Internal Market Orientation and Manufacturing Employee Attitudes

CHAPTER ONE

1.1 Introduction

This thesis investigates how redesigned internal market orientations (hereafter IMO) may be able to influence employee attitudes and behaviour in the manufacturing industry. The research aims to develop and test an empirical model linking the extended internal market orientation with employee attitude measured by happiness, morale and organisational performance which include employee productivity and their intention to stay.

This chapter begins by elaborating the research background, establishing the scope of the research, identifying research gaps, initiating research questions and establishing research objectives. Subsequently, this chapter will outline the theoretical and practical contributions of the study to the real world management and academics who would be interested in this topic. The structure of this chapter is briefly summarised below (see Figure 1.1).

 

Research Objectives

Research Background

Research Gaps

Research Contributions

Summary

 

 

Thesis Structure

 

Figure 1.1: Flowchart of Chapter One

1.2  Research Background

People are having difficulties in balancing work and personal life worldwide, regardless of their nationality, religious affiliation, ethnic culture, or gender (Diversity Best Practices, 2011). The continuous demands from both work and family have greatly influenced employee well-being both physically and psychologically. For example, in China, many working parents face challenges to resolve conflicts between their workplace and family life (Lu et al., 2009). Being different from the domestic migrant workers of thirty years ago in China, a new generation of domestic migrant workers has become the major working population in the manufacturing industry.  This new generation has typical characteristics, such as being more self-centred, more aware of their rights and unwilling to work overtime (Cheng et al., 2014). They care more about their working atmosphere, career development (Banister, 2005), and balanced work and family responsibilities (Cheng et al., 2019). They have a higher aspiration for their future than their forefathers (Cheng et al., 2014). Hence, this new generation of domestic migrant workers means new challenges for employee management as they expect more from both work and life (Chan, 2009).

According to Smith (2010), offering flexible work arrangements, special holiday hours, and flexitime could resolve issues between work and life, and make jobs more attractive. Moreover, offering employees’ flexibility within the workplace contributes to improving their performance, and especially productivity (Uba, et al., 2012). Although many academics have proved that organisations can benefit greatly by adopting family-friendly practices, manufacturers in China still have not yet recognised the importance of satisfying employees’ needs and wants and have not made this a priority in employee management. In fact, managers are less willing to adopt practices to accommodate employees’ different needs, such as childcare needs from a family life aspect and less working hours in a work aspect (Xiao and Cooke, 2012). Even more, managers in the manufacturing sectors in China have taken for granted that salary is the only and best way to help with the work-family balance as income has always been considered the most critical contribution to a family (Chen et al., 2018). Most organisations only use personnel policies to reduce the obvious negative impact caused by unhappy employees (Xiao and Cooke, 2012). These assumptions cause organisations to underestimate the importance of work-family balance and take fewer measures for addressing work and family issues (Liu and Zhu, 2013).

In the current Chinese society, people are mainly facing two significant challenges in life, i.e. family care commitment and intensified workload. People are seeking ways to balance their family commitment and work commitment, which may yield harmony, equilibrium, and integration of work and family life (Voyanoff, 2005). Thus, employees expect that their work will not have a great conflict against their personal life and their needs and wants in the family can be considered by their employers (Baral and Bhargava, 2010).

In recent years, academics, HR professionals, policymakers, and occupational health professionals have begun to notice the importance of work-life balance for employees, especially the ones working for manufacturers in China (Xiao and Cooke, 2012). Work-family balance is defined as the extent to which people are equally engaged and equally satisfied with both work and family roles (Clark, 2000). Various studies have discussed that the work-family balance not only leads to a higher level of an individual’s well-being (Halpern, 2005) but also to enhancing employee productivity (Beauregard and Henry, 2009). The work-family balance and work-life balance are usually regarded as the same terminology (Joseph and Sebastian, 2019). This study chooses the work-life balance over work-family balance because the previous term has a broader scope than the latter. Therefore, this study will focus on migrant workers’ needs in life including family life (e.g. children and elderly caring, etc.) and personal life (e.g. entertainment, social activity, friendship, etc.).

