Tài liệu The importantce and effect of csr reporting on the performance of vietnam companies

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 12,381 words. ______________________ LUU QUYNH LY 28 June, 2010 1 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. Le Van Lien, International School, Vietnam National University Hanoi. He 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, Help University College, who initiated the project and give so much instruction and support. Additionally, I would like to thank the interview participants: Mrs. Phan Thi ThuyDeputy Managing Director of Vietcombank, and Mr. Dau Hoang Minh- the Business Solution Manager of TNT Express Worldwide Ltd. who took their precious time to help me to conduct the interview. I also would like to extend my special thanks to managers, accountants, my friends, and other people who have help me to carry out the survey. I want to thank them for all their support, interest and valuable hints. Last but not least, I would like to express my deep appreciation to my mother who provided me critical commentary which is very important for completing this project. I would like to delicate this project to my family, especially to my beloved father. Thank you for always loving, supporting and believing in me. LUU QUYNH LY 2 THE IMPORTANTCE AND EFFECT OF CSR REPORTING ON THE PERFORMANCE OF VIETNAM COMPANIES By LUU QUYNH LY Jun 2010 Supervisor: Dr. Le Van Lien ABSTRACT CSR has become a burning issue in the world. As Vietnam is among the world’s fastestgrowing economy, CSR has become even more important for the country to develop sustainably. This paper aims to discover how organizations in Vietnam view CSR and CSR reporting, whether CSR information have any effect on the Vietnam customer behavior, and the attitude of Vietnam accountant toward CSR reporting. The results of the study provide evidence that there is strong support for CSR from managers and a growing awareness among consumers and accountants. Nevertheless, there is expectation gap between how people perceive and how people act because there are lack of adequate CSR disclosure from firm, and not-so-enthusiastic support actions from consumers due to the barriers in living expenses, and low effective CSR communication tools that companies use. However, with highly positive attitude toward the important of CSR and the willingness to learn and gain more knowledge about this issue found from the survey have drawing potential bright future for CSR in Vietnam. 3 TABLE OF CONTENTS DECLARATION OF ORIGINALITY AND WORD COUNT ................................................ 1 ACKNOWLEDGEMENT ............................................................................................................ 2 ABSTRACT ................................................................................................................................... 3 TABLE OF CONTENTS .............................................................................................................. 4 LIST OF FIGURES ...................................................................................................................... 6 LIST OF ABBREVIATIONS ...................................................................................................... 7 1. 2. 3. INTRODUCTION ................................................................................................................. 8 1.1. CSR in the world........................................................................................................... 8 1.2. CSR in Vietnam ............................................................................................................ 9 1.2.1. Government actions ...................................................................................................... 9 1.2.2. Vietnamese Accounting Standards (VAS) ................................................................. 10 1.2.3. CSR practice and challenges....................................................................................... 11 1.3. Reasons for further investigation ................................................................................ 12 LITERATURE REVIEW ................................................................................................... 14 2.1. Definition and conceptualization of CSR ................................................................... 14 2.1.1. Carroll's 1979-1991 conceptualization ....................................................................... 15 2.1.2. Wood 1991 conceptualization .................................................................................... 17 2.1.3. Argandona and Hoivik (2010)’s ethical concept ........................................................ 19 2.2. Stakeholder theory ...................................................................................................... 20 2.3. Social accounting ........................................................................................................ 22 2.4. CSR reporting ............................................................................................................. 23 2.5. Hypothesis .................................................................................................................. 26 2.5.1. Management’s attitude toward CSR and CSR reporting ............................................ 26 2.5.2. Consumer’s attitude toward CSR information and disclosure.................................... 29 2.5.3. Accountants’ attitude toward CSR reporting .............................................................. 31 RESEARCH METHODOLOGY ....................................................................................... 33 3.1. Research objective ...................................................................................................... 33 3.2. Research methodology................................................................................................ 