Tài liệu Corporate social responsibility in viet nam a study of its importance for vietnamese investors

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CORPORATE SOCIAL RESPONSIBILITY IN VIET NAM A STUDY OF ITS IMPORTANCE FOR VIETNAMESE INVESTORS BY NGUYEN CONG VIET 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 1 June 2010 Declaration of Originality and Word Count DECLARATION 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. Word Count: 10,125 words. Nguyen Cong Viet Date 2 Abstract CORPORATE SOCIAL RESPONSIBILITY IN VIET NAM: A STUDY OF ITS IMPORTANCE FOR VIETNAMESE INVESTORS BY NGUYEN CONG VIET June 2010 Supervisor: Dr. Le Van Lien Corporate Social Responsibility is no longer a new term for developing countries. It has developed through the long history and nowadays it is expected to implement by any business entities in the world. However, the term is not familiar to Vietnamese until the recent years when the economy is more open and there are many critical cases and scandals concerning about Corporate Social Responsibility as the result of the economic boom. There are not so many researches on that field; therefore, the understanding of Corporate Social Responsibility in Viet Nam is limited. That is the motivation for the researcher to conduct the survey about the importance and perception of CSR among Vietnamese individual investors in FPT Securities Company’s office (FPTS). The objective of the research is to access the understanding of Vietnamese individual investors on the topics of CSR. Besides that, the research also wants to define which major factors contributing to the CSR importance by asking respondents’ understanding and opinion on CSR awareness, investment decision and CSR reporting. 3 By conducting the research, the research is able to show that the understanding of CSR concepts and its importance is limited. The investors have little basic knowledge of CSR; however, the understanding is somehow distorted such as thinking of CSR as regulation compliance only. Besides that, the investors in Viet Nam find hard to use CSR as a tool to value firm and it is also difficult for them to make investment decision when CSR issues are mentioned. 4 Table of contents Declaration of Originality and Word Count ................................................................ 2 Abstract ........................................................................................................................ 3 Table of contents .......................................................................................................... 5 List of Figures and Tables ............................................................................................ 8 List of Abbreviations.................................................................................................... 9 CHAPTER 1: INTRODUCTION .............................................................................. 10 1.1 Research Background ....................................................................................... 11 1.2 Problem Statement ........................................................................................... 12 1.3 Objectives and Sphere of Research .................................................................. 13 1.3.1 Objectives of Research .............................................................................. 13 1.3.2 Sphere of Research .................................................................................... 14 1.4 Research Methods ............................................................................................ 14 1.5 Structure of Research ....................................................................................... 15 CHAPTER 2: LITERATURE REVIEW ................................................................... 16 2.1 Research’s related concepts .............................................................................. 17 2.1.1 CSR definition ........................................................................................... 17 2.1.2 Investment Decision .................................................................................. 17 2.1.3 Responsible Investment ............................................................................. 18 2.1.4 CSR Reporting ........................................................................................... 18 2.1.5 Investor Relation ........................................................................................ 19 2.2 Researches and Studies..................................................................................... 19 2.2.1 Business Ethics in Viet Nam – Reality and Solutions ............................... 19 2.2.2 CSR in business entities in Viet Nam – Reality and Solutions ................. 20 2.2.3 CSR – The Investors’ Perspective ............................................................. 21 2.2.4 CSR, PR of Foreign-Invested Companies ................................................. 22 2.3 Researches Summary ....................................................................................... 24 5 CHAPTER 3: RESEARCH METHODOLOGY ....................................................... 26 3.1 Research Objectives ......................................................................................... 27 3.2 Theoretical Framework and Measurement ....................................................... 27 3.2.1 CSR Importance ......................................................................................... 28 3.2.2 CSR Awareness ......................................................................................... 28 3.2.3 Investment Decision .................................................................................. 29 3.2.4 CSR Reporting ........................................................................................... 29 3.3 Measurement and Quality Design .................................................................... 29 3.3.1 Section 1 .................................................................................................... 30 3.3.2 Section 2 .................................................................................................... 30 3.3.2.1 CSR Awareness ...................................................................................... 30 3.3.2.2 Investment Decision ............................................................................... 31 3.3.2.3 CSR Reporting ........................................................................................ 