Employee motivation and differentiation in continuous improvement

EMPLOYEE MOTIVATION AND EMPLOYEE DIFFERENTIATION IN CONTINUOUS IMPROVEMENT: EVIDENCE FROM A MULTINATIONAL COMPANY IN CHINA

ROH PIN LEE Department of Business Administration Technische Universitt Bergakademie Freiberg 09596 Freiberg, Germany Phone: +49 (0) 3731-39-4423, Fax: +49 (0) 3731-39-4555 roh-pin.lee@iec.tu-freiberg.de/ rohpin.lee@gmail.com

MICHAEL NIPPA Department of Business Administration Technische Universitt Bergakademie Freiberg 09596 Freiberg, Germany Phone: +49 (0) 3731-39-2081, Fax: +49 (0) 3731-39-3313 nippa@bwl.tu-freiberg.de / mnippa@marshall.usc.edu

ANDREAS KLOSSEK Department of Business Administration Technische Universitt Bergakademie Freiberg 09596 Freiberg, Germany Phone: +49 (0) 3731-39-4843, Fax: +49 (0) 3731-39-4555 andreas.klossek@iec.tu-freiberg.de

Employee motivation and differentiation in continuous improvement

ABSTRACT The implementation of a sustainable continuous improvement (CI) program is particularly challenging in China, as traditional Chinese organizational cultures, management systems, and workforce characteristics tend to deter employee empowerment and participation. The research presented here, which is carried out in the Chinese plant of a leading multinational company, challenges the assumption of independency between employee motivation, ability and knowledge in the CI context. It illustrates the importance of focusing on developing employee ability to participate in CI activities as well as their knowledge of what they are expected to do in the CI context in order to encourage CI participation. Furthermore, the value of employee differentiation in enabling companies to gain insights into specific CI weaknesses that might deter CI participation is examined.

Keywords: Continuous Improvement, Employee Motivation, Employee Differentiation, Employee Participation, China

Employee motivation and differentiation in continuous improvement

INTRODUCTION Global competition among firms originating from different countries and an increased flow of information about technologies, products, and organizational capabilities puts pressure on companies to improve their structures and processes in a continuous way. As part of the Total Quality Management and Just-in-Time movements, there has been increasing awareness and implementation of continuous improvement practices since the 1980s (Cua, McKone & Schroeder, 2001). Continuous improvement (CI) is often defined as an organization-wide process of focused and sustained incremental problem solving and innovation (Bessant & Francis, 1999) based on the empowerment and participation of a large proportion of the workforce (Mitki, Shani & Meiri, 1997; Terziovski & Sohal, 2000). While the concept at large promises significant increases in productivity and efficiency (e.g., Kerrin, 1999), many firms learnt that successful implementation appears to be a challenge (e.g., Choi & Behling, 1997; Lillrank, Shani & Lindberg, 2001; Mitki et al., 1997; Spector & Beer, 1994). This is especially prevalent in China (Yeung & Chan, 1999), which is the largest recipient of foreign direct investment in the world today (Zhang, Krug & Reinmoeller, 2005), and which has become the global manufacturing house. Productivity in Chinese plants is considerably low by international standards (Jackson & Bak, 1998; Lockett, 1988), triggering the need to enable and motivate Chinese workers to actively participate in productivity programs. In this regard, implementing CI concepts is not only of interest for globally competitive domestic firms such as Haier, Baosteel or Beijing No. 1, but also for multinational companies (MNCs) such as Bosch, Volkswagen and Continental which operate plants in the Peoples Republic of China (PRC). Not surprisingly, many manufacturers tried to transfer CI concepts from their global leadplants or from strategic alliances to their plants in China. Yet, it appears that CI implementation is

Employee motivation and differentiation in continuous improvement

particularly difficult in China (Yeung & Chan, 1999). One important reason is that the success of CI programs depends on the active participation of the workforce in CI initiatives (e.g., Choi, Rungtusanatham & Kim, 1997; Fairbank & Williams, 2001; Prado Prado, 1998). However, Chinese organizational cultures and management systems, as well as certain characteristics of its workforce, may not encourage employee involvement, initiative and empowerment (Chiu, 1999), leading to difficulties in encouraging and sustaining employee CI participation. As such, a key issue for successfully implementing CI especially in China is how to motivate employee participation. Lillrank, Shani and Lindberg (2001) point out that for employees to be actively involved in CI activities, they should be motivated to do it (WANT), be able to do it (CAN), and know what they are expected to do (KNOW). Previous studies have generally approached WANT, CAN and KNOW as independent and distinct factors that influence employee participation in CI activities (e.g., Hellsten & Klefsjo, 2000; Lillrank et al., 2001; Schneiderman, 1988). However, there is ample evidence that even highly motivated employees abstain from participating if they assume that they cannot fulfill the task and/or if they do not know where and how to contribute (e.g., Bandura & Locke, 2003; Delbridge & Barton, 2002; Katzell & Thompson, 1990; Mitki et al., 1997). One may argue that this moderating impact of CAN and KNOW on CI participation would be even stronger in control-oriented cultural and organizational environments such as China, which is often characterized by a lack of communication of ideas from the top to the bottom of the organization, and where employee involvement is generally not encouraged, with managers threatened by the ideas of delegating authority and empowering employees (e.g., Pun, Chin & Lau, 2001; Yeung & Chan, 1999). Hence, the first objective of our study is to challenge the implicit assumption of independency between the three factors and to prove the influence of employee ability (CAN) and knowledge (KNOW) on their motivation (WANT) to participate in CI activities.

