Tài liệu Corporate social responsibility – csr some theoretical problems and demand for managing changes related to csr in vietnam.

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INTERNATIONAL SCHOOL VIETNAM NATIONAL UNNIVERSITY, HANOI Graduate project: Corporation Social Responsibility – CSR: Some theoretical problems and demand for managing changes related to CSR in Vietnam. Supervisor: Phan Duc Hieu Student: Nguyen Thi Huong Mai ID: 10155367 1 DECLARATION OF ORIGINALITY AND WORD COUNT I want to ensure that my graduation project is based on my own original work except for the quotations which is common with every one. I also declare that my project have not supported for any courses or programs at Help University College or other universities. The word count is 12.328 words. ______________________ NGUYEN THI HUONG MAI 10 October, 2010 2 ACKNOWLEDGEMENT When I did my project, I have received many helps and supports from my teachers, my friends, my parents. Therefore, I hope to take this opportunity to thank all of them, because without their supports I may not finish my project on time Firstly, I would like to thank my supervisor Dr. Phan Duc Hieu, International School, Vietnam National University Hanoi. He has helped me a lot. He also gave me many useful advices which help me find the right way to start my project as well as to finish it. I am very grateful for that. Additionally, I would like to thank Mr. Tran Le Nguyen, the Vice Chairman of Board of Director of Kinh Do group, who have participated in my interview to collect information. I also would like to thank all managers, accountants, consumers and students who have spent their time to help me do my research. Without their supports I would meet many difficulties in finding information. Moreover, I want to express my deep appreciation to my friends and my parents who have encouraged me a lot during my doing the project. Especially, I would like to thank my mother who gave me many supports when I did my project. Thank everyone for always believing in and supporting for me. NGUYEN THI HUONG MAI 3 CORPORATE SOCIAL RESPONSIBILITY – CSR : SOME THEORETICAL PROBLEMS AND DEMAND FOR MANAGING CHANGES RELATED TO CSR IN VIETNAM. By NGUYEN THI HUONG MAI October 2010 Supervisor: Dr. Pham Duc Hieu ABSTRACT CSR is not a new title in the world as well as in Vietnam, but CSR is still one of the burning issues in the day. After Vietnam became a member of World Trade Organization (WTO) in 2007, CSR has become even much more important for the country to develop sustainably. This paper aims to discover the awareness of Vietnam enterprises about CSR and the reality of implementing CSR into business in Vietnam. Then, this paper also points out some challenges and theoretical problems of CSR then shows the demands for managing changes related to CSR in Vietnam. Vietnam is a developing country and it is also one of the fastest – growing economies in the world, therefore how to make the country develop sustainably is still questionable. Vietnamese government has put may efforts in all field to make the country develop sustainably, including society, economic, culture and critic. From the experiences of developed countries, Vietnamese nowadays pay more attention to improve both economic and standard of living. CSR is one of their efforts to make the country develop sustainably. However, the research 4 indicates that although there is a strong support for CSR from managers, consumers, accountants, a part of them are still lack of knowledge about the importance of CSR. 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. INTRODUCTION .......................................................................................................... 8 1.1. CSR: Where did it come from? ....................................................................................... 8 1.2.1. Government actions ............................................................................................... 10 1.2.2. Vietnamese Accounting Standard (VAS) .............................................................. 11 1.2.3. CSR practice and challenges .................................................................................. 12 1.3. Reasons for further investigation .............................................................................. 13 2. LITERATURE REVIEW .......................................................................................... 14 2.1. Definition and conceptualization of CSR ................................................................. 14 2.1.1. Carroll‟s 1979-1991 conceptualization ................................................................. 15 2.2. Stakeholder theory .................................................................................................... 17 5 2.3. Social accounting ...................................................................................................... 18 2.4. CSR reporting............................................................................................................ 19 3. RESEARCH METHODOLOGY ............................................................................. 21 3.1. Research objective .................................................................................................... 21 3.2. Research methodology ............................................................................................. 22 3.3. Data source ............................................................................................................... 22 3.4. Research method ....................................................................................................... 23 3.5. Research too .............................................................................................................. 24 3.5.1. Questionnaire ......................................................................................................... 24 3.5.2. Annual report ........................................................................................................ 25 3.6. Data collection ......................................................................................................... 25 3.7. Sampling ................................................................................................................... 26 3.7.1. Sample population ................................................................................................. 26 3.7.2. Sample frame ........................................................................................................ 