Tài liệu Influence of corporate social responsibility disclosure on corporate governance and company performance

INFLUENCE OF CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE ON CORPORATE GOVERNANCE AND COMPANY PERFORMANCE BY LE ANH CONG Graduation Project Submitted to the Department of Business Studies, HELP University College, in Partial Fulfillment of the Requirements for the Degree of Bachelor of Business (Accounting) Hons i OCTOBER 2010 Declaration of Originality and Word Count DECLARATION I here by declare that this graduation project is based on my original work except for quotations and citation which have been duly acknowledged. I also declare that it has not been previously or concurrently submitted for any other courses/degrees at HELP University College or other institutions. The word Count is 10,093 words. LE ANH CONG 28 October, 2010 ii Acknowledgement This project would not have been made possible without the assistance, support and encouragement of many people. I wish to take this opportunity to thank all the people who have helped me during the time of completing the dissertation. Firstly, I would like to express my deep gratitude to my supervisor Dr. Nguyen Thi Phuong Hoa at the National Economics University (NEU) of Viet Nam . SHe has kindly helped me and supported me all the way through. For that, I am very grateful. I also would like to express my thank to Ms. Sumathi and Ms. Shenba at Help University College, who initiated the project and give so much instruction and support. LE ANH CONG iii Abstract INFLUENCE CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE ON CORPORATE GOVERNANCE AND COMPANY PERFORMANCE BY LE ANH CONG October 2010 Supervisor: Nguyen Thi Phuong Hoa Corporate social responsibility (CSR - Corporate Social Responsibility) is a growing trend in the world but is still very new in Vietnam, only focused on footwear and apparel industries due to the needs of the customer orders overseas. Vietnam is clearly hard goods that can compete on price or quantity with China, that way I can help local businesses get the advantage in a difficult war in this market? CSR may be the answer if your business really understand the meaning and turn into a CSR culture, thinking and working methods. The objective of the research is to assess the understanding of Vietnamese individual businessmen on the topics of CSR. Besides, the research also businessmen wants to define which major factors contributing to the CSR importance by asking respondents‟ understanding and opinion on CSR . Besides that, the business in Viet Nam find hard to use CSR as a tool to value firm and it is also difficult for them to make investment decision when CSR issues are mentioned. iv TABLE CONTENT Declaration of Originality and Word Count ................................................................... ii DECLARATION .............................................................................................................. ii Acknowledgement ........................................................................................................... iii Abstract ............................................................................................................................. iv LIST OF FIGURES AND TABLES .............................................................................viii LIST OF ABBREVIATIONS ..........................................................................................ix CHAPTER 1 : INTRODUCTION .................................................................................... 1 1.1 Research background ............................................................................................ 2 1.2 CSR in Viet Nam .................................................................................................... 3 1.3 Problem Statement ................................................................................................ 4 1.4 Objectives of Research .......................................................................................... 5 1.5 Research Methods .................................................................................................. 6 CHAPTER 2 : LITERATURE REVIEW ......................................................................... 7 2.1 Definition of CSR ................................................................................................... 8 2.2 Caroll’s concept ...................................................................................................... 9 2.3 The concepts related to CSR ............................................................................... 11 2.3.1 Business Ethics .............................................................................................. 11 2.3.2 Corporate culture .......................................................................................... 11 2.3.3 Socially responsible investing ....................................................................... 12 2.3.4 Sustainability investing ................................................................................. 12 2.4 Stakeholder theory ............................................................................................... 12 2.5 Legitimacy Theory ............................................................................................... 13 v 2.6 Institutional Theory ............................................................................................. 13 2.6 Tripple bottom line .............................................................................................. 14 2.7 CSR reporting ...................................................................................................... 14 2.8 CSR’s impacts on accounting.............................................................................. 15 CHAPTER 3: RESEARCH METHODOLOGY ............................................................ 16 3.1 Research Objectives ............................................................................................. 17 3.2 Theoretical framework and measurement......................................................... 17 3.2.1 Corporate governane .................................................................................... 17 3.2.2 Links between CG and CSR ........................................................................ 18 3.2.3 Global Reporting Initiative (GRI) ............................................................... 18 3.3 Research methodology ......................................................................................... 19 3.4 Data sources .......................................................................................................... 19 3.4.1 Primary data .................................................................................................. 