Tài liệu Corporate social responsibility strategic integration and competitiveness for vietnam companies

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CORPORATE SOCIAL RESPONSIBILITY: STRATEGIC INTEGRATION AND COMPETITIVENESS FOR VIETNAM COMPANIES BY NGUYEN THANH HUYEN E0600081 Graduation Project Submitted to the Department of Business Studies, Help University College, in Partial Fulfillment of Requirements for The Degree of Bachelor of Business (Accounting) Hons OCT 2010 1 DECLARATION 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 10,007 words. ______________________ NGUYEN THANH HUYEN 28 Oct, 2010 2 CORPORATE SOCIAL RESPONSIBILITY: STRATEGIC INTEGRATION AND COMPETITIVENESS FOR VIETNAM COMPANIES By NGUYEN THANH HUYEN Oct 2010 Supervisor: Dr. Pham Duc Hieu ABSTRACT In the process of integration of international economy, besides the advantages for social and economic development, Vietnam enterprises are faced with great challenges in the fiercely compete for continued stability and development. This paper aims to examine how executives and managers from different Vietnam industries represent their conduct on Corporate Social Responsibility (CSR) and its reporting, as well as whether the attitude of Vietnam customers toward CSR is positively. The results of the study indicate that while a large proportion of managers express a highly positive attitude toward CSR and its reporting, consumers perception is at low state and questionable; it point out a week of companies’ communication on consumers’ perception. Nevertheless, the willingness to learn and gain more knowledge about CSR found from the survey have drawing a bright future for CSR in Vietnam. “Well implement social responsibility in business” is effective strategy to enhance the competitiveness of products on international markets, and also the conditions for Vietnam companies. 3 TABLE OF CONTENTS Page Declaration of originality and word count ii Abstract iii Table of Content iv List of Figures v List of Abbreviations vi CHAPTER 1 1 INTRODUCTION 1.1 CSR in the world 1 1.2 CSR in Vietnam 2 1.2.1 Government actions 4 1.2.2 Vietnamese Accounting Standards 5 1.2.3 CSR practice and challenges 6 1.3 Reason for Future Research CHAPTER 2 7 LITERATURE REVIEW 2.1 Definition and conceptualization of CSR 9 9 2.1.1 Elkington's 1999 triple bottom line conceptualization 10 2.1.2 Carroll’s 1979 conceptualization 12 2.2 Stakeholder theory 14 2.3 CSR reporting 16 2.4 Hypothesis 18 4 2.4.1 Management’s perception of CSR and its reporting 18 2.4.2 Consumer’s perception of CSR information and disclosure 19 CHAPTER 3 RESEARCH METHODOLOGY 21 3.1 Research objective 21 3.2 Research methodology 21 3.3 Data source 21 3.3.1 Primary data 22 3.3.2 Secondary data 22 3.4 Research method 23 3.5 Research tool 23 3.5.1 Questionnaire 23 3.5.2 Personal interview 24 3.5.3 Annual reports 24 3.6 Data collection 25 3.7 Sampling 25 3.7.1 Sample population 25 3.7.2 Sample frame 26 3.7.3 Sample size 26 CHAPTER 4 ANALYSIS AND DISCUSSION 4.1 Management 27 27 4.1.1 Results of questionnaire survey 27 4.1.2 Actual CSR reporting 32 4.1.3 Results of managers interview 33 5 4.1.4 Overall management’s responses analysis 4.2 Consumers 34 35 4.2.1 Results of questionnaire survey 35 4.2.2 Consumer’s responses analysis 38 4.3 Overall discussion 40 4.4 Limitations of the Study 41 CHAPTER 5 CONCLUSION 43 REFERENCES & 46 APPENDICES 57 6 LIST OF FIGURES Figure Title Page Chapter 1 N/A N/A Chapter 2 Figure 2.1 Triple bottom line of CSR (adapted from Crane & Matten, 11 2004) Figure 2.2 A hierarchy of CSR (adapted from Carroll, 1991) 12 Chapter 3 N/A N/A Chapter 4 Figure 4.1 The number of managers response 27 Figure 4.2 Distribution of managers’ responses towards statements 28 Figure 4.3 Percentage of manager’s response towards CSR by five scale 29 Figure 4.4 Descriptive statistics from management survey (1) 30 Figure 4.5 The number of consumer response 31 Figure 4.6 Consumer category 35 Figure 4.7 Descriptive statistics from management survey (2) 35 Figure 4.8 Distribution of consumers’ responses towards statements 36 Figure 4.9 Percentage of consumer’s response towards CSR by five scale 37 Figure 4.10 Descriptive statistic from consumer survey (1) 38 Figure 4.11 Descriptive statistic from consumer survey (2) 39 7 LIST OF ABBREVIATIONS Abbreviation Full name CSR Corporate Social Responsibility CSP Corporate Social Performance IAS International Accounting Standard VSA Vietnamese Accounting Standard VCCI Vietnam’s Chamber of Commerce and Industry SMEs Small and Medium-sized companies NGO Non-governmental Organization WTO World Trade Organization PR Public Relation TBL Triple Bottom Line MOF Ministry of Finance 8 CHAPTER 1 INTRODUCTION 1.1 CSR in the world Corporate Social Responsibility (CSR), also known as Social responsibility of business, is no stranger to the developed world, and it has become increasingly gaining important with enterprises, shareholders and investors, employees, customers and entire society. Over the world, giants companies are devoting their time and resources to incorporate