33 3.3. Data source ................................................................................................................. 33 4 4. 5. 3.3.1. Secondary data ............................................................................................................ 34 3.3.2. Primary data ................................................................................................................ 34 3.4. Research method ......................................................................................................... 35 3.5. Research tool............................................................................................................... 35 3.5.1. Questionnaire .............................................................................................................. 35 3.5.2. Personal interview....................................................................................................... 36 3.5.3. Annual reports............................................................................................................. 36 3.6. Data collection ............................................................................................................ 36 3.7. Sampling ..................................................................................................................... 37 3.7.1. Sample population ...................................................................................................... 37 3.7.2. Sample frame .............................................................................................................. 37 3.7.3. Sample size ................................................................................................................. 38 3.7.4. Sample techniques ...................................................................................................... 38 3.8. Limitations .................................................................................................................. 38 FINDINGS AND ANALYSIS ............................................................................................. 39 4.1. Management................................................................................................................ 41 4.1.1. Findings from questionnaire survey ........................................................................... 41 4.1.2. Actual CSR disclosures by firms ................................................................................ 46 4.1.3. Findings from managers interview ............................................................................. 47 4.1.4. Overall evaluation of management’s responses.......................................................... 49 4.2. Consumers .................................................................................................................. 51 4.2.1. Findings from questionnaire survey ........................................................................... 51 4.2.2. Overall evaluation of consumer’s responses .............................................................. 53 4.3. Accountants ................................................................................................................ 57 4.3.1. Findings from questionnaire survey ........................................................................... 57 4.3.2. Overall evaluation of accountant’s responses ............................................................. 59 4.4. Overall discussion ....................................................................................................... 61 CONCLUSION .................................................................................................................... 65 REFERENCES ............................................................................................................................ 69 APPENDIX A: QUESTIONNAIRE .......................................................................................... 80 APPENDIX B: STATISTICAL TEST ...................................................................................... 85 5 LIST OF FIGURES Figure 2.1. A hierarchy of CSR (adapted from Carroll, 1991) ..................................................... 17 Figure 2.2. The CSP Model (adapted from Wood, 1991) ............................................................. 18 Figure 4.1. Respondents ................................................................................................................ 39 Figure 4.2. Consumer and accountant categories ......................................................................... 40 Figure 4.3. Distribution of responses from management survey .................................................. 42 Figure 4.4. Distribution of responses from management survey (percentage) ............................. 43 Figure 4.5. Descriptive statistics 1 (management survey) ............................................................ 44 Figure 4.6. Descriptive statistics 2 (management survey) ............................................................ 45 Figure 4.7. Distribution of responses from consumer survey ....................................................... 52 Figure 4.8. Distribution of responses from consumer survey (percentage) .................................. 53 Figure 4.9. Descriptive statistics 1 (consumer survey) ................................................................. 54 Figure 4.10. Descriptive statistics 2 (consumer survey) ............................................................... 56 Figure 4.11. Distribution of responses from accountant survey ................................................... 58 Figure 4.12. Distribution of responses from accountant survey (percentage) .............................. 60 Figure 4.13. Descriptive statistics 1 (accountant survey) ............................................................. 60 Figure 4.14. Descriptive statistics 2 (accountant survey) ............................................................. 