemployees, those working in state-owned enterprises (SOEs) and those working in foreign-invested enterprises (FIEs), and compares the organizational commitment of each group.In order to reflect Chinese characteristics more accurately, the present study useda questionnaire incorporating items drawn from previous Chinese and Western studies.The various multidimensional structures of organizational commitment put forward byboth Eastern and Western researchers to date have been re-examined using a sample of1,232 industrial employees. Results indicate that a five-factor component model, includingaffective commitment, active continuance commitment, passive continuance commitment,normative commitment and value commitment, fits the data best. The key findings of this

study are that SOE employees have higher levels of active continuance commitment andpassive continuance commitment, and a lower level of value commitment, than employeesof FIEs. It can be inferred from these differences that, in contemplating appropriatemeasures designed to foster the commitment levels of Chinese employees, managementshould recognize that the measures required to achieve such a goal will vary according toform of economic ownership (SOEs vs. FIEs). Implications for human resourcemanagement 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 e t 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

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

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:

[email protected]).

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


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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 define 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 affectivecommitment, 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 sub-

dimensions 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 affectivecommitment, continuance commitment, normative commitment and value commitment.

Another Japanese study undertaken at around the same time confirmed 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 identified in

the Japanese studies referred to above.

650 The International Journal of Human Resource Management


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In China, Ling et al. (2001) once proposed a five-factor model (Figure 2), including

affective commitment, normative commitment, ideal commitment, economic commit-

ment 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 reflects 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 influences.

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

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

Wang: The organizational commitment of Chinese employees 651


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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 employeeemployer 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 significant changes since the implementation of

reform policies from the late 1970s. Chinas Open Door policy led to a massive influxof 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 influence 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 forSOEs (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 efficient 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 Neither agreenor disagree

Disagree n

1 I admire those working in FIEs. 42.4% 19.6% 38.0% 1,161

2 I admire those working in SOEs. 55.4% 20.2% 24.4% 1,108

3 If I change my job I would like to work

in an SOE.

30.6% 57.0% 12.4% 1,106

4 If I change my job I would like to work

in an FIE.

16.6% 60.9% 22.5% 1,108



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SOEs (National Bureau of Statistics of China, 2002), and they make a significant

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 significantly 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 influence 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 aone-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

reflect 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. Confirmative 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 filled by executives dispatched by parent companies.

To Chinese employees, these executives can appear impersonal and interested only in

achieving the financial targets set by their parent companies. To most lower-rankemployees, it is difficult to build a rapport with, show emotional affinity 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



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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 flux, it is difficult 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.

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-sacrifice commitment and low-alternative commitment.

High-sacrifice commitment suggests that individuals develop an attachment to the

organization because of the benefits which would be forgone upon departure; low-

alternatives 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 five-factor model, can also be regarded as a form of

continuance commitment. However, ideal commitment is different from the

traditional high-sacrifice/low-alternative formula in that ideal commitment representsa 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 identified in previous Chine se r esearch 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 reflects an individuals lack

of job alternatives, and therefore also corresponds to the traditional concept of low-

alternative 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 reflects stronger financial incentives in FIEs. Moreover, relatively

complete merit-rating systems and fringe benefits 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 firms 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 efficiency 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 inflexibility.

In China, each citizen is required to register his official place of residence with the local

government. Residence registration was initially used to control population flows, and

has been modified to allow some rural residents to enter cites and urban residents to move

between cities (China Business Review, 2001). Nevertheless, the system remains

inflexible. For instance, an individual who wishes to pursue working opportunities awayfrom the town or city in which he is officially registered will find it difficult to change his

officially 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 find it far more difficult 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 fired 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 satisfied. As soon as they



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find 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.

