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    This article was downloaded by: [University College Dublin]On: 11 April 2012, At: 10:35Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House37-41 Mortimer Street, London W1T 3JH, UK

    The Internat ional Journal of Human ResourceManagement

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

    Available onl ine: 17 Feb 2007

    To cite this art icle: Yingyan Wang (2004): Observat ions on the organizat ional commit ment of Chinese employees: comparastudies of stat e-owned enterprises and foreign-invested enterprises, The Internati onal Journal of Human ResourceManagement , 15:4-5, 649-669

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  • 8/2/2019 Performance SOE vs FE China


    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.


    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

    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.

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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)

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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.


    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

    Wang: The organizational commitment of Chinese employees 653

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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


    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.



    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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    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 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


    *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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    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

    Payment satisfaction .311 4.519**

    Normative commitment .150 .185 5.271** 170

    Form of economic ownership .009

    Payment satisfaction .199 2.691**

    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**


    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.


    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


    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

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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.


    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

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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 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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