To satisfy the needs at work and in life, and to improve the possibility of the work-life balance, this study will adopt the internal marketing philosophy, which regards employees as internal customers and jobs as internal products (Berry et al., 1976). When workers are treated well, they are more likely to trust their organisation. In return, they would deliver outstanding services and try their best to achieve company objectives effectively (Berry, 1981). In order to dismiss the confusion that practitioners struggle when trying to implement internal marketing practices, Lings (2004) developed a construct, namely internal market orientation (hereafter IMO) that attempted to resolve such challenges. Compared with internal marketing, IMO is proposed as an employee-friendly managerial philosophy that affects a firm, as well as a set of operational activities to influence employee attitude and behaviour (Lings and Greenly, 2005).

The concept of IMO that was proposed by Lings (2004) was adapted from the concept of market orientation. Market orientation is an approach that prioritises satisfying customers via identifying, communicating and responding to the needs, wants, expectations of customers (Kohli and Jaworski, 1990). Different scholars have different propositions for market orientation, e.g. Shapiro (1988), Narver and Slater (1990) and Kohli and Jaworski (1990). Paralleling with the market orientation that aims at satisfying external customers, the IMO construct constitutes internal information generation, internal intelligence dissemination, and internal information responsiveness with a purpose to satisfy the needs and wants of internal customers, i.e. employees. Thus, IMO is considered to be a facilitator for the internal market exchange between employees and the employer. When employees’ needs and wants are satisfied, they are more likely to reciprocate to their employer via better performance and high productivity (Modi and Sahi, 2018).

Although existing IMO studies have presented different ways to measure the IMO construct and examine its impacts on staff attitude and behaviour, there is no sufficient study on IMO looking at the life side of employees, which plays an important role in their work directly and indirectly. This study marks the first attempt to explore and build a redesigned IMO construct that covers employee needs and wants in life, namely extended internal market orientation (hereafter EIMO). This construct emphasises employee needs in both work and life and in particular, focuses on identifying the specified needs of migrant workers in the Chinese context. The newly developed EIMO is expected to tackle the conflicts that employees confront between work and life, and aims to improve employee morale, happiness, retention, and productivity.

To develop an effective EIMO construct that is suitable for the Chinese context, this study focuses on IMO adoption in the manufacturing industry, where migrant workers’ needs and wants in both life and work are continuously ignored. Hence, in order for the organisations to understand, communicate, and respond to their employees’ expectations appropriately and promptly, this study plans to use two research methods. Both qualitative and quantitative research approaches will be applied for the above-mentioned research purpose. For qualitative research, in-depth interviews will be conducted among managers and workers in manufacturing. It is hoped the results of the qualitative study will lead to an initial proposition for EIMO. The reliability and validity of EIMO will be tested by the following quantitative study. 

The quantitative study will use a survey technique to test a series of hypotheses that propose relationships between EIMO, and dependent variables. Data is going to be collected from manufacturers in Guangdong Province, China in 2019. Since 2004, Guangdong Province has encountered severe labour shortages (Shi, 2008) due to the ageing population, poor working conditions, unfair treatment towards migrant workers and manufacturers started to relocate to inland China from the south-eastern coastal areas (Guangdong Statistical Yearbooks, 2013). The percentage of migrants employed in manufacturing fell from 36.7 per cent in 2010 to 30.5 per cent in 2016 (China Labour Bulletin, 2017). Although with the sharp decrease in the migrant labour force in Guangdong, Guangdong is still considered as “the world’s factory” based on the scale of its existing manufacturing industry. Within the current working force in Guangdong, 75 per cent are migrant workers (Keegan, 2018). Hence, Guangdong Province is an ideal location for such a study.

