"Impact of work motivation on employee performance: A comparative study ofChinese small medium enterprisePage | 1 ACKNOWLEDGEMENTWorking on this research has been a great source of learning, but this would have been highdifficult without proper support and guidance. Therefore, I would like to thank my supervisor forthe valuable suggestion and guidance provided to me throughout my thesis. Whenever, I neededhelp, my supervisor came up with the solution which helped me in writing my report and assistme whenever I needed the help and provided the sources of valuable literature regarding mythesis. I would like to thank all the respondents for helping me in the questionnaires. Withouttheir help I would have not been able to complete my thesis on time. I am thankful to my familyfor their support and all friends who helped me in my report and gave valuable suggestionswhenever I needed. I would sincerely thank my friends, who helped me conducting the surveyfor the analysis. Without them the data collection would have been impossible Page | 2 ABSTRACTThis dissertation aimed to identify and develop an effective incentive mechanism for the mediumand small-sized technology-based companies in China through comparing different incentivetheories and factors. The required data of this research is obtained using various sources, mainlyprimary and secondary data signifies the type of data. In order to test the assumptions made inthis research, questionnaire has been used as the quantitative data collection tool. For qualitativedata, interview method has been used. Moreover, a number of secondary data sources have beenused in this research such as, EMERALD, EBESCO Host, and Google Scholars. For this study,all medium and small-sized technology-based companies are said to be the population and everycompany operating under this specification has been considered as the population. However, thesample has been selected by narrowing down the topic even further. As in this study, Science andInnovation Center in Suzhou, China has been selected as the case organization and the sample isselected from the employees who work in the companies located in this area. The sample sizedecided for questionnaire survey is 260 employees, whereas interviews will be conducted from20 employees. To analyze the gathered discourses analysis is used especially for the qualitativedata. Furthermore, since this research also comprises of quantitative data, hence separate analysismethods have been used to analyze numeric data obtained as a result of questionnaire. After thecollection of data, analysis methods like descriptive analysis, correlation analysis, varianceanalysis and regression analysis will be used to analyze the data. The overall analysis of the dataconcludes that work motivation significantly impacts the employee performance in small andmedium sized organizations that are operating in the information technology business sector ofChina. In addition, the analysis of data also highlights that, compensation, rewards/ recognitionand medical benefits impacts the work motivation of the employees that are working below themanagerial level. On the other hand, the interview analysis concludes that, employees that worksat supervisory level feels more motivated, when the organization provide them trainingprograms, career growth opportunities and work life balance. Page | 3 TABLE OF CONTENTSACKNOWLEDGEMENT ....................................................................................................................... 2ABSTRACT ............................................................................................................................................ 3CHAPTER 1: INTRODUCTION ............................................................................................................ 71.1 Introduction ..................................................................................................................................................... 71.2 The overview of research ................................................................................................................................ 71.2 Problem Statement .......................................................................................................................................... 71.3 Aims and Objectives ....................................................................................................................................... 81.4 Hypotheses ...................................................................................................................................................... 81.5 Significance of the Study ................................................................................................................................ 9CHAPTER 2: LITERATURE REVIEW ............................................................................................... 102.1 Employee Motivation ................................................................................................................................... 102.2 Strategic Human Resources Management .................................................................................................... 102.3 HRM Practices in Chinese SMEs ................................................................................................................. 112.4 Motivation Theories ...................................................................................................................................... 122.4.1 Maslow?s Hierarchy of Needs Theory ....................................................................................................... 122.4.2 Herzberg?s Two-Factor Theory .................................................................................................................. 132.4.3 Vroom?s Expectancy Theory ...................................................................................................................... 142.5 Balancing “Wants” and “Gets” of Employees .............................................................................................. 152.6 Payment and Employee Motivation .............................................................................................................. 162.7 Incentive Rewards and Employee Performance ........................................................................................... 182.8 Mentoring and Employee Motivation ........................................................................................................... 202.9 Summary ....................................................................................................................................................... 21CHAPTER 3: METHODOLOGY ......................................................................................................... 233.1 Research Questions ....................................................................................................................................... 233.2 Overall Methodology .................................................................................................................................... 233.3 Data Collection ............................................................................................................................................. 