Organizational climate for employee work innovation: A case study of hotels and resorts in Nha Trang city

Pham Hong Liem, Nguyen Xuan Lan/ MICA 2018 Proceedings

International Conference on Marketing in the Connected Age (MICA-2018), October 6^th, 2018

Danang City, Vietnam

Organizational Climate for Employee Work Innovation: A

Case Study of Hotels and Resorts in Nha Trang City.

Pham Hong Liem^a*, Nguyen Xuan Lan^b

^aUniversity of Khanh Hoa, 02 Nguyen Dinh Chieu, Nha Trang, Khanh Hoa, Vietnam

^bUniversity of Economics – The University of Da Nang, Vietnam, 71 Ngu Hanh Son Street, Danang City, Vietnam

A B S T R A C T

In the hospitality industry, the brand is the tangible element so that the customer can identify and evaluate the

service quality of the supplier. Therefore, spreading the organizational brand value and image to retain talent

and attract customers is one of the strategies to create competitive advantage for businesses. In order to

balance the benefits of service providers and customers, innovation is the solution that plays an important role.

This study explores the impact of organizational climate on brand loyalty and brand support behaviour,

thereby affecting employee work innovation. The results of the analysis based on data from 428 staff at hotels

and resorts in Nha Trang confirmed the important role of these factors. Therefore, creating an organizational

climate that fosters brand loyalty and enhances brand support behaviour of staffs is essential. This is the basis

for stimulating the innovation of employees. This is also the proposed theoretical framework to provide

holistic view of various factors that influence employee work innovation. The results of this paper have

important HR and political implications for managers and policy makers to attract talent, affirm brand value

and promote employee work innovation in hospitality industry.

Keywords: Brand loyalty; brand support behaviour; Hotels and resorts; Organizational climate; Work

innovation.

1. Introduction

In fact, the demand of customers is increasingly diversified, requiring enterprises to have appropriate and

creative solutions, which help to increase customer satisfaction (Wang & Netemeyer, 2004). Moreover,

consumers with more choices but less satisfaction (Prahalad & Ramaswamy, 2004) will always aim for a higher

satisfaction. Therefore, they will be attracted by new suppliers with better capabilities, more diversified products

and services to better satisfy their needs. In the hospitality industry, the organizational brand is the visible

element so that the customer can identify and evaluate the service quality (invisible) of the hotels and resorts.

Improving the organizational climate to promote positive brand support behaviour and innovation of

employee is an important research topic for both academics and practitioners. Research has shown that

organizational culture, especially work environment factors such as encouraging the dynamics, creativity and

professionalism of employees, has a positive influence on brand support behaviour, increase the satisfaction and

promote the return (Ayupp & Chung, 2010). In addition, close relationships and interaction among employees

also contribute to the formation of positive behaviours such as brand support and loyalty to the organization

(Punjaisri et al., 2009b). However, the factors that drive branding behaviour as well as the psychological

mechanisms underlying such behaviour have not been properly addressed and there is a lack of quantitative

* Corresponding author. E-mail address: phamhongliem@ukh.edu.vn

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Pham Hong Liem, Nguyen Xuan Lan/ MICA 2018 Proceedings

evidence (Helm et al., 2015). The relationships between brand loyalty and brand support behaviour with work

innovation of staffs as well as the organizational climate is relatively new and no research has been found in

Vietnam.

In the field of travel services, when the difference is always the top search element of the travellers, the

flexibility and skills of the staff are the main factors that make the differences and increase the satisfactions of

customers. As a result, the hospitality industry always wants to have employees who are talented, capable and

thriving at work because they can anticipate, recognize, understand, analyse and meet the needs of their clients in

a the fastest. Innovation is seen as the right solution to balance the interests of customers and service providers.

Therefore, the theoretical and practical issues of the employee work innovation need to be discovered more.

This study examines the impact of work environment cultural factors on brand loyalty and brand support

behaviour, thereby stimulating work innovation of workers in hotels and resorts at Nha Trang city. In this area,

employees have a very important role in providing services that assure the brand's commitment to the customer.

However, job hopping has put businesses in a difficult position in maintaining their brand identity. The absence

of specific products and services, the emergence of internationally displaced brands, the freedom of movement

of the workforce, the intense competition from the surrounding regions has put pressure on organizations. It is

required to improve the working environment of enterprises in the direction of increasingly integration. This

research, therefore, focuses on the key factors that shape the advanced and competitive organizational climate of

affiliation, fairness and innovativeness (Bock et al., 2005; Porter, 2008), and explore their role in shaping brand

loyalty, branding support behaviour and work innovation of employee. The findings of this study are expected to

contribute significantly to enhancing the organizational climate and increasing the brand image of the

organization (Herrera et al., 2011).