26 3.7.3. Sample size............................................................................................................. 26 3.7.4. Sample techniques ................................................................................................. 27 3.8. Limitations ............................................................................................................... 27 4. FINDINGS AND ANALYSIS ................................................................................... 27 4.1. Some typical corporations ......................................................................................... 27 6 4.1.1. Domesco Medical Corporation – first prize in the implementation of liability for workers ............................................................................................................................. 27 4.1.2. JSC Pesticides Can Tho (CPC) – Second prize in the field of environmental protection 28 4.1.3. Vietnam Daewoo Motor Company South-Vidamco – Third prize in the field of environmental protection ................................................................................................. 29 4.1.4. Zamil steel building Vietnam Company – Consolation prize of CSR ................... 29 4.1.5. Son Ha Garment Joint Stock Company – received a prize of CSR ....................... 29 4.2. Management ............................................................................................................. 32 4.2.1. Finding from questionnaire survey ........................................................................ 32 4.2.2. Actual CSR disclosures by firm ............................................................................ 37 4.2.3. Finding from managers interview .......................................................................... 38 4.3. Consumers ................................................................................................................. 41 4.3.1. Finding from questionnaire survey ........................................................................ 41 .................................................................................................................................. 4.3.2. Overall evaluation of consumer‟s responses .......................................................... 43 4.4 Accountants ................................................................................................................ 47 4.4.1. Findings from questionnaire survey ...................................................................... 47 4.4.2. Overall evaluation of accountant‟s responses ....................................................... 49 4.5. Overall discussion ..................................................................................................... 51 4.5.1. Real situation of CSR in Vietnam .......................................................................... 51 7 4.5.2. Some theoretical problems and demand for changing ........................................... 54 5. CONCLUSION ........................................................................................................... 57 REFERENCES ............................................................................................................... 60 APPENDIX A: QUESTIONNAIRE ............................................................................. 67 LIST OF FIGURES Figure 2.1.1. Dipiction of Carroll‟s (1991) CSR pyramid ................................................................ 15 Figure 2.1.2. Comparion of CSR studies using Carroll's pyramid concept ..................................... 16 Figure 2.2. The pressures influence on company ............................................................................. 18 Figure 4.1. Respondents .................................................................................................................... 27 Figure 4.2. Consumer and accountant categories ............................................................................. 28 Figure 4.3. Distribution of responses from management survey ...................................................... 30 Figure 4.4. Distribution of responses from management survey (percentage) ................................. 31 Figure 4.7. Distribution of responses from consumer survey ........................................................... 38 Figure 4.8. Distribution of responses from consumer survey (percentage) ...................................... 40 Figure 4.11. Distribution of responses from accountant survey ....................................................... 44 Figure 4.12. Distribution of responses from accountant survey (percentage) .................................. 46 8 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 VAS Vietnamese Accounting Standard VCCI Vietnam Chamber of Commerce and Industry SMEs Small and Medium – sized Enterprises VASB Vietnam Accounting Standard Board RIA Rich Internet Applications IQR Inventory Quality Ratio 9 1. 1.1. INTRODUCTION CSR: where did it come from? In the 1970s and 1980s environmental concerns such as loss of rainforest and the effects of pollution led to a recognition that something had to be done to change the way we were using the planet resources. As a result, heads of state came together at Rio, Brazil in 1992 for what was called the Earth Summit. At Rio, governments pledged action to stop the unsustainable use of resources and to promote sustainable development. For this to happen social, environment and economic considerations should be assessed together and not in isolation. CSR is now sometimes considered as the business respond to the challenge of sustainable development. So 10 far, CSR has become more and more popular in the world. The customers now pay more attention to the origin of the products, they want to know if the products made by harming the environment, if the products against moral disciplines. Of course, they tend to refuse fringe foods or the products which are made from animals further. There has a movement which is shopping with conscience. Many companies, therefore, are aware of the importance of CSR to get the profit. They take part in many programs to raise charity funds to help the poor, they improve the environment of work, they participate in programs of decreasing carbon dioxide in the air, etc. Typically, Unilever, a global company, always ensures that their supplier meet their expectations on environment and social impacts. The same example is Toyota, a worldwide automobiles company, also has many activities for community, such as using renewable energy. Moreover, Levis Strauss, a famous clothes company, is committed to become a zerowaste company offering customers more sustainable products. Also, TNT, a world-wide transferring goods and document company, has adopted the international standard ISO 14001 for the purpose of managing and reducing its environmental impact and increasing operating efficiency. In general, CSR report enclosed with annual business reports appear in most companies. That is quite good news, but it is only one aspect of the issue. Many commentators, despairing at the fact that companies have failed to clean up their act despite so many claims of social responsibility. Even when many companies are aware of the importance of CSR they still only regard CSR as their task rather than their opportunity. 