This chapter presents the overall perspective of this research, including the background of the study, research motivation, research purpose, research question, significance of the study, limitations, delimitations, and definition of terms.
Background of the Study
Moving from the industrial age to the information age of globalization, a paradigm shift of transformation between producing tangible assets to exploiting intangibles such as ideas, knowledge and information was formed (De Chematony, 1999; Hatch & Schultz, 2003), and, since then, intensified. Intangible assets have also been widely recognized as important value creation by business such as brands (Blair, 2011; Hatch & Schultz, 2003), trademarks, customer goodwill and other forms of reputational capital, intellectual capital and organization capital (Blair, 2011).
Among the changes that businesses make as they move toward globalization is a shift in marketing emphasis from product brands to corporate branding. In recent years, findings suggest that companies with strong corporate brands can have market values that are more than twice their book values (Hatch & Schultz, 2001).
Thus, the equity value of a corporate brand is gradually increasing its importance as the quality of the company product. The human capital has been recognized as an important resource organizations should develop to gain sustained competitive advantage. The formation of a brand personality is also created by the interaction of the people behind the logo. Without the innovation and creativity of people, a brand is merely a logo. Moreover, the importance of human capital in organizations as a source of innovation and strategic renewal has been stated (Kong
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& Tsai, 2012). Unique resources, imitation difficulty, and the importance of knowledge are becoming a critical ingredient for gaining competitive advantage in the new economic landscape, added to the fragmentation of markets, the human capital has grown in importance, as they are like knowledge and intellectual capital, one of the elements of sustained competitive advantage (Blair, 2011; Bierman, Hitt, Shimizu, & Kochhar, 2001; Hatch & Schultz, 2003). The employee is the most valuable asset of a company. Satisfied employees can have a positive impact on customers’ satisfaction with the firm and its products. Vice versa, studies have found that marketing efforts enhancing customer satisfaction not only make employees feel good about their employer, but may improve their future performance (Wells, 2007).
An aspiration for good performance brings out good brand equity. For many companies, people are the only source of long-term competitive advantage (Bassi &
McMurrer, 2007).
Throughout Taiwan’s economic development, many of Taiwan’s industries established numerous “Taiwan No. 1” records internationally, earning affluent foreign exchange due to the hardworking nature of the Taiwanese people. According to Taiwan e-Learning and Digital Archives, footware, textile, bicycle and personal computer manufacturing industries have been regarded as the entrepreneurial spirit of Taiwan. Taiwan’s industrial development flourished in the 1970s, starting with years of Original Equipment Manufacturing (OEM). After the rise of labor costs, investment started to shift to the mainland, due to the lifting of a ban, attracting large manufacturers to invest cross-strait. In 2005, due to factory relocations oversea and the abolishment of quotas, Taiwan began focusing on forming strategic alliances in design, research and development, transforming into an Original Design Manufacturer (ODM) type of enterprise (http://culture.teldap.tw). Many are the international brands that were born in Taiwan, including Acer, which was also an
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OEM transformed ODM company. In 2013, Acer suffered a tremendous net loss of profit amounting to NT$20.6 billion ($685 million), Acer acknowledges missteps in the past on resource allocation, and the over expectation of Ultrabooks and notebooks with touch panels, although the products were leading in design they did not accurately fulfill market needs (Sun & Culpan, 2014). A product design that does not accurately fulfill the market needs, suggests a misjudgment and a failed attempt in the company direction and misalignment of endeavors. Economic growth and human development, thus, exhibit a degree of independence, but long term links exist of human development helping economic growth, and economic growth helping human development (Wilson, 2005). Thus, failed revenue growth stimulates contemplation on the human capital development outcomes within the brand for the sake of innovation and risk. One answer to the critical question in strategic management, regarding why firms vary in performance, is that they differ in human capital, human capital attributes (education, experience, skills) and particularly the characteristics of top managers affect firm performance outcomes (Bierman, Hitt, Shimizu,& Kochhar, 2001). Human capital makes a valuable contribution to a firm’s competence, exerting a positive relationship between leveraging human capital and firm performance (Bierman, Hitt, Shimizu, & Kochhar, 2001; Lepak & Snell, 2002).