The research model was tested using the structural equation modelling (SEM), based on survey data of

different staff groups from 50 hotels and resorts in Nha Trang. Tourism business is a type of regional service,

based on different standards and characteristics, in accordance with culture, and tourism resources in the region.

So this research context is expected to provide an interesting perspective on the phenomenon of research.

2. Conceptual framework and hypotheses development

2.1. Innovation

Innovation has been defined by various authors and expresses some important aspects of it, but all emphasize

“novelty” as the core of innovation. Most definitions of innovation involve the development and implementation

of new ideas. Innovation is defined “as the development and implementation of new ideas by people who over

time engage in transaction with others within an institutional order” (Van de Ven, 1986, p.591). More

specifically, Scott & Bruce (1994) defined innovation as “a multistage process, with different activities and

different individual behaviours necessary at each stage” (p.582). And according to Amabile (1996), innovation is

“the successful implementation of creative ideas within an organization” (p.1).

Personally, innovation in the workplace is an individual's activity in initiating and proactively introducing

new or/and useful ideas, processes, products, or mechanisms. However, because innovation is characterized by

intermittent activities rather than sequential stages, workers can participate in this activity at any time. Employee

innovation is the foundation for the company's efforts to renew its business in the creation of new products and

services (Janssen, 2000).

Innovation is an important subject of research in tourism. The tourism sector recognizes increasing

competition worldwide, not only between destinations but also between firms within the destinations (Dwyer et

al., 2009; Tseng et al., 2008). With the ability to offer differentiated products and services, innovative hotels are

more successful than non-innovative competitors. Employee work innovation, consider from the behavioural

perspective as innovative work behaviour, is seen as an important factor to increase the effectiveness of

organizational innovation performance (De Jong & Den Hartog, 2007; Janssen, 2000; Scott & Bruce, 1994). In

service, employee innovation is the result of the process of interacting with customers (Michael et al., 2011). In

this study we focus on the employee work innovation and consider it a multi-stage process, not consider each of

the concepts of innovation as well as a multidirectional scale.

2.2. Brand supporting behaviour

The brand is referred to as the value that the organization will provide and guarantees to the requirements of

the customer (Aaker, 2004). A brand is formed through a process of interaction between the company, the

customer, and the employee (Schlager et al., 2011). In that process, the interaction between the customer and

employee who convey the brand through their brand supporting behaviour is the most important (Machtiger,

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2004). According to Burmann & Zeplin (2005, p.282), brand supporting behaviours is “an aggregate construct

which describes a number of generic employee behaviours that enhance the brand identity”.

Attitudes and behaviors of employees play a very important role in the transmission of brand image in the

service. They have transformed the brand identity into the minds of consumers (Gronroos, 1994; Wangenheim et

al., 2007). Service staff not only understands what the brand represents, but more importantly, acts to support the

brand as well as fulfil the brand promise to the customer. Without these actions, negative consequences can

occur, creating a bad image of the organizational brand in the minds of the parties involved (Miles & Mangold,

2004).

Today, brand supporting behaviour is important because it has a positive impact on the branding of hotels and

resorts (Burmann et al., 2009). In the process of providing services, employees should behave in accordance with

customer’s requests or feedbacks. And employee brand-supporting behaviour is evident to the customer to assess

the quality of hotel service (King, 2010). The studies also show the role of brand-supporting behaviour in

positively influencing the hotel brand, and are the basis for better employee performance (Baker et al., 2014;

Thomson et al., 1999). The next hypothesis is proposed:

H1: Brand supporting behaviour positively relates to employee work innovation.

2.3. Brand loyalty

Brand loyalty of staffs is “An employee’s willingness to remain with the present brand” (Punjaisri et al.,

2009b, 567). Employee brand loyalty contributes to organizational brand value, and is a major factor influencing

employee brand supporting behaviour (Burmann & Zeplin, 2005; Shaari et al., 2012).

The study by Mowday (1998) and Meyer et al. (2002) concluded that brand loyalty is a key factor for

measuring brand value from employee perceptions. When employees are loyal to the organization's brand, they

engage in sharing the values of the organization more easily, taking care of others and being accountable to the

whole community (Mowday et al., 1979). Studies also show that brand loyalty leads to better employee

performance, through their brand supporting behaviour (Baker et al., 2014). In addition, brand supporting

behaviour is enhanced when employees feel empathetic and loyal to the organizational brand (Punjaisri et al.

