UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Bao Nghi INNOVATIVE WORK BEHAVIOR: THE ROLE OF PARTICIPATIVE LEADERSHIP, EXTERNAL WORK CONTACTS AND SELF-LEADERSHIP SKILLS IN INFORMATION TECHNOLOGY SERVICE INDUSTRY IN VIETNAM MASTER OF BUSINESS (HONORS) SUPERVISOR: Dr TRAN PHUONG THAO Ho Chi Minh City Year 2017 Abstract The thesis investigates the correlation of participative leadership, external work contacts and self-leadership skills on employee innovative work behavior (IWB) in information technology service industry in Vietnam Using a sample of 369 employees from 15 IT service companies in Vietnam, the results showed that participative leadership, external work contacts and self-leadership skills effects IWB positively The empirical results also suggested that participative leadership, external work contacts and self-leadership skills are powerful motivational tools that may help employees to depict IWB Key words Innovative work behavior, self-leadership skills, participative leadership, external work contacts, information technology service industry, Vietnam Acknowledgement I would like to explicit my sincere acknowledge to my supervisor, Dr Tran Phuong Thao for the insightful guidelines, valuable recommendations, and feedbacks during my research time This research could not be possible without her evaluation in each stage which I spent My next appreciation also sends to participants of the survey They are colleagues, friends in many information technology companies in HCM city They shared their time to assist me to answer the questionnaire All their contributions have helped me to have the successful study TABLE OF CONTENTS ACKNOWLEDGEMENT ABSTRACT TABLE OF CONTENTS LIST OF FIGURES LIST OF TABLES INTRODUCTION LITERATURE REVIEW AND HYPOTHESIS 2.1 The effect of Participative leadership on IWB .10 2.2 The effect of External Work contacts on IWB 11 2.3 The effect of self-leadership skills on IWB 12 METHODOLOGY 13 3.1 Procedure and Sample .13 3.2 Measurement scales 16 DATA ANALYSIS AND RESULT 20 4.1 Measure validation 20 4.2 Confirmatory Factory Analysis (CFA) 26 4.3 Structural result .29 4.4 Hypothesis testing 30 DISCUSSION 32 5.1 Implications for managers 32 5.2 Conclusion 34 5.3 Limitations and directions for future research 35 APPENDIX A APPENDIX B REFERENCES Introduction Innovation is one of vital factors leading the organization to success in business in the long term Indeed, it is a factor which brings competitive advantages for organizations to survive and success in today business market through the development and implementation of new ideas disclosed to products, processes and services (Anderson, Potocnik, & Zhou, 2014; Lin & Liu, 2012) IWB is the purpose establishment, debut, and applicant new concept for improving productive processes, and product designs in organization (West & Farr, 1989) Hence, IWB show a vital part in any organizations for their further development in our challenging business environment Innovation is a vital source for organization for surviving in economy because of the change in technology, global competition and new regulations Thus, there is a need for examining all factors which increase the IWB for employees (Argawal, 2014) In the body of literature, there are different components, which aim to lead business organization in motivating their employees for best outcomes include participative leadership, external work contacts (Jong & Hartog, 2007), and selfleadership skills (Manz, 1992) Firstly, participative leadership is the leadership style in which leaders give their employees the right to influence important decisions, design and guide their own tasks by implement decision-making process (Yukl, 2002) Similarly, participative leadership is found to enhance very positively IWB at working place (Krause, 2004) Secondly, external work contacts is the way of exchanging information for better, and more expertise knowledge with other people outside of their organization, such as customers, scientists, and professors Indeed, Kimberly and Evanisko (1981) believed that more communicating with external contacts is the main source to lead more innovation at works for employees So, there is a positive correlation between external work and IWB (Perry-Smith & Shalley, 2003) Thirdly, self-leadership skills are an important factor which influences IWB Manz (1992) stated that self-leadership skills are a development in which staff members inspire and lead themselves in order to gain preferred manners and results Organizations need to improve self-leadership skills for their employees in order to bring back the best performance In addition, self-leadership skills are positively effect on IWB (Carmeli & Weisberg, 2006) There were many prior studies examined the impact of different styles of leadership on IWB in a wide range of industries including information technology (IT) service industry However, in the context of developing country like Vietnam, there is still a gap in research on leadership in a specific industry such as IT service industry Additionally, IT service industry is growing significantly in Vietnam with high productivity Moreover, Vietnam has become one of the most attractive nations where foreign IT investors want to outsource their service, software render and solutions because of low paid salary with high quality workforce Additionally, according to the report by the national workforce master plan (Vietnam lacks high-quality IT workforce, 2016), Vietnam needs to one million workers in IT industry by 2020 (Vietnam lacks high-quality IT workforce, 2016) The main decisive human resources of IT service industry are the programmers and IT engineers who make out software or new solutions in order to bring revenue to company Furthermore, the vast majority of IT workforce is weak in term of skills such as self-study skills, negotiation skills and English proficiency In fact, the radical innovation requirements, quick adapting in advanced technology, and dynamic environment are the main barriers, and real challenging for survival of IT services organizations (Akram, 2016) Hence, IWB in IT working environment could encourage their employees’ innovation for better performance in the market, where technological advancement and global competition are the key things to success in IT industry As a result, innovation is a main task of organization Additionally, organization also can reduce employee’s turnover rate and saving budget for new employees training for long term business development (Popescu & Popa, 2012) Hence, the particular objective of the research is to address the correlation of selfleadership, participative leadership, and external work contacts on IWB in a context of an developing country In other words, the overall purpose of this research is to examine some items affecting the IWB in IT service provider industry in Vietnam Three specific research objectives are shown as follow: - Examine the effect of participative leadership on IWB in the IT service industry in Vietnam - Examine the effect of external worked contacts on IWB in IT service industry in Vietnam - Examine the effect of self-leadership skills on IWB in IT service industry in Vietnam In the study, target interviewees are employees who are working at IT service industry in Vietnam The result of the research will contribute to fill the gap of the influences of different leadership on IWB within IT services industry in the context of Vietnam This empirical result also provide applicable source for managers used as preference for services outsourcing making decision and assists managers in knowing well the important of IWB into driving business more successfully through choosing appropriated leadership style in Vietnam Literature review and hypothesis The theory of individual innovation is to understand what innovative work behavior is and how leader understands the phenomenon within the individual (Jong & Hartog, 2010) Similarly, according to Yi (2006), individual innovativeness helps to distinguish passion employees towards particularly of subject or industry Managers will identify who is the true innovative employees and put them in the right position or tasks based on their vision and future goals Indeed, the eagerness of a person is to try out new knowledge and material and the result of innovative motivation from managers to their employees (Moore, 2002) Therefore, in order to deeply understand the vital of the influences of leadership styles into IWB of employees within IT industry services, the three factors namely participative leadership, external work contacts, and self-leadership skills are examined Jong and Hartog (2010) stated that participative leadership