1.3  Research Objectives and Questions

Although there is increasing development of IMO research, ambiguity on the conceptualisation of IMO and the application of IMO in both research and practice remains. First of all, IMO adoption has not received sufficient attention except in the service industries. It is necessary to examine the effectiveness of IMO practice for the organisational performance across different industries and sectors. Second, except Yu et al. (2017)’s publication in English, not enough research has been published in English which investigates the implication of IMO in mainland China, regardless that China has the largest manufacturing industry in the world. China accounted for appropriately 50% of global manufacturing output in 2017, and its manufacturing industry output has increased 339% in the past decades (Xiao, 2018). The development of the Chinese manufacturing industry and newly emerged management modes have triggered continuous attention in research and practice. It is hoped that IMO research can somehow contribute to employee management and organisational performance in China from the internal market perspective.

Third, employee expectations nowadays are changing fast due to the ever-changing economic and social environment. They are not just satisfied with having a job but have higher expectations relating to their job, and on how this job may contribute to their personal and family life. In the 21^st century, to obtain a work-life balance is increasingly significant for employees because if there is a conflict between work and life, employees may find it hard to engage in their work fully. The existing IMO construct only focuses on identifying employees’ needs and wants about their work; employees’ needs and wants relating to life and family are neglected. This study proposes an extended IMO construct with items including wants and needs from both the work and life aspects.

Through an understanding of the significance of IMO research, the overall aim of this study is to examine the impact of EIMO and its impact on employees’ attitudes and performance among the manufacturing industry in China. The specific research objectives of this thesis are listed below:

• Apply a systematic literature review approach to examine major literature of internal market orientation, the underlining theories applied, employed research methods, antecedents and different levels of outcomes, the scope of research and identify research gaps.
• Redesign an extended IMO construct and develop measurement items including dimensions relating to employees’ needs into the life aspect.
• Test EIMO as a valid construct and investigate the influence of EIMO on employee attitude and their performance.
• Examine how important the role of a manager is in the relationship between EIMO and employee attitude.
• Provide managerial implications for migrant employee management for organisations in the manufacturing industry in China.

In order to achieve these research objectives, this research will explore specific items of EIMO through qualitative interviews with migrant workers and managers. After the development of the EIMO construct, a quantitative survey will be applied to validate the newly developed construct by factor analysis. In order to examine the various relationships between EIMO and the proposed outcomes, i.e. employee morale, happiness and organisational performance, structural equational modelling will be used to detect these relationships.

1.4  Proposed Research Contributions

This study proposes to make both academic and practical contributions to the area of management studies. By reviewing the existing literature, this study first contributes to outlining key theories that have been used in this area, summarising key research themes, methods and context, and identifying the gaps of existing research. Based on a comprehensive understanding of IMO research, developing an EIMO construct can contribute to broadening the existing IMO research by emphasising its significance and how it impacts the employees’ attitudes and performance. Second, by extending the construct of IMO that includes the life aspect, this study considers the work-life balance in the design of the IMO construct which contributes to employees’ psychological happiness in organisational performance, particularly in terms of employee productivity. Moreover, this study argues for the importance of the supervisor’s support in facilitating the relationship between EIMO and employee attitude.

From the theoretical perspective, this study makes the first attempt to introduce the border theory into IMO study and integrate different theories (e.g. planned behaviour theory and social exchange theory) from psychology and sociology to help develop a new construct, i.e. EIMO and develop hypothesised relationships. The border theory will offer fundamental support for the development of EIMO with a consideration of the increasing challenge of work-life balance for the new generation workers.  The planned behaviour theory is applied to explain the rationale of how an individual’s attitude can affect their behaviour.

Form the practical perspective, by redesigning and developing an extended IMO construct, which includes the understanding of employee needs from both work and family perspectives, the newly developed EIMO measurement can be applied to manufacturers that have difficulties in managing migrant workers. The adoption of EIMO is expected to increase the workers’ perception of work-life balance and enhance their happiness in life. By arguing for the effectiveness of EIMO, this study contributes to the practical world by demonstrating the positive relationships between EIMO and employee attitude and performance in the manufacturing industry.