Employee motivation and differentiation in continuous improvement Adding to the challenge of encouraging employee CI participation is the fact that

employees are not homogeneous. Employees differentiate from one another with regard to beliefs, aspirations, motivation and abilities (Bessant, Caffyn & Gilbert, 1996). Moreover, their attitudes, values, behaviors and efficacy differ across national cultures (Newman & Nollen, 1996). Thus, companies, in particular multinational companies operating in numerous countries, face the question of how to manage their diverse workforce as a strategic asset. It has been found, for instance, that workforce differentiation can help companies in achieving significant strategic impact in the competitive marketplace by increasing the motivation and engagement of workers (Huselid, Becker & Beatty, 2005). Research in other fields has also demonstrated the value of employee differentiation according to job category (e.g., white-collar vs. blue-collar workers) (e.g., Friedlander, 1965; Pennings, 1970) and gender (e.g., Feingold, 1994; Klein & Hodges, 2001). However, research into whether and where employee differentiation has an impact on the ability and willingness to participate in CI activities is lacking, especially in the Chinese context. Thus, the second objective of our study is to address this research gap through analyzing whether and how actual job category, gender and number of years with the company may impact employees motivation (WANT), ability (CAN) and knowledge (KNOW) in the CI context. The paper proceeds as follows: First, CI implementation challenges, especially those faced by firms producing in China, are reviewed. Then, employee motivation (WANT), ability (CAN) and knowledge (KNOW) in the CI context, as well as various areas of employee differentiation, are analyzed. This results in several hypotheses that are tested through survey data obtained from employees of a Chinese manufacturing plant of a leading multinational automotive company. This is followed by a discussion of employee motivation and employee differentiation as factors influencing employee CI participation, as well as the practical implications of our

Employee motivation and differentiation in continuous improvement research findings. Finally, limitations, possible directions for future studies and conclusions are drawn.

THEORETICAL BACKGROUND AND HYPOTHESES Although CI is simple to conceptualize, its implementation is not straightforward (Bessant et al., 1996). Effective CI implementation remains a challenge, as shown by many failures and shortcomings reported: The Economist Intelligence Unit (1992) reported, for instance, that many organizations experienced disappointment as their CI programs failed. Moreover, numerous studies have indicated that companies attempts to foster CI were frequently unsuccessful, or exhibited only limited success in delivering the expected increase in key performance indicators (e.g., Choi & Behling, 1997; Mitki et al., 1997; Spector & Beer, 1994). Hence, the question of how companies could achieve effective CI implementation is of increasing interest to both researchers and business practitioners, especially for companies producing in China, where CI implementation has been observed to be particularly challenging (e.g., Tseng, Wong & Wan, 1995; Yeung & Chan, 1999). As active participation of workers and managers has been found to be an important factor in CI implementation success (Marin-Garcia, Pardo del Val & Martin, 2008), one has to investigate into reasons for employee reservation. Lack of employee participation in CI initiatives has been identified as a major reason for the non-sustainability of CI programs (Welikala & Sohal, 2008). Therefore, one of the main challenges of CI implementation is how to better motivate employee participation in CI activities. It has been found that especially in China, managers often fail to recognize the importance of employee participation and involvement (e.g., Chin & Pun, 2002; Yeung & Chan, 1999), probably because of the predominant organizational cultures and

Employee motivation and differentiation in continuous improvement management systems which tend to be control-oriented, with large power distances and centralized decision-making authority in managerial hands. Employee differences add to the challenge of encouraging employee CI participation. Employees differ in their motivation, abilities, attitudes and behaviors not only within an organization (Bessant et al., 1996) but also across national cultures (Newman & Nollen, 1996). Thus, companies face the question of how to manage their diverse workforce as a strategic asset. One issue is the increased emphasis on differentiation of employees, jobs and performance

(Huselid, Becker & Beatty, 2005). As mentioned earlier, many manufacturers tried to transfer the CI concepts from their global leadplants or from strategic alliances to their plants in China. However, studies have shown that in attempting to motivate Chinese workers, practices drawn from concepts that work in other countries might not work in China (Jackson & Bak, 1998). As such, it may be argued that employee differentiation, which takes into account that China is a predominantly masculine country characterized by large power distance (e.g., Chin & Pun, 2002; Nielsen, Mauritzen & Srensen, 2004), might be a particularly useful strategy for companies producing there. So far, however, employee motivation and employee differentiation in the CI context, especially in the case of China, has not garnered significant research attention. Prior studies have mainly investigated various cultural aspects and management systems dominating the Chinese economy with regards to their impact on the empowerment and initiative of the workforce at large (e.g., Lockett, 1988; Ng, 1998; Pun et al., 2000), or as related to CI initiatives (e.g., Chin & Pun, 2002; Yeung & Chan, 1999, Wu & Chen, 2006). These include, for instance, the consequences of a large power distance, a paternalistic and control-oriented approach to management, the failure to recognize the importance of employee involvement and participation, and the reluctance of employees to question authority.

Employee motivation and differentiation in continuous improvement The implementation of CI measures within firms located in the PRC whether by multinational companies (MNCs) or local employers is further hampered by specific

characteristics of the Chinese workforce, which is very often made up of largely migrant workers who generally perform according to instructions and are unwilling to accept responsibilities (Tsang & Chan, 2000). These workers seldom exhibit characteristics that are necessary for active CI participation, which includes taking the initiative in acquiring new knowledge for selfdevelopment, nor are they motivated to improve their work quality (e.g., Lockett, 1988; Tsang and Chan, 2000). These obstacles and challenges faced by companies in China illustrate the difficulties of encouraging employee CI participation in China and emphasize the need for further studies that focus on employee motivation as well as on insights into employee differentiation in the Chinese context.