233.3.1 Primary Data .............................................................................................................................................. 233.3.2 Secondary Data .......................................................................................................................................... 243.4 Justification of Sample Size .......................................................................................................................... 243.5 Research Paradigm ....................................................................................................................................... 253.6 Ethical Issues ................................................................................................................................................ 263.7 Interview Method-Setting, Timings, Frequency ........................................................................................... 263.8 Data Analysis ................................................................................................................................................ 273.8.1 Coding ........................................................................................................................................................ 273.8.2 Discourse Analysis ..................................................................................................................................... 28Page | 4 3.8.3 Selected Analysis Method .......................................................................................................................... 283.9 Timelines ....................................................................................................................................................... 29CHAPTER 4: DATA ANALYSIS .......................................................................................................... 304.1 Introduction ................................................................................................................................................... 304.2 Reliability Analysis ....................................................................................................................................... 304.3 Analysis of Questionnaire ............................................................................................................................. 304.3.1 Demographic Information .......................................................................................................................... 314.3.2 Motivation Factors ..................................................................................................................................... 334.3.3 Employee Motivation Level ...................................................................................................................... 434.4 Correlation Analysis ..................................................................................................................................... 444.5 Regression Analysis ...................................................................................................................................... 454.6 Analysis of Interview .................................................................................................................................... 494.7 Chapter Conclusion ....................................................................................................................................... 50CHAPTER 5: DISCUSSION ................................................................................................................. 525.1 Introduction ................................................................................................................................................... 525.2 Discussion ..................................................................................................................................................... 525.3 Chapter Conclusion ....................................................................................................................................... 55CHAPTER 6: CONCLUSION .............................................................................................................. 566.1 Introduction ................................................................................................................................................... 566.2 Conclusion .................................................................................................................................................... 566.3 Research Limitations .................................................................................................................................... 576.4 Recommendations ......................................................................................................................................... 576.5 Future Research Suggestions ........................................................................................................................ 58References ............................................................................................................................................. 59Appendices ........................................................................................................................................... 62Appendix (A) ...................................................................................................................................................... 62Analysis of Employee Motivation Level ............................................................................................................ 62Appendix (B) ...................................................................................................................................................... 64Employee Motivation Survey Questionnaire ...................................................................................................... 64Interview Questions ............................................................................................................................................ 67LIST OF FIGURESFigure 1: Maslow?s hierarchy of needs ............................................................................................................... 13Figure 2: Ranking of “wants” (left) and “gets” (right) of employees in the private sector ................................. 16Figure 3: The formal mentoring process (Data source: Orpen, 1997) ................................................................ 21Page | 5 Figure 4: Gender ................................................................................................................................................. 31Figure 5: Age ...................................................................................................................................................... 32Figure 6: Number of years served at current organization .................................................................................. 33Figure 7: My compensation is appropriate with respect to the nature of my job. ............................................... 