Tài liệu Corporate social responsibility in vietnam; a study of its importance

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CORPORATE SOCIAL RESPONSIBILITY IN VIETNAM; A STUDY OF ITS IMPORTANCE BY PHAM THUY LY E0700048 i BACHELOR OF BUSINESS (ACCOUNTING) HONS HELP UNIVERSITY COLLEGE MARCH 2011 DECLARATION OF ORIGINALITY AND WORD COUNT I hereby declare that the graduation project is based on my original work except for quotations and citations which have been duly acknowledged. I also declare that it has not been previously or concurrently submitted for any other course/degree at Help University College or other institutions. The word count is 10,758 words. ii _____________________ Pham Thuy Ly 28 March, 2011 ACKNOWLEDGEMENT This project would not have been made possible without the assistance, support and encouragement of many people. I wish to take this opportunity to thank all the people who have helped me during the time of completing this study. I would like to express my deep gratitude to my supervisor Dr. Le Van Lien, International School, Vietnam National University Hanoi. He has kindly helped me and supported me all the way through. I also would like to express my thank to Ms. Sumathi and Ms. Shenba, Help University College, who initiated the project and give so much instruction and support. Additionally, I also would like to extend my special thanks to managers, accountants, my friends, and other people who have help me to carry out the survey. I want to thank them for all their support, interest and valuable hints. PHAM THUY LY iii CORPORATE SOCIAL RESPONSIBILITY IN VIETNAM; A STUDY OF ITS IMPORTANCE By PHAM THUY LY March 2011 Supervisor: Dr. Le Van Lien ABSTRACT CSR is currently an important and necessary issue for everyone and business organizations in the world, as well as in Viet Nam. CSR concept has been developed for several decades in the world, but in Viet Nam, it is not popular for all people and companies. Especially, Vietnamese economy has been integrated with global economy, and then CSR has become more important issues for business to develop sustainably and competition with internal and external partners. In order to develop CSR concept and disclosure further, perception on CSR of stakeholder groups is a unique factor. This study aims to discover how organization view CSR and CSR issues, whether behavior or attitude of manager‟s business organization and consumers, as well as accounting students toward CSR. The results of the study suggest that there is strong support for CSR from managers and a growing awareness among consumers and accounting students. Nevertheless, there is expectation gap between how people perceive and how people act because there are lack of adequate CSR disclosure from firm, and not-soiv enthusiastic support actions from consumers due to the barriers in living expenses, and low effective CSR communication tools that companies use. However, with highly positive attitude toward CSR and the willingness to learn about CSR of people, CSR concept and practice will be popular and developed further in the future. TABLE OF CONTENTS DECLARATION OF ORIGINALITY AND WORD COUNT i ACKNOWLEDGEMENT ii ABSTRACT iii TABLE OF CONTENTS iv LIST OF FIGURES v 1. INTRODUCTION 1 1.1 Idea for Corporation Social Responsibility 1 1.2 CSR in the world 2 1.3 CSR in Vietnam 3 1.4 The reason for conduct this research 4 2. LITERATURE REVIEW 5 2.1 5 The definition and conceptualization of CSR 2.1.1 Zenisek‟s conceptualization (1979) 6 2.1.2 Carroll‟s conceptualization (1979) 6 2.1.3 Wood 1991 conceptualization 9 2.2 Stakeholder theory 11 2.3 Social accounting 13 v 3. 4. 2.4 CSR reporting 15 2.5 Hypothesis 17 2.5.1 Manager‟s perception on CSR conceptualization 17 2.5.2 Consumer‟s perception on CSR conceptualization 18 2.5.3 Accounting student‟s perception on CSR conceptualization 20 RESEARCH METHODOLOGY 22 3.1 Research objective 22 3.2 Applied research methodology 22 3.3 Data source 22 3.3.1 Primary data source 23 3.3.2 Secondary data 23 3.4 Research method 24 3.5 Research tool 24 3.6 Data collection 25 3.7 Sampling 25 3.7.1 Sample population 25 3.7.2 Sample entity 25 3.7.3 Sample size 26 3.8 26 Language in questionnaire FINDINGS AND ANALYSIS 27 vi 4.1 Findings 27 4.2 Result analysis 28 4.2.1 Management 28 Result of manager‟s questionnaire survey 28 Discussion 30 Conclusion 31 4.2.2 Consumers 32 Result of questionnaire survey 32 Discussion 34 Conclusion 36 4.2.3 Accounting students 4.3 5. 36 Result of questionnaire survey 36 Discussion 38 Conclusion 39 Implementation 39 CONCLUSION 40 5.1 Conclusion 40 5.2 Recommendation 42 5.3 Limitation of study 43 REFERENCES 45 vii APPENDIX: QUESTIONNAIRE 56 LIST OF FIGURES Figure 2.1. A hierarchy of CSR (adapted from Carroll, 1991) ....................................................... 8 Figure 2.2. The CSP Model (adapted from Wood, 1991) ............................................................. 11 Figure 4.1. Respondents ................................................................................................................ 27 Figure 4.2. Distribution of responses from management survey .................................................. 