Employee motivation and CI participation To date, CI research has dealt extensively with enabling employees to participate in CI activities, as seen by the ample amount of literature that focuses primarily on CI tools, techniques, prescriptions and procedures (Chin & Pun, 2002). Whereas studies have extensively addressed the use of some form of reward and recognition systems to motivate employees (e.g., Frese, Teng & Wijnen, 1999; Kerrin & Oliver, 2002; Schuring & Luijten, 2001; van Dijk & van den Ende, 2002), other aspects that relates to employee motivation in CI participation have so far not garnered significant CI research attention. One particular exception is research that focuses on organizational design in general (e.g., Berger, 1997; Lillrank et al., 2001). More specifically, researchers propose that three organizational design requirements are necessary in order for employees to actively participate in

Employee motivation and differentiation in continuous improvement CI activities, namely: employees should want to do it (WANT), be able to do it (CAN), and

know what they are expected to do (KNOW) (Lillrank et al., 2001). These categories or design requirements are described and summarized in Table 1 and explained below in more detail.

Table 1 goes about here According to this research, WANT relates to employee motivation. Employees have to want to invest their time and energy in CI activities and to improve their work performances. As CI requires extra efforts and produces desirable results such as increases in productivity and efficiency (e.g., Kerrin, 1999), there is a need for incentive systems, monetary or otherwise, which are designed around compensation for the extra time and efforts needed in CI participation. The ability of employees to independently evaluate existing work processes and complex man-machine systems and to perform the required CI tasks is a necessary condition for successful CI implementation subsumed under the category CAN. Accordingly, employees should have access to relevant resources such as facilities (e.g. meeting rooms), tools, methods and knowledge beyond ordinary work skills as well as access to slack resources (e.g. spare time). Finally, as there are many potential improvement targets in most work environments, it seems to be necessary to distribute information regarding what employees are expected to do. As such, the necessity to establish, maintain and communicate areas of work responsibilities, CI priorities and goals are subsumed under the third category KNOW. In contemporary CI literature, the three organizational design requirements WANT, CAN and KNOW (Lillrank et al., 2001) are seen as independent and separate factors that managers have to address in order for a company to achieve CI in a systematic way. First, employee participation in CI initiatives has been researched from a pure motivation (i.e., WANT)

Employee motivation and differentiation in continuous improvement perspective. Such research has focused primarily on the use of some form of reward and recognition system to motivate employees in CI participation, such as the use of suggestion

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systems, which offer a procedure for collecting, evaluating and rewarding CI ideas by individual employees and/or improvement teams (e.g., Frese et al., 1999; Kerrin & Oliver, 2002; Rapp & Eklund, 2002; Schuring & Luijten, 2001). Second, employee CI participation has been researched from the perspective of enabling employees to carry out CI activities (i.e. CAN). Studies in this direction have added to our understanding of sophisticated CI tools and techniques as well as to the importance of employee access to training and resources in encouraging CI participation (e.g., Hellsten & Klefsjo, 2000; Liker, 2004; Spear & Bowen, 1999). Finally, the value of having a clear implementation plan, CI directions and goal setting (i.e., KNOW) in encouraging active employee CI participation is also well covered in CI literature (e.g., Delbridge & Barton, 2002; Leonard-Barton, 1994; Schneiderman, 1988). However, the two factors CAN and KNOW have generally been analyzed from an isolated viewpoint in the CI context. Despite their relevance and importance in enabling CI participation, the question of how having the abilities, equipments and resources to carry out CI activities (i.e., CAN) and the knowledge of what to do in the CI context (i.e., KNOW) could influence employee motivation in CI participation (i.e., WANT) has not yet been discussed. Therefore, in this study, we examine the impacts of CAN and KNOW on WANT based on a comprehensive model which is illustrated in Figure 1. Figure 1 goes about here On the one hand, work motivation research indicates that strategies for improving and sustaining work motivation include those addressing the availability of personal and material resources (Katzell & Thompson, 1990). On the other hand, Bandura and Locke (2003) noted in their self-efficacy research that the motivation to act or to persevere in the face of difficulties is

Employee motivation and differentiation in continuous improvement

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rooted in the core belief that one has the power to produce the desired effects. By this means, an employees belief that he/she possesses the necessary skills and tools to carry out his/her CI tasks could contribute significantly to his/her level of motivation. Taken differently, insights from motivation research suggest that employee participation in CI initiatives is a function of employee motivation and their beliefs in their ability to carry out their respective tasks. Although there might be a small direct effect on CI participation (see the dotted arrow in Figure 1), the main effect of whether an employee possesses the ability to carry out CI activities will be through moderating his/her motivation to participate in CI activities, leading to our first hypothesis:

H1: Employee ability to carry out CI activities is positively related to his/her motivation to participate in CI activities.

Goal setting techniques have been shown to be another effective strategy in improving and sustaining work motivation (Katzell & Thompson, 1990; Kreitner & Kinicki, 1999; Locke, Latham & Smith, 1990). For example, researchers have highlighted the importance of having clear and well-communicated CI goals in motivating participation (e.g., Krishnan, Shani, Grant & Baer, 1993; Lynch & Cross, 1995; Schneiderman, 1988). Having a clear implementation plan encourages active CI participation as well (e.g., Delbridge & Barton, 2002; Leonard-Barton, 1994; Mitki et al., 1997). This is due to the large number of potential improvement targets in most work environments. Hence, establishing goals, defining clear task responsibilities and giving clear implementation directions reduce efforts wasted in blind alleys or laborious projects with insignificant payoffs, which could also have a detrimental effect on employee motivation (Lillrank et al., 2001).