allows employees to get involved in making important decision with their supervisors It means that participative leadership has a very strong relationship with IWB Secondly, external work contacts also have employees to increase their innovation at working place, because it allows employees to have a chance to communicate with the people outside the organization from different industries Finally, self-leadership skills are the combination of behavioral and cognitive strategies which allow the employees to be rewarded for their well performance and self-motivation for innovation enhancement (Houghton & Neck, 2002) Therefore, the IWB has a very strong relationship with three different components such as participative leadership, external work contacts, and self-leadership skills Innovative work behavior is the goal of almost employers from a variety of industries in various countries on over the world, as they realized how important to leadership styles in encouraging their employees' innovation as well as bringing the better development, and success of business Indeed, the concepts discussed within this literature part aim to figure out the relationship between IWB and its components as given in the Figure below: Participative leadership H1 H2 External work contacts Behavior-focused strategies Natural reward strategies Innovative work behavior H3 Self-leadership skills Constructive thought patterns Figure 1: Conceptual model 2.1 The effect of Participative leadership on IWB According to Yukl (2002), the participative leadership is the process in which leaders responsible for guiding, controlling, and then allowing their employees to join making important decision with their leaders When participate leadership is conducted by leaders, there is an increasing concern and participate of employees (Sax and Torp, 2015) Indeed, leaders play a vital and significant role in managing efficiently the working place environment, where the leaders might provide their employees with sufficient amount of valuable information and feedbacks (Durham, Knight and Locke 10 thể công việc tài Tôi thường nhận hội để khác biệt cách tích cực cơng việc, phịng ban, tổ chức tôi, với khách hàng Tôi ý đến vấn đề không thường xuyên công việc, phận, tổ chức bạn thị trường 27 Tôi tạo ý tưởng giải pháp để vấn đề giải 28 Trong công việc tôi, tơi xác định vấn đề rộng rãi để có nhìn sâu sắc vào họ? 25 26 II THÔNG TIN CÁ NHÂN Xin vui lòng cho biết Anh/ Chị thuộc giới tính gì? □ Nam □ Nữ Xin vui lịng cho biết Anh/ Chị thuộc độ tuổi nào? □ 18-21 □ 22-30 □ 31-35 □ >35 Xin vui lòng cho biết trình độ Anh/ chị □ Bằng cao đẳng □ Bằng đại học □ Bằng cao học □ Khác Mức thu nhập trung bình tháng Anh/Chị bao nhiêu? □ Dưới triệu VNĐ/tháng 39 □ Từ triệu- 10 triệu VNĐ/tháng □ Từ 10 triệu – 20 triệu VNĐ/tháng □ Từ 20 triệu VNĐ/tháng trở lên Thâm niên Anh/Chị: □ ≤ năm □ 1-3 năm □ – năm □ > năm APPENDIX B KMO and Bartlett's Test 40 Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Approx Chi-Square Sphericity df Sig .911 7605.548 351 000 Communalities Extractio Initial n Behavior1 Behavior2 Behavior3 Behavior4 Reward1 Reward2 Reward3 Reward4 Constructive Constructive Constructive Constructive Contacts1 Contacts2 Contacts4 Contacts5 Leadership1 Leadership2 Leadership3 Leadership4 Leadership5 Leadership6 Innovative1 Innovative2 Innovative3 Innovative4 Innovative5 738 819 779 704 763 761 642 802 767 864 807 733 789 812 647 867 736 805 681 709 755 833 591 595 746 756 732 753 536 531 524 555 621 639 492 668 584 586 442 786 805 781 812 547 552 542 544 677 693 518 794 633 601 452 41 Communalities Extractio Initial n Behavior1 738 767 Behavior2 819 864 Behavior3 779 807 Behavior4 704 733 Reward1 763 789 Reward2 761 812 Reward3 642 647 Reward4 802 867 Constructive 736 805 Constructive 681 709 Constructive 755 833 Constructive 591 595 Contacts1 746 786 Contacts2 756 805 Contacts4 732 781 Contacts5 753 812 Leadership1 536 547 Leadership2 531 552 Leadership3 524 542 Leadership4 555 544 Leadership5 621 677 Leadership6 639 693 Innovative1 492 518 Innovative2 668 794 Innovative3 584 633 Innovative4 586 601 Innovative5 442 452 Extraction Method: Principal Axis Factoring Total Variance Explained 42 Initial Eigenvalues Factor Total % of Variance Extraction Sums of Squared Loadings Cumulative % Total % of Variance Cumulative % Rotation Sums of Squared Loadingsa