Asia Pacific Journal of Management

, Volume 27, Issue 3, pp 423–443 | Cite as

Organisational determinants of employee turnover for multinational companies in Asia

Article

Abstract

High employee turnover rates among multinational companies (MNCs) in Asia have become an organisational issue, which cannot be sufficiently addressed at the individual level. In this paper, we examine the issue of employee turnover at the organisational level. A group of organisational variables (e.g., training, size, age, industry, percentage of expatriate managers and headquarters’ national base) were tested, using a sample of 529 MNCs in six Asian countries. The standard multiple regressions show that training, size, the length of operation in local subsidiary and nature of industry are significantly related to turnover. An effect of the percentage of expatriate managers present in the local subsidiary on employee turnover appears to be moderate. These results fill a research gap by identifying organisational variables (as opposed to individual characteristics) and contribute to better explanation of employee turnover at firm level. Implications to MNCs in the greater Chinese region and Asia are discussed.

Keywords

Turnover Training Multinational companies (MNCs) Expatriate management Chinese Asia 

References

  1. ADB (Asian Development Bank). 2005. Key indicators 2005—labor markets in Asia: Promoting full, productive, and decent employment. Bangkok: ADB.Google Scholar
  2. Ahmad, K. Z., & Bakar, R. A. 2003. The association between training and organizational commitment among white-collar workers in Malaysia. International Journal of Training and Development, 7(3): 166–185.CrossRefGoogle Scholar
  3. Allen, D., & Meyer, J. 1990. Organizational socialization tactics: A longitudinal analysis of links to newcomers’ commitment and role orientation. Academy of Management Journal, 33(4): 847–858.CrossRefGoogle Scholar
  4. Allen, D., Shore, L., & Griffeth, R. W. 2003. The role of perceived organizational support and supportive human resource practices in the turnover process. Journal of Management, 29(1): 99–118.CrossRefGoogle Scholar
  5. Arthur, J. B. 1994. Effects of human resource systems on manufacturing performance and turnover. Academy of Management Journal, 37(3): 670–687.CrossRefGoogle Scholar
  6. Arthur, M. B., Khapova, S. N., & Wilderom, P. M. 2005. Career success in a boundaryless career world. Journal of Organizational Behavior, 26: 177–202.CrossRefGoogle Scholar
  7. AsiaNews.IT. 2006. Labour shortage at Aceh. www.asianews.it, Accessed Feb. 6, 2006.
  8. Asia Times. 2006. No stopping Asia. www.atimes.com, Accessed Feb. 6, 2006.
  9. Barrick, M. R., & Zimmerman, R. D. 2005. Reducing voluntary, avoidable turnover through selection. Journal of Applied Psychology, 90(1): 159–166.CrossRefGoogle Scholar
  10. Becker, B. E., & Huselid, M. A. 1999. Overview: Strategic HRM in five leading firms. Human Resource Management, 38: 287–301.CrossRefGoogle Scholar
  11. Beer, M., Spector, B., Lawrence, P. R., Mills, D. Q., & Walton, R. E. 1984. Managing human assets: The groundbreaking Harvard Business School program. New York: Free Press, Macmillan.Google Scholar
  12. Bennett, N., Blum, T. C., Long, R. G., & Roman, R. M. 1993. A firm-level analysis of employee attrition. Group and Organization Management, 18(4): 482–499.CrossRefGoogle Scholar
  13. Benson, G. S. 2006. Employee development, commitment and intention to turnover: A test of “employability policies in action.” Human Resource Management Journal, 16(2): 173–183.CrossRefGoogle Scholar
  14. Booth, A., & Snower, D. 1996. Acquiring skills, market failures, their symptoms and policy responses. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  15. Bradley, F. 2002. International marketing strategy, 4th ed. Essex, UK: Pearson Education.Google Scholar
