Tài liệu The impact of corporate social responsibility about the environment issue of vietnamese limited companies

THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ABOUT THE ENVIRONMENT ISSUE OF VIETNAMESE LIMITED COMPANIES BY TRAN BAO NGOC E0700052 Graduation Project Submitted to the Department of Business Studies HELP University College, in Partial Fulfillment of Requirements for The Degree of Bachelor of Business (Accounting) Hons MARCH 2011 DECLARATION OF ORIGINALITY AND WORD COUNT I hereby declare that the graduation project is based on my original work except for quotations and citations which have been duly acknowledged. I also declare that it has not been previously or concurrently submitted for any other course/degree at Help University College or other institutions. The word count is 9397 words. ______________________ TRAN BAO NGOC 28 March, 2011 2 ACKNOWLEDGEMENT First of all, I would like to express my sincere appreciation to my supervisor, Dr. Le Van Lien International School, Vietnam National University Hanoi who has guided me throughout this thesis. Because of his constant guidance, insightful suggestions, and constructive ideas, those can be helpful and encourage for me to complete my project. Furthermore, I also would like to express my thank to Ms. Sumathi and Ms. Shenba, Help University College, who initiated the project and give so much instruction and support durng this process. Next, I would like to acknowledge to two managers who join in my interview: Mr Tran Thanh Hai- Direct Manager of Thach Bich Mineral Water company and Mr Nghuyen Van Thuan- Manager of Human Resouces in Banh mut Keo Ha Noi spent their precious time to help me to conduct the interview. In adition, I also would like to extend my special thanks to managers, Government Staffs, my friends, and other people who have help me to carry out the survey because they gave me their support, interest and valuable hints. Without them, I can not complete my project. Lastly, I would also like to extend my heartfelt gratitude to my family who always are on my side for loving me, supporting me and beliving in me. TRAN BAO NGOC 3 THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITIES ABOUT THE ENVIRONMENT ISSUE OF VIETNAMESE LIMITED COMPANIES. By TRAN BAO NGOC MARCH 2011 Supervisor: Dr. Le Van Lien ABSTRACT CSR and it components have become important issues in the world also in Vietnam. Vietnam is developing country with developing economy, thus CSR and environment issue are the key term for the country to develop sustainably. This paper aims to discover how limited companies in Vietnam view CSR and environment duties, whether those have any effect on the Vietnam citizens behavior, how they can have impact in Limited compay, and the attitude of Vietnam Governemtn staff toward them. After we can see that, there is strong support for CSR and its component: environment from managers and a growing awareness among citizens and Government staffs. Nevertheless, there is expectation gap between how manager think and how they act because there are lack of honesty CSR disclosure from firm or manager, inactive support actions from consumers due to the barriers in living expenses, and the way company chose to communicate CSR. In contrast, with highly positive attitude toward the important impact of CSR and environment duties and the strong belive finding from the survey have drawing potential bright future for CSR and environment duties in Vietnam. 4 TABLE OF CONTENTS DECLARATION OF ORIGINALITY AND WORD COUNT ................................................. 2 ACKNOWLEDGEMENT............................................................................................................. 3 ABSTRACT.................................................................................................................................... 4 TABLE OF CONTENTS .............................................................................................................. 5 LIST OF FIGURES ....................................................................................................................... 7 LIST OF ABBREVIATIONS ....................................................................................................... 8 1. INTRODUCTION ................................................................................................................. 9 2. 3. 1.1. CSR and CSR about environment issue in the world .................................................. 9 1.2. CSR and CSR about environment issue in Vietnam .................................................... 9 1.3. Government actions ................................................................................................... 10 1.4. CSR practice and challenges ...................................................................................... 11 LITERATURE REVIEW ................................................................................................... 12 2.1. Definition and conceptualization of CSR .................................................................. 12 2.1.1. Carroll's 1979-1991 conceptualization ...................................................................... 13 2.2. Responsibility of the firm .......................................................................................... 15 2.3. Limited companies ..................................................................................................... 16 2.4. CSR reporting ............................................................................................................ 