Tài liệu A case study of corporate social responsibility a sustainable tool of companies’ development in vietnam

DECLARATION OF ORGINALITY AND WORD COUNT I 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 8946 words. HOANG THUY HANG October 2011 1 ACKNOWLEDGEMENT As to complete this graduation project, I was granted a lot of support, guidance and assistance from mentors and lecturers. Therefore, I want to thank to all who support, direct and motivate me during the process of completing the research. 1. First, I would like to express my deep gratitude to my supervisor, Dr. Pham Duc Hieu from International School at Vietnam National University, Hanoi who guide me in my choice of assignment 2. I also would like to thank to Ms. Sumathi and Ms. Shenba at Help University College, who initiated the project and give so much instruction and support. 3. Thank all the respondents in Panasonic company who have helped me complete the survey with their enthusiastic and supporting manner. 2 A CASE STUDY OF CORPORATE SOCIAL RESPONSIBILITY: A SUSTAINABLE TOOL OF COMPANIES’ DEVELOPMENT IN VIETNAM By HOANG THUY HANG October 2011 Supervisor: Dr. PHAM DUC HIEU ABSTRACT With the increasing effects of ASEAN over the world, Vietnam is an ideal market for corporations. Furthermore, becoming the member of WTO since 2007 is an opportunity as well as the threats for local companies. Following the globalization trend, corporate social responsibility (CSR) has been the vital issue in both national and global market. CSR has recently emerged in Vietnam’s market, however, the knowledge and actions of CSR is limited. Many scandals occurred relating to CSR issues such as the case of Vedan Co. Ltd, Sabeco Song Lam Co., and Tung Khuang Co. Ltd. Public now pays more attention to CSR. The objective of the research is to analyze the relationship between CSR and the company’s stainable development in the case of Panasonic Vietnam Co. Ltd. From conducting the research, it is able to show the understanding and awareness about CSR concept, how the company treat its different layers of stakeholders, CSR implementation process, and give the conclusion about the connection of CSR and the company’s sustainable development. 3 TABLE OF CONTENTS DECLARATION OF ORGINALITY AND WORD COUNT ............................... 1 ACKNOWLEDGEMENT ......................................................................................... 2 ABSTRACT ................................................................................................................ 3 LIST OF FIGURES ................................................................................................... 6 LIST OF ABBREVIATIONS ................................................................................... 8 CSR: Corporate Social Responsibility ..................................................................... 8 1. 2. 3. INTRODUCTION .............................................................................................. 9 1.1 Corporate social responsibility: an overall view ................................................. 9 1.2. CSR in Vietnam.................................................................................................... 11 1.3 Panasonic Vietnam Co. Ltd................................................................................. 12 1.4 Problem statement ............................................................................................... 13 1.5 Research objective ............................................................................................... 14 LITERATURE REVIEW ................................................................................ 16 2.1 Definition of CSR ................................................................................................. 16 2.2. CSR models........................................................................................................... 18 2.2.1 Social-Economic Model of CSR ................................................................... 18 2.2.2 The two-dimension model.............................................................................17 2.2.3 Carroll pyramid............................................................................................18 2.3 Stakeholder model of CSR ............................................................................... 21 2.4 Other theories .................................................................................................... 23 2.5 CSR reporting ...................................................................................................... 24 2.6 Sustainability ........................................................................................................ 24 2.7 CSR in Vietnam.................................................................................................... 25 RESEARCH METHODOLOGY .................................................................... 26 3.1 Research objective ............................................................................................... 27 4 3.2 Research methodology ......................................................................................... 27 3.3 Data source ........................................................................................................... 28 3.4 Research tool ........................................................................................................ 28 3.5 Data collection and processing ............................................................................ 29 3.5.1 Sampling ............................................................... Error! Bookmark not defined. 3.5.2 Questionnaires ..................................................................................................... 29 3.5.3 Personal Interviews.............................................................................................. 31 3.5.4 4. Data Treatment .............................................................................................. 31 RESULT ANALYSIS ....................................................................................... 33 4.1 Respond summary ............................................................................................... 33 4.2 Description of result ............................................................................................. 33 4.2.1 Age ....................................................................................................................... 34 4.2.2 Gender................................................................................................................... 34 4.3. Questionnaires analysis ............................................................................................ 