32 3.4 Research Method .............................................................................................. 33 3.4.1 Sampling .................................................................................................... 34 3.5 Hypothesis Statement ....................................................................................... 34 3.5.1 Correlation of Independent Variable ......................................................... 35 CHAPTER 4: RESULT ANALYSIS ........................................................................ 36 4.1 Collection of Questionnaires ............................................................................ 37 4.2 Description of Result ........................................................................................ 37 4.2.1 Age ............................................................................................................. 37 4.2.2 Gender ........................................................................................................ 38 4.2.3 CSR Awareness ......................................................................................... 38 4.2.4 Investment Decision .................................................................................. 44 4.2.5 CSR Reporting ........................................................................................... 49 4.3 Result Analysis ................................................................................................. 51 4.3.1 Hypothesis 1 .............................................................................................. 52 6 4.3.2 Hypothesis 2 .............................................................................................. 53 4.3.3 Hypothesis 3 .............................................................................................. 54 CHAPTER 5: CONCLUSION AND RECOMENDATION ..................................... 55 5.1 Conclusion ........................................................................................................ 56 5.2 Recommendation .............................................................................................. 57 5.3 Limitation of Study .......................................................................................... 58 5.4 Suggestion for Future Research........................................................................ 59 Reference (Harvard referencing system) ................................................................... 61 APPENDICES ........................................................................................................... 63 7 List of Figures and Tables Figure 1: Theoretical Framework .............................................................................. 28 Table 1: Researches and Studies Summary ............................................................... 25 Table 2: Age ............................................................................................................... 37 Table 3: Gender .......................................................................................................... 38 Table 4: Question 1 - Result and Analysis ................................................................. 39 Table 5: Question 2 - Result and Analysis ................................................................. 41 Table 6: Question 3 - Result and Analysis ................................................................. 42 Table 7: Question 4 - Result and Analysis ................................................................. 43 Table 8: Question 5 - Result and Analysis ................................................................. 45 Table 9: Question 6 - Result and Analysis ................................................................. 46 Table 10: Question 7 - Result and Analysis ............................................................... 47 Table 11: Question 8 - Result and Analysis ............................................................... 49 Table 12: Question 9 - Result and Analysis ............................................................... 50 Table 13: Question 10 - Result and Analysis ............................................................. 51 Table 14: Hypothesis 1............................................................................................... 52 Table 15: Hypothesis 2............................................................................................... 53 Table 16: Hypothesis 3............................................................................................... 54 8 List of Abbreviations FPTS FPT Securities Company CSR Corporate Social Responsibility RI Responsible Investment IR Investor Relations WTO World Trade Organization VCCI Viet Nam Chamber of Commerce and Industry NIRI National Investor Relations Institute PR Public Relations 9 CHAPTER 1: INTRODUCTION 1.1 Research Background 1.2 Problem Statement 1.3 Objectives and Sphere of Research 1.3.1 Objectives of Research 1.3.2 Sphere of Research 1.4 Research Methods 1.5 Structure of Research 10 1.1 Research Background Corporate social responsibility (CSR) is relatively new terminology to not only individual but also to the business in Viet Nam. Moreover, this term is limitedly understood as donation and the implementation is dependent on the directors’ willingness. With the join of Viet Nam to the World Trade Organization (WTO) in 2007, CSR is getting more concerns from businesses because of the requirements from the foreign clients and partners (WTO website, 2006). From year 2005, Viet Nam has an award “CSR – towards the sustainable development” established by Viet Nam Chamber of Commerce and Industry (VCCI) to reward the companies which actively implement CSR in the international economics integration circumstances. According to Dr. Doan Duy Khuong, the vice-chairman of VCCI, “CSR is a requirement for the companies and they could not reach the international market without CSR implementation” (Securities Investment Newspaper, 2008). The problem is that regardless the importance of CSR, the companies in Viet Nam find it difficult to apply because of their understanding and perception, relatively small business size, and lack of financial and technical resources. As illustrated in more detail later, there is one firm which has been caught by polluting a river in Viet Nam claims that it has to do so to keep it survive after the recent economic crisis. We can