Therefore, the role of a human capital developer is crucial in developing human capital to build up the brand equity. The Human Capital Developer is a Human Resource (HR) role identified by Ulrich (2005). Ulrich believes human capital developers play a distinctive role within organizations, emphasizing the development of individual employees (especially managers) through personal development programs, coaching organizational leaders, and managing the formation and development of effective management teams (Oxford Press, 2008).
Contemporary branding models emphasizes value through employees'
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involvement in relationship building, and additionally, brand management has become more of a culture management internally, and externally a customer interface management (De Chematony, 1999). Yet, when financial resources for training and development are limited, efficient usage can be met when those that are responsible for human resource development (HRD) are clear about the business strategy and priorities. The practice may be considerably different in many countries (Wilson, 2005). A theme which is also what this research wishes to explore in Taiwan major corporate brands.
Marketing and human resources are the two functional areas that provide mega impetus to change efforts in an organization. Aligning these two functions can create competitive advantage and success for the firm (Memon & Kolachi, 2012). For successful brands such as Disney, the collaboration of both functions is prominent, benefitting the whole body of the corporation. The collaboration is like an amplifier that leverages the brand to another level, and brings a potential charismatic attraction to customers from the inside-out. Dissonance of brand communication isolating the two functions brings out ineffective disadvantages. As Hatch and Schultz (2001) stated in the Harvard Business Review:
“Obstacles in the way of such communications, detriment their corporate brands. Consider the potential for misalignment when marketing talks to customers, HR talks to employees, public relations talks to the media, but the departments don't talk to one another.” (p.132 )
The business environment background in Taiwan is highly intense where efficiency and quality are required from employees in any industry. Workplace stress has resulted in high turnover rates in Taiwan. Abiding by the fact, high frequency of
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employee liquidity and turnover is seen in lower position jobs with poor salary. Most often, even in low turnover rate business environments, employees may be settled in their comfort zones, and are not engaged in the organization goals and identity. In other circumstances, top players in the industry are lured by headhunters easily to rival companies, due to low commitment. These shortcomings will disadvantage the brand equity by lack of employee contribution of equity. In all situations, high turnover is without a doubt lethally a disadvantage of brand building. Therefore, understanding the function, tasks and existence of the human capital developer, and the effects on employee based brand equity might turn a new leaf and help companies to adapt new strategies to enhance the corporate brand.
Leadership is a unique property of extraordinary individuals whose decisions are capable of sometimes radically changing the streams of history (Zaccaro, 2007).
Inspiring leaders are typical visionary. Like great leaders, a leading brand surpasses industry competitors by inspiration, a sense of innovation, and the possession of an extraordinary vision. Another aspect of leadership is to provide vision, although this is the chief executive’s task, HRD functions to contribute by providing a vision of how people need to interrelate and develop themselves in order to achieve the organization’s mission and strategic aim (Wilson, 2005).
The Disney Brand has not yet perished even though the founder Walt Disney has deceased for a decade. Walt Disney had instilled in everyone the hallmark of Disney entertainment was consistency of vision, his vision (Koenig, 1997). In time, leadership ensures that the development storyline of this brand’s fate is following an ensured vision. In order for a vision to come true, faithfulness of the employee is anticipated hence a strong retention force is also a foundation during the phase of brand establishment and organization development. A brand is essentially a promise of commitment and performance by an organization (Love & Singh, 2011). Visionaries have stated
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that for an organization to be successful, the brand vision must outgrow the need of the entire organization, and be “claimed” or “owned” by all important actors (De Chernatony & Vallester, 2005). In the Harvard Business Review, Hatch and Schultz (2001) stated that companies are increasingly seeing the benefit of a corporate branding strategy. But to get the most benefit, three essential elements must be aligned: vision, culture, and image. Hence, the motivation of this research is to find out how the human capital developer aligns the three elements in the company by human resource developing.