28 Figure 4.3. Distribution of responses from consumer survey ....................................................... 32 Figure 4.4. Distribution of responses from accounting student survey ........................................ 36 viii CHAPTER I: INTRODUCTION 1.1. Idea for Corporate Social Responsibility In recent time, CSR concept is not new to people in over the world. CSR is concerned by not only enterprises, but also relevant parties, and stakeholders (“stakeholder” is the people are directly affected by the business operation). In the past, most of firms only concern for profit maximize wherever their factories caused some negative effects on environment and local citizen around their location. However, this attitude has been changeable, as most of firms need to care about their responsibilities toward society. This is also the foundation for appearance the concept of “CSR” that is the way business balance between their operations and their effect on environment and society. In other words, managers also take strategies to meet the expectations of shareholders and stakeholders relating to their attitude toward society. The key word of this concept is “Social Responsibility” including organization‟s interaction with environment and organization‟s treatments for employees also. Based on concentration on CSR, managers expect that they will involve their firms into sustainable developments. For more clear understanding about the concept of CSR, the following parts will provide more detailed information about CSR in the world, the fact of CSR in Vietnam, and the reason for conduct this research. 1 1.2. CSR in the world As mentioned above, most firms focus on CSR strategies in their operations. Besides financial reports, they also concern about CSR report. CSR report or we call Sustainability report is the strategic tool help managers evaluate what they done to meet stakeholder‟s expectations, and what they need to improve better stakeholder‟s expectations. Sustainability reports are not new and this type of report is published by over two-thirds of the Fortune Global 500 companies. Sustainability reports also help manager evaluate the economic and social performance (http://www.environmentalleader.com). We know some reputation corporation that issued its CSR reports every year such as: Philips Electronics, Facility Service Company ABM, Coca-Cola, Dell, and Hitachi… Most of firms tried to conduct some strategic methods to improve the quality of its CSR report every year. We just look at some examples including: Philips Electronics, Toshiba Groups. Philips Electronics always focus on in its carbon footprint. Between 2009 and 2010, this corporation also reduced this element by seven percent, and increased operational energy efficiency by six percent. In addition, green innovation has been invested of 450 million for the purpose of improve CSR toward society (www.environmentalleader).Another example comes from Toshiba Group. This group has issued CSR Report 2010 in which Toshiba Group strives to act with the highest level to protect environment and solves the social issues facing by this corporation (http://www.toshiba.co.jp). Besides that, Toshiba focus on the third party commends on the CSR 2010, as well as getting CSR Report back issues. Doing that, Toshiba Group‟s managers can learn from the existing issues and improve their responsibility toward the society. There are two of many examples relating to corporations that focus on CSR and pursue sustainable development. 2 1.3. CSR in Vietnam The word “CSR” was appeared in Vietnam for long time; nevertheless Vietnamese citizen and Vietnamese‟s enterprises do not understand it completely. More detail, through twenty six (26) Vietnamese Accounting Standards, we have no any Vietnamese Accounting Standard mentions the necessity of conducting CSR Report or Social accounting; whereas most of the international firms involve the social accounting system in its report system. However, in recent year, Vietnamese government has taken some significant steps to raise the awareness of business men. Vietnamese government also set up some forum about CSR to educate most business should act in stakeholder‟s perspective. This is shown that Vietnam is trying to make CSR as an important factor in sustainable development. Not only Vietnamese corporations, but also international corporations in Vietnam have to care about their stakeholders when they conduct their business operations. Besides that, Vietnam set up the CSR awards in order to improve organizations operating in Vietnam territory to improve their responsibilities toward society. Vietnamese government made some detail plan and strategy and projects concerned in CSR based on its resources such as working conditions, safety, hygiene, environment, quality and productivity, labor relations and manpower resources management (http://www.bpsc.com.vn). Nevertheless, we face some interferences and challenges in developing CSR in Vietnam, such as: the concept of CSR is not still updated to most of the Vietnamese businessmen circles. The concerned sides do not identify long term plan and strategy to conduct the programs of CSR in practice. On the other hands, this is lack of companies‟ management ability