  16. Breukelen, W. V., Vlist, R. V. D., & Steensma, H. 2004. Voluntary employee turnover: Combining variables from the “traditional” turnover literature with the theory of planned behavior. Journal of Organizational Behavior, 25: 893–914.CrossRefGoogle Scholar
  17. Budhwar, P. 2004. Managing human resources in Asia-Pacific. London: Routledge.Google Scholar
  18. Budhwar, P., & Debrah, Y. A. 2009. Future research on human resource management systems in Asia. Asia Pacific Journal of Management, 26: 197–218.CrossRefGoogle Scholar
  19. Carley, K. 1992. Organizational learning and personnel turnover. Organization Science, 3(1): 20–46.CrossRefGoogle Scholar
  20. Cavusgil, S. T., Zou, S., & Naidu, G. M. 1993. Product and promotion adaptation in export ventures: An empirical investigation. Journal of International Business Studies, 24(3): 479–506.CrossRefGoogle Scholar
  21. Chang, L.-Y., & Tam, T. 2004. The making of Chinese business culture: Culture versus organizational imperatives. In E. T. Gomez & H. H. M. Hsiao (Eds.). Chinese enterprise, transnationalism, and identity. London: Routledge Curzon.Google Scholar
  22. Churchill, G. A. Jr. 1979. A paradigm for developing better measures of marketing constructs. Journal of Marketing Research, 16(1): 64–73.CrossRefGoogle Scholar
  23. Dougherty, T., Bluedorn, A., & Keon, T. 1985. Precursors of employee turnover: A multiple sample causal analysis. Journal of Occupational Behaviour, 6: 259–271.CrossRefGoogle Scholar
  24. Dowling, P. J., & Welch, D. E. 2004. International human resource management, 4th ed. London: Thomson.Google Scholar
  25. Dowling, P. J., Welch, D. E., & Schuler, R. S. 1999. International human resource management: Managing people in a multinational context, 3rd ed. Cincinnati: South-Western College.Google Scholar
  26. Evans, P., Pucik, V., & Barsoux, J. L. 2002. The global challenge: Framework for international human resource management. Boston: McGraw-Hill.Google Scholar
  27. Feldman, D. 1976. A contingency theory of socialization. Administrative Science Quarterly, 21: 433–452.CrossRefGoogle Scholar
  28. Fisher, C. 1986. Organizational socialization: An integrative review. Research in Personnel and Human Resource Management, 4: 101–145.Google Scholar
  29. Fischer, R. 2004. Standardization to account for cross-cultural response bias: A classification of score adjustment procedures and review of research in JCCP. Journal of Cross-Cultural Psychology, 35(3): 263–282.CrossRefGoogle Scholar
  30. Glance, N. S., Hogg, T., & Huberman, B. A. 1997. Training and turnover in the evolution of organizations. Organization Science, 8(1): 84–96.CrossRefGoogle Scholar
  31. Goerzen, A., & Beamish, P. W. 2007. The Penrose effect: “Excess” expatriates in multinational enterprises. Management International Review, 47(2): 221–239.CrossRefGoogle Scholar
  32. Goodall, K., & Roberts, J. 2003. Only connect: Teamwork in the multinational. Journal of World Business, 38(2): 150–164.CrossRefGoogle Scholar
  33. Gravetter, F. J., & Wallnau, L. B. 2000. Statistics for the behavioral sciences, 5th ed. Belmont, CA: Wadsworth.Google Scholar
  34. Griffeth, R. W., Hom, P. W., & Gaertner, S. 2000. A meta-analysis of antecedents and correlates of employee turnover: Update, moderator tests, and research implications for the millennium. Journal of Management, 26: 463–488.CrossRefGoogle Scholar
  35. Guthrie, J. P. 2001. High-involvement work practices, turnover, and productivity: Evidence from New Zealand. Academy of Management Journal, 44(1): 180–190.CrossRefGoogle Scholar
  36. Harzing, A. 2001a. An analysis of the functions of international transfer of managers in MNCs. Employee Relations, 23(6): 581–598.CrossRefGoogle Scholar
  37. Harzing, A. 2001b. Of bears, bumble-bees and spiders: The role of expatriates in controlling foreign subsidiaries. Journal of World Business, 36(4): 366–379.CrossRefGoogle Scholar