A vision has an important direct and indirect effect on follower’s attitude and performance (Kirkpatrick & Locke, 1996). The role of a human capital developer is crucial, since the human capital developer is the molder and gatekeeper of the company’s vision. Therefore, defining such a vision keeper’s role inside a corporate brand name is important. According to Bassi and McMurrer (2007) as the links between people and performance come into focus, organizations will also begin to appreciate the long-term value of investments in human capital, and the folly on dwelling on narrow, near-term goals.
Although training and development in Taiwan HR functions are mature, the role of a human capital developer is not yet defined. Furthermore, the relationship of the human capital development and brand equity is not yet explored in any existing literature. As for the research participants, the significance of this study also is based on the statement of King and Debra (2008) that in internal branding research, the cognitive view and perceptions of the employee party are currently under-represented.
Kulvisaechana (2006) has emphasized that little work has been done on what constitutes a framework of human capital development, particularly in view of investigating the gap between rhetoric (what is espoused) and reality (what is enacted) in an international organization.
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Problem Statement of the Study
A vision of a company leads its management. For low or high performance brands, a vision culture gap is, to different extents, existent. Therefore the problem lies in how human resource professionals tackles the issue to minimize the difference between the two, since vision culture gap is relevant to the brand’s performance in terms of brand equity or even financial revenue. Added to that in recent HR practice, the role of a human capital developer in the corporation has not yet been defined. In terms of internal marketing, this research explores the functions of human capital development in Taiwan enterprise brands to find new insights and solutions to manage the vision culture gap and employee based brand equity. Furthermore, the methodology of understanding the employee based brand equity is worth more investigation, since compared with customer based brand equity, this is a new pioneering territory in research. The goal of this study is to determine the scenarios and gaps in actual HR business practice and investigate the relationship of human capital development and employee based brand equity. In significance, this study wishes to shed light on the aspect of the human capital developer role in Taiwan.
Significance of the Study
The human capital developer is an HR role identified by Ulrich (2005). Ulrich believes human capital developers play a distinctive role within organizations, emphasizing the development of individual employees (especially managers) through personal development programs, coaching organizational leaders, and managing the formation and development of effective management teams (Oxford Press, 2008).
Although training and development in Taiwan HR functions are mature, the role of a human capital developer in the corporation has not yet been defined. Furthermore, the relationship of the human capital development and brand equity is not yet explored in
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any existing literature. As for the research participants, the significance of this study also resonanced the statement of King and Debra (2008) that in internal branding research, the cognitive psychology aspect and the perceptions of the employees are currently under-represented. Kulvisaechana (2006) had emphasized that little work has been done on what constitutes a framework of human capital development, particularly in view of investigating the gap between rhetoric (what is espoused) and reality (what is enacted) in an international organization. Therefore this research hoped to investigate the outcomes of human capital development by employee based brand equity in depth search from the employee psychological brand building behaviors.
Research Objectives
The purpose of this research was addressed by the following objectives:
1. To explore and describe the task analysis of a human capital developer within a culture matured business organization of an existent brand name in Taiwan.
2. To explore and describe strategies used by the human capital developers to retain and cultivate internal talent aligning the corporate vision.
3. Find out how the human capital developer manages the vision-culture gap.
4. To gain further insight of identifying how corporate culture and brand education bring out employee brand building behaviors, and following outcomes of the employee based brand equity. Furthermore, integrate the correlation of human capital development and standardize measurements of employee-based brand equity.
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Research Questions
According to the research objectives, the research questions were developed into the following:
1. What are the perceived tasks of a human capital developer?
2. How does a human capital developer retain and cultivate talent aligning to the corporate vision?
3. By managing the vision culture gap with development, how does a human capital developer influence employee psychology capital and decrease psychosocial risks?