and professional knowledge in concept of CSR.The topic of CSR becomes the burn topic when we found that pollution for Thi Vai River from Vedan Vietnam Corp. This river is polluted seriously by untreated wastewater, and this caused the bad effects on the local people (http://english.thesaigontimes.vn).Another aspect of CSR violation in Vietnam is issue relating to labor standards. Most of Vietnam‟s labor are paid 3 with the low cost and treated unfair by both of private domestic and foreign-invested enterprises. According to Ho Chi Minh City LA our officials, Vietnamese labors are dealing with the serious violations of the Vietnamese Labor Law that increasing continuously. Besides that, one report on May 26 showed that thirty four domestic and foreign-invested limited companies revealed numerous violations related to labor contracts, payment policies, overtime hours, annual leave, and pregnancy and sick leave (http://www.csr-asia.com).These examples again dedicate that it is the time for Vietnam government and Vietnamese relevant parties need to improve completely knowledge about CSR, as well as define some solution for CSR violations happening in Vietnam, contribute to strategy for sustainable development. 1.4. The reason for conduct this research As we know, after “Doi moi” policy in Vietnam in 1986, Vietnam developed rapidly. Moreover, Vietnam has joined World Trade Organization (WTO) shows evidence for Vietnam need to pursue strategies for sustainable developments in long term. The research is conducted with purpose of improvement CSR knowledge for managers, consumers, and accounting students. Managers need to know clearly the overall picture of CSR to act in the effective way, whereas stakeholders need to know how the CSR support for their life from the bad effect of business operations. More importance, accounting students, they need to aware about the concept in CSR as they will be the future general develop country better. 4 CHAPTER 2: LITERATURE REVIEW 2.1The definition and conceptualization of CSR For past few decades, an examination of literature on CSR continues to be an interesting issue for researchers and academics. Over the last three decades, many academics and economic consultants have debated finding the definition of social responsibility of doing business. Two decades ago, Neli Chamberlain( 1953) defined social responsibility in terms of action that the leadership in business and unions are expected to take with the respect to their following in a given situation as mater of right, whether legal or non-legal. Against the feature of Chamberlain‟s definition, William Frederick (1960) expressed that social responsibility is not simply to narrow benefit and interest of individual persons or companies that is to combine of human and economic resources for social benefits. Philip Klein (1978) explains the meaning of social responsibility as relating to internal and external organizational problems. In which, internal problems are stockholders and labors rights while external problems are responsibilities dealing with the affect of the products or services on the community, the relationship among firm and society. The above discussion of different authors leads to one conclusion that any definition of phenomenon of corporate social responsibility must involve the relationship between social ideology and business ethic in both ideological and operational aspects. (Zenisek J,1986). Nevertheless, the developing definition of CSR is complex process because it could understand different meaning to different stakeholder groups. For example, shareholders could define CSR is maximization of profits or high earnings. To customer CSR may mean high quality product or services at a good price and perhaps ethical behavior. 5 In this paper, there are three studies which are introduced including Zenisek (1979); Carroll (1979) and Wood (1991). 2.1.1 Zenisek’s conceptualization (1979) In 1979, Zenisek (University of Calgary) proposed that corporate social responsibility is conceptualized as the degree of “fit” between society‟s expectations of the business community and the ethics of business. There are two components in this “fit” which are behavioral and attitudinal. The first component is the fit between social expectations and firm‟s actions. Thus, the first component of social responsibility is what a business does in relation to what society expect to do. The second component is attitudinal which is fit between social expectations and what a business manager‟s regard to be legitimate societal demands. This component represents ideological aspect of the firm‟s ethics. 