see that the financial crisis has been pushing firms into a really difficult situation. However, it is the end of implementation of CSR activities? Somebody may think of that way; however, in a complicated business climate, the firms which are responsible and sustainable will develop on the long- 11 term basis. Therefore, the financial crisis will even alert the ones who do not care much about CSR activities and strengthen the importance of CSR. 1.2 Problem Statement In the recent years, CSR draws attention from not only the business but also the government, media, investors, and the society as the whole. As the Viet Nam economy is developing fast, the business is expected not only to make profit but also care for the whole society’s welfare. There are a lot of awards for companies which have put efforts on CSR activities such as CSR Viet Nam Award (Saigon Businessman, 2009). Companies also participate in many events to help the poor, the disadvantaged and the sustainable development of the surroundings. Nonetheless, the public is concerning about the wrong-doing things made by many firms which have been discovered recently. There is one Taiwan-owned firm named Veda International has been caught by the environmental police for discharging directly waste water into the Thi Vai River in Dong Nai province. It used two pumping systems; one is direct while other goes through refining process. However, the later is rarely used and it is made just for inspection and supervision from the local governmental office (Invest in Vietnam, 2008). Another Vietnamese company which is well-known for soy sources has been claimed for 3-MCPD chemical contained in its products. The chemical is one factor that can cause people cancer. The interesting thing is that the company’s product is compliant with current Vietnam requirement standards; however, it is not the case in the Europe. The question is of ethical rather than legal issue and it draws lots attention from media and the public (Vietnamnet, 2007). Another wrong-doing is the melaminecontaminated milk which is known all over the world. Even though there is not much 12 contaminated milk in Vietnam, people are scared of using that product. Recently, a Taiwanese-owned company in Quang Minh industrial zone near Ha Noi has been found discharging waste water directly into a river. The interesting thing is that the firm’s deputy director general Mr. Liu Chien Lin has explained in a press interview that the firm has to do so to keep it able to survive after the financial crisis. By doing so, the firm has saved around US$4,209-5,261 a month (Thanh Nien News, 2010). As the results of those issues, the customers have been rejecting buying products from Vedan, the pollution-making firm mentioned above. We can see that CSR issues are the problematic matter in developing economy like in Viet Nam. That can affect the firms, the shareholders and stakeholders in the society as the whole. The investors are those being strongly affected as their capital invested may be lost. Therefore, understanding of CSR concepts, theories and especially its importance is important for the individual investors who care for their own, relatives’ and society’s benefits. Therefore, the research is a demand of individual investors in Viet Nam. It makes the contribution to the theory and implementation of CSR in Viet Nam which helps not only the managers, investors but also the society as the whole. 1.3 Objectives and Sphere of Research 1.3.1 Objectives of Research - Summarize the CSR concepts and its definitions. - Inspect the understanding of Vietnamese individual investors of CSR concept, its importance and implementation. 13 - Establish theoretical model and inspect the relationship between CSR importance for Vietnamese individual investors and other contributions such as CSR awareness, investment decision and CSR reporting. - Raise the understanding of individual investors on CSR issues, concepts and its importance. - Recommend some solutions for the organizations to raise the awareness and understanding of investors CSR concepts and its importance, solutions for the firms to have better investor relation. 1.3.2 Sphere of Research - Research conducting place: FPT Securities Company office, Ha Noi, Viet Nam. - Object of the research: Vietnamese individual investors. - Time duration of conducting the research: from April 19, 2010 to May 07, 2010. 1.4 Research Methods Investigation and survey are used for the project: The researcher distributes the questionnaire and conducts the study among investors in FPT Securities company (FPTS) office, Ha Noi, Viet Nam. FPTS is one of the largest securities firm in Ha Noi, Viet Nam at its office the individual investors usually stay on the weekday to look at electronic board, discuss with each other and make investment decision by writing commands or using their own laptops. The researcher comes to each individual investor to ask them to answer and fill in the survey. The previous researches and studies are used for making the questionnaire. The measurement is made in accordance with the past researches. The quantitative 14 method is used to carrying out the research. Besides that, the sample of n equals 60 (n = 60). By surveying the investors in FPTS office, the researcher can analyze the collected data to see how individual investors understand the CSR concepts and CSR’s importance. In the research, Microsoft Excel software is used to assist the researcher in analyzing and check the measurement after all data has been collected. Besides, the data from previous studies help the researcher to understand and be able to use statistical and descriptive methods of analysis. 1.5 Structure of Research This project is divided into five following chapters: Chapter I: Introduction Chapter II: Literature Review Chapter III: Research Methodology Chapter IV: Result Analysis Chapter V: Conclusion and Recommendation 15 CHAPTER 2: LITERATURE REVIEW 2.1 Research’s related concepts 2.2 Researches and Studies 2.3 Comparison and Summary of all Researches 16 2.1 Research’s related concepts 2.1.1 CSR definition There are many CSR definitions made by different researchers and organizations throughout the world; however, there is one definition that is widely used by World Business Council for Sustainable Development (WBCSD). According to WBCSD (WBCSD, 1998), corporate social responsibility is defined as “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 of the community and society at large". Even though there are many ways to define what CSR is, many organizations around the world recognize the growing economic benefits of CSR activities and policies. Furthermore, the firms fully understand its responsibility for its employees, customers, society and the natural environment. Many companies have used CSR as competitive advantage which help the firm to improve their financial status, employees’ motivation and customers’ loyalty and the company’s image. 