2009a; Punjaisri & Wilson 2011; Punjaisri et al., 2013). The theory of organizational commitment also shows

that, once employees trust and accept the values and goals of the organization, they will be more willing to work

for the prestige of the organization. Thus, brand loyalty contributes to organizational brand value, and is a major

factor influencing employee branding behavior (Burmann & Zeplin, 2005; Shaari et al., 2012). So we propose

that:

H2: Brand loyalty positively relates to employee brand supporting behaviour.

H3: Brand loyalty positively relates to employee work innovation.

2.4. Organizational climate

Organizational climate is “a relatively enduring characteristic of an organization which distinguishes it from

other organizations and embodies members collective perceptions about their organization with respect to such

dimensions as autonomy, trust, cohesiveness, support, recognition, innovation, and fairness …” (Moran &

Volkwein, 1992, p.20 ). An effective organizational environment consists of appropriate characteristics to

promote the capacity of workers as well as allow them to support each other or even replace colleagues in

unpredictable situations.

Organizational climate studies have shown that managers can increase employee positive attitudes and

behaviors, creations and innovations by paying attention to the environment they are creating, by creating

suitable elements of organizational climate. And the salient elements of organizational climate have been pointed

out by scholars are: climate supports innovation (Baer & Frese, 2004; Gilson & Shalley, 2004; Jung et al., 2003;

King et al., 2007; Pirola-Merlo & Mann, 2004; Richardson & Vanderberg, 2005; Smith et al., 2005) and

tolerance with reasonable failures (Leonard & Sensiper 1998); climate increase the sharing of knowledge,

leading to innovation (Wasko & Faraj, 2000), and creating positive climate (Glisson & Jannes, 2002; Hui et al.,

2007; Liao & Chuang, 2004; Salanova et al., 2005; Schneider et al., 2005); ethical or justice climate: (Ambrose

et al., 2008; Colquitt et al., 2002 ; Cullen et al., 2003; Ehrhart, 2004). Therefore, within this study, the

employee's perceptions about their organization with respect to such dimensions as:

(i) Affiliation (The perception of social norms),

(ii) Fairness (The perception of trustworthiness) and

(iii) Innovativeness (The organizational practices accepts failure, and transparent information, free publicity)

(Bock et al., 2005).

Many factors have been consistently found to be facilitators of innovation at differing levels of analysis.

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These are organizational, team, job, and individual label factors. However, there is a small body of research that

focuses on climate factors. Climate factors also contribute to employee individuality. So there is a need for better

understanding of its relationship with employee outcomes (Luthans et al., 2008).

Organizational support plays an important role in shaping employee attitudes and behaviors (Eisenberger et

al., 1986). In addition, relationships and close interaction among employees also contribute to their positive

behaviors (Herrera et al., 2011). When employees work in an organization where they are recognized and

rewarded appropriately, trained and developed, and confident, it will stimulate and motivate them to share their

knowledge with colleagues (Kim & Ko, 2014), as well as increase the satisfaction and commitment to the

organization, develop their own capacity, thereby improving the efficiency of the work of employees (Luthans et

al., 2008).

Previous research has confirmed the close relationship between the organizational climate and the brand

supporting behaviour, such as preserving core values, improving service quality, the activities to strengthen the

brand identity (Burmann & Zeplin, 2005), and activities to best satisfy the needs of customers (Ayupp & Chung,

2010; Herrera et al., 2011; Yang & Tsai, 2014). In addition, positive working environment will help employees

to find happiness in their work, to commitment to the organization and more effort for the development and

success of the business (Chiang et al., 2012), thereby increasing brand supporting behaviour (Punjaisri &

Wilson, 2011). Hence we expect that:

H4: Organizational climate positively relates to employee brand supporting behaviour.

H5: Organizational climate positively relates to employee brand loyalty.

Figure 1. Model of employee work innovation.

3. Research methodology

3.1 Research sample

This study employed a survey method, using a questionnaire to test the conceptual model and developed

hypotheses. The prospective respondents were chosen in convenience sampling method from 50 hotels and resort

(classified from 3 stars to 5 stars) in Nha Trang City. Furthermore, during the survey, researcher tried to keep the

ratio between participants in Food and Beverage, Housekeeping, and Front Office and other departments around

1:1:1. The questionnaires were distributed to respondents. They completed the questionnaire and handed it to the

researcher. The survey was conducted officially from May 2016 to April 2017. The number of questionnaires is

expected to be 450. However, due to incomplete samples, only 428 valid samples are used for further analysis.