2.1.2 Carroll's CSR model (1979) Carroll‟s model in 1979 perhaps the most oft-cited definition of corporate social responsibility. Carroll‟s CSR model contains four categories of corporate responsibility arranged from most to least important including economic, legal, ethical and philanthropic. Firstly, according to Carroll‟s model, all business responsibilities are based on the corporation‟s economic responsibility. It indicates that business organization‟s principal role provides product or services what customer‟s need and want and making acceptable profits in the process. In other words, before business organization was anything else, it was the basic 6 economic in the community. The motivation of profit was considered as the primary motivator for companies. Secondly, legal responsibility is principal expectation of society to business that include implying with laws and regulations issued by federal, state and local governments as ground rules which business must operate. Besides that, business and society firms are expected to pursue their economic missions within the legal framework of the law as a partial fulfillment of the social contract. In other concept, legal responsibility reflects a view of “codified ethics” that embody basic notion of fair operation. Third part, ethical responsibilities combine those standards, norms, or expectations that reflect a concern, for what consumers, employees, shareholders, and the community regard as fair, just, or in keeping with the respect or protection of stakeholders' moral rights. In another sense, ethical responsibilities may be seen as newly emerging values and norms society expects business to meet, even though higher standard of performance of such values and norms. Besides that, ethic responsibility is important to perform in a manner consistent with expectations of societal mores and ethical norms or to recognize and respect new or evolving ethical moral norms adopted by society. Finally, philanthropic responsibilities encompass those corporate actions in respond to society‟s expectation to make companies to be good corporate citizens. For example, those activities are business contribution of finance resources or executive time to art, education or the community. The different feature between philanthropic and ethical responsibilities is that society‟s expectation is based on ethical or moral sense. In other word, communities expect companies to provide their money, facilities, and employee time to humanitarian programs. However, firms are regarded as ethical if it does not satisfy the desired level. Therefore, on 7 the part of business, philanthropy responsibility is more discretionary or voluntary even through businesses always provide societal expectation. Figure2.1: Carroll (1991) CSR Pyramid There is no research or study to be exact and conceptualization CSR model of Carroll is the same situation. Carroll‟s conceptualization is either a durable or useful model for defining and exploring CSR. However, this model has some lacking of conceptual clarity and questions about its descriptive accuracy, especially in different cultural contexts. Secondly, it is very simplistic and static, failing to capture the complexity of CSR in practice. Besides that, definition of CSR/CSP in this model domains but not the nature of responsibility or performance (Wood, 1991). 8 2.1.3 Wood 1991 conceptualization Wood (1991) took similar approach concepts of corporate by proposing a conceptual model social responsibility. Corporate social performance or CSR is defined more completely than Carroll‟s once as: “a business organization’s configuration of principles of social responsibility processes of social responsiveness, and policies, programs and observable outcomes as they related to the firm’s societal relationships” (Wood, 1991). Wood (1991) argued that business and society are interwoven rather than distinct separate entities. Hence, society has certain expectations of business behavior and outcomes with regard to business. These expectations can be divided into three groups with corresponding principles (figure 2.2). The first group includes expectations of all businesses because their roles play as economic institutions. The principle that applies to institutional level of analysis is that of legitimacy. The principle of legitimacy is to concerns business as a social institution and frames the analytical view of the inter-relationship of business and society. This principle is based on the premise that “society gave business its charter to exist, and that charter could be amended or revoked at any time that business fails to live up to society's expectations.” (Davis & Blomstrom,1971). The second group expectations are placed in individual firms. This principle is for organizational level of analysis that the principle of public responsibility applies. According to this principle, Wood (1991) states that businesses do not have responsibility to solve all social issues but they are responsible for their stakeholders and to solve problems related to their activities that they have caused and they are responsible for helping to solve problems and social issues related to their business operations and interest. The third group of expectations relates to the manager as a moral agent. It is for individual level of analysis that is of managerial discretion. This principle is based on that “managers 9 exist in an organizational and societal environment that is full of choices, their actions are not totally prescribed by corporate procedures, formal job definitions, resource availabilities, or technologies. They are moral actors on the job as well as in other domains of their lives” (Wood, 1991). This principle states that business‟s managers face ethical concern when they make