19 3.4.2 Secondary data .............................................................................................. 20 3.5 Research method .................................................................................................. 20 3.6 Research tool......................................................................................................... 20 3.7 Limitations ............................................................................................................ 21 CHAPTER 4 : ANALYSIS.............................................................................................. 22 4.1 Description of Result ............................................................................................ 23 4.1.1 Age .................................................................................................................. 23 Table 1 : Age.................................................................................................................... 23 4.1.2 Gender ............................................................................................................ 23 Table 2 : Gender .............................................................................................................. 23 4.1.3 Corporate governance .................................................................................. 24 vi 4.1.4 Links between Corporate governance and Corporate social responsibility .................................................................................................................................. 28 4.1.5 Global Reporting Initiative .......................................................................... 31 4.2 Result Analysis .................................................................................................... 33 4.2.1 Assessment of CSR/ CSR practices ............................................................. 33 4.2.2 Assessment of the CG – CSR Link .............................................................. 35 4.2.3 Global Reporting Initiative .......................................................................... 35 CHAPTER 5: CONCLUSION AND RECOMMENDATION ...................................... 37 5.1 Conclusion............................................................................................................. 38 5.2 Recommendation .................................................................................................. 39 5.3 Limitation of Sutdy .............................................................................................. 40 5.4 Suggestion for Furture Research ........................................................................ 40 REFERENCES ( Harvard referencing system)............................................................. 41 APPENDICES................................................................................................................. 47 Appendix A: Questionnaire Sample ............................................................................... 47 vii LIST OF FIGURES AND TABLES Figure 2.1. A hierarchy of CSR (adapted from Carroll, 1991) .................................... 9 Table 1 : Age ................................................................................................................... 23 Table 2 : Gender ............................................................................................................. 23 Table 3 : Question 1 - Description of Result .............................................................. 24 Table 4 : Question 2 - Description of Result .............................................................. 25 Table 5 : Question 3- Description of Result ................................................................ 26 Table 6 : Question 4- Description of Result ............................................................... 27 Table 7 : Question 5 - Description of Result .............................................................. 28 Table 8 : Question 6 - Description of Result ............................................................... 29 Table 9 : Question 7 -Description of Result .............................................................. 30 Table 10 : Question 8 - Description of Result ............................................................ 31 Table 11 : Question 9 - Description of Result ............................................................. 32 Table 12 : Question 10- Description of Result ........................................................... 33 viii LIST OF ABBREVIATIONS CG Corporate governance CSR Corporate Social Responsibility GRI Global Reporting Initiative SI Sustainability investing SRI Socially responsible investing TBL Triple Bottom Line VCCI Chamber of Commerce and Technology of Vietnam WBCSD World Business Council for Sustainable Development WTO World Trade Organization ix CHAPTER 1 : INTRODUCTION 1.1 Research background 1.2 CSR in Viet Nam 1.3 Problem Statement 1.4 Objectives of Research 1.5 Research Methods 1 1.1 Research background In the World, CSR has been acknowledged as a factor to develop a reputation of a company in the global market. CSR became the main factor to consider in the decision of enterprises to invest responsibly. Social responsibility is considered as an important factor as the other traditional factors such as cost, quality and progress in business. Social responsibility is integrated into business strategy and becomes a prerequisite for enterprises to survive and grow. CSR refers to business relationships with stakeholders including government, business, labourers, community, society and development organizations. CSR focuses on labor issues and the environment. CSR-based businesses will gain many benefits such as improved labor relations, reduced occupational and rate holiday, increased labor productivity, and engagement of workers to the enterprise. CSR is often related to the enterprise‟s commitment to balance different interests of stakeholders so that it can contribute to sustainable development. Some aspects of CSR include environmental protection, security, labor and business rights of the community standards of participation, markets, business and economic development, health and education and leadership development. The CSR concept relates closely to corporate citizenship, corporate social responsiveness, corporate social performance and stakeholder management. In this sense, CSR generally refers to business-decision making which is related to ethical values, compliant to law and regulations, and respect for people, communities and the environment. Social responsibility is a business process applications that aim to meet or exceed to meet the requirements and expectations of stakeholders about the