35 4.3.1 CSR perception .................................................................................................... 35 4.3.2 Stakeholder interest............................................................................................... 40 4.3.3 CSR Implementation ............................................................................................ 42 4.4 Interview analysis................................................................................................. 46 5. CONCLUSION AND RECOMMENDATION ................................................. 51 5.1 Conclusion ............................................................................................................ 51 5.2 Recommendation.................................................................................................. 53 5.3 Limitations ............................................................................................................ 54 REFERENCES ......................................................................................................... 56 APPENDIX ............................................................................................................... 60 5 LIST OF FIGURES Figure 1: A two-dimensional model of CSR (Quazi and O’Brien, 2000) ................. 19 Figure 2: Carroll’s Pyramid of CSR (1991) ............................................................... 21 Figure 3: Market stakeholders .................................................................................... 22 Figure 4: Non-market stakeholders ............................................................................ 22 Figure 5: Distribution of CSR perception .................................................................. 39 Figure 6: CSR Implementation .................................................................................. 46 Table 1: Age ............................................................................................................... 34 Table 2: Gender .......................................................................................................... 34 Table 3: Answers for question 1 ................................................................................ 35 Table 4: Answers for question 2 ................................................................................ 36 Table 5: Answers for question 3 ................................................................................ 37 Table 6: Answers for question 4 ................................................................................ 38 Table 7: Answers for question 5 ................................................................................ 40 Table 8: Answers for question 6 ................................................................................ 41 Table 9: Answer for question 7 .................................................................................. 42 Table 10: Answer for question 8 ................................................................................ 43 6 Table 11: Answers question 9 .................................................................................... 44 Table 12: Answers for question 10 ............................................................................ 45 7 LIST OF ABBREVIATIONS CSR: Corporate Social Responsibility GPC: Global Panasonic Corporation 3Ps: Planet, People, and Profit PR: Public Relation PVCL: Panasonic Vietnam Co. Ltd. VCCI: Vietnam Chamber of Commerce and Industry WTO: World Trade Organization WBCSD: World Business Council for Sustainable Development 8 1. INTRODUCTION 1.1 Corporate social responsibility: an overall view The term “Corporate Social Responsibility” (CSR) has popularly been applied over the world and is still on aggressive debates among corporations, governments, professionals, and communities. CSR is the further development of business ethics being promoted in 1980.At first, CSR is a performance about good actions but today it becomes the common thinking of most people and organizations. For society as a whole, CSR benefits the global market by increasing the competition among organizations across borders to comply with the standards. For policy makers, CSR is the obligation of companies with customers, employees, authority agencies, and any related parties. In Europe, CSR is used as an economic tool or the trade barrier in Western countries (Breitbarth et al, 2011). For corporations, CSR is the responsibility of conducting business activities based on the commitment to balance stakeholders’ interests and contribute to the sustainable development of organizations. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through 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. Together with other traditional factors as costs, products’ 9 quality, shares price, after introduced, CSR is also considered in evaluating company’s performance. Moreover, bbusinesses expressed their concern for social welfare on the basis of the whole. CSR was established and flourish for several reasons. One is that companies must be more difficult to protect its reputation and expansion - they protect the environment where business and government must be more aggressive with them. Second, the spread of non-governmental organizations and the organization is willing to fight with multinational companies as these companies have made a mistake. Thirdly, a series of evaluation and ranking organizations put pressure on companies to report both financial and non-financial results CSR has three layers. The first layer is charity activities. Returning something to the community is considered as a "right thing to do." The second layer is the risk management. Beginning in the 1980s, when environmental disasters happened such as explosions in the pesticide factory in Bhopal (India), and Exxon case of broken Valdex ship causing oil spill near Alaska, the reputation of industrial companies had been damaged. The big pharmaceutical companies were criticized for refusing to provide drugs for people infected with HIV / AIDS in developing countries. In clothing and footwear companies like Nike or GAP was attacked for using child labor. The companies responded by trying to manage risks. They discussed with nongovernmental organizations and the government to set up rules of behavior (code of conduct) and to commit to greater transparency in their activities. They met with their rivals in the same industry to establish general rules, sharing of risks and opinions. Implementing CSR will create value for the company. In general, CSR’s issues related to protect environment, save society’s benefits and consumers’ one, commit to the safety and the rights of employees in company, and 10 ensure shareholders’ benefits. There are some illustrative examples of successfully implementing CSR to enhance the company’s image. Starbucks apply strategies of Fair Trade certified ingredients and engaging in community-based development projects. Unlike Starbucks, Bodyshop-a Korean beauty product initiative- has built a globally natural inspired image and set up CSR strategy: “saying NO to animal testing”. 