4. By managing the vision culture gap with development, how does a human capital developer perceive brand-building behavior?
5. How is the effect and recent state of the employee-based brand equity?
Delimitations and Limitations
Due to the incremental necessity of a brand’s ultimate growth to sustain competitiveness, the investigation of a human capital developer role and the relationship with the corporate brand development is a crucial issue. For in-depth investigate, the employee psychologies influencing the brand building behavior unity was considered. Through the research instrument, the research discovered the employee based brand equity and the underlying psychological aspects of brand-building behavior. This research was conducted from a human resource point of view, the coverage scope of industries in this research were international brands established in Taiwan that had won the “Taiwan Excellence Award” in the development of the brand history, or is in the top three brand of an industrial field.
This research only focused on human capital development, therefore, aspects of social capital was not further discussed in this paper. Furthermore, the
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industry brands selected for this research was limited to international company brands that were established in Taiwan.
Definition of Terms Corporate Culture
In this research corporate culture was defined by the definition according to Zwetloot and Leka (2012) as a set of shared values underlying company strategy, structure, and systems (the hard side of business) but also the company skills, staff, and style (the soft side of business)
Vision
For this research, vision was regarded as a projected image of what a company wants to achieve, an image of the future based on general, long-term goals and blueprint.
Vision-culture Gap
In this research vision-culture gap was defined as the distance between an aspired brand image blueprint of a corporate brand, and the present existent internal values and cultures.
Human Capital
In this research, human capital was defined as the competence and commitment of employees: knowledge, skill or ability applied to meeting the organization’s goal and purposes (Wilson, 2005).
Human Capital Development
In this research, the definition of human capital development was based on that which is defined by Bassi and Mcmurrer (2007), including existent training and development tasks for leadership practice, employee engagement, knowledge accessibility, workforce optimization, learning capacity, including the definition of
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cultivating employee psychological capital (Avey, Luthans, Luthans, & Sweetman, 2011) to decrease psychological risks for retention possibilities.
Human Capital Developer
A distinctive role within organizations, emphasizing the development of individual employees (especially managers) through personal development programs, coaching organizational leaders, and managing the formation and development of effective management teams (Oxford, 2008). The term was as synonymous with HRD in this research, adding the functions of tasks mentioned by Ulrich (2005).
Brand Building Behavior
Brand building behavior in this paper was defined as a modification set of behavior criteria according to the usage of King and Grace (2008) term “Brand Citizen Behaviour” and “Positive Word of Mouth (WOM),” and including strategies from the Cornell University IRL school article “Making Human Capital the Creative Core of Strategy Execution” (ilr.cornell.edu), the research abstracted and applied the following definitions: taking responsibility for tasks outside of own area, demonstrating brand personality-consistent behaviors, consider impact on brand before acting, interested to learn more about brand, positive employee word-of-mouth: recommend to others, positive employee word-of-mouth: talk positively about brand, employee involvement: participate in development of customer initiative, involve in organizational initiatives, provide feedback about organizational activities, offering and contributing innovative ideas, motivating one another towards fast-pace learning and knowledge exchange.
Operational definition.
In the research questionnaire of 40 items, 9 items including the above mentioned definitions were made into a summated rating scale, from a scale of 1 to 5, ranking above the median value 3 represented good brand building behavior
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outcomes, below the median value 3 represented inadequate brand building behavior outcomes.
Employee Based Brand Equity
In this research the definition of employee based brand equity includes employee information generation, knowledge dissemination, role clarity, brand commitment, brand citizenship behavior, employee satisfaction, employee intention to stay, positive word of mouth, management support, organization socialization, employee attitude toward their job, and employee involvement (King & Grace, 2008) .
Operational definition.
In the research questionnaire of 40 items, 34 items including the above mentioned definitions will be made into a summated rating scale, ranking above the Median value 3 represented good employee based brand equity outcomes. Below the Median value 3 represented inadequate employee based brand equity outcomes.
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