decisions. Basing on this principle, society expects managers to focus both on the companies‟ interests and on the implications that their decisions have for society. In general, business organizations adopt their social responsibilities on above three levels that will contribute to environmental improvement and sustainable development and will enjoy consumer loyalty, as well as improving human resources management. These principles state that responsibility of organizations is for “their primary and secondary areas of involvement with society” and that managers are “moral actors obliged to exercise such discretion as is available to them, toward socially responsible outcomes.” (Wood, 1991) Furthermore, Wood (1991) also suggests that companies use three main of processes to apply these principles into practice: environmental assessment, issues management, and stakeholder management. In the process of CSP model, Wood presents the outcomes of bringing principles into practice within the economic, legal, ethical, and discretionary domains, categorizing them in terms of social impacts, social programs, and social policies. In the contrast, there are some limitations of Wood principle of CSR. The first limitation Wood (1991) acknowledged is that terms such as legitimate functions, obligations, and social well-being are neither universal nor absolute in their meaning; they are time and culture bound. It implies that a firm may have different responsibilities in different countries and at different points in time. A second limitation is that these principles are defined variously by relevant stakeholder groups even within a specific time and culture, concepts. As result, a 10 firm may face conflicting expectations. A third limitation is that organizational and individual-level concepts including options, opportunities, constraints, and choices are bound by different conditions and perceptions among organizations and people. Due to these limitations, Wood (1991) concludes that “the principles of CSR should not be thought of absolute standards, but as analytical forms to be filled with the content of explicit value preferences that exist within a given cultural or organizational context and that are operational zed through the political and symbolic processes of that context”. Figure 1.2 Corporate Social Performance Model (Wood, 1991) Principals of corporate social responsibility Institutional principal: legitimacy Organizational principal: public responsibility Individual principal: managerial discretion Processes of corporate social responsiveness Environmental assessment Stakeholder management Issues management Outcomes of corporate social behavior Social policies Social programs Social impacts 2.2 Stakeholder theory The term” stakeholder” is now popular word for most executives. The term implies various stakeholder groups who can affect or be affect by the organization‟s activities. Freeeman (1998) defines stakeholders as “groups and individuals who benefit from or are harmed by, and whose rights are violated or respected by, corporate actions”. Stakeholders include 11 creditors, employees, customers, suppliers, and the communities at large. Hence, stakeholder‟s legitimacy and power are influenced on the firm. For CSR perspective, their legitimacy may be the most important. Hence, the concept of stakeholder personalizes social and society responsibility should consider in CSR orientation (Carroll, 1991). Deegan and Unerman (2006) states that “ more correctly, the tem stakeholder Theory as an umbrella term that actually represents a number of alternative theories that address various issues associated with relationship with stakeholders, including considerations of the rights stakeholders the power of stakeholders or the effective management of stakeholders” In other research, Jones and Wicks (1999) attempts to discuss the current state of stakeholder theory which are summarized as following. First, the corporation has the relationships with many stakeholder groups who can affect and can be affected by its decisions. Second, the nature of these relationships in term of both processes and outcomes for the firm and its stakeholders are main purpose of theory. Third, the interests of all stakeholders have intrinsic value and no set of interests is assumed to dominate the others. Last, stakeholder theory focuses on managerial decision making. There are two branches of Stakeholder Theory namely ethical branch (moral) and the positive (managerial) branch (Deegan 2009). Under the ethical perspective, business organization must treat fairly all stakeholder groups by their right and business‟s managers should operate organization for the benefit of all shareholders. Due to companies‟ moral obligations, hence, they will expose information to their shareholders. In the contrast, the managerial perspective of stakeholder theory attempt to distinguee that corporate disclosure is driven by the level of power or control which are obligated by the specific stakeholder groups over the firm‟s resources. And so, corporate management will attend to focus on expectations of particular stakeholder groups (Freeman, 1984). 12
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