17 2.5. Hypothesis ................................................................................................................. 17 2.5.1. Management‟s attitude toward CSR and environment duties .................................... 17 2.5.2. Citizen‟s attitude toward CSR information and environment duties ......................... 18 2.5.3. Government staffs‟ attitude toward CSR and environment duties............................. 19 RESEARCH METHODOLOGY ....................................................................................... 20 3.1. Research objective ..................................................................................................... 20 3.2. Problem statement...................................................................................................... 21 3.3. Reasearch methodology ............................................................................................. 21 3.4. Data source ................................................................................................................ 21 3.4.1. Primary data ............................................................................................................... 21 3.4.2 Secondary data ........................................................................................................... 22 3.5. Research method ........................................................................................................ 23 3.6. Research tool.............................................................................................................. 23 3.6.1. Questionaire ............................................................................................................... 23 5 4. 5. 3.6.2. Personal interview...................................................................................................... 23 3.6.3. Annual report …………………………………………………………………………………………………………23 3.7. Data collection ........................................................................................................... 24 3.8. Sampling .................................................................................................................... 24 3.8.1. Sample population ..................................................................................................... 24 3.8.2. Sample frame ............................................................................................................. 24 3.8.3. Sample size ................................................................................................................ 24 3.8.4. Sample technique ....................................................................................................... 24 3.9. Limitation................................................................................................................... 24 FINDINGS AND ANALYSIS ............................................................................................. 26 4.1. Management............................................................................................................... 27 4.1.1. Findings from questionnaire survey........................................................................... 27 4.1.2. Actual CSR disclosures by firms ............................................................................... 31 4.1.3. Findings from managers interview ............................................................................ 33 4.1.4. Overall evaluation of management‟s responses ......................................................... 34 4.2. Citizens ...................................................................................................................... 35 4.2.1. Findings from questionnaire survey........................................................................... 35 4.2.2. Overall evaluation of citizen‟s responses................................................................... 37 4.3. Government staff ....................................................................................................... 40 4.3.1. Findings from questionnaire survey........................................................................... 40 4.3.2. Overall evaluation of Government staff‟s responses ................................................. 43 4.4. Overall discussion ...................................................................................................... 44 CONCLUSION .................................................................................................................... 47 REFERENCES............................................................................................................................. 51 APPENDIX A: QUESTIONNAIRE........................................................................................... 55 APPENDIX B: STATISTICAL TEST ....................................................................................... 60 6 LIST OF FIGURES Figure 2.1. CSR basic knowledge ……………………………………………………….13 Figure 2.2. A hierarchy of CSR (adapted from Carroll, 1991) ......................................... 13 Figure 2.3. The CSP Model (adapted from Wood, 1991) ................................................. 16 Figure 4.1. Respondents .................................................................................................... 26 Figure 4.2. Citizens and Government staff categories ...................................................... 