Total 9.339 34.590 34.590 9.055 33.537 33.537 3.540 13.110 47.700 3.252 12.044 45.581 2.408 8.919 56.619 2.149 7.960 53.541 2.314 8.570 65.190 2.026 7.505 61.047 1.574 5.830 71.019 1.310 4.851 65.897 1.444 5.350 76.369 1.171 4.337 70.234 559 2.071 78.439 536 1.984 80.423 526 1.950 82.373 10 491 1.820 84.193 11 447 1.654 85.847 12 399 1.478 87.325 13 376 1.393 88.719 14 339 1.254 89.973 15 321 1.189 91.162 16 288 1.068 92.230 17 264 979 93.209 18 245 909 94.118 19 230 852 94.970 20 210 777 95.747 21 204 754 96.501 22 191 706 97.207 23 182 675 97.882 24 179 661 98.543 25 146 540 99.084 26 132 487 99.571 27 116 429 100.000 Extraction Method: Principal Axis Factoring a When factors are correlated, sums of squared loadings cannot be added to obtain a total variance Factor Matrixa 43 5.046 4.773 5.558 6.059 5.399 6.101 Factor Behavior2 732 -.323 Behavior3 682 -.350 Innovative2 656 Innovative4 655 Behavior1 647 Behavior4 646 -.315 Reward4 645 -.373 Constructive 624 Reward2 624 -.339 Reward1 619 -.322 Constructive 610 Reward3 605 Innovative3 600 Innovative5 589 Constructive 585 Constructive 553 Innovative1 547 Contacts2 530 493 Contacts4 524 443 Contacts1 523 476 Leadership4 519 397 Contacts5 509 476 Leadership2 492 397 Leadership3 447 414 Leadership5 428 551 Leadership6 459 523 Leadership1 444 457 Extraction Method: Principal Axis Factoring a factors extracted iterations required -.389 -.392 -.461 -.408 -.377 333 -.307 410 -.315 -.346 -.316 336 308 305 322 -.334 415 -.365 305 341 -.343 -.423 -.449 -.412 -.301 -.311 301 -.335 -.434 359 389 Pattern Matrixa 44 Factor Leadership6 853 Leadership5 848 Leadership3 739 Leadership1 733 Leadership2 704 Leadership4 684 Contacts5 915 Contacts2 886 Contacts4 882 Contacts1 879 Reward4 937 Reward2 899 Reward1 892 Reward3 764 Behavior1 Behavior2 Behavior3 Behavior4 Constructive Constructive Constructive Constructive Innovative2 Innovative3 Innovative1 Innovative4 Innovative5 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization a Rotation converged in iterations Structure Matrix 45 904 888 885 856 927 921 811 747 948 803 740 665 545 Factor Leadership6 829 Leadership5 817 301 Leadership1 736 Leadership2 732 Leadership3 732 Leadership4 729 334 Contacts5 324 900 Contacts2 370 897 Contacts1 347 886 Contacts4 323 883 Reward4 930 Reward2 900 Reward1 887 Reward3 801 Behavior2 560 Behavior3 520 Behavior1 483 Behavior4 488 Constructive 336 Constructive Constructive 379 Constructive Innovative2 312 352 Innovative3 304 Innovative4 349 367 Innovative1 334 321 Innovative5 303 376 331 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization Factor Correlation Matrix 46 309 525 520 507 475 928 897 874 856 363 309 317 342 460 440 368 402 313 303 336 345 361 368 357 386 373 359 408 451 429 386 398 414 912 475 378 895 474 451 837 447 365 770 451 412 336 416 303 363 439 462 516 306 405 887 792 762 710 657 Facto r 1.000 381 226 287 381 1.000 263 262 226 263 1.000 569 287 262 569 1.000 256 213 372 468 384 399 426 467 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization 256 213 372 468 1.000 539 384 399 426 467 539 1.000 Descriptive Statistics N Behavior1 Behavior2 Behavior3 Behavior4 Reward1 Reward2 Reward3 Reward4 Constructive1 Constructive2 Constructive3 Constructive4 Contacts1 Contacts2 Contacts3 Contacts4 Contacts5 369 369 369 369 369 369 369 369 369 369 369 369 369 369 369 369 369 Minimu Maximu m m 1 1.0 1 1 1 1 1 1 1 5 5.0 5 5 5 5 5 5 5 47 Mean 4.01 3.96 3.970 4.02 3.85 3.84 3.74 3.75 3.51 3.56 3.74 3.38 2.21 2.25 3.04 2.25 2.32 Std Deviation 746 753 7566 759 769 797 764 795 927 907 826 949 836 914 1.363 866 921 Leadership1 Leadership2 Leadership3 Leadership4 Leadership5 Leadership6 Innovative1 Innovative2 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Examine the effect of participative leadership on IWB in the IT service industry in Vietnam - Examine the effect of external worked contacts on IWB in IT service industry in Vietnam - Examine the. .. research in order to clarify the effect of participative leadership, external work contacts and self- leadership skills on innovative work behavior in information technology service industry in Vietnam. ..Abstract The thesis investigates the correlation of participative leadership, external work contacts and self- leadership skills on employee innovative work behavior (IWB) in information technology service