Employee motivation and differentiation in continuous improvement Overall, insights from both motivation and CI research suggest that employee participation in CI activities is a function of their motivation and their knowledge of what they are expected to do in the CI context. This suggests that although there might be a small direct effect on participation (see the dotted arrow in Figure 1), the main effect of an employee possessing the knowledge of what to do in the CI context will be through moderating his/her motivation to participate in CI activities, leading to our second hypothesis:

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H2: Employee knowledge of what he/she is expected to do in the CI context is positively related to his/her motivation to participate in CI activities.

Employee differentiation and CI participation Adding to the challenge of motivating employee CI participation is the issue of employee differentiation, which looks into employee profile categorization (i.e., characteristics of groups of employees) in a diverse workforce. Companies are not homogeneous entities. They are complex organisms composed of groups and factions with widely differing beliefs, aspirations, motivation and abilities (Bessant et al., 1996). In addressing employee participation in CI, it may be valuable to take such heterogeneity among employees into consideration and to account for traits such as job category or gender. By this means, CI programs could be adjusted to better target appropriate employee groups. However, although research in other fields has demonstrated the value of employee differentiation (e.g., Huselid, Becker & Beatty, 2005; Lush, Kerr & Ronis, 1995; Pennings, 1970), research into whether and where employee differentiation occurs in the CI context is still lacking in the literature. Researchers have observed that many CI programs are top-down initiatives from the management (e.g., Bessant & Francis, 1999; Marin-Garcia et al., 2008; Mitki et al., 1997). Hence,

Employee motivation and differentiation in continuous improvement

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a disregard of the influence of differences in employee motivation, ability and knowledge on CI participation could be detrimental to the success of the implemented CI program. In order to manage their diverse workforce as a strategic asset, companies could particularly benefit by gaining insights into where and in what form such differences between their employees exist (e.g., white-collar workers have higher abilities to carry out CI activities compared to blue-collar workers, etc.). Such insights could help companies to refine their CI programs in order to address specific CI participation needs and weaknesses of their employees. An area of possible employee differentiation is that between white- and blue-collar workers. Prior studies on work-value systems have clearly shown the value of making such a distinction between employees. Friedlander (1965), for example, showed that work-value systems of employees were largely a function of their occupation and their education. Similarly, Seeman (1967) and Turner and Lawrence (1965) observed that differences in membership groups led to different work-value systems. Researchers have also observed that blue-collar workers usually attribute great importance to extrinsic values, whereas the value systems of white-collar workers are predominantly intrinsic (Friedlander, 1965; Pennings, 1970; Seeman, 1967; Turner & Lawrence, 1965). However, although the literature clearly suggests that significant differences exist between white- and blue-collar workers, most CI studies have focused mainly on shop-floor (i.e., blue-collar) workers (e.g., Delbridge & Barton, 2002; Liker, 2004; Mitki et al., 1997). Our study addresses this gap by offering a full sample of white- and blue-collar workers in the CI context. Furthermore, there has been no literature to our best knowledge that focused on whiteand blue-collar workers in a Chinese CI context. This might be a serious shortcoming as Chinese organizational cultures and management systems differ from the Western archetypes. For instance, the Chinese systems are characterized by a hierarchy of specialized managerial roles

Employee motivation and differentiation in continuous improvement

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with top-down allocation of authority to monitor and control workers. Moreover, there is often a lack of communication of ideas and a lack of cooperation from the top to the bottom of the organization (e.g., Chin & Pun, 2002; Pun et al., 2000; Yeung & Chan, 1999). This could result in significant differences in white- and blue-collar workers access to CI training, resources and information as well as in their motivation to participate in CI activities. This possibility is investigated in our study, leading to the following hypotheses:

H3a: White-collar workers differ from blue-collar workers in their motivation to participate in CI activities. H3b: White-collar workers differ from blue-collar workers in their abilities to carry out CI activities. H3c: White-collar workers differ from blue-collar workers in their knowledge of what they are expected to do in the CI context.

Differentiating between male and female workers is another possible form of employee differentiation. Several authors have observed gender differences in studies relating to motivation, personality and work attitudes (e.g., Feingold, 1994; Klein & Hodges, 2001; Martin & Kirkcaldy, 1998). Therefore, we cannot eliminate the possibility that such gender differences may also be relevant for employee motivation, abilities and knowledge in the CI context. Moreover, China is a predominantly masculine country (Nielsen et al., 2004), characterized by features such as a traditional masculine work role model of male achievement, control and power, and a high degree of gender differentiation. With males dominating a significant portion of the power structure of Chinas masculine society, this could result in significant differences in male and female workers access to CI training, resources and information as well as in their motivation to

Employee motivation and differentiation in continuous improvement participate in CI activities. This possibility is investigated in our study, leading to the following hypotheses:

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H4a: Male workers differ from female workers in their motivation to participate in CI activities. H4b: Male workers differ from female workers in their abilities to carry out CI activities. H4c: Male workers differ from female workers in their knowledge of what they are expected to do in the CI context.

In addition to the two forms of employee differentiation mentioned above, our study also distinguishes employees based on how long they have been with the company. As a CI program has been initiated in the Chinese plant of the MNC we have studied in 2006, employees who have been with the company for longer than three years (i.e. before 2006) could be differently motivated to participate in CI activities compared to those who joined the company later. Their abilities to carry out CI activities and their knowledge of what to do in the CI context may differ as well. In order to investigate potential effects resulting from this, employees will be differentiated based on the number of years they have been with the company (i.e., less than/equal to three years work experience versus more than three years work experience). This leads us to the following hypotheses:

H5a: Workers with less than/equal to three years work experience differ from workers with more than three years work experience in their motivation to participate in CI activities.