61 6 LIST OF ABBREVIATIONS CSR Corporate Social Responsibility CSP Corporate Social Performance IAS International Accounting Standard IQR Inter-Quartile Range MOF Ministry of Finance NGO Non-governmental Organization PR Public Relation TBL Triple Bottom Line VSA Vietnamese Accounting Standard 7 1. INTRODUCTION 1.1.CSR in the world Corporate Social Responsibility (CSR) in the world is not new but it is still a hot subject for enterprise, investors, customers, and entire society. Over the world, giant corporations pay a lot of money in order to become perfect business model and responsible for society. Typically, Best Buy Co., Inc, a retailer of consumer electronics in USA and Canada, has applied recycled goods program. The same example is Starbucks, a world-wide coffee company, also has many activities for community. Besides, Evian Company, a French mineral water producer, distributes their product in environment-friendly water bottle. Moreover, unbeatable web search engine "Google", with head office called Googleplex, treats their staffs as golden. Also, General Electrics uses more than two billion USD yearly for studying new technologies to protect environment. Deputy Manager of public relations of Best Buy Company says, “We only feel that we will succeed in the market if we take responsibilities for society” (Saga Vietnam, 2008). Besides having quality assurance of staffs' living standard, protecting environment, and making useful products for customers and environment, companies also raise funds for charity and donation for the development of society and community. For example, Royall Dutch Shell, a long-standing oil Corporation, built lots charitable funds, one of them is the Early Learning Centre in South Africa which educates children and teaches skills to mature people. World Bank and Merck Pharmacy Company also have ideals to raise charitable fund of USD 50 millions, in which, they give free 8 Mectizan medicine to eliminate illness in 28 countries in Africa (Saga Vietnam, 2008). Besides, billionaires also use their fortune to contribute significantly in social activities such as Bill Gates and Warren Buffett. CSR report enclosed with annual business reports appear in most companies. 1.2.CSR in Vietnam In Vietnam, CSR is a relative new concept. It is firstly introduced by international corporations sourcing in Vietnam under the form of Code of Conduct or social standard requirements. According to Professor André Schmitt, Director of CFVG, “Current financial crisis show that Vietnam Economy was depended on supply chains of the world. Vietnam Economy can not evade the global competitive pressures. Thus, the task of implementing CSR is as difficult as it is in any developed countries” (CSR Vietnam Forum, 2009). Presently, events such as pollution in Thi Vai River, contaminated China milk, conflict between workers and their bosses have proved that implementing CRS is necessary for sustainable economy. 1.2.1. Government actions “Sustainable development and protecting the environment” is the commitment Vietnam government set in the national strategy SRV 1993:45, which along with most nations in the world (O’Rourke, 1995). The Doi Moi reforms and open-door policies, implemented since 1986, have helped Vietnam to achieve high economic growth, however major 9 social problems still remain. In order to tackle those problems, the Vietnam government had created new regulations, Environmental Protection Law and the Vietnam Agenda 21 for sustainable development. Other legislative tools also include Labor Code enforcement and labor inspection. Besides, the government also established Environmental Police and special fees levied on the emission of wastewater to strengthen enforcement measures against companies that pollute. Moreover, the government strongly expresses its commitment and puts effort in calling on companies to protect the environment and promote safety and health in the workplace (Civil Law Network, 2009). The violations of the Labor law and Environmental law would cause company to incur cost of monetary penalties, to be suspended, or in severe case, to be imprisonment. However, there is no requirement from government for the companies to formally issue CSR reporting. 1.2.2. Vietnamese Accounting Standards (VAS) In February 12, 1999, the Vietnam Accounting Standards Board (VASB) was established by the Ministry of Finance (MOF). Presently, basing on the International Accounting Standard (IAS), the VAS is set up by the MOF through the Accounting Policy Department. With the IAS base, Vietnamese considerations are used to adjust economic, finance and accounting issues when VAS is drafted. There are some differences in disclosure requirement between two standards. Under the VAS 21 Presentation of Financial Statement, which is derived from IAS 1, bonuses and welfare funds for employees are not required to disclosure. In Vietnam, retirement benefits are 10 paid by companies under compulsory levy, the companies charge this contribution against operating costs. Besides, comparing to the IAS 19 Employee Benefits, there are no other disclosure requirements for retirement benefits in VAS. Moreover, Vietnam does not have standard specifically addressing areas which are established under IAS 26 Accounting and Reporting by Retirement Benefit Plans. Thus, it can be seen that VAS does not have any special requirement for the enterprise to disclose employee benefits. Also, the VASB does not require the company to disclose CSR information (Vietnamese Accounting Standard). 