corporate social responsibility in viet nam a study of stakeholders’ perceptions of corporate social responsibility

CORPORATE SOCIAL RESPONSIBILITY IN VIET NAM: A STUDY OF STAKEHOLDERS’ PERCEPTIONS OF CORPORATE SOCIAL RESPONSIBILITY BY PHAM VAN THUAN 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 October 2010 i 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: 11,523 Words Pham Van Thuan Date ii Abstract CORPORATE SOCIAL RESPONSIBILITY IN VIET NAM: A STUDY OF STAKEHOLDERS’ PERCEPTIONS OF CORPORATE SOCIAL RESPONSIBILITY BY PHAM VAN THUAN October 2010 Supervisor: Dr Nguyen Thi Phuong Hoa Corporate Social Responsibility has developed through the long history and it is also expected to implement by any business entities in the world It is no longer a new term for developing countries such as Viet Nam However, in recent year, when the economic is open and there are a lot of scandals and critical case concerning about the Corporate Social Responsibility and ethical business as the result of the economic boom So, there are a lot of researches on that field; however the understanding of Corporate Social Responsibility is limited in Viet Nam Therefore, it may be as a result of motivation for the researcher to conduct the survey about the perceptions of CSR among Vietnamese individual investors in TL Securities Company’s office (TLS) In this study, the researcher wants to access the understanding of Vietnamese individual investors on the topics of CSR Further more, the researcher will to define the three factors which contribute to the CSR perceptions such as CSR awareness, investment decision and CSR reporting base on the understanding and opinion of the investors iii By conducting the research, the research is able to indicate that the understanding of CSR concepts and its perceptions is limited; because of the investors have little basic knowledge about the CSR So, the investors in Viet Nam are very hard to use CSR information as a tool to value firm and it is also difficult for them to make investment decision iv Table of contents Declaration of Originality and Word Count ii DECLARATION ii Abstract iii Table of contents v List of Figures and Tables ix List of Figures and Tables ix List of Abbreviations x CHAPTER 1: INTRODUCTION .xi 1.2 Research Background 1.1.1 CSR in the world 1.1.2 CSR in Vietnam 1.3 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 CHAPTER 2: LITRERATURE OF REVIEW 2.1.4 Investment Decision 2.2.1 Business Ethics in Viet Nam – Reality and Solutions 2.2.2 CSR in business entities in Viet Nam – Reality and Solutions 2.2.3 CSR – The Investors’ Perspective 2.2.4 CSR, PR of Foreign-Invested Companies v 2.3 Researches Summary 2.1 Research’s related concepts 2.1.1 Carroll's 1979-1991 conceptualization 2.1.2 Wood 1991 conceptualization 11 2.1.3 Stakeholder theory 13 2.1.4 Investment Decision 14 2.1.5 Responsible Investment 15 2.1.6 Investor Relation 15 2.1.7 CSR Reporting 16 2.1.8 CSR practice and challenges 19 2.2 Researches and Studies 20 2.2.1 Business Ethics in Viet Nam – Reality and Solutions 20 2.2.2 CSR in business entities in Viet Nam – Reality and Solutions 21 2.2.3 CSR – The Investors’ Perspective 22 2.2.4 CSR, PR of Foreign-Invested Companies 23 2.3 Researches Summary 24 Table 1: Researches and Studies Summary 26 CHAPTER 3: RESEARCH METHODOLOGY 27 3.1 Research Objectives 28 3.2 Theoretical Framework and Measurement 28 3.2.1 CSR perceptions 29 3.2.2 CSR Awareness 29 3.2.3 Investment Decision 30 3.2.4 CSR Reporting 30 3.3 Measurement and Quality Design 30 vi 3.3.1 Section 31 3.3.2 Section 31 3.3.2.1 CSR Awareness 32 3.3.2.2 Investment Decision 33 3.3.2.3 CSR Reporting 33 3.4 Research Method 34 3.4.1 Sampling 35 3.5 Hypothesis Statement 35 3.5.1 Correlation of Independent Variable 36 CHAPTER 4: RESULT ANALYSIS 37 4.1 Collection of Questionnaires 38 4.2 Description of Result 38 4.2.1 Age 38 Table 2: Age 38 4.2.2 Gender 39 Table 3: Gender 39 4.2.3 CSR Awareness 40 Table 4: Question - Result and Analysis 40 Table 5: Question - Result and Analysis 41 Table 6: Question - Result and Analysis 42 Table 7: Question - Result and Analysis 43 4.2.4 Investment Decision 44 Table 8: Question - Result and Analysis 44 Table 9: Question - Result and Analysis 45 Table 10: Question - Result and Analysis 46 vii Table 11: Question - Result and Analysis 47 4.2.5 CSR Reporting 48 Table 12: Question - Result and Analysis 48 Table 13: Question 10 - Result and Analysis 49 Table 14: Question 10 - Result and Analysis 50 4.3 Result Analysis 50 4.3.1 Hypothesis 51 Table 15: Hypothesis 51 4.3.2 Hypothesis 53 Table 16: Hypothesis 53 4.3.3 Hypothesis 54 Table 17: Hypothesis 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) 60 APPENDICES 62 viii List of Figures and Tables Table 1: Researches and Studies Summary 26 Table 2: Age 38 Table 3: Gender 39 Table 4: Question - Result and Analysis 