34Figure 8: The compensation and benefits policy of my organization is at par with industry practices. ............. 35Figure 9: The Company offers a wide range of health-related benefits to all its employees .............................. 36Figure 10: The company has a pro employee medical facility ........................................................................... 37Figure 11: The Company offers good career prospect for its employees. ........................................................... 38Figure 12: In this organization advancement is merely based on the individual?s abilities and skills. ............... 39Figure 13: The management pays due attention on the immediate recognition of performance ........................ 40Figure 14: The management practices immediate feedback to manage employees? expectations ...................... 41Figure 15: Employees in my organization are encouraged to participated in the additional training to enhancetheir skills and abilities ....................................................................................................................................... 42Figure 16: This organization provides adequate training programs for its employees ....................................... 43Figure 17: Employee Motivation Level .............................................................................................................. 44LIST OF TABLESTable 1: Reliability .............................................................................................................................................. 30Table 2: Correlation ............................................................................................................................................ 45Table 3: Model Summary.................................................................................................................................... 45Table 4: ANOVA ................................................................................................................................................. 46Table 5: Coefficients ........................................................................................................................................... 46Table 6: Model Summary.................................................................................................................................... 47Table 7: ANOVA ................................................................................................................................................. 47Table 8: Coefficients ........................................................................................................................................... 47Table 9: Model Summary.................................................................................................................................... 48Table 10: ANOVA ............................................................................................................................................... 48Table 11: Coefficients ......................................................................................................................................... 49 Page | 6 CHAPTER 1: INTRODUCTION1.1 IntroductionThe chapter of introduction in this research focused on some important elements of the researchsuch as, background or overview of the research, the problem of the research, aims andobjectives of the research. This chapter is highly crucial, because if the research work isintroduced effectively; it creates the interest among the readers to read out the whole researchwork. The chapter of introduction also highlights the research hypotheses and the significance ofthe research. Overall, this chapter provides a brief overview to the readers about, what issues thisresearch is going to address and the significance of conducting this research work. 1.2 The overview of researchRecently, with the increasingly fierce competition in almost all of the business areas, it isimportant for companies to develop their competitive advantage. Moreover, one crucial partencompassed in the competitive advantage is the human resource management. Effective humanresource management can?t only help the company reduce costs and increase the source ofservice and product, but also help the company attract new talented workers and retain theexisting ones (Lengnick-hall, 1988). It is significant for companies to attract and retain talentedworkers, especially for the medium and small-sized companies. It is undeniable that everyworker expects the rewards, so the company needs to focus on developing motivation andincentives to attract the new talented workers and improve the effectiveness and productivity ofthe current workers (Hong et al., 1995). However, for some medium and small-sized companiesin China, there are some problems and defects in their incentive mechanism of talents, so most ofthem face the problems about high bankruptcy rate and the shortage of talented workers (He andChen, 2012). Accordingly, an effective incentive mechanism and system is eagerly needed. 1.2 Problem StatementIt has been identified that, even though the organizations in the current competitive businessenvironment have been giving due priority to enhance the performance of the organizationthrough investing huge amount in human resource development, yet the organization is facinglots of issues in managing employee performance effectively. It has also been found out that, inPage | 7 small and medium sized organizations, the employees working at supervisory level failed tomaintain adequate level of motivation, satisfaction and job performance of the employees.Nevertheless, in regard to overcome the issues related to employee motivation and the jobperformance, lots of research studies have been conducted in context of large organizations and in developed countries. Moreover, very limited findings available that highlights the factors thatmotivate the employees in small and medium sized organizations that positively impacts theperformance of employees particularly, in the small and medium sized technology basedcompanies of China. Thus, the identified issues have provided a reason to conduct a study to findout;“The impact of work motivation on employee performance; a comparative study of Chinesesmall-medium enterprise”1.3 Aims and ObjectivesThis dissertation aims to identify and develop an effective incentive mechanism for the mediumand small-sized technology-based companies in China through comparing different incentivetheories and factors. According to the aim, the specific objectives are listed as following: ? Critically review the previous research relating to incentive mechanism and system.? Compare the incentive factors put forward by the previous research, and identify howthese incentives affect employee motivation. ? Collect data relating to the effectiveness of different kinds of incentive factors in formedium and small-sized technology-based companies in China.? Critically analyze the collected data through empirical analysis.? Make suggestions about how to develop an effective incentive mechanism for themedium and small-sized technology-based companies in China.1.4 HypothesesTo provide the empirical evidence, the following hypotheses are tested