1.2. CSR in Vietnam Despite the widespread of CSR implementation over the world, this term is still a new topic to the Vietnamese market. As Vietnam joined WTO in 2007, Vietnamese organizations must be aware of an internationally competitive market with new strict rules and standards and CSR is one of requirements from foreign clients and partners. The most important objective of a firm’s operation is to maximize the shareholders wealth. In order to achieve this long-term goal, corporations should not only concentrate on profit maximization but also their future image. CSR will contribute to a better goodwill and enhance the business development. Vinamilk and Dutch Lady are real meaningful illustrations of CSR performance. Vinamilk created a social program called “Ten millions cup of milk to children in Vietnam”. And for each purchasing cup of Dutch Lady Milk, you saved a small amount of money for the rural and poor children who get the chance to receive the scholarship “Firefly Light”. The two have built the good social image to the media and public, and have received customer trust and loyalty. 11 In order to raise the awareness of domestic companies, Vietnam Chamber of Commerce and Industry (VCCI) has set up an award called “CSR towards the sustainable development” since 2005. Vietnamese government has also amended and supplemented some Acts and Regulations to adapt the requirements of public. They are demonstrated in the amending of Labor Law 1994 in 2002 and 2006, which added provisions to protect workers’ rights, the replacement of Environmental Protection Law 1994 in 2005, and the investigation of polluting cases made by the Environmental Police Department (C36), which established in the end of 2006. Moreover, new established enterprises have to comply with numbers of standards to have the establishment license such as: ISO 9000 – the administration system of quality, ISO 14000 – the administration system of environment, SA 8000 – labor and social responsibility and ISO 26000 – the corporate social responsibility. 1.3 Panasonic Vietnam Co. Ltd. Panasonic AVC Network Vietnam was firstly established in 1996 in Ho Chi Minh City as a member of Global Panasonic Corporations (GPC). In 2005, Panasonic Vietnam Co. Ltd. (PVCL) was known as the holding company of Panasonic Group in Vietnam. It has been expanded rapidly since the establishment and controlled 6 subsidiaries including Panasonic Sales, Panasonic R&D Center, Panasonic Electronic Devices, Panasonic System Networks, Panasonic Home Appliances and Panasonic AVC Networks. Following the fundamental operating concepts of GPC, CSR is the vital aspect for PVCL. The slogan “a company as a public entity” is utilized through its primary business. It commits to improve society through products it produce and sell, to improve the society welfare and to protect the environment. 12 1.4 Problem statement However, the CSR implementation is still limited because of the unawareness of “How important is CSR?” and “How can CSR affect the long-term growth?” as well as the lack of technical and financial resources (especially small and medium companies). This is the reason for the occurrence of damaging cases in recent years. According to latest statistics, out of more than 100 industrial parks in Vietnam, up to 80% are violating environmental regulations (Tap chi cong san, 2010). Ministry of Natural Resources and Environment has hold more inspection teams throughout the local, and made a "black list" of enterprises which caused serious pollution and are capable of being closed. Vedan Vietnam has polluted the Thi Vai River and caused serious impacts to both the environment and nearby community. In 2008, the case was exposed to the public through the caught and accusation of Environmental Polices. Beside the Vedan case, food poisoning cases of Melanine Milk imported from China and 3-MCPD contained sauce, fraud in selling fuel, or hiring adolescents to manufacturing Nike shoes are the whistle blowing for the Vietnamese government. Although a lot of research has been conducted about CSR, very few studies are taken place in Vietnam. Because CSR is the hot issue, the benefits and drawbacks of CSR implementation reflect on the daily performance of organizations. Thus, the paper aims to examine whether CSR is the sustainable element for the development of Panasonic Vietnam Co. Ltd. in Vietnam. 13 In order to better understand CSR of recent companies, we need to answer some following questions: 1) Why and how does CSR related to PVCL’s growth? 2) How does PVCL implement CSR? 1.5 Research objective The paper objective is to: - Explain what is CSR - Access the perception and understanding of individuals of CSR concept - Build theoretical model and inspect the relationship between CSR and the firms’ development - Raise awareness of individual employees, investors and the company about CSR as the whole, and, - Recommend possible solutions to improve the perception and awareness of CSR effects on the business operations. 1.6 Sphere of research Research conducting place: Panasonic Vietnam Co. Ltd., Hanoi, Vietnam. Objective of the research: multinational companies operating in Vietnam. Time duration of conducting: from August 12th, 2011 to October 10th, 2011. 14 1.7 Research Methods The project will use the survey and interview methods. The research distributes the questionnaire and conducts the study among the managers and employees in PVCL. Each individual will be questioned and then will fill the most appropriate answers in the survey. The previous researches and studies are also investigated to construct the questionnaire. The measurement is made in accordance with the past researches. Both quantitative and qualitative are used to carrying out the research. By surveying the managers and employees in PVCL; results and conclusions can be analyzed to assess the awareness and implementation of CSR of managers and employees. 