The sample consisted of 167 males (39.02%) and 261 females (60.98%). The working time is less than 3 years:

198 staffs (46.26%), 93 staffs (21.73%) worked 3 - 6 years, and 137 staffs with more than 6 years (32.01%). The

result also shows that 38.08% of respondents work in Food and Beverage, 26.87% in Housekeeping, 18.69% in

Front Office and 16.36% in other departments.

3.2 Scale of concepts

To measure the various constructs, validated items were adapted from prior studies. The measurement of the

three components of the organizational climate (Bock et al., 2005), brand loyalty and brand support behaviour

(Punjaisri et al., 2009b) and employee work innovation (Scott & Bruce, 1994) inherited from previous studies

using a five-point Likert scale, with a rating scale from (1) “strong disagree” to (5) “strong agree”. To create the

measurement, a group interview was conducted with 10 experts in hotels and resorts. The content of each item is

discussed. As a result, all items of the scales were retained in the study. Moreover, in line with the research

context in Vietnam, the items were adjusted according to expert opinion, through in-depth interviews. All expert

opinions are recorded. Finally, adding or decreasing or using the appropriate word for each item is decided by

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the majority of experts. Preliminary research was conducted with 30 samples to examine and adjust the scales.

The results show that the scales are reliable with a value that exceeds the minimum threshold of 0.60 for

commonly used scales (Hair et al., 2010).

3.3 Analytical procedures

The research followed a two-step approach. Firstly, the scales are evaluated by the Cronbach's alpha values,

the exploratory factor analysis (EFA) and the confirmatory factor analysis (CFA). Next, the Structured Equation

Modelling (SEM) method is used to test the structural relationships between concepts in a theoretical model.

4. Results

4.1. Reliability and validity of measurements

The results of the EFA analysis yielded results consistent with the structure of the six scales. The CFA model

with six concepts also demonstrates good fit with the data (CFI = 0.983; TLI = 0.981; GFI = 0.942; RMSEA =

0.032). The factor loading of all concepts are high (≥ 0.696), as well as variance extracted (ρvc) of 0.691 to

0.820, composite reliability (ρc) of 0.820 to 0.914. Finally, the squared correlation coefficient between the two

concepts is less than the variance extracted of each concept. Thus, the scales are convergent validity,

discriminate validity and reliable (Bagozzi & Yi, 1988) (see Table 1, Table 2, and Figure 2).

Table 1. Test results of measurement models

Concepts

Factor Loading

t- statistics

ρ_c

ρ_vc

Affiliation (AF)

0.914

0.796

AF06

AF07

0.872

0.856

0.858

0.827

21.758

21.169

21.239

21.169

AF08

AF09

Innovativeness (IN)

0.890

0.830

0.820

0.871

0.820

0.747

73.65

0.721

IN51

IN52

0.880

0.782

0.905

24.305

20.199

24.305

IN53

Fairness (FA)

FA51

0.802

0.822

0.741

15.473

15.761

15.473

FA52

FA53

Brand Loyalty (LO)

LO61

LO62

LO63

0.799

0.702

0.829

17.110

14.847

17.710

Brand Support Behaviour (SU)

SU71

SU72

SU73

SU74

0.738

0.794

0.848

0.790

17.803

16.088

17.083

15.943

Employee Work innovation (EW)

0.876

0.619

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EW81

EW82

EW83

EW84

EW85

EW86

0.790

0.778

0.696

0.715

0.730

0.707

15.096

16.641

14.647

15.096

15.461

14.914

χ2 (215) = 310.615 (p = 0.000); CFI = 0.983; TLI = 0.981; GFI = 0.942; RMSEA = 0.032

Table 2. Correlation coefficients between concepts

Concepts

Affiliation (AF)

AF

IN

FA

LO

SU

Innovativeness (IN)

0.517

0.529

0.538

0.485

0.224

Fairness (FA)

0.626

0.578

0.585

0.349

Brand Loyalty (LO)

0.632

0.690

0.326

Brand Support Behaviour (SU)

Employee Work innovation (EW)

0.744

0.313

0.445

Note: correlations are statistically significant at 5%.

Figure 2. Verification of CFA components in the research model.

4.2. Evaluate structural relationships and test hypotheses.

The results of model testing by SEM in Table 3 show the fit of the model with data (CFI = 0.983, TLI =

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Pham Hong Liem, Nguyen Xuan Lan/ MICA 2018 Proceedings

0.980, GFI = 0.941, RMSEA = 0.033). Accordingly, organizational climate has positive influence on brand

loyalty and explains 59.8% change in this factor. Moreover, both organizational climate and brand loyalty have

positive influence on brand support behaviour (R2 = 67.5%). Next, brand support behaviour also has a positive

influence on employee work innovation. However, the H3 hypothesis was not supported because their direct

impact on employee work innovation was not statistically significant (see Table 3, and Figure 3).