Employee motivation and differentiation in continuous improvement H5b: Workers with less than/equal to three years work experience differ from workers with more than three years work experience in their abilities to carry out CI activities. H5c: Workers with less than/equal to three years work experience differ from workers with more than three years work experience in their knowledge of what they are expected to do in the CI context.

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RESEARCH METHODOLOGY Questionnaire development The variables analyzed in this study relate to employee motivation in CI participation, employee ability to carry out CI activities and employee knowledge of what he/she is expected to do in the CI context. For analysis purposes, the variables are termed WANT, CAN and KNOW, respectively. An initial list of items describing the variables to be measured was generated from literature relating to organizational design for CI (Lillrank et al., 2001). Two managers and the CI team of the multinational company that participated in the survey (see below) scrutinized this list as to the understandability, applicability, clarity and ambiguity of the items. Based on their comments and feedback, items and/or wordings were modified. The modified set of items was used in the questionnaire. The questionnaire was initially developed in English. The Chinese version of the questionnaire was generated using the following process: A native Chinese who has sufficient knowledge of the subject and a good command of both English and Chinese first translated the English version of the questionnaire into the Chinese language. Another native Chinese who has sufficient knowledge of both Chinese and English then translated the Chinese questionnaire back

Employee motivation and differentiation in continuous improvement

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into English. Following that, the original English version of the questionnaire was compared with the English translation of the Chinese version. Questions and wordings of the Chinese version were then corrected based on this comparison. A sample of survey questions is illustrated in Table 2. Table 2 goes about here The variables WANT, CAN and KNOW were operationalized on a four-point interval scale with multiple items. Employees were requested to indicate on a scale of 1 to 4 how much they (dis)agree with a statement (1-strongly disagree; 2-disagree; 3-agree; 4-strongly agree). The summation value of all items measuring a particular variable was taken as the respective value of that variable for that respondent.

Sample and data collection Our study was carried out in the Chinese manufacturing plant of a leading automotive MNC. The questionnaire was given out to the employees as a survey of employee perceptions of the CI culture in the company. At the time of the survey, the plant had 1,349 employees. A total of 696 employees participated in the survey, indicating a response rate of 51.6%. Respondents were requested to indicate their job categories (white- or blue-collar workers), gender (male or female) and length of time with the company (in years). Descriptive information on survey participants are summarized in Table 3. Table 3 goes about here Of the accepted questionnaires, 202 were from white-collar workers, and 494 were from blue-collar workers. Of the survey respondents, 489 were male and 207 were female. Moreover,

Employee motivation and differentiation in continuous improvement 409 respondents had less than or equal to three years working experience with the company,

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while 287 respondents have worked with the company for more than three years. All respondents were of Chinese nationality.

RESULTS Descriptive analyses Table 4 reports the correlations for the constructs WANT, CAN and KNOW. Table 4 goes about here As expected, CAN is significantly and positively correlated with WANT (p < 0.05). This suggests that employees who exhibit higher abilities to carry out CI activities also tend to be more motivated to participate in CI activities. Similarly, KNOW exhibits a significant positive correlation with WANT (p < 0.01). This suggests that employees who have more knowledge of what they are expected to do in the CI context also tend to be more motivated to participate in CI activities. Note that the significant positive correlation of WANT with CAN and KNOW indicates that there is a positive linear relationship between employee motivation and their abilities and knowledge in the CI context. The influence of CAN and KNOW (independent variables) on employee motivation in CI participation, i.e., WANT (dependent variable), is examined in the next section.

Multiple regression Regression analysis was employed to analyze the validity of CAN and KNOW as factors influencing employees motivation to participate in CI activities. The hypothesized interactions between the variables in H1 and H2 were tested using multiple regression analyses. Table 5 displays the results of the analyses.

Employee motivation and differentiation in continuous improvement Table 5 goes about here In the regression analyses, variations in job category, gender and employees length of

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time with the company (in years) have been controlled to minimize their effects on the outcome of the analyses. The variance inflation factor (VIF), which measures the impact of collinearity among the variables in a regression model, indicates no presence of multicollinearity in our model. In model 1, WANT is regressed against the independent variable CAN in order to test H1. The control variable job category ( job category = 0.50, p < 0.01) exhibited significant and positive results in the analysis. The significant and positive relationship between WANT and CAN is consistent with H1 ( can = 0.41, p < 0.01) and indicates that employee ability to carry out CI activities is positively related to their motivation to participate in CI activities. This finding shows that having the necessary CI skills, as well as access to CI tools, training, relevant facilities and slack resources (e.g. spare time) can have a positive impact on employee motivation in CI participation. In model 2, in addition to CAN, WANT is regressed against the independent variable KNOW in order to test H2. In the regression analysis, control variables job category ( job category = 0.42, p < 0.01) and gender ( gender = 0.11, p < 0.1) exhibited significant and positive results. The coefficient for KNOW is positive and significant ( know = 0.60, p < 0.01). This provides support for H2 and indicates that employee knowledge of what he/she is expected to do in the CI context is positively related to his/her motivation to participate in CI activities. Therefore, having clear task responsibilities, CI targets and implementation directions (i.e. KNOW) can have a statistically significant positive influence on employee motivation to participate in CI activities.