11 1.2. CSR in Vietnam CSR was first introduced in Vietnam by international corporations sourcing under the form of Code of Conduct or Social Standard requirement. As CSR is getting more attention throughout the world, Vietnam has a great deal left to learn considering that many SMEs in Vietnam do not really see the importance of CSR. CSR plays a special crucial role in the country‟s economy when nowadays many of the world largest MNCs are increasingly focus on Vietnam as the next emerging economy in the Asia Pacific region. The truth is that Vietnam is suffering from a shortage of skilled labor and an inconsistent legal system and there is a need for competitiveness and investment in infrastructure. Therefore, to be able to compete in today‟s global arena, companies must be able to ensure human rights, good labor conditions and safety requirements, not just provide fast and high quality products. The pollution in Thi Vai river, contaminated milk and conflict between workers and their bosses are the events proved that implementing CSR is necessary for Vietnam to develop sustainably. 1.2.1. Government actions Vietnam government has put many efforts in calling on companies to protect the environment and promote safety and health in workplace ( Civil Law Network, 2009 ). That plays an important role in making the country develop sustainably, especially after the Doi Moi reforms and open-door policies in 1986. Being a developing country, Vietnam can not refuse many major social problems. The government is aware of that therefore many new regulations, Environment law, Environment policies, tariff barriers had been created to encourage companies to produce “clean products”, protect the environment and establish good workplace, etc. Also, the government takes place annual awards for companies who made much more 12 efforts not only in making good products but also in concerning about labor conditions and environment impacts, such as the program called “3 R”, including reuse, reduce, recycle. This program received many attention from both the consumers and the management. CSR-award, the annual award held by VCCI belonged to Dong Tien Joint Stock Company and Domesco Joint Stock Company with best CSR practices is also a good example. However, Vietnam government needs to make more efforts on this issue because of the fact that there is no requirement from government for the companies to formally issue CSR reporting. 1.2.2. International Accounting Standard (IAS) and Vietnamese Accounting Standards (VAS) In February 12, 1999, the Vietnam Accounting Standards Board (VASB) was established by the Ministry of Finance (MOF). Vietnam has not issued Accounting Standards. Presently, basing on the International Accounting Standard (IAS), the VAS is set up by the MOF through the Accounting Policy Department. With the establishment of VAS, accountants have more tools to work better. It is can not deny that there are still many problems, many argument in VAS, but the true is that Vietnamese Government have tried their best to help companies operate their business successfully. However, the shortage in VAS requires more efforts from government to make it more complete 1.2.3. CSR practice and challenges A weak competitiveness and lack of investment in infrastructure are two of the biggest challenges that Vietnamese companies are currently facing. Many efforts have been made to improve the situation. Vietnamese shoe manufacturers and textile industry began respecting 13 CSR norms of conducts as a result of pressure from MNCs in developed country. Some big companies also put CSR into their business strategy. Typically, Vinamilk company with the program “six million glasses of milk for Vietnamese children”, or Ducth Lady Co., with the program “Den Dom Dom scholarship”. Some SMEs started to pay more attention to CSR. For instance, HUB café is making a communist library with over 10,000 books in various kinds to serve customers. “establishing the communist library met many difficulties due to rare documents or even popular documents but becoming out of date. When all efforts had been made and the library was already established, the attention of customers is not as expectation because customers are in habit of chatting while drinking coffee rather than reading books” says Mr. Truong Giang, the director of HUB cafe company. In general, many companies did something for CSR, but how many percent of them did because of their volunteer or all they did because of their image? According to Ms. Nguyen Hong Ha, the general manager of VCCI in HCMC “the leaders of the companies should do CSR because of their worker first in the environment of workplace, social insurance, etc, to build a good relationship based on the belief between the employers and the employees”. Some challenges of implementing CSR in Vietnam are that there are still gaps between national labor code and CoCs, there is a lack of law enforcement, lack of cooperation, lack of understanding of the benefits from the application of CSR at factories, lead to the lack of support from employers. To overview, although Vietnamese enterprises had made many efforts on implementing CSR, they still meet many challenges, not only at national level, industry level but also at corporate level 1.3. Reasons for further investigation .CSR is the hot issue nowadays in every part in the world. Vietnam is integrating into the global economy, so the country must improve its competitiveness not only through good 14 products but also through good environment. That why CSR should be received much more attentions and actions from the government and companies. This paper aims to discover how the companies do to implement CSR in Vietnam then show some theoretical problems and the demand for managing changes related to CSR in Vietnam. As such it does not claim to have all the answers and invites open exchange. 