Tài liệu The role of corporate social responsibility in business practices and key stakeholders a case study of lg electronics

THE ROLE OF CORPORATE SOCIAL RESPONSIBILITY IN BUSINESS PRACTICES AND KEY STAKEHOLDERS A CASR STUDY OF LG ELECTRONICS BY NHAM MINH THUONG 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. OCTOBER 2011 1 October 2011 Declaration of Originality and Word Count DECLARATION I hereby declare that this graduation project is based on my original work except for quotations and citations which have been duly acknowledge. I also declare that it has not been previously or concurrently submitted for any other courses/ degree at Help University College or other institutions. Word account: 10,688 words. NHAM MINH THUONG Date: 28/10/2011 2 ACKNOLEDGEMENT 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 graduation project. By his constant guidance, insightful suggestions, I can complete my project. Furthermore, I would like to express my appreciation to Ms. Sumathi, Help University College, who initiated the project and give so much instruction and support during this process. Next, I would like to express my appreciation to all managers and staff of LG Electronics Vietnam helped me to complete my graduation. By their help to take into my survey, I can have information to support my project. They play a vital role in completing my graduation project. Lastly, I want to give my pleasure to my family, who always support me in the period doing my project. NHAM MINH THUONG 3 ABSTRACT THE ROLE OF CORPORATE SOCIAL RESPONSIBILITY IN BUSINESS PRACTICES AND KEY STAKEHOLDERS A CASR STUDY OF LG ELECTRONICS By NHAM MINH THUONG OCTOBER 2011 Supervisor: Dr. Le Van Lien Nowadays, CSR becomes more and more important issue in over world and also in Vietnam. CSR plays a vital role in business practices and key stakeholders. So, to develop sustainably, CSR is the key term for this development. This paper aims to discover the how the CSR affect to business practices and key stakeholders in Vietnam. However, the researcher gives a case study of LG Electronics to analyze. Because of LG Electronics is multinational organization and from Korea. It is difficult for researcher to analyze, so the researcher focuses on LG Electronics Vietnam. The main aim of this research is to find the role of CSR in the business practices and key stakeholders by examining the case study of LG Electronics Vietnam. The survey will be given to the LG”s staffs to find out the level of awareness and the implementation of CSR in LG Electronics Vietnam. 4 TABLE OF CONTENTS DECLARARION OF ORIGINALITY AND WORD COUNT …………………...2 ACKNOWLEDGEMENT ………………………………………………………….. 3 ABSTRACT ..................................................................................................................4 TABLE OF CONTENTS …………………………………………………………….5 LIST OF FIGURES AND TABLES ……………………………………………...... 8 LIST OF ABBREVIATIONS ………………………………………………….........9 CHAPTER 1: INTRODUCTION ………………………………………………….10 1.1. CSR in the world ………………………………………………………………...11 1.2. CSR in Vietnam …………………………………………………………………12 1.3. CSR in multinational companies in VN …………………………………………13 1.4. CSR practices and challenges …………………………………………………...14 1.5. Objectives of research …………………………………………………………...15 1.5.1. Objectives of research …………………………………………………………...15 1.5.2. Sphere of research ……………………………………………………………….15 1.5.3. Research method ………………………………………………………………...16 CHAPTER 2: LITERATURE REVIEW ………………………………………….17 2.1. Definition of CSR & benefits from CSR …………………………………………18 2.2. Carroll 1979-1991 conceptualization ……………………………………………..19 2.3. The concepts related to CSR ……………………………………………………...21 2.3.1. Stakeholder theory ………………………………………………………………21 2.3.2. Utilitarianism in an organization ………………………………………………..22 2.3.3. CSR reporting …………………………………………………………………..23 2.3.4. Triple bottom line ………………………………………………………………24 5 2.3.5. Sustainable development ……………………………………………………….25 CHAPTER 3: RESEARCH METHODOLOGY…………………………………..27 3.1. Research objectives ………………………………………………………………28 3.2. Problem statement ………………………………………………………………..28 3.3. Research methodology ……………………………………………………………28 3.3.1. Data source………………………………………………………………………28 3.3.1.1. Primary data …………………………………………………………………..29 3.3.1.2. Secondary data ………………………………………………………………..29 3.4. Research method ………………………………………………………………….29 3.5. Research tool ……………………………………………………………………...29 3.6. Sampling …………………………………………………………………………..30 3.6.1. Sampling population …………………………………………………………….30 3.6.2. Sampling frame ………………………………………………………………....30 3.6.3. Sampling size ……………………………………………………………………30 3.7. Limitations ………………………………………………………………………...31 3.8. Hypothesis statement ……………………………………………………………...31 CHAPTER 4: ANALYSIS …………………………………………………………..34 4.1. Collection of questionnaires ………………………………………………………35 4.2. Description of result ………………………………………………………………35 4.2.1. Age ……………………………………………………………………………...35 4.2.2. Gender …………………………………………………………………………. 