40 Table 5: Question - Result and Analysis 41 Table 6: Question - Result and Analysis 42 Table 7: Question - Result and Analysis 43 Table 8: Question - Result and Analysis 44 Table 9: Question - Result and Analysis 45 Table 10: Question - Result and Analysis 46 Table 11: Question - Result and Analysis 47 Table 12: Question - Result and Analysis 48 Table 13: Question 10 - Result and Analysis 49 Table 14: Question 10 - Result and Analysis 50 Table 15: Hypothesis 51 Table 16: Hypothesis 53 Table 17: Hypothesis 54 ix 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 x Question 10 Frequency Percent Strongly Agree 15 25.86% Agree 19 32.76% Disagree 16 27.59% Disagree 10.35% Strongly Disagree 3.44% Neither Agree Nor Total 58 100.00% Table 13: Question 10 - Result and Analysis In the next question, the researcher was asked the investors questions as “I would like to invest in a firm which issues CSR reports” And, the researcher see that the result may same with previous question, that mean most of the respondents choose “strongly agree” or “agree” which can show the need of CSR reporting for the respondents (58.62%) 49 Question 11 Frequency Percent Strongly Agree 20 34.48% Agree 18 31.04% Disagree 13 22.42% Disagree 8.62% Strongly Disagree 3.44% Neither Agree Nor Total 58 100.00% Table 14: Question 10 - Result and Analysis In the last question, the researcher wants to access the understanding about the vision of investors with the CSR reporting in the future The question asked was “I think the CSR reporting will be more develop and important in the future in Vietnam” And, the researcher sees that there is large number of respondents was choosing answer “strongly agree” or “agree” with the percentage is 65.52% The other numbers of investors who chosen “neither agree nor disagree” answers (22.42%) 4.3 Result Analysis As mentioned above, the average means is imply the relationship between that independent variables and dependent variable From the result, it will give us a 50 conclusion about the determined factors for CSR importance and perception of individual investors 4.3.1 Hypothesis In order the researcher has been mentioned, the first hypothesis is used to inspect the relation ship between the CSR perception and CSR awareness According to the five points Liker Scale method, the average point (3) is use to determine the relationship between variables And, it is considered that no correlation between two variables if the value of mean is less than Mean Standard Deviation Question 3.15517 1.3219 Question 4.24138 1.04815 Question 3.32759 1.04944 Question 2.67241 1.16058 Average Mean 3.34914 Table 15: Hypothesis From the table above, we can see that the average mean for those questions have value is (3.34914) which are greater then Because of this, the null hypothesis of these is no relationship between CSR perception and CSR awareness is rejected and alternative hypothesis is accepted 51 Under the result of the question and question2, we are easily seen that most of the investors are aware of the term “corporate social responsibility” However, the number of the investors think that they full understanding about the term of CSR is less under question The implication behind these numbers the researcher thinks that the investors may be heard or read about the term of CSR issue in the media and they not have taken any formal courses on CSR Further more, wit the join of Viet Nam to the WTO, most of investors are consider about the CSR as the important issue in Viet Nam, according to result of question In the result of question 3, with the mean of 3.32759 and have a highest percentage of investors who chosen “neither agree nor disagree”; we can see that there is confusing among respondents in this issue So, this question also gives us the more detailed limitation on awareness and understanding of CSR concept Because of this, they not care about the CSR activities and they may believe that following the regulation made by the government is good enough In the last but not least question, the researcher also wants to ask the investors in real case In that case, there is company has to discharge directly waste water into river to save cost With the result collected (mean = 2.67241), we can see that the number of investors think that the firm should that way in order to survive without any ethical conducts 52 4.3.2 Hypothesis Mean Standard Deviation Question 2.05172 1.13048 Question 3.89655 1.13462 Question 2.82759 1.39092 Question 2.89655 1.25222 Average Mean 2.91810 Table 16: Hypothesis In this section, the average mean of those questions is 2.91810 less than So, the null hypothesis is accepted However, it does not mean that there is no relationship between the CSR perception and investment decision It only indicated that the limited of individual investors concerns about CSR when they make investment