CSR activities in their overall strategies to become an ideal business model, and to be accountable to society. In the United States there is “One PERCENT Club” that is a collection of businesses committed to use at least 1% of their profits into social work; the Group's U.S. manufacturing light bulbs, Haitech Group investment $ 4.3 billion on controlling environmental pollution. Also in France, a series of cultural funds of enterprises such as France Télécom (France Telecom), RATP (Subway Company) were among the sponsors of contemporary French art. In addition, “Google”- Web search engine- with headquarters called Googleplex behaves their employees like gold pearl. General Electric uses $2 billion annually for researching technologies to protect the environment. World Bank, World Bank and Merck pharmaceutical company has launched an initiative to develop a fund of U.S. $ 50 million to donate the Mectizan medicine to help 28 countries in Africa. Shell Co. set up a Shell Foundation to help educate the community’s children and adults (Saga Vietnam, 2008). The billionaires such as Bill 9 Gates also built a charity fund to the development of community. Prahl Paul, Deputy Head of Public Relations of Best Buy, has stated that „We are successful in the marketplace because we take social responsibility into business operation” (Saga Vietnam, 2008). In short, more and more companies in the world are getting involved in CSR activities strategy to ensure the quality of life for employees, environmental protection and development of products that create benefits for consumers and the society. Schiebel and Pöchtrager (2003) reported that “it makes good business sense to fully integrate the interests and needs of customers, employees, suppliers, communities, and our planet - as well as to those of shareholders - into corporate strategies”. 1.2 CSR in Vietnam CSR is a topic which is quite attractive in over three years for enterprises in Vietnam. And the concept of CSR is best known in the two major export industries, namely textiles and footwear. The reason is that the importer, especially in the U.S. and Europe, always requires businesses to have a“completed CSR evaluation panel” before exporting goods. Recently, the concept of CSR in Vietnam became more popular as a serious infringement cases on the environment occurs (Vedan Co., Ltd discharging waste into the Thi Vai River for 10 years) and many products were found to have substance hazardous to human health (milk with melamine, a 3MPCD sauce). Such immoral companies are failing to rebuild trust from the community. 10 According to Mr. Florian Beranek, chief advisor of the project Industrial Development Organization United Nations (UNIDO Chief Technical Advisor CSR), some Vietnam businesses in small and medium-scale (SMEs) considered social responsibility of business is a burden and the responsibility that must be implemented more than an opportunity. He stated that “More and more foreign enterprises apply the implementation of CSR into business strategy. Meanwhile, some enterprises in Vietnam, especially small and medium enterprises, have not yet found the opportunities and benefits that CSR can bring” (Saigon Economic Times Online, 2010). Besides, in the last two years, financial and economic crisis in the world has a little impact on operations and policies of many Vietnam businesses, as well as the public’s attention to CSR. Therefore, some companies cut off the cost in social activities or reduce the size of community projects. For businesses trying to keep CSR activities, they also have faced many difficulties in carrying on a business. This situation prompted the Chamber of Commerce and Industry of Vietnam (VCCI) launched the CSR Award to encourage enterprises to social responsibility. Consequently, the awareness of the problems of workers and the environment are increasing rapidly due to the efforts of the Government, industry associations as well as strict requirements from the foreign partner. In addition, CSR appearances on several studies, seminars, articles, websites which help the perception on CSR is gradually improving. In recent years, many Small and Medium-sized companies in VN put CSR into their business strategies, in which, they launched some CSR activities to support the take11 up of CSR as a means to enhance their competitiveness. For example, Vinamilk, Dutch Lady, two famous milk producers, built social programs such as “6 million cups of milk for children Vietnam “and funds scholarships “fireflies light” that are resonated and supported from the consumer. Besides, Kirin Acecook - Latte Beverage Company, a joint venture between Vietnam and Japan implement CSR in a different way of focusing on maximum product quality. They are the pioneer in applying technology Vietnam pouring Aseptic sterile, process design and bottle blowing was conducted at the factory to ensure hygienic source of plastic bottles. These proved that implementing CRS is a major concern of businesses. According to Nguyen Hong Ha, deputy director of the Chamber of Commerce and Industry of Vietnam (VCCI) in HCM City, CSR must be placed on the business strategies of each business. It was, is and will be an indispensable part of decision success of the business. With the context of Vietnam joining the World Trade Organization (WTO) as well as the fact that Vietnam's enterprises are small and medium businesses, to achieve a balance of economic, social and environmental, business must also consider all other relevant issues to improve the competitive advantage as well as better opportunities to export goods to the international market. 