26 Figure 4.3. Distribution of responses from management survey ...................................... 27 Figure 4.4. Distribution of responses from management survey (percentage) ................. 29 Figure 4.5. Descriptive statistics 1 (management survey) ................................................ 30 Figure 4.6. Descriptive statistics 2 (management survey) ................................................ 31 Figure 4.7. Distribution of responses from citizen survey ................................................ 35 Figure 4.8. Distribution of responses from citizen survey (percentage) ........................... 37 Figure 4.9. Descriptive statistics 1 (citizen survey) .......................................................... 38 Figure 4.10. Descriptive statistics 2 (citizen survey) ........................................................ 39 Figure 4.11. Distribution of responses from Government staff ........................................ 40 Figure 4.12. Distribution of responses from Government staff (percentage) ................... 41 Figure 4.13. Descriptive statistics 1 (Government staff survey) ...................................... 42 Figure 4.14. Descriptive statistics 2 (Government staff survey) ...................................... 42 7 LIST OF ABBREVIATIONS CSR Corporate Social Responsibility IQR Inter-Quartile Range VSA Vietnamese Accounting Standard 8 1. INTRODUCTION 1.1. CSR and CSR about environment issue in the world Nowadays with the booming of Internet and Information Technology (IT), the world become closer and the economy in over the world also become more global. As the result, to gain advantages of this chance all companies in the world need to have the perfect image to the society to ensure that they can run their business well with the support of public. As the result, they spend a lot of money to achieve that and responsible for society that means a huge number of money are used to complete their Corporate Social Responsibility. For example, General Electrics uses more than two billion USD per year for ensure its CSR. In addition the most important aspect need to consider when talking about CSR is environment aspect. It can not be denied that nowadays the environment of the world become more and more polluted by the human harm thus to have better imagine in society all companies need also protect our environment. Typically, Uno one of the biggest company in Japan has applied recycled goods program. The other example is Coca- cola the biggest beverage company has many activities for community: recycling bottle, distributing its product in environment friendly water bottled. 1.2. CSR and CSR about the environment issue in Vietnam In contrast, Vietnam is a developing country and it has a potential economy with the growth rate is high thus this country also try its best to join in the world‟s economy to have more advantages and privilege. After a lot of negotiation and efforts, now it has 9 already been formal members of Word Trade Organization (WTO) which open a new gate for all companies in this country try their best to do efficiently and effectively to take part in the global economy and make their development better with more profitable chances. With this global trend, and the rapidly development in this harmony of economy, Vietnamese companies need to care about a lot of issues. Among a lot of issue the main issue which they need to care most is CSR. However in Vietnam, CSR is a new concept. It newly introduced by internal corporations sourcing in Vietnam under the form of Code of Conduct or social standard requirements since Vietnam dos not have much experience about this filed. Presently, a lot of events: Vedan polluted Thi Vai river, China milk contain minamin, conflict between parties inside company make this term especially environment aspect become more necessary for all sustainable economies in Vietnam. 1.3. Govenrment action Because of the above necessary, Vietnamese Government have already taken actions to ensure that all companies in over the country must to complete their CSR especially environment issue. For example, Vietnamese Government use “Sustainable development and protecting the environment” which set in the national strategy SRV 1993:45, along with most nations in the world (O‟Rourke,1995). They also made new regulations, “Environmental Protection Law and the Vietnam Agenda 21” for sustainable development. Besides, the Government also established Environmental Police and special fees levied on the emission of waste water to strengthen enforcement measures against companies that polluted. 10 1.4. CSR practice and challenge Vietnam had CSR Awards, which was organized by Vietnam Chamber of Commerce and Industry, Ministry of Labor-Invalids and Social Affairs, Vietnam Ministry of Industry and Trade since 2005, together with Vietnam Leather & Footwear Association, and The Vietnam National Textile and Garment Group, in order to honor enterprises and all limited companies that effective done of CSR and environment duties. In 2006, there are 50 Vietnamese companies in field: Leather & Footwear Association, Textile and Garment that join in that. According to PhD Doan Duy Khuong - Vice-Director of Vietnam Chamber of Commerce and Industry, “CSR and its component have become necessary requirement for each company, if the company does not embrace CSR, they can not approach the global market” (Saga Vietnam, 2008). However, in Vietnam, there are still a lot of difficulties in applying CSR and complete environment duties. Firstly, there