decision Because of low means for the 5th question, we can see that the responsible investment in short is quite a new terminology In the question and 7, the researcher wants to access the perception of CSR for investor to make investment decision According to this, we can see that using financial ratio is easier for investor to evaluate a firm rather than using the CSR information to understand the potential viability of the firm So, they find it hard to use that type of information in valuing firm In the last question of this section, the researcher was asked for a specific situation in which the investor should make a decision According to the result of this question, the 53 researcher seen that the investors were very hard to choose to invest or not into a wrongdoing firm which general a lot of profit It also makes them many confused 4.3.3 Hypothesis Mean Standard Deviation Question 3.5 1.15849 Question 10 3.67241 1.08236 Question 11 3.84493 1.10504 Average Mean 3.67245 Table 17: Hypothesis From the table above, we can easier to see that the average mean of this section is greater than 3(3.67245) So, the null hypothesis of there is no relationship between CSR perceptions and CSR reporting is rejected and the alternative hypothesis is accepted From the result of question and 10, the researcher see that a larger number of investors want to have CSR reports to help them easier and safer for investment decision Beside that, the CSR reporting also help the firm to build up its image which will be financial benefits for investor on long-term basis Further more, according to the result of last question, most of investors think that the CSR report will be more develop and become more important in the future 54 CHAPTER 5: CONCLUSION AND RECOMENDATION 5.1 Conclusion 5.2 Recommendation 5.3 Limitation of Study 5.4 Suggestion for Future Research 55 5.1 Conclusion In this study, the researcher has been focuses on the CSR perceptions and these other factors which contribute to the CSR perceptions and understanding by the conduct of a research among Vietnamese individual investors in TLS office, Ha Noi, Viet Nam In order, there are three factors which the researcher have been chosen for this study after reviewing various sources of literature from different countries and within Viet Nam They are including: CSR awareness, Investment decision, and CSR reporting From the result of this research, we can see that not all three factors are affecting the CSR perceptions for the individual investors There are two factors that most investors care about such as CSR awareness and CSR reporting With the investment decision, it is not really thing for Vietnamese individual investors care much when they think about the CSR From that, CSR seems to be quite irrelevant for individual investor to make investment decision Further more, we can also have the more detailed following implication In the first one, we can see that investors are aware of the CSR concept and related term However, the investors are not care much about the responsible investment because it is quite new concepts From the result, the researcher seen that the understanding of investor on those term is quite limited In the next one, we can see that the investor may be confused about the CSR and regulation; because, they think that CSR activities and objective are limited to regulation compliance only Further more detail as the investors not use CSR information to valuing the firm Some time, they are very difficult to implement investment decision base on those information Actually, they are also known that the CSR activities and report are good for themselves as the firm on the long-term basis Last 56 but not least, the investors are very confused when they have to face with real situation such as they have to make hard decision and/or incur financial loss In this study, there are only two out of three independent variables such as CSR awareness and CSR reporting have relationships and affect the dependent variable CSR perception Beside that, there are several differences in set level among them to CSR perception 5.2 Recommendation After the study, the researcher sees that there are so many seriously shortcomings to investors about the CSR related issue These shortcomings not only harm with investor as long-term benefits but also lead to bad image for company and society as the whole From the researches, we easier to see that the limited of investors about the understanding of CSR related concepts and terms; therefore, there is a need to raise the awareness and perception of CSR related issue As you know that, law is the most obvious frame for CSR in Viet Nam as the world So, it is necessary to supplement and complete the legal frame to create firm legal foundation for CSR activities Now it is necessary to complete some related Acts in Viet Nam such