1.2.3. CSR practice and challenges From 2005, 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, together with Vietnam Leather & Footwear Association, and The Vietnam National Textile and Garment Group, in order to honor enterprises that well done of CSR in context of global integration. In 2006, 50 companies of Vietnam Leather & Footwear Association, and The Vietnam National Textile and Garment Group took part in this prize. According to PhD Doan Duy Khuong - Vice-Director of Vietnam Chamber of Commerce and Industry, “CSR has 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 lots of challenges in implementing CSR. Firstly, there is lack of law enforcement as well as the cooperation. The evaluations of CSR 11 effectuation are set in Code of Conduct and standards such as SA8000, WRAP, ISO 14000, GRI, etc. However, the standards are not agreement among Governments or regulations in international convention. Thus, ties are only among export or import companies or companies' rules. Secondly, the companies' knowledge about CSR is still limited. They understand that CSR is only charity; they do not understand that this is a need to implement CSR right from the inside of the organization. Thirdly, the companies are lack of money and technique to apply criterions of CSR, specially, in medium and small companies (Saga Vietnam, 2008). Moreover, the awareness and demand for CSR information of Vietnamese are also not strong, giving less incentive for companies to embrace CSR and disclose CSR information. There are some companies that have started to produce clean vegetables, clean aquaculture, clean coal etc, however, those actions have compelled or unprompted nature rather than in a voluntary basis that associate with the business activities and company’s image. 1.3.Reasons for further investigation CSR has become burning issue in the world. However, while there are so many CSR studies and researches have been conducted in the Western countries, very few studies are taken place in Vietnam. As Vietnam is among the world’s fastest-growing economy, CSR has become even more important for the country to develop sustainably. This paper aims to discover how organizations in Vietnam view CSR and CSR reporting, whether 12 CSR information has any effect on the Vietnam consumer behavior, and the attitude of Vietnam accountant toward CSR reporting. 13 2. LITERATURE REVIEW 2.1.Definition and conceptualization of CSR Over the last three decades, there is an intense debate among academics, consultants and corporate executives to find a definition of a more human, more responsible and more transparent way of doing business. From 1999 to present, several definitions of social responsibility of business have been introduced, however this vast of corporate social responsibility (CSR)’s definitions has created confusion for both society and corporation. Everybody knows the concept, everybody can give the appropriate definitions but the question is that these definitions can be understood with different meanings (Blanco & Souto, 2009), and as Votaw and Sethi (1973) considered CSR, ”it means something but not always the same thing to everybody”. The definition of CSR provided by the Commission of European Communities is one of the most frequently cited definition. It defines CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. Being social responsible means not only fulfilling legal expectations, but also going beyond compliance and investing more into human capital, the environment and the relation with stakeholders” (Deegan, 2009). In literature, various conceptualizations of CSR have been developed, three concepts of CSR from different authors will be introduced in this paper. Two of them are the most famous conceptualizations: Carroll (1979) four-part definition of CSR and the Corporate 14 Social Performance (CSP) model by Wood (1991). The third concept, which is developed by Argandona and Hoivik (2010) under the ethical viewpoint, is one of the most recently concept. 2.1.1. Carroll's 1979-1991 conceptualization In 1979, Carroll distinguished CSR into four areas: economic, legal, ethical, and discretionary. The first category Carroll mentioned is economic responsibility. It indicates that providing goods and services, and making profit are the principal roles of business organizations. For example, organization has the responsibility to generate returns for the shareholders, to create job and pay fair salary to the workers, to promote innovation and design new products and services, etc. In other words, business organization was the basic economic unit before it was anything else. The second part, legal responsibility, expresses the expectation of society that the business comply with the regulations and laws, and fulfill their economic missions within the legal framework set by societal legal system. The concept of fair operation established by lawmakers is the basis for the view of “codified ethics” reflected in legal responsibility (Carroll, 1979). However, while the films may be successfully forced by regulations to respond to the issue, determining whether their applications are fairly is very difficult (Pratima, 2002). Besides, the opportunity for the firm to be proactive is limited by the reactive nature of the laws. Therefore, the laws attempt to circumscribe the limits of tolerable business behavior, but they neither define ethics nor do they “legislate morality” (Solomon, 1994). 15 In essence, the companies have depended on the ethical responsibility to overcome the limitation of law. Therefore, ethical responsibility, which is mainly rooted in human principals and human rights commitment, is not necessary codified into law, but rather it is expected by the societal members (Novak, 1996). However, the blurred definition of ethical responsibility makes it very difficult for the organization to deal with it properly (Carroll, 1979). The final category, discretionary responsibility, includes activities that response to the society’s expectation of businesses be good corporate citizens. The key point to differentiate between discretionary and ethical responsibility is that the public’s expectation is not based on ethical or moral sense under discretionary area. The community desires firms to contribute to or build in humanitarian programs, however the firm is not regarded as unethical if it does not satisfy such desires. Discretionary responsibility is more voluntary for the business even there is always