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 qualified employees has

become a serious problem. On the other hand, SOEs have traditionally provided a variety

of basic benefits 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 inefficientproduction 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.Valuecommitmentrefers 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 ofaffective commitment of Chinese employees, Chen and Francesco (2003) suggested that

affective commitment might in fact reflect more of an emotional attachment to the people

within theorganization rather than to theorganization 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 define 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 benefits 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 high-

ability 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 influence 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 difficult for rank-and-file

employees to feel value congruence with the company. Furthermore, those employees

whose conduct leads to deleterious consequences for the company are not likely be

fired 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 findings 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 first 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 inflow 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 first 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



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employees participated in the study include three SOEs and four FIEs. Although detailed

financial statements were not examined, none of the enterprises included in this study

faced financial difficulties. All participants were formal Chinese employees. The final

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 non-

manual workers; 1,056 were non-managerial employees and 176 were managers.

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 ageand tenure, have been proven to be antecedent variables of affective

commitment in a study using introductory psychology students and university employeesas a sample (Meyer and Allen, 1984), but this conclusion was not confirmed 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 1019; 2 209; 3 309:

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 specific salaries, payment satisfaction was measured

by asking respondents Are you satisfied 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 paymentsatisfaction 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

influence of cultural factors and disagreements over particular sub-dimension definitions

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 specifically 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 reflect special Chinese characteristics are cited.

Confirmatory factor analysis method has been used.

Affective commitment In this study, three items quoted from the OCQ (the wordorganization is changed to company) areused 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 find 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 benefits. The original alphas of overall, active and passive

continuance commitment were .73, .79 and .63, respectively.

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

confirmatory 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 confirmatory factor analyses. Among the three estimated

models, the five-factor model of model 3 shows the best fit indices. Another recent

study into Chinese employees commitment reported that, although a five-factoroblique model, including both substantive and method factors, fits the data best, the

three-component models were not appreciably worse (Cheng and Stockdale, 2003).

However, in the present study, the five-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 fit. 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 five sub-dimensions (Figure 3), viewing organizational commitment as a

five-factor sub-dimensional structure, including affective commitment, active

continuance commitment, passive continuance commitment, normative commitment

and value commitment.

Table 2 Confirmatory factor analysis results (maximum likelihood, n 1,232)

Model GFI AGFI CFI NFI x2 df RMR

1 A-C-N .909 .871 .852 .839 725 74 .128

2 A-C-N-V .907 .877 .875 .858 948 129 .112

3 A-Ca-Cp-N-V .956 .940 .944 .927 491 125 .077



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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 first-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 significant 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) FIEs (n = 100)

Antecedent variables

Age** 3.24 1.92

Gender 0.31 0.40

Status 0.25 0.27

Job role** 0.59 0.38

Payment satisfaction 3.32 3.29

Supervisor satisfaction 3.37 3.17

Organizational commitmentAffective commitment 3.24 3.36

Active continuance commitment* 3.18 2.82

Passive continuance commitment** 3.61 2.75

Normative commitment** 3.01 2.55

Value commitment** 4.28 4.62

Notes

*Group difference is statistically significant at p.05.

**Group difference is statistically significant at p , .01.

Figure 3 Structure of organizational commitment in the present study



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Table4

Means,standard

deviationandintercorrelationsamongstudyvariables(n

171)

Mean

SD

1

2

3

4

5

6

7

8

9

10

11

1

Affectivecommitment

3.312

0.981

2

Activecontinuance

commitment

2.968

0.923

.393**

3

Passivecontinuance

commitment

3.109

1.077

.064

.136

4

Normativecommitm

ent

2.743

0.989

.412**

.406**

.266**

5

Valuecommitment

4.481

0.620

.383**

.094

2.154*

.126

6

Form

ofeconomic

ownership

0.585

0.494

.058

2.191*

2.393**

2.228**

.272**

7

Age

2.468

1.019

.002

.096

.362**

.245**

2.093

2.640**

8

Gender

0.363

0.482

2.021

2.154*

2.163*

2.070

.141

.092

2.216**

9

Status

0.263

0.442

.000

.127

2.098

2.095

.029

.018

.052

2.009

10

Jobrole

0.468

0.500

2.179*

.070

2.033

2.159*

2.094

2.209**

.018

.195*

.132

11

Paymentsatisfaction

3.304

1.256

.416**

.149

.300**

.251**

.206**

2.013

.049

.060

.078

2.134

12

Supervisorsatisfaction

3.251

1.415

.251**

.248**

.046

.211**

.249**

2.069

.065

.029

.138

2059

.231**

Notes

*p.05;