Employee motivation and differentiation in continuous improvement The regression analysis indicates that almost 50% (R2 = 0.450) of the variability in

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employee motivation to participate in CI activities can be explained by a fitted regression model based on an employees abilities to carry out CI activities and his/her knowledge of what he/she is expected to do. CAN and KNOW are therefore empirically shown to be significant factors influencing employee motivation in CI participation; neither variable can be dropped without significantly degrading the model.

Analysis of variance (ANOVA) Table 6 presents the means and standard deviations of the variables WANT, CAN and KNOW when employees are differentiated according to job category, gender and time with company. Table 6 goes about here It can be observed that employees differ in their motivation, abilities and knowledge when they are differentiated according to a certain group profile. Whether such differences exhibited by the employees are significant is examined using ANOVA. ANOVA was chosen because the variables of interest were measured on an interval scale. In the ANOVA, job category, gender and number of years with the company were considered as factors. Variables WANT, CAN and KNOW were used as dependent variables. The results of ANOVA, testing for the significance of the differences exhibited by the employees when they are differentiated according to job category, gender and time with the company, are presented in Table 7. Table 7 goes about here

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From the ANOVA results it can be seen that in the Chinese manufacturing plant surveyed white- and blue-collar workers exhibited statistically significant different means at the 99% significant level for two out of three variables tested, namely, WANT and CAN. No significant difference was found between them for KNOW. The results are consistent with H3a and H3b, indicating that white- and blue-collar workers differ significantly from each other in their motivation to participate in the companys CI activities. Moreover, they also exhibit significant differences in their abilities to carry out CI activities (i.e., different levels of CI skills and different levels of access to CI tools, training, relevant facilities and slack resources). No significant difference was found between white- and blue-collar workers for KNOW. This indicates that white- and blue-collar workers do not differ significantly from each other in their knowledge of what they are expected to do in the CI context (i.e., having clear task responsibilities, being given CI targets and implementation directions), thus providing no support for H3c. No significant difference was found between male and female workers for WANT, CAN and KNOW. This indicates that male and female workers do not differ significantly in their motivation, abilities and knowledge in the CI context in this study, hence providing no support for H4a, H4b, and H4c, respectively. As proposed in H5b, workers who have been with the company for less than or equal to three years differ significantly in their abilities to carry out CI activities from their colleagues who have been with the company for more than three years (p < 0.1). Otherwise, they exhibited no significant differences in their motivation and knowledge in the CI context, providing no support for H5a and H5c in this study. All the results of our hypotheses testing are summarized in Table 8 and will be discussed in the following section.

Employee motivation and differentiation in continuous improvement

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Table 8 goes about here

DISCUSSION In accordance with the model proposed (see Figure 1), we found that employees ability to participate in CI activities, as well as their knowledge of what they are supposed to do in the CI context, are positively related to their motivation to participate in CI activities. This finding is consistent with motivational research findings that strategies for improving and sustaining work motivation include those addressing the availability of personal and material resources, as well as goal-setting techniques (e.g., Katzell & Thompson, 1990). Prior CI research has focused primarily on the use of some form of reward and recognition systems to motivate employees in CI participation (e.g., Bessant & Francis, 1999; Marin-Garcia et al., 2008; Kerrin & Oliver; 2002). Though CAN and KNOW are recognized as necessary in order for CI activities to be carried out in a company (Lillrank et al., 2001), little empirical attention has been devoted to their influence on employee motivation in the CI context. Generally, the three factors WANT, CAN and KNOW are seen as independent and distinct entities from the organizational design perspective. Our study challenges this assumption. Our empirical findings indicate that employees motivation in CI participation is positively affected by their abilities to carry out CI activities as well as by their knowledge of what they are expected to do in the CI context. Hence, to encourage and sustain employee motivation in CI participation, an alternative strategy companies should consider is to ensure that employees have access to relevant facilities, tools, training and slack resources needed to carry out their CI activities. In addition, they could make an effort to ensure that employees know what they are

Employee motivation and differentiation in continuous improvement expected to do in the CI context through giving them clear task arenas, CI targets and CI implementation directions. From the analyses, we observed that white- and blue-collar workers exhibit significant differences in their motivation to participate in CI activities and in their ability to perform the

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required CI tasks. Table 7 shows that white-collar workers exhibited a significantly higher level of motivation to participate in CI activities compared to blue-collar workers ( white-collar = 7.09,
blue-collar =

6.80, p < 0.01). Chinese workforce characteristics as well as aspects of the

organizational cultures and management systems of companies producing in China could provide insights in analyzing this observed difference between white- and blue-collar workers in their motivation to participate in CI activities. Blue-collar workers have been observed to be largely migrant workers who seldom try to acquire new knowledge for self-development and are rarely motivated to improve their work quality (e.g., Lockett, 1988; Tsang & Chan, 2000). Moreover, they are reluctant to question authority and to disagree with their supervisors in a culture of topdown allocation of authority to monitor and control workers, where the importance of employee empowerment and participation is seldom recognized (e.g., Chin & Pun, 2002; Pun et al., 2000; Yeung & Chan, 1999). As CI hinges on the empowerment and initiative of workers to take part in CI activities, characteristics of the work culture in China could have lead to the significantly lower levels of employee motivation to participate in CI activities observed in the blue-collar workers. Future studies are necessary to investigate such a possible influence of work culture characteristics on employee differentiation in their motivation in CI participation. Our findings also indicated that blue-collar workers reported significantly higher abilities to carry out CI activities as compared to white-collar workers ( white-collar = 6.69, blue-collar = 7.10, p < 0.01) (see Table 7). This is surprising considering that white-collar workers have reported significantly higher motivation to take part in CI activities. Yet, this finding is consistent with the