2. 2.1. LITERATURE REVIEW Definition and conceptualization of CSR The term “CSR” came into common use in the early 1970s, after that there has been 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, then some definition of CSR were introduced. But with the same definition, CSR is understood differently in different countries, even with different people. 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 15 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 brief, the concept of CSR has been evolved considerably since it first emerged in the 1950s (Carroll 1999; Freeman 1984:38; Carroll and Beiler 1977; Sturdivant 1977). As a result there appears to be disagreement about what the term means, whether it should be implemented, how it should be implemented or why it should be implemented (Welford 2004; Stigson 2002). In this paper, one concept of CSR will be introduced. It is the most famous conceptualizations : Carroll (1979) four-part definition of CSR. 2.1.1. Carroll's 1979-1991 conceptualization Carroll(1979) categorized CSR in a paper on corporate social performance, along four layers which he labeled economic, legal, ethical and discretionary responsibilities. He indicates that providing goods and services and making profit are the principle roles of business organizations, then emphasizes on legal aspect and later concern for ethical and discretionary aspects. In 1991, his first CSR model as a pyramid was introduced, as shown in the following figure. According to Carroll, the management‟s identification of the issues that are most importance to firms in a given time is necessary for high corporate social performance. 16 Figure 2.1.1 Dipiction of Carroll‟s (1991) CSR pyramid Another study tested Carroll‟s CSR pyramid for a sample of 503 large Black-owned business in the U.S., suggesting the importance of culture (Edmodson and Carroll, 1999). The survey found that while the economic component was rated as philanthropic and legal responsibilities was relatively small. A further study with a culture dimension compared the views of 165 Hong Kong and 157 U.S. students on CSR and found that Hong Kong students emphasized economic aspects more strongly than their U.S. counterparts and gave no difference in weighting between legal and ethical dimensions of CSR (Burton, parh, & Hegarty, 2000). Studies Economic orientations Mean values Legal Ethical orientations orientations 17 Philanthropic orientations Aupperle, Carroll & Hatfield (1985) Pinkston & Carroll (1994) 3.50 2.54 2.22 1.30 3.28 3.07 2.45 1.15        England 3.49 3.15 2.29 0.98 France 3.60 3.04 2.35 0.98 Germany 2.86 3.21 2.46 1.42 Japan 3.34 2.76 2.42 1.41 Sweden 3.27 3.30 2.43 1.00 Switzerland 3.11 3.04 2.70 1.10 USA Edmondson & Carroll (1999) Burton, Farh & Hegarty (2000) 3.11 2.96 2.48 1.19 3.16 2.12 2.19 2.04 - - - -   Hong Kong 3.11 2.32 2.32 1.84 USA 2.81 2.42 2.51 1.99 Table 2.1.1: Comparison of CSR studies using Carroll‟s pyramid concept 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 In fulfilling their CSR obligations, firms might be expected to engage with their stakeholders, an activity that may be labeled stakeholder dialogue to determine what might be appropriate business behavior under each of the three headings (O‟Riordan, 2006). Many definitions of stakeholder have been introduced, in brief, stakeholder can be understood as “any identifiable 18 group or individual who can affect the achievement of an organization’s objectives, or is affected by the achievement of an organization’s objectives”(Freeman and Reed, 1983). Ethical and managerial are two branches of stakeholder theory. The ethical branch of stakeholder theory indicates that all stakeholders have the right to be treated fairly by an organization and issues of stakeholder power are not directly relevant. So management should manage the organization for the benefit of all stakeholders. On the other hand, managerial branch of stakeholder theory attempts to explain when corporate management will be likely to attend the expectations of particular (powerful) stakeholders. In this branch of stakeholder theory, organization will not respond to all stakeholders equally, but to the most powerful. Managers should understand the two branches of the stakeholder theory to be one or the other of the absolute extremes of the ethical or managerial branch. Companies are under pressure of internal and external stakeholders as shown as below. Table 1: the presures influence on company Figure 2.2: The pressure influence on a company 19 Then, to make CSR more popular to the stakeholders, both managers and accounts need to have a full knowledge about stakeholder theory as well as the importance of CSR. 2.3. Social accounting Social accounting is not a new concept – it has been around for decades (Sustainability 1999). Then we can understand social accounting as “Social accounting is about understanding the impact of organizations on our society…the overarching context is…sustainability: both sustainability of the organization itself (the interrelation of the social, the environmental, the cultural and the financial) and sustainability of behavior which contributes to a future for the people and the planet” (Pearce 2001). Everybody can realize that any actions an organization undertakes influence not just itself but also may influence other with which it interrelates. It may include the business environment in which the firm is operating, local community, and the wider global context. These influences can be significant, multiple, and ambiguous. In some countries social reporting as a legal requirement. For instance, in France companies with over 300 employees are required to produce a social report. In the UK a regulation on Pension Funds “requires trustees to state the extent to which they have taken the environmental and ethical considerations into account in fund management” (New Economics Foundation 2000). The themes of social and environmental accounting have increased the complexity of the traditional view by including both internal and external stakeholder, along with a multidimensional view of performance (including the non-financial values). So, the essential features of social accounting are, firstly, an endeavor to report the effects of the operation of the firm upon the society; secondly, focused on stakeholders external to the 20
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