2.1.2 Investment Decision According to Richard Butler (1993), investment decision making is the process whereby resources are allocated in organization in anticipation of future gain. However, in the research’s context, individual investment decision is just the same thing by which the investors make decision to allocate their scarce resources to gain in the future. Investing in firms is one of the most popular ways to make investment. Investment decision traditionally involves taking financial aspects and measures to evaluate the firm only. However, in the modern world, financial status is not enough for investors to make decision. Therefore, the new concepts are developed to meet 17 the change. CSR becomes one of those concepts with which investors consider CSR as a “central” or “important” consideration in investment decision (Economist Intelligence Unit, 2005). 2.1.3 Responsible Investment According to Louche C. (2005), responsible investment (RI) is defined as an “investment strategy which seeks to generate both financial and sustainable value”. This is not the single concept but the bunch of investment manners that include social, governance and environmental and ethical issues. This is used to put into the financial analysis process and decision making. In the past, RI is used for equities market only; however, throughout the time of development, the concept which is also known ethical investing or sustainable investing can be used in many investment asset categories. RI is not only the target but also the process. It is the target in the sense that investors want to achieve that. Furthermore, it is also the manner with which RI is used to identify the performance, sustainability and responsibility of the investment. 2.1.4 CSR Reporting CSR reporting is a new model with which the company has a new business protocol of ethics (Kevin Wilhelm, 2009). Even though the concept has been newly developed, CSR reporting is emerging need for the business in the world today. That is because of the demands by investors, consumers and society for CSR reporting. There are many reporting schemes and standards which are used in different organizations and countries. Those CSR reports help the company to better communicate with the investors and other stakeholders. They also increase the image and reputation of the organizations which issue the reports. 18 2.1.5 Investor Relation Investor Relations is defined by NIRI (2001) as “a strategic management responsibility using the disciplines of finance, communication and marketing to manage the content and flow of company information to financial and other constituencies to maximize relative valuation”. NIRI as the first recognized profession investor relations body defines its main reason for existence is to maintain the firm’s fair relative market value. With that approach, the role of investor relations has been focus on the firm valuation. However, there is another perspective with which the researchers believe that IR includes three phases: simple communication, focus on financial results and active marketing (Marcus and Wallace, 1997). Moreover, the researchers also focus not only on financial aspects only but also the CSR activities and practices which will be delivered to the investors. 2.2 Researches and Studies There are not so many researches conducted on the topic of CSR in Viet Nam; therefore, the research faces with difficulties in finding enough studies and researches to use for reference and foundation. As the limitation of conducted studies and researches, the researcher has to use some studies which consist of more than one topic. Those topics usually are quite related such as business ethics, corporate culture. However, CSR is mostly discussed and studied in those researches; therefore, it is still appropriate to use them. 2.2.1 Business Ethics in Viet Nam – Reality and Solutions Ethics is concerned with moral obligation, responsibility and social justice. The word ethics is rooted from the Geek words “ethikos” and “ethos”, meaning custom or usage. However, business ethics is only four decades old despite the fact that it is 19 self-conscious academic discipline. According to Nguyen (2008), business ethics has become a topic of popular discussion by American business officers, employees, shareholders, consumers and college professors. Therefore, the study of business ethics has expanded widely to almost all countries in the world. One major part of this research is about corporate social responsibility. In the research, Nguyen conducts with two emphases on corporate responsibility of production quality and corporate responsibility in environment protection. In order to study the matter, the researcher conducts a survey with which questions on CSR topic are asked. The questions are asked to access the understanding of students, investors and managers on the term of CSR. The question about 3-MPCD rate that complies with Vietnamese regulations but exceeds EU permissible levels is appropriate or not. This question attempts to gain the perception of stakeholders who mostly think of a vague delimitation between regulations and CSR. Nguyen (2008) has made several proposals for developing and completing CSR in Viet Nam. Firstly, regulations and laws should be strengthened to eliminate the wrong-doing things of the business entities. Secondly, awareness of CSR in Viet Nam should be enhanced through not only the media, business organization and researchers but also support from governmental offices and departments. Last but not least, the enterprises should be encouraged in raising their business ethics for both their and other stakeholders’ benefits. 2.2.2 CSR in business entities in Viet Nam – Reality and Solutions Tran (2009) concludes that there are two ways to define CSR. The first one is that there is one and only one responsibility. That is to solve the issues of scarce resources and operation of the organization to enhance the operation performance. 20
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