  38. Hequet, M. 1993. Can training stop turnover?. Training, 30(10): 82–87.Google Scholar
  39. Hofstede, G. 1980. Culture’s consequences: International differences in work-related values. Beverly Hills: Sage.Google Scholar
  40. Hofstede, G., & Bond, M. H. 1988. The Confucius connection: From cultural roots to economic growth. Organizational Dynamics, 16(4): 4–21.CrossRefGoogle Scholar
  41. Holtom, B. C., Mitchell, T. R., Lee, T. W., & Inderrieden, E. J. 2005. Shocks as causes of turnover: What they are and how organizations can manage them. Human Resource Management, 44(3): 337–352.CrossRefGoogle Scholar
  42. Hom, P. W., & Griffeth, R. W. 1995. Employee turnover. Cincinnati: South/Western.Google Scholar
  43. Hom, P. W., & Kinicki, A. 2001. Toward a greater understanding of how dissatisfaction drives employee turnover. Academy of Management Journal, 44(5): 957–987.CrossRefGoogle Scholar
  44. Huselid, M. A. 1995. The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of Management Journal, 38(3): 635–670.CrossRefGoogle Scholar
  45. ILO (International Labour Organization). 1998, 2000. Yearbook of labour statistics. Geneva: ILO.Google Scholar
  46. IOM (International Organization for Migration). 2005. World migration 2005: Costs and benefits of international migration. Geneva: IOM.Google Scholar
  47. Jackofsky, E. F., & Peters, L. H. 1983. Job turnover versus company turnover: Reassessment of the March and Simon participation hypothesis. Journal of Applied Psychology, 68: 490–495.CrossRefGoogle Scholar
  48. Khatri, N., Chong, T. F., & Budhwar, P. 2001. Explaining employee turnover in an Asian context. Human Resource Management Journal, 11(1): 54–74.CrossRefGoogle Scholar
  49. Kochanski, J., & Ledford, G. 2001. “How to keep me”—retaining technical professionals. Research-Technology Management, 44(3): 31–38.Google Scholar
  50. Kuwahara, Y. 1993. New developments in human resource management in Japan. Asia Pacific Journal of Human Resources, 31(2): 3–11.CrossRefGoogle Scholar
  51. Lawler, E. E. 2005. Creating high performance organizations. Asia Pacific Journal of Human Resources, 43(1): 10–17.CrossRefGoogle Scholar
  52. Lee, G. J., & Rwigema, H. 2005. Mobley revisited: Dynamism in the process of employee turnover. International Journal of Human Resource Management, 16(9): 1671–1690.CrossRefGoogle Scholar
  53. Lee, T. W., & Mitchell, T. R. 1994. An alternative approach: An unfolding model of voluntary employee turnover. Academy of Management Review, 19(1): 51–89.CrossRefGoogle Scholar
  54. Lee, T. W., Mitchell, T. R., Holtom, B. C., McDaniel, L. S., & Hill, J. W. 1999. The unfolding model of voluntary turnover: A replication and extension. Academy of Management Journal, 42(4): 450–462.CrossRefGoogle Scholar
  55. Li, J. J. 2008. How to retain local senior managers in international joint ventures: The effects of alliance relationship characteristics. Journal of Business Research, 61(9): 986–994.CrossRefGoogle Scholar
  56. Li, L., & Kleiner, B. H. 2001. Expatriate-local relationship and organizational effectiveness: A study of multinational companies in China. Management Research News, 24(3/4): 49–56.CrossRefGoogle Scholar
  57. Lin, C. Y. Y. 1998. Success factors of small and medium sized enterprises in Taiwan: An analysis of cases. Journal of Small Business Management, 36(4): 43–56.Google Scholar
  58. Lucas, R. 1988. On the mechanics of economic development. Journal of Monetary Economics, 32: 3–42.CrossRefGoogle Scholar
  59. Lueke, S. B., & Svyantec, D. J. 2000. Organizational socialization in the host country: The missing link in reducing expatriate turnover. International Journal of Organizational Analysis, 8: 380–400.CrossRefGoogle Scholar
  60. MacDuffie, J. P. 1995. Human resource bundles and manufacturing performance: Organization logic and flexible production systems in the world auto industry. Industrial and Labour Relations Review, 48: 197–221.CrossRefGoogle Scholar