36 4.3. Management ………………………………………………………………………36 4.3.1. Level of awareness ……………………………………………………………...37 4.3.2. The implementation of CSR …………………………………………………….40 4.4. Employees ………………………………………………………………………...48 6 4.4.1. Level of awareness ……………………………………………………………...49 4.4.2. The implementation of CSR ……………………………………………………50 4.5. Customers …………………………………………………………………………51 4.5.1. Level of awareness ……………………………………………………………...52 CHAPTER 5: CONCLUSION ……………………………………………………...54 5.1. Conclusion ………………………………………………………………………...55 5.2. Recommendation ………………………………………………………………….56 5.3. Limitations of study ……………………………………………………………….57 5.4. Suggestion for future researchers …………………………………………………57 REFERENCES ………………………………………………………………………58 APPENDICES ………………………………………………………………………..60 APPENDIX A: QUESTIONAIRES ………………………………………………...60 7 LISTS OF FIGURES AND TABLES Figure2.1. pyramid mode of CSR (Archie. B. Carroll. 1979) Figure2.2. the relationship between the firm and stakeholders Figure2.3. triple bottom line Figure4.1. distribution of responses from management survey Figure4.2. LG Electronics‟ CSR Governance Figure4.3. take-back and recycling amounts in Asia Figure4.4. work-life balance Figure4.5. distribution of responses from employee‟s survey Figure4.6. distribution of responses from customers‟ survey Table1 Age Table 2 Gender 8 LIST OF ABBREVIATIONS CSR Corporate social responsibility VND Vietnam Dong WTO World trade organization TBL Triple bottom line VBLI Vietnam Business Link Initiative VCCI Vietnam Chamber of Commerce &Industry 9 CHAPTER 1: INTRODUCTION 1.1. CSR in the world 1.2. CSR in Vietnam 1.3. CSR in multinational companies in Vietnam 1.4. CSR practices & challenges 1.5. Objectives & Sphere research 1.5.1 Objective of research 1.5.2 Sphere of research 1.5.3 Research method 10 CHAPTER1: INTRODUCTION 1.1 CSR in the world Nowadays, CSR is no longer an option; it becomes one part of the normal business obligations to all stakeholders. The issue of CSR is a topical one in every country around the world today, not because CSR is a soft issue but because it is an issue that touches different aspects which are important & of concern to us all. The issue is global warming, corporate and individual philanthropy, CO2 emissions reduction, and so on. However, the stakeholders are now sophisticated, educated, well informed and they know what is best for them. They will not hesitate to take whatever actions are deemed responsible and legitimate to request corporate entities to produce what is needed. For example, in UK, stakeholders‟ increasing requests for information from companies on their CSR activities appear to be the main driving force behind the issuing of CSR reports by UK companies. These companies have realized that providing information on their CSR activities is a good method of achieving positive public relations. As an engine for social progress, CSR helps companies live up to their responsibilities as global citizens and local neighbors in a fast changing world. And acting in a socially responsible manner is more than just an ethical duty for company. For instance, Swedish Bank (SEB) has a department responsible for corporate sustainability including environment and CSR. That department delivers on a comprehensive range of commitments such as a target to reduce carbon emissions by 45% by 2015. Chief Executive Officer, Annika Falkengren explains: “We want to be the trusted partner for customers with aspirations and know that we must meet 11 increasingly higher expectations on responsible corporate behavior if we want to remain successful”. It is just because of SEB‟s understanding of how its role in society must develop, that it requires a team to focus on driving that change throughout the business. Or IBM, over the 100 years existence, they developed and refined a thoughtful and comprehensive approach to corporate citizenship by corporate service programs on specific societal issues, including the environment, community economic development, education, health, literacy, language and culture. 1.2. CSR in Vietnam Nowadays, Vietnam is one of the new markets for many companies from over the world. With the advantages such as human labor is cheap plus the growth of economic is high, Vietnam attracts more foreign investment enterprises. It can be said that, when many foreign companies came to Vietnam, CSR concept is used to popular in Vietnam. Some businesses have adopted CSR policies and rules of ethics, but they are often based on approaches from the top suppliers to apply moral rules upon request from customers rather than developing their own CSR to expand market share. Moreover, understanding the concept of CSR in Vietnam is still not exactly, therefore this makes the application of CSR in Vietnam as passive. According to recommendations from a study of CSR in Vietnam has urged the Government to provide businesses and stakeholders information about the rules of CSR in order to raise awareness and capacity, the Government need to set