1.8 Structure of research This project will be divided into five following chapters: Chapter I: Introduction Chapter II: Literature review Chapter III: Research Methodology Chapter IV: Finding and Result Analysis Chapter V: Conclusion and Recommendation 15 2. LITERATURE REVIEW 2.1 Definition of CSR CSR is also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business. Since the concept of CSR emerges in the business literature, academic researchers and non-academic advocators have given out numerous definitions. According to Carroll (1999), the construction of CSR definition started in the 1950s. It was widening in the 1960s and proliferated during the 1970s (Liangrong Zu, 2008). Even though there is no single commonly accepted definition of CSR. Bowen (1953) defined CSR as “an obligation to pursue policies to make decisions and follow lines of action which are compatible with the objectives and values of society” (Hussein, 2006). MaGuire (1963) expressed the view “the idea of social responsibility supposes that the corporations have not only economic and legal obligations, but also certain responsibilities to society which extend beyond these obligations.” In 1975 Votaw and Sethi stated that CSR is “bringing corporate behavior up to level where it is congruent with the prevailing social norms, values and expectations.” And there are also some other different definitions of CSR which indicated there. Following Wikipedia, "Corporate social responsibility is a form of corporate selfregulation integrated into a business model. CSR policy functions as a built-in, selfregulating mechanism whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, 16 communities, stakeholders and all other members of the public sphere. Furthermore, CSR-focused businesses would proactively promote the public interest (PI) by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. CSR is the deliberate inclusion of PI into corporate decision-making that is the core business of the company or firm, and the honoring of a triple bottom line: people, planet, profit. Or Mallen Baker also said that “CSR is about how companies manage the business processes to produce an overall positive impact on society". However, the most modern and accepted definition of CSR is built by World Business Council for Sustainable Development (WBCSD). CSR means “the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as community and society at large.” The emphasis of this definition is that business activities are mandated by laws, and expected moral or ethical nature. It is the voluntary commitment which demonstrates socially responsible operations and performance of the firm. And the firm has to consider both human and environment aspects because CSR will benefit the firm by improving financial performance; enhancing brand image and reputation; increasing sales and customers loyalty; increasing ability to attract and retain skilled employees; risk management; reducing regulatory oversight; and somehow reducing operating costs (Fernando, 2010). 17 2.2. 2.2.1 CSR models Social-Economic Model of CSR This model has two distinctive arguments on social and economic dimensions of CSR. Cited in Liangrong Zu (2008), Bhide and Stvenson-1990; Friedman-1989, 1970, 1968; and Gaski-1985, on one hand, represented their view of a single dimension activity in which companies were in charge of supplying goods and services to society at a profit. They emphasized on the cost of social involvement of business and only considered profit as the measurement of business efficiency. On the other hand, Steiner and Steiner, 1997; Quazi, 1997; Quazi and Cool, 1996; and Samli 1992 accessed business in a social matrix contributing to society welfare as a whole and agreed that business is a part of large society. They also went beyond the view of profit maximization in the short-run. They understand the complexity of social responsibility in the new era; hence the second dimension is initiated. 2.2.2 The two-dimension model Quazi and O’Brien (2000) developed a two-dimension model and tested its validity in the context of two countries: Australia and Bangladesh. The model is illustrated in Figure 1. 18 Figure 1: A two-dimensional model of CSR (Quazi and O’Brien, 2000) This model has two axes. The horizontal one has two extremes: Narrow CSR and Wide CSR. The Narrow view demonstrates the perception of business in the classical sense that is supplying goods and services leading to profit maximization within the political regulations. Conversely, the Wide view take into account a broader context, the wider expectations of society such as environmental protection, community development, resource conversation and philanthropic giving. The Vertical axe shows two extremes: Benefits and Costs of CSR Action. One is implementing social costs in the short term; the other is long term benefits received from social actions. Thus the model has four quadrants: Classical View, Socialeconomic View, Modern View, and Philanthropic view. 19 2.2.3 Carroll pyramid Also under the social-economic view, Carroll (1979, 1983, and 1991) developed the Pyramid of CSR model (Figure 2). Carroll’s Pyramid of CSR includes 4 responsibilities in economy, legal, ethical, and philanthropy. Economy responsibility is illustrated by the effective growing of the company. It can be understood as an obligation of the company to produce what are demanded and result the beneficial profit. Furthermore, the company must care about looking for sources of labor and materials, attempt to find new resources or substitutes, update the advanced technology, research and development strategies. It also considered as the priority target because any company was established to earn profit. Other responsibility of company must base upon the economic responsibility of company. Company is treated as “a person” under the law, so obeying the law is the next responsibility of the company. Every locations and bordered areas have its own set of law and regulations for conducting and running the business. This is the compulsory things that are regulated and governed by the state authorities. Although the profit maximization is vital to the business operations, legal requirements is a measure of true and fair decisions to increase the trust and loyalty from customers. Ethical in business is mentioned many times while in today business, some companies accept doing any things to earn profit, even they cross the basic business ethic. So, besides the law, companies also must perform ethical responsibility. Ethical responsibility is the expectation of the public and society to the company that is going beyond the legal requirements. After all, companies should contribute back to society by doing philanthropy. This is mainly about set principle and moral values in the organization’s strategies. By this way, they can improve people’s life, and make their image be more well-known. This categories consist of almost business activities. 20