  61. March, J., & Simon, H. 1958. Organizations. New York: Wiley.Google Scholar
  62. Martin-Alcazar, F., Romero-Fernandes, P. M., & Sanchez-Gardey, G. 2005. Strategic human resource management: Integrating the universalistic, contingent, configurational and contextual perspectives. International Journal of Human Resource Management, 16(5): 633–659.Google Scholar
  63. Matthews, J. 2002. Innovation in Australian small and medium enterprises: Contributions from strategic human resource management. Asia Pacific Journal of Human Resources, 40(2): 193–204.Google Scholar
  64. Mitchell, T. R., Holtom, B. C., Lee, T. W., Sablynski, C. J., & Erez, M. 2001. Why people stay: Using job embeddedness to predict voluntary turnover. Academy of Management Journal, 44(6): 1102–1121.CrossRefGoogle Scholar
  65. Mobley, W. H. 1977. Intermediate linkages in the relationship between job satisfaction and employee turnover. Journal of Applied Psychology, 62: 237–240.CrossRefGoogle Scholar
  66. Mobley, W. H. 1982. Employee turnover: Causes, consequences and control. Reading: Addison-Wesley.Google Scholar
  67. Mowday, R. T., Porter, L. W., & Steers, R. M. 1982. Employee-organization linkages: The psychology of commitment, absenteeism, and turnover. New York: Academic.Google Scholar
  68. Nankervis, A., Chatterjee, S., & Coffey, J. 2006. Perspectives of human resource management in the Asia Pacific. Sydney: Pearson Prentice Hall.Google Scholar
  69. Nankervis, A., Compton, R., & Baird, M. 2005. Human resource management: Strategies and processes, 5th ed. Australia: Nelson.Google Scholar
  70. Neupert, K. E., Baughn, C. C., & Dao, T. T. L. 2005. International management skills for success in Asia. Journal of European Industrial Training, 29(2): 165–180.CrossRefGoogle Scholar
  71. Ng, Y. C., & Siu, N. Y. M. 2004. Training and enterprise performance in transition: Evidence from China. International Journal of Human Resource Management, 15(4/5): 878–894.CrossRefGoogle Scholar
  72. OECD. 1993. Employment outlook. Washington, DC: OECD.Google Scholar
  73. Park, H. J., Gardner, T. M., & Wright, P. M. 2004. HR practices or HR capabilities: Which matters: Insights from the Asia pacific region. Asia Pacific Journal of Human Resources, 42(3): 260–273.CrossRefGoogle Scholar
  74. Peterson, S. L. 2004. Toward a theoretical model of employee turnover: A human resource development perspective. Human Resource Development Review, 3(3): 209–227.CrossRefGoogle Scholar
  75. Podsakoff, P. M., MacKenzie, S. B., Lee, J.-Y., & Podsakoff, N. P. 2003. Common method biases in behavioral research: A critical review of the literature and recommended remedies. Journal of Applied Psychology, 88(5): 879–903.CrossRefGoogle Scholar
  76. Price, J. L. 1977. The study of turnover. Ames: Iowa State University Press.Google Scholar
  77. Reiche, B. S. 2007. The effect of international staffing practices on subsidiary staff retention in multinational corporations. International Journal of Human Resource Management, 18(4): 523–536.Google Scholar
  78. Rhoades, L., Eisenberger, R., & Armeli, S. 2001. Affective commitment to the organization: The contribution of perceived organizational support. Journal of Applied Psychology, 86(5): 825–836.CrossRefGoogle Scholar
  79. Sargent, J., & Matthews, L. 1998. Expatriate reduction and “mariachi” circles: Trends in MNC human-resource practices in Mexico. International Studies of Management & Organization, 28(2): 74–96.Google Scholar
  80. Schuler, R. S., & Jackson, S. E. 2000. Strategic human resource management. Oxford: Blackwell.Google Scholar
  81. Schultz, T. 1961. Investment in human capital. American Economic Review, 51: 1–17.Google Scholar