economic benefits, environmental performance and social impact. There are three important concepts should be considered in order to achieve sustainable development: economic growth, ecological balance and the 2 evolution of society. With the process of social responsibility, business can contribute to the objectives of sustainable development through the local association of their activities with the community to achieve positive results for all parties. Aligning CSR concepts into daily operations bring many benefits to the enterprise. For small and medium enterprises in Vietnam, the application of the concept of CSR can bring significant benefits in the market, signing or extending contracts with customers, including international organisations and customers. Productivity of the enterprises can be enhanced through the improvement of working conditions of workers. Benefits of adopting CSR for businesses are substantial. First, the responsibility of investors indicated correspond to the performance and social environment of a business. The positive response of investors, in the developed countries and developing countries, is seen as the environmental performance of organizations as well. Similarly, the organization is a multinational operation focused performance and the social environment of potential partners before choosing investments. The underlying trend of investment in the future will require the Vietnamese enterprises to look at the application of CSR. 1.2 CSR in Viet Nam Becoming a member of WTO is synonymous with joining in an international playing field with many new, harsh rules to comply with. Besides, globalization has made the fact that the company‟s targets are not only profit but also contribution to the society. From this point of view, in the respect of strategy, CSR has a compulsory meaning in making reliable social standards for decision- making process of companies. However, the concept of CSR is still relatively new in Vietnam, so the application remains limited. According to research by the World Bank in Vietnam, barriers and challenges to the 3 implementation of CSR include: 1) awareness of CSR is still limited, 2) lack of financial resources and technical capacity to implement standards CSR (especially for small and medium-size enterprises). Therefore, in Vietnam, the government has improved the awareness of businessmen and concerned sides about CSR, and made CSR an important part in the agenda of steady development. International organizations in Vietnam have exerted all their strength to push up and extend CSR. The programs and projects concerned in CSR concentrate on important contents of CSR depending on the projects targets, resources and experiences. Those contents including: working conditions, safety, hygiene, environment, quality and productivity, labor relations and manpower resources management. Services to advise and issue certificates for administration systems has expanded for example: the administration system of quality (ISO 9000), the administration system of environment (ISO 14000), labor and social responsibility (SA 8000). 1.3 Problem Statement In the era of globalization, businesses are not only representing themselve but also the face of the country. Therefore, social responsibility is not floating pool, not as an aspect of "plus" that is the nature of the business. Because, just good ethics is good business , that is, the more businesses have much social responsibility, the more likely that much more profitable and againsts. So the question is how to improve the implementation of activities of social responsibility of enterprises. However, in economic development like Vietnam, it seems that most small and medium-scale enterprises have not been focused and interested in adopting and implementing CSR. Typical, examples are contaminated milk in China and the direct discharge of untreated waste into the Thi Vai River of Vedan Viet Nam company . However, some enterprises have put CSR into their business 4 strategies. Typically, the social programs such as "six million cups of milk to children of Vietnam" and the scholarship fund "firefly light" of big brands like Vinamilk, Dutch Lady resonate and are consumer support . HUB Cafe is one of the enterprises are small and medium-scale implementation of CSR by creating a community library with more than 10,000 volumes of customer service. HUB is being built as a place to share knowledge and materials to help students and conduct research, organize events, and the assembly agreed on issues of education, work experience and career. Therefore, the most difficult of Vietnam enterprises at present is the information leads to confusion not know where to start before the jobs related to CSR. To promote the implementation of social responsibility of enterprises, it is best to have an association or organization to monitor and advise businesses. 1.4 Objectives of Research According to Nguyen Hong Ha Deputy director of the Chamber of Commerce and Technology of Vietnam (VCCI) in Ho Chi Minh, CSR must be placed on the business strategies of each business. CSR has been and will be an essential part to the success of some business enterprises. The application of CSR has created a more stable and productive business . Moreover, the enterprises received support from consumers and society in the common interests that bring businesses to the community. To succeed in the application of CSR in Vietnam, the first business owners to deploy, implement CSR exploited for their labor as the observance of laws on wages policy, social insurance, employment contract to build a relationship based on trust and goodwill with business workers. 5 1.5 Research Methods The first aim of this study is to provide a theoretical framework for understanding the completed concept of CSR and other relevant components under this area. In general, the CSR is a concept that offers to companies their opportunity to treat environmental and social problems as a part of their business operations. The second aim of this study is to evaluate the impact of corporate social responsibilities in Viet Nam. Four questions are developed and tried to explain including: Why should enterprises implement social responsibility? Which are benefit of implementation of social responsibility. How is the situation of implementing social responsibility of Vietnamese enterprises at present? Which are solutions to improve the social responsibility of business? 