up a support fund for the application of CSR. Research by the World Bank at the level of enterprises in Vietnam have identified a positive trend in organizations have adopted CSR, such as improving the image and reputation of the business, working conditions better productivity and quality improved. In particular, firms have adopted CSR in Vietnam, said the 12 improved method has helped them improve their product quality, reduce product defects and improving the ability to meet the requirements of customers the stability related to delivery deadlines. There are two companies that are the examples in implementing successful CSR, are Hung Cuong trading limited company and Unilever Vietnam. Since 1998, Hung Cuong has seriously programs to support the employees‟ living conditions. Employees in the company have annually health checking, and distributed two sets of clothing and other items as shoes, gloves, masks, hats for working. In the business of production and processing tea for export, the leading factor that companies must comply with the performance standards in quality management system ISO 9001: 2000 and the food safety system HACCP. While Unilever Vietnam, multinational company, always work with the mission “develop through people”, the company promise to take care of the interest of the employees and have policies to support their working. During operations in Vietnam, company has policies of human resource development, Unilever come up with several humanitarian and development community. Unilever spent a big budget for humanitarian commitments, mainly in the areas of health, education, poverty reduction and disaster prevention. It can be said that these are the two leading in implementing successful CSR in Vietnam. It will build the foundation for understanding about CSR in Vietnam. 1.3. CSR in multinational companies in Vietnam When Vietnam enters the WTO, it makes a big opportunity for many companies over the world come to Vietnam. Now, there are many multinational companies in Vietnams, such as Samsung, LG Electronics, Nestle‟, Nokia, Toyota, and so on. Because they are multinational organizations, the managers might to have knowledge about CSR. Therefore, the company has the CSR policies. From that, the concept of 13 CSR is becoming popular in business in Vietnam, and it has to be needed on the future for any companies in Vietnam. We can see many multinational companies implemented CSR very successful, and they are trying to take into the many social activities as much as possible. For example, we talked above about Unilever. Unilever come up with several humanitarian and development community. Unilever spent a big budget for humanitarian commitments, mainly in the areas of health, education, poverty reduction and disaster prevention. Or LG Electronics paid attention to donation and give scholarship for student that have poor condition, or becomes a tenyear donor for the game show to finding the excellent student on TV called “Olympia way to the top”. So that, many good student have opportunities to go abroad for studying. On the other hand, many companies have not adopted and implement CSR. The famous example is Vedan, one company from Taiwan, polluted the water in Thi Vai River in 10 years. These causes the serious consequences for people live near this river. Level of pollution was 90% with the range of about 10km affected along the Thi Vai River ( Dantri, 2009). 1.4. CSR practices and challenges In Vietnam, the Government has to raise awareness of businesses and stakeholders on CSR; CSR is regarded as an important content in the agenda of sustainable development. The international development organizations in Vietnam have so much effort in promoting and implementing CSR. The programs and projects related to CSR focused on some important issues of CSR depend on the project‟s objectives, resources and experience available. The Vietnam Business Links Initiative (VBLI), launched under the auspices of the Vietnam Chamber of Commerce and Industry (VCCI), cooperates with international organizations, offers consulting services and 14 training programs that will improve the labor environment, raise the CSR awareness among such enterprises. However, in Vietnam, there are still a lot of difficulties in applying the CSR. Firstly, there is not enough law and regulation to enforce companies to complete their duties to the society. Secondly, the manager and employees still lack of knowledge about CSR. This is the most difficult obstacle for any companies in process to implement CSR. 1.5. Objectives and sphere research 1.5.1. Objective of research There are some main objectives of research: - Provide framework about CSR, including definitions, concepts related to CSR. - To find the level of awareness of CSR in LG Electronics Vietnam. - To present the benefits that CSR can bring to company, and key stakeholders. - To show the implementation of CSR in LG Electronics Vietnam. 