Employee motivation and differentiation in continuous improvement observations of numerous scholars that many CI programs tend to focus on CI tools, training, relevant facilities and slack resources for the shop-floor (i.e., blue-collar) workers (e.g., Delbridge & Barton, 2002; Liker, 2004; Mitki et al., 1997). This points to the need for more attention to CI beyond the shop-floor. The observed lack of a significant difference between white- and blue-collar workers in

24

their knowledge of what they are expected to do in the CI context in this study is interesting (see Table 7). Prior research indicated that Chinese management is characterized by a lack of communication of ideas from the top to the bottom of the organization (Fukuda, 1994). The problem becomes more complicated in the case of foreign-owned manufacturing plants. As most senior executives in such plants are expatriates, there may be cultural barriers and communication problems with the Chinese management staff and employees (Yeung & Chan, 1999). Hence, in this study, one would expect white- and blue-collar workers to differ significantly in their knowledge of what they are expected to do. Yet, this is not the case. One possible explanation could be that the management in this instance has realized the importance and value of unbiased communication in CI implementation. In view of the importance of communication in achieving CI effectiveness (Choi & Liker, 1995), the role of communication in influencing employee differentiation in CI participation warrants further research. Our findings also indicated that employees who have more than three years of work experience with the company exhibited a slightly higher ability to carry out CI activities in comparison to their colleagues who have been with the company for equal to/less than three years ( less than or equal to three yrs = 6.92, more than three yrs = 7.07, p < 0.1) (see Table 7). However, this may be not so surprising. Employees who have been with the company for a longer period could have collected more experience and, thus, the ability to use CI tools in the course of their work life. However, it should be noted that the possibility that employees who have been with the company

Employee motivation and differentiation in continuous improvement for less than three years could have been exposed to CI tools and training etc. in their previous companies is not accounted for in this study, but should be accounted for in future studies. The above significant findings that are observed when employees are differentiated suggest that it is worthwhile for companies to differentiate their employees during CI

25

implementation. Our study has shown that not all employees are equally motivated to participate in CI activities. Similarly, not all employees possess the relevant skills or have access to the necessary facilities, CI training, equipments and slack resources which could enable them to carry out their CI activities. Hence, in planning CI programs, the management of a company should make the effort to find out whether and in what form such differences between their employees exist. Such awareness could aid companies in refining their CI initiatives to address specific CI needs according to the appropriate employee groups. This could in turn increase their chances of achieving the desired CI results.

CONCLUSION In this study we addressed two key issues in encouraging employee CI participation, namely, employee motivation and employee differentiation in the Chinese CI context. Our analyses indicate that employees motivation to participate in CI activities is significantly influenced by their ability to carry out CI activities as well as by their knowledge of what they are expected to do in the CI context. This implies that employee motivation, abilities and knowledge are not independent entities in the CI context as it is generally implicitly assumed in CI literature (e.g., Hellsten & Klefsjo, 2000; Lillrank et al., 2001; Schneiderman, 1988). Furthermore, significant differences in employee CI motivation and abilities are observed when employees are differentiated based on job category (i.e., white-collar vs. blue-collar worker). This suggests that

Employee motivation and differentiation in continuous improvement the issue of employee differentiation in the CI context warrants deeper attention by both researchers and managers. However, although our study results in valuable insights into employee motivation and employee differentiation in CI participation, in particular in the Chinese cultural context, there are some limitations. First, our study focused on two factors that may influence employee motivation in CI participation, but other possible factors exist. The regression analyses indicate that CAN and KNOW account for a significant amount of variability in WANT (see Table 5). Future research could broaden the investigation to identify other factors influencing employee

26

motivation in CI participation. Motivation and CI research provides a hint as to what these factors could be, namely, the existence of a CI reward and recognition system (e.g., Bandura & Locke, 2003), the existence of a CI measurement and feedback system (e.g., Becker, 1978; Kim & Hammer, 1976), or the importance of management commitment (e.g., Kaye & Anderson, 1999; Porter & Parker, 1993; Powell, 1995). Second, our study explored the differences between employees in their motivation, abilities, and knowledge in the CI context as a first step towards addressing the issue of employee differentiation in the CI context. The significant differences that we observed between white- and blue-collar workers indicate that this is an avenue deserving more research attention. Future research in employee differentiation in the CI context could take the direction of exploring alternative forms of employee differentiation (e.g., different management levels, functional departments, different cultural contexts for MNCs, etc.). Third, our study is carried out in the Chinese plant of a multinational company. Chinas unique cultural heritage and collective orientation has a pervasive influence on the mode of Chinese management and organization (Pun et al., 2000). One example noted in this study is that the survey responses by employees tend towards the positive. This is consistent with cultural

Employee motivation and differentiation in continuous improvement

27

studies indicating that Chinese workers are reluctant to report negative things to the management (Fukuda, 1994). Such unique aspects of the Chinese organizational culture may thus limit the ability to generalize the present findings to other cultures. Moreover, Ralston and colleagues (1996) observed that diverse values are held across the various regions of China itself. This is because just as societal cultures can differ, regions within a society can vary, especially if that society is large and complex (Goodman, 1992; Roberston, 1993). China clearly meets both of these criteria (Goodman, 1989). This could thus limit the ability to generalize the present findings to all regions in China. Nonetheless, despite this limitation, our empirical findings have led to insights into employee motivation and employee differentiation in the CI context. Future research may thus provide further contributions by carrying out comparative studies in different cultures. In addition, and considering that cultural differences within China itself are well known (Huo & Randall, 1991), comparative studies could also be extended to other locations within China to ascertain whether our findings remain consistent within the same country. Finally, our study focused on CI in the manufacturing setting. However, CI has relevance beyond manufacturing. For instance, CI is playing an increasing role in healthcare (e.g., Jackson, 1999; Shortell, Bennett & Byck; 1998) and service industries (e.g., Babbar, 1992; Eccles & Durand, 1998). Therefore, another opportunity for further inquiry is the investigation of the applicability and relevance of our findings from this study in other settings.