1.2.1 Government actions Government plays a very important role for the development of CSR in shaping and promoting enterprises conduct societal responsibility. After Vietnam carrying out its economic reforms in the mid 1980s called Doi Moi (renovation) and implement 12 open-door policies, Vietnam has had many chances to joint into the world economy in which Government has strengthened its legal implementation mechanism, promoted Foreign Direct Investment (FDI) and has raised awareness of the business and stakeholders on CSR. This is regarded as an important content in the agenda of sustainable development. Vietnam Government has expressed Agenda 21 of Vietnam as a special attention on CSR in Orientation Strategy for Sustainable Development in Vietnam on the basis of harmonious incorporation between economic development, social development and environmental protection. Besides the Labor Code legislation, Government has created new regulations, represented by the new Environment Protection Law that strengthened enforcement measures to fight against immoral companies. Along with these, the Government is relatively calling on businesses to perform their tasks for the environmental protection and concern for the interests of workers. As to help SMEs make effort on CSR, Vietnam government, along with the VCCI and several international Nongovernmental Organizations (NGOs) offered them consulting services, conferences and training programs in order to enhance the need to implement CSR and to improve their competitiveness through CSR, in particular in SMEs operating in footwear and textile & garment industries. 1.2.2 Vietnamese Accounting Standards (VAS) 13 Vietnam has issued 26 Vietnam Accounting Standards (VASs) in five phases since 1996 with the assistance of the World Bank and European Community. Generally, the VASs are set up by the Ministry of Finance that based on the International Accounting Standards (IAS) to support adjusting economic, finance and accounting issues. In Vietnam, many VASs are still unclear and flawed. They also have some conflicts among standards and do not consist between standards and guidelines for such standards. Besides that, many Vietnam enterprises lack of transparency in accounting activities, especially in State companies and Banking system. Moreover, CSR information of enterprises is not required by Vietnamese Accounting Standards Board (VASB) to disclose to public. 1.2.3 CSR practice and challenges While CSR is gaining more attention throughout the world Vietnam is left behind to realize that it is a matter of business survival. A quite many business in small and medium-scale in Vietnam do not really see the importance of CSR. People’s awareness and the management about CSR is actually still slightly poor and weak state than other countries on the world, legal documents are not realistic, and the enforcement is sporadic. These have lead to business spleen law easier, denied business ethics responsibility or pollute the water environment in the long times without treatment. In addition, Vietnam goods are obviously hard to compete on price or quantity with many countries on the world such as China, Thailand, etc. Some recent researches 14 indicate that CSR’s meaning is not really understood by some SMEs. These entire roles have answered the question of “which ways that can help the domestic enterprises have advantages in the market?” CSR may be the answer if businesses really understand the meaning and turn into a CSR culture, style of thinking and working methods. CSR can be a key tool to increase benefits for their brands and their overall reputation, or as a means to improve the business-relationship or the way to promote business operation effectively. So, there is a need of integrating CSR in day to day business affairs as PhD Doan Duy Khuong – Vice Director of Vietnam Chamber of Commerce and Industry state “Vietnam companies must embrace CSR as a necessary requirement to approach the global market” (Saga Vietnam, 2008). In the current economic integration, CSR is gradually becoming a concept that many people are more interested and have strategic importance for business. It may be considered as a competitive advantage for a company. It not only refers to CSR as "the right thing to do" but also "wise to do". Embracing CSR, business could get many benefits; such benefits as enhanced reputation, improved relationships at work, motivated work forces, ability to attract desired employees, and convenience in calling for investment, especially foreign investment (Schmidt Albinger & Freeman, 2002). 