1.5.2. Sphere of research - Research place: LG Electronics Vietnam. - Objective of research: the role of CSR in business and key practices. - Time duration of conducting the research: from August 1, 2011 to October 9, 2011 1.5.3. Research method 15 In order to do this research, the researcher used survey method to collect information from managers, employees, and customers. The questionnaires are given to managers, employees of LG Electronics and customers in Hanoi. 16 CHAPTER 2: LITERATURE REVIEW 2.1. Definition of CSR & benefits from CSR 2.2. Carroll 1979-1991 conceptualization 2.3. The concepts related to CSR 2.3.1. Stakeholder theory 2.3.2. Utilitarianism in an organization 2.3.3. CSR reporting 2.3.4. Triple bottom line 2.3.5. Sustainable development 17 CHAPTER 2: LITERATURE REVIEW 2.1. Definition of CSR and benefits from CSR In the fact, to define the content of CSR we have various ways to do that. The World Business Council for Sustainable Development in its publication “Making Good Business Sense” by Lord Holme and Richard Watts used the following definition. “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”. Or the CSR is defined by Business for Social Responsibility “Operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business. CSR is seen by leadership companies as more than a collection of discrete practices or occasional gestures, or initiatives motivated by marketing, public relations, or other business benefits. Rather, it is viewed as a comprehensive set of policies, practices, and programs that are integrated throughout business operations, and decision-making processes that are supported and rewarded by top management.” However, according to a new study, CSR initiatives do bring one very important benefit to companies- a supervisor ability to raise money for strategic investments and initiatives. Beiting Chen and George Serafeim of Harvard Business School, with Ionannis of London Business School, analyzed the CSR scores of 2,439 publicly traded companies, as provided by Asset 4, a unit of Thomson Reuters. They then compared those scores to a five- point index designed to measure the companies‟ access to capital, looking at every year from 2002 to 2009. They found that companies with high CSR scores have much easier time raising money than their 18 less socially- responsible competitors. This implies, the researchers say, that firms with great CSR scores can access capital at better interest rates than other firms, or that they can access more money than other firms, but at the same interest rates. It could be that a particularly high CSR score kicks of a “virtuous cycle”: Companies with great CSR score are better able to raise money for their strategic investments and initiatives, which in turn improve their stock market returns-and that makes it easier for them to raise money. CSR is generally divided into three types of initiatives: environmental responsibility, social responsibility, and good corporate governance. And the result is found that the factors was most responsible for improved ability to raise money are environmental and social responsibility, and corporate governance was much less important because a company‟s corporate governance may be more influenced by the regulations and expectations in its home country than by any independent initiative. 2.2. Carroll 1979-1991 conceptualization According to Carroll (1983), “CSR involves the conduct of a business so that it is economically profitable, law abiding, ethical and socially supportive. To be socially responsible then means that profitability and obedience to the law are foremost conditions when discussing the firm‟s ethics and the extent to which it supports the society in which it exists with contributions of money, time and talent”. Carroll introduced CSR into four parts: economic responsibility, legal responsibility, ethical responsibility, and philanthropic. 19 Figure 2.1: Pyramid model of CSR (Archie. BCarroll.1979) Firstly, he concerned about economic responsibilities which business organizations was the basic economic unit in our society, and its principal role was to produce goods and services that consumers needed and wanted and to make an acceptable profit in the process. Secondly, legal responsibilities reflect a view of “codified ethics” in the sense that they embody basic notions of fair operations as established by lawmakers. Business is expected to comply with the laws and regulations promulgated by federal, state and local governments as the ground rules under which business must operate. The third is ethical responsibilities. Although economic and legal responsibilities embody ethical norms about fairness and justice, ethical responsibilities embrace those activities and practices that are expected or prohibited by societal members even though they are not codified into law. Ethical responsibilities embody those standards, norms, or expectations that reflect a concern for what consumers, employees, shareholders, and the 20