  82. Shaw, J. D., Delery, J. E., Jenkins, G. D., & Gupta, N. 1998. An organization-level analysis of voluntary and involuntary turnover. Academy of Management Journal, 41(5): 511–525.CrossRefGoogle Scholar
  83. Sheridan, J. 1992. Organization culture and employee retention. Academy of Management Journal, 35(5): 1036–1056.CrossRefGoogle Scholar
  84. Stahl, C., & Zheng, C. 2002. Skill shortages, training needs & HRD strategies of MNCs in APEC member economies. Singapore: APEC Secretariat.Google Scholar
  85. Staw, B. M. 1980. The consequences of turnover. Journal of Occupational Psychology, 1: 253–273.Google Scholar
  86. Steel, R. P., & Griffeth, R. W. 1989. The elusive relationship between perceived employment opportunity and turnover behaviour: A methodological or conceptual artefact?. Journal of Applied Psychology, 69: 846–854.CrossRefGoogle Scholar
  87. Steel, R. P., Shane, G. S., & Griffeth, R. W. 1990. Correcting turnover statistics for comparative analysis. Academy of Management Journal, 33(1): 179–187.CrossRefGoogle Scholar
  88. Su, Z., Xie, E., & Li, Y. 2009. Organizational slack and firm performance during institutional transitions. Asia Pacific Journal of Management, 26: 75–91.CrossRefGoogle Scholar
  89. Taormina, R. J. 1999. Predicting employee commitment and satisfaction: The relative effects of socialization and demographics. International Journal of Human Resource management, 10(6): 1060–1076.CrossRefGoogle Scholar
  90. Taylor, R., & Davies, D. 2004. Aspects of training and remuneration in the accommodation industry: A comparison between Australian and Singaporean providers. Journal of European Industrial Training, 28(6): 466–473.CrossRefGoogle Scholar
  91. Terborg, J. R., & Lee, T. W. 1984. A predictive study of organizational turnover rates. Academy of Management Journal, 27: 793–810.CrossRefGoogle Scholar
  92. Tett, R., & Meyer, J. 1993. Job satisfaction, organizational commitment, turnover intention, and turnover: Path analyses based on meta-analytic findings. Personnel Psychology, 46(2): 259–293.Google Scholar
  93. The Straits Times. 1999. Job-hopping still prevalent, MP tells house. March 16.Google Scholar
  94. Tsang, E. W. K. 1994. Human resource management problems in Sino-foreign joint ventures. International Journal of Manpower, 15(9/10): 4–21.CrossRefGoogle Scholar
  95. Tsui, A. S., Pearce, J. L., Porter, L. W., & Tripoli, A. M. 1997. Alternative approaches to the employee–organization relationship: Does investment in employees pay off?. Academy of Management Journal, 40(5): 1089–1121.CrossRefGoogle Scholar
  96. Ulrich, D., & Brockbank, W. 2005. The HR value proposition. Boston: Harvard Business School Press.Google Scholar
  97. UNCTAD. 2005. World investment report. Geneva: UNCTAD.Google Scholar
  98. Wan, D. 1996. Developing human resources and labour flexibility in Singapore. International Employment Relations Review, 2(1): 77–90.Google Scholar
  99. Welch, D. 2003. Globalization of staff movements: Beyond cultural adjustment. Management International Review, 43: 149–169.Google Scholar
  100. Wong, C.-S., Hui, C., & Law, K. S. 1995. Causal relationship between attitudinal antecedents to turnover. Academy of Management Journal, 342–346.Google Scholar
  101. Wozniak, L. 2003. Companies in China struggle to train, retain qualified managers. Wall Street Journal, December 30, A8.Google Scholar
  102. Yeung, H. W. C. 2006. Change and continuity in Southeast Asian ethnic Chinese businesses. Asia Pacific Journal of Management, 23: 229–254.CrossRefGoogle Scholar
  103. Zheng, C., Morrison, M., & O’Neill, G. 2006. An empirical study of high performance work practices of Chinese SMEs. International Journal of Human Resource Management, 17(10): 1772–1803.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.School of Management, College of BusinessRMIT UniversityMelbourneAustralia
  2. 2.Nottingham Business SchoolNottingham Trent UniversityNottinghamUK

Personalised recommendations