1.3 Reasons for further investigation Although CSR is really hot subject in the world, SCR in Vietnam is still weak with very few studies are taken place. However, CSR has become even more important 15 for Vietnam companies to develop sustainably since Vietnam has joined into World Trade Organization (WTO). This paper aims to explore how companies in Vietnam view CSR and its disclosure as a strategic integration and competitiveness, and whether Vietnam consumer behavior is affected by CSR information. 16 CHAPTER 2 LITERATURE REVIEW 2.1 Definition and conceptualization of CSR There are many different definitions of CSR. Each organization or company, government recognizes CSR under its own perspective and opinions, depending on conditions and characteristics and their level of development. Keith Davis (1973) gives a rather broad view of “CSR is the interest of the organizations and react to issues beyond satisfying the legal requirements, economic and technology”. Meanwhile, Carroll (1999) argues that CSR has a larger scope of “all matters economic, legal, moral, and other areas of social expectations on businesses in each period of time”. According to Matten and Moon (2004), “CSR is a concept cluster includes many other concepts such as business ethics, business philanthropy, corporate citizen, sustainability and environmental responsibility. It is a concept and always challenging in the context of each economic, political and social characteristic”. The definition defined by The World Bank and the World Business Council on Sustainable Development (WBCSD) is one of the most cited definitions, in that, “the commitment of business to contribute to sustainable economic development – working with employees, their families, the local community and society at large to improve their quality of life, in ways that are both good for business and good for development” (SIDA, 2005). 17 Various theories about CSR have been introduced, but only two CSR conceptualizations from different authors will be highlighted in this paper. Both of them are the most cited and most used conceptualizations that facilitate a basic understanding of CSR concept: Elkington’s triple bottom line CSR conceptualization and Carroll four-part definition of CSR. 2.1.1 Elkington’s 1999 tripe bottom line The triple bottom line (TBL or 3BL) theory of CSR is known as a common way for companies to conceptualize CSR (Crane & Matten, 2004; Cornelissen, 2008). In 1999, Elkington, author and founder of the consultancy firm sustainability, introduced this concept that refers to three aspects of organization when carrying on business, namely companies’ economic, environmental, and social performance. In the study of Crane and Matten (2004), they has summarized Elkington’s key idea to be that businesses do not have only one goal on economic value, but have further goals on environmental and social value. In other words, company must to fulfill all three things at once to achieve the sustainability. Under this theory, organizational activities are composed in three categories: people, planet, and profit; such categories present for the social issues, environment issues and healthy financial performance respectively. The figure 2.1 below visually illustrates these bottom lines are being interdependent and interrelated: 18 Figure 2.1 Triple bottom line of CSR (adapted from Crane & Matten, 2004) People affected by a company are often called stakeholder groups, such as shareholders, non-governmental organizations, consumers, and governmental regulators and agencies are trying to call for information related to the social and environmental dimensions. However, quite large companies that usually figure out how much they to be social responsible and how they are attempting to help the world by advertise their “green” practices on media actually mask community to reduce social and environment debt (Darrell Brown, Jesse Dillard, R. Scott Marshall, 2006). Not all businesses are really achieving the TBL. Elkington and others argued that consumer are becoming more aware of damaging practices, and then their choices to use or invest in companies are being changed. As said above, business practitioners use TBL to define CSR. From The Global Reporting Initiative (2010) the TBL sets directions and principles to evaluate and 19 report business economic, social performance and environmental conduction. That the reason why it is described as a “frame of social sustainability in the language of business”. 2.1.2 Carroll's 1979 conceptualization Carroll’s Pyramid is widely accepted and used in CSR literature and can be seen as a mainstream conceptualization of CSR. In 1979, Carroll divided CSR into four separate areas: economic, legal, ethical, and discretionary responsibility. Each area is presented as consecutive layer of pyramid that illustrated in Figure 2.1 and briefly summarized below: Figure 2.2 A hierarchy of CSR (adapted from Carroll, 1991) 20
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