Table 3. Result of verifying relationship between concepts

Path Coeffient

P-

Hypothesis

Relationship

Result

Not

Standardiz

value

standardized

ed

Organizational

Climate



Brand Loyalty

H5

H4

H2

H3

H1

0.799

0.593

0.331

(0.037)

0.498

0.773

0.551

0.317

(0.034)

0.476

0.000

0.709

0.000

Accept

Reject

Accept

Organizational

Climate

Brand Support

Behaviour

Brand Support

Behaviour

Brand Loyalty

Employee Work

innovation

Brand Support

Behaviour

Employee Work

innovation

Figure 3. Test modeling with SEM.

5. Discussion

This study shows the relationship between organizational climate, brand loyalty, brand support behaviour and

work innovation of employee in the hotels and resorts. It is the role of the organizational climate in shaping the

brand loyalty and branding behaviour of staffs. While brand loyalty does not directly impact innovation, it has

contributed to increasing employee brand support behaviour, thereby indirectly impacting innovation. This

discovery demonstrates the prudence of hotels and resorts in providing high quality services to visitors. Any

negligence undermines the quality of service delivery. Therefore, brand loyalty employees need time to

accumulate knowledge and skills to better meet customer needs as well as fulfil the brand promise. It is the

foundation for employee work innovation in the hotels and resorts.

The results highlight the importance of building the true organizational climate in hotels and resorts. It is an

environment that fosters loyalty, and shapes brand support behaviours of employee (Danish & Usman, 2010). In

particular, this study provides important evidence for the role of organizational climate in locating the corporate

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brand in the minds of employees and customers. In addition, brand support behaviour is quite new construct, and

exploring the factors that influence it has received much debate among scholars (Punjaisri et al., 2009a, 2009b).

This finding is consistent with previous studies of the direct impact of brand loyalty on brand support

behaviour of employee (eg, Burmann et al., 2009; Punjaisri et al., 2009a, 2009b; Shaari & et al., 2012). This is

the motivation for employees to achieve the highest level of service quality, meeting the brand standards of the

organization, the diverse needs of customers, thereby fulfilling the brand promise for customer with service

innovations. (Baker et al., 2014; Burmann et al., 2009).

The findings of this study are important for service providers, as customers are always geared towards the

differences and uniqueness of the services they provide. Therefore, it is necessary to appreciate the role of

service personnel in the service delivery process: They are the people who deliver the Organizational service

brand to the consumer. And so human resource management needs to establish positive relationships in the

workplace, create the affliation and fairness climate that encourages knowledge sharing, and provides learning

opportunities for employees, thereby stimulating work innovation.

Thus, research has generated a better understanding of how to maintain and spread the brand identity through

harmony, equity, and innovation in the corporate environment with brand support, with the transmission of brand

loyalty and work innovation of workers in hotels and resorts.

6. Conclusion and limitations

The study explores the positive effects of organizational climate factors in creating brand loyalty and

promoting brand support behaviour as well as work innovation of employee. When employees are properly

assessed, connected to colleagues, encouraged to change for development, they will gradually form their brand

loyalty. From there, to create a basis for belief in positive behaviour to fulfil the brand promise, and to increase

innovation in the workplace. As a result, the organizational brand image is closer to the community, and

positioned in the mind of the customer.

This result has important implications for better understanding and clarification of the nature of organizational

climate: not just at the level that affects the intention to share knowledge (Bock et al., 2005), or motivational

work (Danish & Usman, 2010), but at a higher level, implementing branding behaviour and innovation in the

workplace. It is the foundation for employees to develop their abilities through positive actions to spread the

brand identity of the organization, and positioning in the minds of customers. The study also clarifies the nature

of relationships that have not been fully explored in previous studies, between the organizational climate

(Affiliation, fairness, innovativeness), brand loyalty, brand support behaviour and work innovation of employees

in the hospitality industry.

In addition to the results obtained, the research still has certain limitations. First of all, it is not a

representative sample of Nha Trang accommodation, surveyed only in 50 hotels and resorts. The results have not

been analysed for each type of hotels and resorts. A number of other unique factors in the organizational climate

of the hotels and resorts have not been included in this study (egg, sincerity, openness, norms). These restrictions

are a hint for future research.

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