Moreover, this study contributes to management practice in the manufacturing industry where recruiting and retaining migrant workers is challenging. The supervisor’s moderating effect on the relationship between EIMO and employee happiness provides evidence of the importance of the manager’s management skill. The organisation is suggested to provide leadership training to the supervisors. Also, the managers should consider the proper communication modes (e.g. face to face, social media, mailbox), frequency and content with employees. The organisation is suggested to understand and respond to employee expectation in the workplace via adopting the EIMO programme. For example, the management should provide the migrants who have kids and family responsibility with children schooling opportunities, eldercare service, and a baby caring room in the company; they should consider offering the migrant workers entertainment facilities (e.g. games room, theatre, karaoke room), social activities (e.g. team building, travelling, social gathering), and social insurance; for the workers who have ambitions in their work, the management team should provide them with a selective training programme, constructive feedback on their work, and promotion opportunities etc.

Finally, using China as the research context may shed light on companies in other emerging economies that are facing similar challenges. The outcomes of the research will not only contribute to the involved manufacturers but also the local community and the overall society in general. If migrant workers’ well-being is looked after and enhanced, there will be an overall enhanced social well-being and a more harmonious society.

1.5  Structure of the Thesis

This thesis constitutes nine chapters and each chapter demonstrates different stages in this study. The first chapter proposes a layout of the whole research, which covers a brief introduction of this study, research objectives, research contributions, and a brief elaboration on the methodology. This chapter aims to demonstrate the importance of IMO as a tool in the Chinese context and the contributions for practitioners and academics who are interested in the internal marketing field and would like to adopt IMO in practice. The second chapter covers the research context in this study. It explains why migrant workers in the manufacturing industry in China are worth investigating. The new generation of migrant workers has different demands of their employers. The changes in the new emerging labour force require the organisation to pay more attention to this new work force by understanding their needs and wants, so recruit, train, and design job packages for employees accordingly. The third chapter presents a systematic literature review, including the analysis of existing literature on internal markets, internal marketing, market orientation, internal market orientation. This chapter aims to demonstrate the existing research topics, critique the existing research and identify research gaps. In chapter four, the theoretical background will be introduced to illustrate the fundamental theories applied in this study, such as social exchange theory, planned behaviour theory and border theory.

Following these, a conceptual framework is demonstrated in chapter five. This chapter will give detailed discussions on how this framework is developed and hypothesise the relationships in the framework. There are nine hypotheses in total, which cover the hypotheses on the construction of EIMO and its correlations with employee attitudinal variables, such as happiness and morale, and the outcomes of attitude, e.g. intention to stay and employee productivity. Chapter six will discuss the methodologies applied in this study. In order to clearly explain the methods, the research philosophy, strategy and design will be discussed, and the second half of this chapter will demonstrate why the mixed method is applied and how the data will be collected.

Chapter seven and eight are the chapters for data analysis. Chapter seven will cover the analysis of the qualitative study. The results of the qualitative data will be analysed by using NVivo and then a summary of the qualitative data will be presented. Following the results of the qualitative study, chapter eight focuses on the analysis of the quantitative survey. Data will be tested via factor analysis in SPSS and structural equation modelling in AMOS. This chapter will test the proposed hypotheses and demonstrate the findings from all these statistical tests. The last chapter will discuss the research findings and their applications in both theory and practice. By summarising the study, this chapter further outlines the limitations, offers suggestions for the practitioners, and provides recommendations for future research.

1.6  Summary

This chapter has given a general view and structure of the thesis, including the research gaps, objectives, and contributions. The aims of the thesis are a) to demonstrate the importance to develop an extended internal market orientation which extends from the original construct by including the life side of employees’ needs and wants; b) to argue the importance of EIMO to keep employees’ work and life in balance, which further contributes to improving employee productivity and maintaining employee retention; c) to call for practical attention of the internal market situation and facilitate healthy employee-employer relationships by promoting the adoption of EIMO.  Finally, the findings of this thesis are expected to be beneficial not only to employees and organisations in China but also other similar bodies of interest in emerging countries.