Education, organizational commitment, and rewards within Japanese manufacturing companies in China

Publication Date03 April 2018
DOIhttps://doi.org/10.1108/ER-12-2016-0246
Pages458-485
AuthorKeisuke Kokubun
SubjectHR & organizational behaviour,Industrial/labour relations,Employment law
Education, organizational
commitment, and rewards within
Japanese manufacturing
companies in China
Keisuke Kokubun
Office of Society-Academia Collaboration for Innovation,
Kyoto University, Kyoto, Japan
Abstract
Purpose The purpose of this paper is to investigate the relationship between organizational commitment
(OC) and extrinsic, intrinsic, and social rewards, among employees who work for Japanese manufacturing
companies in China.
Design/methodology/approach Hierarchical regression analysis was utilized to examine survey data
obtained from 27,854 employees, who work for 64 Japanese manufacturing companies in China.
Findings The findings demonstrate that the variables measuring extrinsic, social, and intrinsic rewards
were strongly related to OC, suggesting that the antecedents of OC in Japanese companies are different from
those in other kinds of corporations in China and the West. A further comparison between university
graduates and other employees showed that for graduates, extrinsic and intrinsic rewards had a stronger
influence on OC than social rewards, compared to non-graduates.
Research limitations/implications This study used self-report data from individual respondents, which
may have resulted in common method bias. Future research might consider including supervisor-rated scales
to strengthen the study design and reduce common method bias.
Practical implications As Japanese companies in China have both Western and Chinese characteristics,
they often utilize balanced human resources management (HRM) practices. To enhance their employeesOC,
especially those with less formal education, it is most effective to focus not only on some particular rewards
but also on more varieties of rewards. However, balanced HRM may not be equallyeffective for enhancing the
OC of university graduates, who prefer to obtain more extrinsic and intrinsic rewards and fewer social
rewards. As Japanese companies are sometimes said to be less attractive workplaces, especially for university
graduates, the results of this study could help HR professionals revise their HRM strategies and employ
workers who can contribute to their Chinese branches on a long-term basis.
Originality/value This research investigates how employees of Japanese companies in China could have
higher OC, by focusing on the difference between university graduates and non-graduates and utilizing a
large volume of their opinion data.
Keywords China, Organizational commitment, Exploratory factor analysis, Rewards, Japanese companies
Paper type Research paper
Introduction
Among developingcountries, China is the largest recipient of foreign directinvestment (FDI)
and has the largest number of employees who work for foreign companies (UNCTAD, 2010).
In 2004, approximately 24 million workers (3 percent of Chinas total employment) were
employed by foreign companies in China (UNCTAD, 2004). Japanese companies continue to
benefit from Chinas growth and remain one of the leading investors in China, accounting
for 6.5 percent of Japans total FDI in 2015 ( Japan External Trade Organization, 2016b).
In response to the yens appreciation against the dollar following the 1985 Plaza Accord, the
Japanese investment in China hasshown a remarkable increase:it accounted for 6.0 percentof
the total effectiveFDI in 2013 and Japan becameChinas third largest source of foreigncapital,
following Hong Kong and Singapore (Japan External Trade Organization (JETRO), 2016a).
Employee Relations
Vol. 40 No. 3, 2018
pp. 458-485
© Emerald PublishingLimited
0142-5455
DOI 10.1108/ER-12-2016-0246
Received 24 December 2016
Revised 13 October 2017
21 December 2017
Accepted 21 December 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0142-5455.htm
This research was done as a project of International Economy and Work Research Institute when the
researcher was a member of it.
458
ER
40,3
The number of Japanese companies located in China at the end of 2012 was 23,094,
which accountedfor the highest share (7.9 percent)of total foreign companies located in China
(The Japanese Chamber of Commerce and Industry in China, 2016). Similarly, 1.62 million
employees worked for Japanese companies in China in 2015, which was 40.5 percent of
total employees of Japanese companies across Asia (Ministry of Economy, Trade and
Industry of Japan, 2016 ).
However, foreign companies in China face a major problem: they must determine how to
manage and retain the local employees. Japanese companies have significant problems in
this regard, both in terms of high employee turnover and of competing for the best
employees. Surveys have indicated that Japanese companies in China rarely if ever rank
among the most popular employers, and are even frequently listed among foreign
companies that people least want to work for (Zhang, 2003). These difficulties may have to
do with a decrease in their rank and share in the total effective FDI in this country, from
third (6.0 percent) in 2013 to fifth (2.5 percent) in 2015. During this period they were
outstripped by both Taiwan and Korea ( JETRO, 2016a).
Given this situation, it is necessary to determine how Japanese companies can reduce
their employee tu rnover rates or attract the best employees in China. To meet these goals,
this study analyses the antecedent of organizational commitment (OC) and how those
antecedents differ between university graduates and other workers who are employed by
Japanese manufacturing firms in China. Here, OC is defined as an employees state of
being committed to assist in the achievement of the organizations goals, and involves the
employees levels of identification, involvement, and loyalty (Caught et al., 2000). OC is
seen as a prime explanation for why some people desire to remain employed while others
do not (Allen and Meyer, 1990; Mowday et al., 1982; Perryer et al., 2010; Steers, 1977) or
why some have a high work performance while others do not (Meyer et al., 2002;
Phipps et al., 2013). Likewise, this study focuses on university graduates because
previous research indicated that the future growth of Japanese multinational
corporations (MNCs) will depend on their international human resource management
(HRM) efforts t o attract, develo p, motivate, and retain the best and brightest local talents
(Furusawa et al., 2016). As described below, however, Japanese companies have largely
failed to attract such laborers. The study may also contribute to the creation of jobs for
those who cannot find work due to a labor market mismatch, by attracting more talent to
Japanese as well as other foreign companies who need high-OC employees with
appropriate skills. In this context, a labor market mismatch is the difference between
the talents a company wants and those a job seeker has, and has become more serious
due to the economic slowdown and an increase in higher education opportunities
(The Japan Research Institute, 2008).
Literature review
Japanese companies in China
Japanese companies have come up with a distinct HRM model, characterized by high levels
of commitment, loyalty, productivity, and product quality, along with lower rates of
turnover, absenteeism, and industrial conflict (Colignon et al., 2007). These features of the
Japanese manufacturing workplace are said to be strongly present in Japanese overseas
subsidiaries, and may be even more appropriate for countries that are developing
economically (Wasti, 1998). Accordingly, several studies have investigated if and how
Japanese companies can transfer this model to their overseas operations (e.g. Komai, 1989;
Konomoto, 2000). Along similar lines, elements of the iron rice-bowlwidely observed in
Chinese society, such as secure employment or an emphasis on seniority, seem to resemble
the elements of Japanese management, even though Japanese companies are often included
in the Western group among foreign companiesin China.
459
Japanese
manufacturing
companies
in China

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