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Employee motivation and differentiation in continuous improvement FIGURE 1 Conceptual Model

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Employee differentiation

Factors influencing Employee motivation in CI

H3b/H4b/H5b Job Category/ Gender/ Time with Company H3a/H4a/H5a

CAN (ability) H1 WANT (motivation) H2 CI Participation

H3c/H4c/H5c

KNOW (knowledge)

Employee motivation and differentiation in continuous improvement TABLE 1 Design Requirements for CI Organizational Design Refers to: Requirement WANT Employee motivation to participate in CI activities

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Include: Compensation for time and effort Rewards for suggestions Motivational message Availability of time and facilities CI skills, tools, and techniques Setting of CI direction and goals Setting of the task arena CI implementation plan Information and knowledge

CAN

Employee ability to carry out CI activities

KNOW

Employee knowledge of what they are expected to do in the CI context

Source: derived from Lillrank et al. (2001 ) p. 46

Employee motivation and differentiation in continuous improvement TABLE 2 Survey Items I want to improve my work performance My participation in improvement activities are being encouraged and rewarded by my superiors. I possess the skills and have access to tools and training which enable me to improve my work performance. Time and space (e.g. meeting rooms) are available to me for improvement activities. I know what my work responsibilities are. I am given clear improvement goals and implementation directions.

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WANT

CAN

KNOW

Employee motivation and differentiation in continuous improvement TABLE 3 Descriptive Information of Survey Participants Frequency White- and Blue-collar workers White-collar workers Blue-collar workers Gender Male Female Time with Company Less than/equal to three years More than three years 202 494 489 207 409 287

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TABLE 4 Pairwise Pearson Correlations WANT WANT CAN KNOW 1 0.41* 0.67** CAN 1 0.46 KNOW

Number of Cases: 696 Significance: p < 0.1 *p < 0.05 **p < 0.01

Employee motivation and differentiation in continuous improvement

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TABLE 5 Results of Regression Analyses for WANT Dependent Variable WANT Independent Variables Intercept Control variables Job Category Gender Time with Company Main Effects CAN KNOW Model 1 3.75** (0.23) 0.50** 0.13 0.14 0.41** (0.08) (0.07) (0.07) (0.03) Model 2 1.39** 0.42** 0.11 0.08 0.16** 0.60** 134.70** 0.49 (0.22) (0.06) (0.06) (0.06) (0.03) (0.03)

F-Ratio 48.24** 2 0.22 R Number of cases: 696 Significance: p < 0.1 *p < 0.05 **p < 0.01

Dummy variable "0": blue-collar worker; male worker; Time with company = less than/equal to three years Dummy variable "1": white-collar worker; female worker; Time with company = greater than three years

Employee motivation and differentiation in continuous improvement TABLE 6 Means (Standard Deviations) of Variables WANT, CAN and KNOW by Job Category, Gender and Time with Company Construct Job Category White-collar (N = 202) Blue-collar (N = 494) Gender Male (N = 489) Female (N = 207) Time with company Less than/ equal to three years (N = 409) More than three years (N = 287) WANT 7.09 (0.99) 6.80 (0.95) 6.85 (0.98) 6.96 (0.94) 6.89 (0.98) 6.88 (0.96) CAN 6.69 (1.10) 7.10 (1.00) 7.01 (1.06) 6.91 (1.01) 6.92 (1.06) 7.07 (1.02) KNOW 6.97 (1.04) 7.04 (0.93) 7.02 (0.94) 7.01 (1.00) 6.99 (0.96) 7.06 (0.96)

40

Employee motivation and differentiation in continuous improvement

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TABLE 7 Results of ANOVA of Variables WANT, CAN and KNOW by Job Category, Gender and Time with Company Construct Job Category White-collar (N=202) Blue-collar (N=494) F-Values Gender Male (N=489) Female (N=207) F-Values Time with Company Less than/equal to three years (N=409) More than three years (N=287) F-Values Significance: p<0.1 *p<0.05 **p<0.01 WANT 7.09 6.80 13.60** 6.85 6.96 1.89 6.89 6.88 0.02 CAN 6.69 7.10 22.26** 7.01 6.91 1.44 6.92 7.07 3.22 KNOW 6.97 7.04 0.72 7.02 7.01 0.01 6.99 7.06 1.03

Employee motivation and differentiation in continuous improvement TABLE 8 Summary of Significance of Hypotheses Hypotheses H1: CAN is positively related to WANT H2: KNOW is positively related to WANT H3a: White-collar workers vs. blue-collar workers in WANT H3b: White-collar workers vs. blue collar workers in CAN H3c: White-collar workers vs. blue-collar workers in KNOW H4a: Male workers vs. female workers in WANT H4b: Male workers vs. female workers in CAN H4c: Male workers vs. female workers in KNOW Significance Significant Significant Significant Significant Not significant Not significant Not significant Not significant

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H5a: Workers three years work experience vs. workers > three years Not significant work experience in WANT H5b: Workers three years work experience vs. workers > three years Significant work experience in CAN H5c: Workers three years work experience vs. workers > three years Not significant work experience in KNOW