6 CHAPTER 2 : LITERATURE REVIEW 2.1 Definition of CSR 2.2 Caroll’s concept 2.3 The concepts related to CSR 2.3.1 Business Ethics 2.3.2 Corporate culture 2.3.3 Socially responsible investing 2.3.4 Sustainability investing 2.4 Stakeholder theory 2.5 Legitimacy Theory 2.6 Institutional Theory 2.7 CSR reporting 2.8 CSR’s impacts on accounting 7 2.1 Definition of CSR In the current economic integration, social responsibility (CSR - Corporate Social Responsibility) is becoming a concept many people are interested and have strategic importance for business. It refers to CSR is not only the right thing to do "but also" wise to do ". So to understand exactly what is CSR? There have been numerous definitions given as "Social responsibility implies improving the behavior of the business to a level consistent with the norms, values and social expectations are common" (Prakash, Sethi, 1975). Or "social responsibility of enterprises, including the expectations of society on economic, legal, ethics and philanthropy for organizations in a given time" (Archie.B Carroll, 1979) . Maignan and Ferrell also introduced the concept of their own concise about CSR: "A business with social responsibility in deciding and its operators to create and balance the different interests of individuals and groups related bodies. " There are many different definitions to explain CSR, but one of the definitions are used most commonly defined by the World Business Council for Sustainable Development (WBCSD) launched "CSR is the commitment of business to contribute to sustainable economic development, through the compliance standards of environmental protection, gender equality, labor safety, labor rights, fair pay, training and staff development, community development in ways that benefit both businesses as well as the overall development of society ". In the increasingly fierce competition, demanding customers from the growing social and increasingly strict view of the business enterprises to sustainable development must always abide by the standards of protection natural environment, work environment, gender equality, labor safety, labor rights, training and employee development, contributing to community development. 8 2.2 Caroll’s concept CSR is becoming more common. But still there are many different views on the concept, content and scope of CSR. Among them, the "pyramid" by Caroll (1999) is the most comprehensive and the widely used. Accordingly, the CSR includes economic, legal, ethical and discretionary . Figure 2.1. A hierarchy of CSR (adapted from Carroll, 1991) The first category Caroll mentioned is economic aspects. Economic aspects of social responsibility of business is to produce goods and services that society needs and wants at a price businesses can maintain it and to satisfy obligations of the business with investors are looking for sources of labor supply, discover new resources, promoting advances in technology, product development, distribution is the source of production of goods and services, such as how social system. In conducting this work, businesses actually contribute to increased social welfare, ensure the existence and development of the business. For workers, the economic aspect of business is to create jobs with remuneration deserve equal job opportunities, job opportunities and professional development, adequate remuneration, environmental effects labor safety and hygiene and ensure the privacy and individuals in the workplace. For consumers, the economic 9 responsibility of business is to supply goods and services, economic responsibility of the business also related to issues of quality, product safety, pricing, information on product (advertising), distribution, sales and competition. Economic aspects of social responsibility of a business is the basis for the operation of the business. Most of the economic obligations in business are institutionalized into the legal obligations. The second part, legal aspects. Legal aspects of the social responsibility of a business enterprise is to fully implement the provisions on the formal legal for the parties concerned. Things like this law will regulate competition, consumer protection, environmental protection, promote fairness and safety initiatives and provides protection against misconduct. The legal obligation is expressed in civil and criminal law. Basically, legal obligations, including five aspects: (1) Regulatory competition, (2) Consumer Protection, (3) Environmental Protection,(4) Safety and Equality, (5) Encourage detect and prevent misconduct. Through legal liability and social force members must implement the behavior is acceptable. Organizations can not survive long if they do not perform their legal responsibilities. Ethical dimensions of social responsibility of a business are the acts and activities that society wants to exist in the business but not defined in the legal system, not been institutionalized into law. This aspect is related to what the company decides to be true, fair, beyond the legal requirements are tight, it just acts and activities that members of organizations, communities and society expect from the business even though they were not written into law. Ethical dimensions of a business is often expressed through the principles and moral values are presented in this respect the mission and strategy of the company. Through this publication, principles and moral values become the lodestar for the concerted action of each member of the company and with our stakeholders. The final 10 category, discretionary aspect: Responsibility is the charitable acts of the business beyond the expectations of social support such as donations to the poor people, funding scholarships, contributions to community projects. The difference between charity and responsible business ethics is entirely voluntary. 2.3 The concepts related to CSR 2.3.1 Business Ethics Business ethics is expressed as the standards and principles are social as well as the business world recognizes, as the rules of behavior, the professional relationship between managers with one another, or between managers value to society in the process of conducting business activities, allowing managers to behave honestly and responsibility to the community and with each other. Business ethics is a manifestation of the balance between the interests of managers in implementing the business objectives with the interests of the employees work for managers, customer benefits, the partners and the interests of the community in general 2.3.2 Corporate culture Corporate culture is full of cultural values should be build during the existence and development of a business, become the values, perceptions and practices, rooted in traditional activities of enterprises and govern her feelings, thinking and behavior for all members of the business in the pursuit and implementation purposes. Corporate culture is the product of the same work in a business and meet the needs of sustainable value. Corporate culture also contributed to the difference between business and considered separately each of the traditional enterprise. 11