**p.01.



15/22

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 significant 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 first 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 ba t DR 2 R 2 F df

Affective commitment .187 .215 7.508** 170

Form of economic ownership 2 .003

Payment satisfaction .369 5.113**

Supervisor satisfaction .167 2.329*

Active continuance commitment .109 .145 3.956** 170

Form of economic ownership 2 .209 22.123* .020

Gender 2 .185 22.430*

Supervisor satisfaction .211 2.799**

Passive continuance commitment .259 .290 9.495** 170

Form of economic ownership 2 .289 23.231** .042


Normative commitment .150 .185 5.271** 170

Form of economic ownership .009


Supervisor satisfaction .154 2.089*

Value commitment .157 .192 5.535** 170

Form of economic ownership .375 3.926** .074

Supervisor satisfaction .231 3.146**

Notes

Only statistically significant values are noted.

*p.05; **p.01.a The bs shown here are standardized regression coefficients.



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commitment, the significance of the ANOVAs reached the p , .01 level. Form of

economic ownership is demonstrated to be a significant 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 confirmed. With respect to normative

commitment, b was not statistically significant and, therefore, hypothesis 4, i.e. thatSOEs and FIEs have the same level of normative commitment, was supported.

Covariance structural analysisCovariance structural analysis is used to re-confirm the model. Because the sample is

only 171 and not over 1,000, both GFI and chi-square are normally important indices for

model fits. The model shows a considerably good fitness of 0.98 and chi-square of 23

(df 15). This is considered a reasonably good fit 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 coefficients suggest that active continuance and passive

continuance commitment levels in SOEs are higher than those in FIEs, the positive path

coefficient suggests that value commitment is higher in FIEs.

Discussion

Considering the results of correlation, multiple regression analyses and covariancestructural 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-file employees, although periodic pay rises are

expected, promotion and on-the-job training opportunities are limited. Employers will

regard most rank-and-file employees as the dispensable employees who may be fired 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 activecontinuance 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



17/22

Table6

Standardizedpathcoefficientsforcovariancestructuralmodel(n

171)

GFI

NFI

x

2

Df

Affective

commitm

ent

Activecontinuance

commitment

Passivecon

tinuance

commitment

Normative

commitment

Value

commitment

0.98

0.95

23

15

Form

ofeconomic

ownership

.068

2.207*

2.290**

2.158

.373**

Age

.013

2.102

.144

.128

.152

Gender

2.034

2.185*

2.121

2.018

.125

Status

2.043

.086

2.118

2.118

2.027

Jobrole

2.094

.082

2.018

2.141

2.007

Paymentsatisfaction

.370**

.118

.313**

.200**

.143*

Supervisorsatisfaction

.171*

.211**

2.036

.155*

.231**

Notes

*p,

.05;**p,

.01.



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employee performance. Most of them did not succeed in finding 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

employeeorganization linkages. The limitations of initial research into this area have

been re-examined and the opinion that different commitment components could

influence 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 benefits (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 difficult 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 belinked. 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 benefits 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 profit-oriented management

culture if they operate in internationalized and competitive markets rather than in the

strategic low-profit, 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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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 influence 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

efficient way to win full employee commitment (Brooks and Zeitz, 1999). Great

diversity of treatment, benefiting 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 influenced

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-file employees

will find 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 beneficial relationships, and an organization will benefit 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 five-factor component model. Hypotheses

are suggested in light of the possible factors that may influence 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 reconfirmation of the results with covariance

structural analysis, differences are demonstrated in three sub-dimensions. The key

findings 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 significant difference is shown

in terms of affective commitment and normative commitment. Consequently, four of

the original hypotheses are supported by the analysis. One hypothesis, concerningactive 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 rank-

and-file 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



20/22

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 difficult 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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