is not enough law and regulation to enforce limited companies and other kind of companies to complete their duties to the society. The evaluations of CSR effectuation are set in Code of Conduct and standards such as SA8000, WRAP, ISO 14000, GRI, etc. Furthermore, there are not common deal between Government and International department about the way to do those. Thus, ties are only among export or import companies or companies' rules. Secondly, there is also a lack of knowledge from limited companies' knowledge about CSR and environment duties. The do not have enough knowledge and experience. Besides, we have some limited companies that have started to produce friendly environment goods such as: Thach Bich, Hai Ha tokobuki….however, those actions have mainly been based on company‟s nature rather than voluntary that complies with the business statement and company‟s image 11 2. LITERATURE REVIEW 2.1. Definition and conceptualization of CSR In the fact, to define the content of CSR we have various way to do that but the following definition ifs one of the most common way to define it. CSR “is also known as corporate conscience, corporate citizenship, responsible business, sustainable responsible business (SRS), or corporate social performance, is a form of corporate self- regulation integrated into a business model. Ideally, CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure its support to law, ethical standards and international norms. Consequently, business would embrace responsibility for the impact of its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, CSR- focused businesses would proactively promote the public interest by encouraging community growth and development and voluntarily eliminating practices that harm the public sphere, regardless of legality. Essentially, CSR is the deliberate inclusion of public interest into corporate decision making and the honoring of a triple bottom line: people, planet, profit.” The following figure represent this idea. 12 Figure 2.1 http://denisemerald.wordpress.com/category/csr-basic-knowledge/ In literature, there are various conceptualization of CSR have been developed, in this paper, I will introduce some concepts of CSR such as: Carroll (1979) four part definition of CSR, Argandona and Hoivik (2010)‟s ethical concept. 2.1.1. Carroll 1979- 1991 conceptualization Figure 2.2 http://denisemerald.wordpress.com/category/csr-basic-knowledge/ Carroll introduced CSR into four part: economic responsibility, legal responsibilities, ethical responsibilities, and discretionary in 1979. Firstly, he concerned about economic 13 responsibilities which represents the principal roles of business organizations is not only making goods and services but also making profit that means business organization was the basic economic unit before it was anything else. Secondly, legal responsibilities of the firm were talked, represents the expectation of society that all activities of company need to take care of law, and fulfill their economic target set by Government. “Fair operation” was established by lawmakers is the basis for the view of “codified ethics” affect legal responsibility (Carroll, 1979). In fact, companies can take advantages of law and regulation but it is not easy to know whether it is fair or not. Hence, the laws are used when the tolerable business behavior are limited, but they neither define ethics nor do they “legislate morality” (Solomon, 1994). In fact, to fulfill with the limitation of law, the ethical responsibility have been depended on by the companies. Thus, it is not necessary to make ethical responsibility that based on human principals and rights commitment become law, but the societal members want that (Novak, 1996). In contrast, the firms might face up with difficulties to deal with the ethic because of various definitions. Lastly, when talk about model of Carroll we can not miss discretionary responsibility which includes activities that relates to the society‟s expectation of businesses to become good citizens. The difference between ethical responsibility and that is that the public‟s expectation is not based on ethical or moral sense under this area. The community need companies to join in the process of building and enhancing the society, however if it does not satisfy such desires, it will become unethical firm. This responsibility is more voluntary for the business even there is always expectation that the business provide it. 14 For example: reduce the greenhouse effect, increase the literacy rates. This responsibility may be conflict with the statement of company. While economic responsibility lays on the foundation, this category is the peak of the pyramid. Under this opinion, economic and legal responsibilities are socially required, ethical responsibility is socially expected, and discretionary responsibility is socially desired (Windsor, 2001). From up to now, this theory is useful and effective but it also has some limitations: three dimension are complex and not easy to test and it need to base on other theory to be better for all companies to apply. Clarkson (1995) 2.2. CSR report: Nowadays, with the booming of Internet and Information Technologythe world become closer as the result, the economy in the world also become lobal. Thus the demand for implement CSR and Environment duties_ one way in which organizations use to communicate information about social and environmental issues to different stakeholders. CSR reports can be mandatory, solicited or voluntary (Van der Laan, 2004; Woodward et al, 1996) is much higher than before as it can enhance the image and reputation of companies in society. However there are not consistent form or standard for all companies in the world to follow thus all managers of companies try their best to enhance their reputation by misstating these report. 