while executing thisstudy;H1: Compensation exert stronger influence on employee motivationH2: There is a positive relationship between employee motivation and rewards/recognitionPage | 8 H3: Medical benefits provided by the organization positively impact the employee motivationH4: Highly level of work motivation positively impacts the employee performance1.5 Significance of the StudyConducting this research has been significant due to number of reasons. Such as, the findings ofthis research define the role of different factors like compensation, rewards or recognition andmedical benefits offered by the small and medium sized organization in influencing the workmotivation among the employees in China. Apart from this, the study results and findings of thisresearch also clarified the impact of work motivation on the employee performance in the smalland medium sized organizations of China, particularly in context of information technologybusiness sector. In addition, to effectively study the impact work motivation on employeeperformance, the current motivation level of the employees of small and medium sizedorganizations in China is measured, which helps the organizations to develop the strategiesaccordingly in order to sustain or increase the employee motivation level effectively.Furthermore, the findings of this research not only contributes in existing literature, but it alsoprovides an avenue to the future researchers to explore more ideas that might play a crucial roleinenhancing work motivation and the job performance of the employees in small or mediumsized organizations in China. Page | 9 CHAPTER 2: LITERATURE REVIEW2.1 Employee MotivationMotivation is defined as a psychological feature, which drives people to accomplish personal andorganization goals (Lindner, 1998). In the area of human resource management, it is regarded asthe incentives that induce the employees to get better job performance and contribute largerefforts. The motivation can be classified as intrinsic motivation and extrinsic one. The latter is interms of the interest of employees themselves into the tasks or job, while the extrinsic motivationstems from the external pressure or rewards. The author will take it as an instance that if theemployees believe they can get more autonomy in a company, they are more likely to beintrinsically motivated. In comparison, the extrinsic motivation mainly includes payment,rewards and so on (Weightman, 2008; Schacter, 2011).Motivational theories such as Maslow?s hierarchy of needs, Herzberg?s two-factor theory andVroom?s expectancy theory are often referenced to support the importance of the relationshipbetween motivation and employee performance. The reason why HR managers generally focuson motivating their employee is to improve their productivity, which in turn increases the overallperformance of the company, because the quality and efficiency of the workforce is thefoundation of a company, especially for SMEs. 2.2 Strategic Human Resources ManagementAs well as this, Lengnick-Hall (1988) reviewed three approaches related to human resourcesmanagement and business strategy. These approaches are matching with human resourcesmanagement and personnel activities with corporations? business strategies, forecastingmanpower requirements in the condition of certain strategic objectives or environments, andpresenting the means of incorporating human resources management into the business?s strategyand structure. Lengnick-Hall (1988) summarised the difficulties in the process of integratinghuman resources management and business? strategic choice and the ways to deal with thesedifficulties. The paper used the “Growth/Readiness” matrix to illustrate its special views about the strategicmanagement of human resources. Lengnick-Hall (1988) listed four attributes associated withPage | 10 organisational strategic human resources management models. First of all, strategic humanresources management models emphasise implementation over strategy formulation. Secondly,traditional models focus on matching people to strategy, but not on matching strategy to people.Thirdly, many models rely heavily on organisation or product life cycles as single oruncontrollable catalysts of change. Finally, most of strategic human resource managementmodels emphasise fitness, or congruence, and don?t recognize the need for lacking of fitnessduring organising transitions, and when organizations have multiple and conflicting goals. Inaddition, the “Growth/Readiness” matrix can be used to explore the complex, multivariaterelationships in a systematic fashion. It also further examines the relationship between strategichuman resources management and organisational choices. 2.3 HRM Practices in Chinese SMEsWith the great economic reforms in recent years, China has undergone reforms in the HRMpractices as well. In the past, the employment system was monitored by state agencies toenterprise-based recruitments. Chinese companies have shifted their focus from traditional HRpractices (such as the emphasis on social and economic egalitarianism) to the motivation andcompensation with the aim of improving organisational efficiency and performance (Zheng etal., 2008). There is no doubt that Chinese SME has found it easier to adopt innovative HRMpractices due to their size and flexibility. The need to improve employee performance andenhance organisational efficiency, as the productivity is a key factor in achieving a competitiveadvantage against competitors. In the study conducted by Zheng et al., on the effect of HRM practices on the performance ofChinese SMEs, three major areas of HR practices were common among the Chinese SMEs in theresearch, which were strategic selection and recruitment, performance based remuneration, andemployee involvement in decision making. At the same time, the study also showed that themotivation factor in HRM practices had a significant impact on the HRM outcomes, while thefactors such as social benefits and staff development had insignificant effects. Page | 11 2.4 Motivation Theories2.4.1 Maslow’s Hierarchy of Needs TheoryAbraham Maslow, one of the famous scholars studying how motivation works, proposed hisHierarchy of Needs Theory in 1943. The model explains that human beings have a set ofinstinctual needs, which push them forward to self-fulfillment and personal satisfaction. Maslowcame up with five different levels of these instinctual needs. Human beings have to fulfill theneed at the bottom of the pyramid before they can move up to the next stage (Vroom and Deci,1970). Firstly, according to Maslow?s hierarchy of Needs Theory, the bottom of the pyramid is thePhysiological need, which is the most basic need of human beings, such as food, water, shelterand warmth. When this need is fulfilled, human beings will move to the next stage----Safetyneed, which is expressed as security, stability and freedom from fear. The third stage can beclassified as Belonging-love need, in which human beings will focus on friends, family, spouseand lover. The fourth stage is Self-Esteem need, which is the need for acceptance and to beacknowledged by others. Finally, the last stage is the Self-Actualisation need, in which humanbeings will seek for personal growth and further fulfillment.Page | 12 "