expectation that the business provide it. Examples of such activities may include philanthropic contribution, making effort to reduce the greenhouse effect, or conducting programs to increase the literacy rates. This responsibility causes a lot controversy because of its wide scope and its implications may conflict with the firms’ economic missions. Carroll has put four categories of CSR into pyramid: 16 Discretionary responsibility Ethical responsibility Legal responsibility Economic responsibility Figure 2.1. A hierarchy of CSR (adapted from Carroll, 1991) While economic responsibility lays on the foundation, the discretionary forms the peak of the pyramid. Under this perspective, economic and legal responsibilities are socially required, ethical responsibility is socially expected, and discretionary responsibility is socially desired (Windsor, 2001). Carroll’s conceptualization is useful and timely, however it still has limitation as Clarkson (1995) states that:” Carroll’s model in the form of a three dimensional cube was complex and difficult to test. It did not lend itself to the development of a methodology that could be used in the field to collect, organize, and evaluate corporate data”. 2.1.2. Wood 1991 conceptualization In 1991, Wood had created broader context for CSR than just a mere definition. His model has three steps. The first one is the principal which is the motivation for the firm to act socially responsible at three levels: institutional, organizational, and individual. 17 The motivation may come from the principal of legitimacy, the organizational sense of public responsibility, or the managers’ personal responsibility preferences and attitudes. The second one is the responsiveness which, according to Wood, includes an action dimension that complements the motivation of social responsibility. It comprises environmental assessment, stakeholder management and issues management. The strategies for adapting to or changing the environment can be generated based on the knowledge of the external environment. On the other had, particular types of stakeholder management devices, for example employee newsletter, corporate social reporting, are useful in investigating stakeholder management. Besides, issues management requires investigating the approach firm used to respond to social issues. Figure 2.2 The Wood’s CSP Model (adapted from Wood, 1991) Principals of CSR 1 Institutional principal: legitimacy Organizational principal: public responsibility Individual principal: managerial discretion Processes of CSR 2 Environmental assessment Stakeholder management Issues management Outcomes of corporate behavior Social impacts Social programs Social policies 18 The last one is the outcomes of corporate behavior which is consisted of three types: the social impacts of corporate behavior, the programs firms use to implement social responsibility and the policies developed by the firms to handle social issues and stakeholder interests (Jamali, 2008). Although Wood’s model had made great strides in CSR research, the importance of stakeholder impacts, according to Waddock (2004), had not been considered fully. Moreover, Meehan et al. (2006) state that:” While Wood’s 1991 model represents a significant piece of scholarship, it nevertheless failed to address the needs of practicing managers charged with implementing CSR/CSP programs and crucially measuring their impacts”. 2.1.3. Argandona and Hoivik (2010)’s ethical concept Argandona and Hoivik (2010) identify four aspects of the “R” in CSR. The first is “responsibility as attribution”. The action is undertaken under the sense of moral rather than is seen as the causal responsibility. The second is “responsibility as a duty”. It emphasis not only a duty for the organization to comply with obligation, but also the willingness to shoulder all the consequences that may be raised from the organization’s activities; it is here where the ethical responsibility and legal responsibility are linked together. The third is “responsibility as responsiveness”, it means that the firm is sensitive and willing to respond to the need and demands of society. And the last one, “responsibility as accountability”, is the inference draw from “responsibility as attribution”. It is not only the actions of the firms are to be accounted but also the moral 19 reasons to justify the action. It is accounting “towards others or in terms of some shared sense of normative propriety” (Painter-Morland, 2006). Responsibility as such implies a certain right, a legal, moral or social authority, or at least a moral community to which the agent and those to whom he is accountable belong (Eshleman, 2004). Thus, all these moral responsibilities are included in the social responsibility that firm owns to both its external and internal stakeholders. From that viewpoint, Argandona and Hoivik define CSR as “the set of moral duties towards other social actors and towards society that the firm assumes as a result of its economic, social, political, and ethical reflection on its role on society and on its relationships with those other actors. And with regard to external observers, it is the set of moral duties that the other agents and society attribute to the firm as a consequence of the role it assumes and its relationship with those actors”. All three frameworks seem to be oriented toward developing theory and research instead of influencing practice. The complex business environment that is faced by organizations nowadays implies the need for and important of on-going stakeholder management. The Stakeholder Theory is discussed in the next section. 2.2.Stakeholder theory While the profit making orientation is the main concern under the classical view of an organization’s activities, there is an alternative concept that focus on the mutual relationship between business and society, and with a range of stakeholders (Freeman, 1984).During the last two decades, Stakeholder Theory has been increasingly mentioned 20