15 2.3. Responsibility of the firm Beside the normal activities of a firm, it needs to complete it social responsibility. What is it? “Social responsibility is the principle that companies should contribute to the welfare of society and not be solely devoted to maximizing profits. This responsibility can be “negative”, meaning there is exemption from lame or liability, or it can be “positive”, meaning there is a responsibility to act beneficently (proactive stance). Let‟s check the following diagram to see the relationship between companies and environment. Figure 2.3 : http://www.mallenbaker.net/csr/definition.php 16 2.4. Limited company In addition, to complete this paper we must know what limited company is. A limited company is a type of business entity. In the United Kingdom or Republic of Ireland it is a corporation with shareholders whose liability is limited by share (Ltd), which is the most common form of privately held company. Setting up as a limited company is an attractive opinion for many people as, unlike sole proprietorships, personal assets are distinct from company finances.” 2.5. Hypothesis: 2.5.1. Management‘s attitude toward CSR and Environment issue It can not be denied that there are many different ways to define CSR and it component: environment by firms. They can be the way to increase efficiency and effectiveness in operation and performance, or some companies commit to CSR and environment duties just because they simply believe that it is morally right. However, according to a survey among corporate managers, there are none company have those. It can not be denied that many companies focus mainly not on action only in saying about that. Although there are some companies make good progress in implement CSR and environment duties, it is not easy CSR become fully adopted by business (Franklin, 2008). Thus, integrating CSR and environment duties in day-to-day operation is a key issue for management. However, there are also some challenges which can affect the attitude of manager. We have inherent risk that may occur if social responsibility is not undertaken such as higher 17 borrowing costs, fines and public boycott on companies‟ products. If social responsibility is properly taken, there are not only future costs are saved but also the competitive advantage and reputation can be gained through disclosing information on CSR. Besides, the general feelings in the society also influence managers‟ attitude toward. The expectations society put on firm to be social responsible will influence the managers to have action toward CSR to meet those expectations. So, there is reasonable to assert that manager have positive attitude toward CSR and CSR reporting in order to maintain the “license to operate”. Thus, the following hypothesis is developed: : Managers’ attitude toward CSR and environment issue is positive 2.5.2. Citizen‘s attitude toward CSR and Environment issue They are people in developing country thus they only care about how they can remain the stable budget in other word they only focus on price of goods not the moral issue. That means their attitude toward CSR and environment duties are not strong as managers but they still know the important of them hence the following hypothesis is develop: : Citizens’ attitude toward CSR and environment issue is positive 18 2.5.3. Government staff‘s attitude toward CSR and Environment issue Government staff are agency of the Government they directly control the process of completing CSR and environment of all companies thus the realize clearly the important of them. Hwever they only are the agency of Government thus they do not have the right to make the policies. As a result, they show their neutral but positive trend attitude. We might conclude that: : Citizens’ attitude toward CSR and environment issue is positive. 19 3. RESEARCH METHODOLOGY 3.1. Research objective The first aim of this project is to provide a theoretical framework for understanding the completed concept of corporate social responsibilities and other relevant components under this area to build framework for all companies to have better understanding about it and they can avoid breaching any issue related to CSR. The second aim of this project is to evaluate the impact of CSR especially environment issue in Vietnamese companies mainly in limited companies. In other word, when these firms do CSR, what they can achieve and what they can take advantage of. The last aim of this project is to obtain from the view of all Vietnamese companies within the industry that means it is designed to explore how the Vietnamese companies and limited companies relating to the corporate social responsibilities. This project also tries to find out the components that impact on this awareness. Many questions can rise: do all limited company respond to corporate social responsibilities or they try to avoid this to have more profit? If they respond to do it, how they do well or not? 3.2. Problem statement I, what is the fact of conducting corporate social responsibilities in Vietnamese companies? II, When and how the issue relating the term “corporate social responsibilities” penetrates deep into Vietnamese economy? 20