as Investment Act, Labour Act, and Environment Act and so on Further more, it is needed to build up awareness and understanding of investors and society about the CSR issue It also helps investors have better understanding about the firm and also use it as a good measure in valuing firms In order to that, it is required to have various information channels In the first channel the researcher would like to mention is universities and colleges because it will be the good channel to educate and express information to student, post-graduates and especially the MBA student who are 57 dong the job as managers Next, state bodies like Ministry of Industry and Trade, VCCI, Department of Planning and Investing in the provinces should participate to popularize the knowledge With the firms, they should be able to provide better about the CSR information and CSR reporting to the investors From that they can build up the good image of the organization and also having good relationship in the long-term with the investors When they provide the good CSR information to investors, it will help firms have better communicate with shareholders Beside that, with the better understand of investors about the firm will enhance trust of investors in investing in that firm 5.3 Limitation of Study There are some limitations in this research which also make the research not sufficient, accurate and wide scale enough Firstly, the limitation comes when the research is conducted with Vietnamese individual investors only It may lead to the narrow and limited understanding of the population; because of there are some others types of investors such as foreign ones Secondly, the research is using the small sample size, so it may not represent sufficiently the population Further more, the research does not pay any attention to characteristics of investors such as gender and age; and, there are not many young investors in the office So, the mostly old sample size may not be good for understanding the whole population as there may be difference in understanding and perception due to age In this research, gender also plays as an important role; however, because of limitation in time and budget, the research find hard to expand the research into other aspects 58 Last but not least, as the researcher mentioned above, there are only three factors such as CSR awareness, investment decision and CSR reporting may be not enough for understanding the CSR importance and the perception of investors 5.4 Suggestion for Future Research In this section, the researchers also want give some suggestions for other researchers in order to the same topic as CSR in the future Firstly, the researches should pay attention to characteristics of investor or they should research more other object of the research besides individual investors to have an overall picture of the topic Further more, the future research should have larger size of sample which also having more accurate result The sphere of research should be bigger which can be conducted in Hanoi or in the North of Vietnam 59 Reference (Harvard referencing system) Economist Intelligence Unit (2005), the importance of corporate responsibility London: Economist Intelligence Unit Ho Thien Nga (2008), CSR, PR of Foreign-Invested Companies, Da Nang University publication Invest in Vietnam (2008), Dong Nai: Foreign-invested firm killing Thi Vai River, available at http://investinvietnam.vn/Default.aspx?ctl=CD&tID=2&pID=332&aID=570 [accessed May, 2010] Kevin Wilhelm (2009), Return on Sustainability, Dog Ear Publishing, 2009, pp 157 – 159 Louche C Tagger J (2005), socially responsible investment - now and looking forward, Public Service Review, (9): 20 -22 Louche C (2009), Corporate Social responsibility: The investor's perspective, in Idowu, S.O & Filho, W., Professional’s Perspectives of Corporate Social Responsibility, 211 -232 Marcus, B.W and S.L Wallace (1997), New Dimensions in Investor Relations: Competing for Capital in the 21st Century, John Wiley & Sons, New York Nguyen Hoang Anh (2008), CSR in business entities in Viet Nam – Reality and Solutions, Foreign Trade University, Ha Noi NIRI (2001), NIRI Mission and Goals, available at http://www.niri.org/about/index.cfm [accessed 19 May, 2010] Richard Butler (1993), Strategic investment decisions: theory, practice, and process, Taylor & Francis publisher, page 60 Saigon Businessman Newspaper (2009), CSR Award 2009, available at http://doanhnhansaigon.vn/online/tin-tuc/xa-hoi/2009/07/1035471/giai-thuong-trachnhiem-xa-hoi-doanh-nghiep-nam-2009-csr-award-2009/ [accessed 19 April, 2010] Securities Investment Newspaper (2008), CSR – still an interesting matter, issued January, 2008 ThanhNien News (2010), Polluter blames crisis for untreated wastewater release, available at http://www.thanhniennews.com/2010/Pages/20100419151214.aspx [accessed May, 2010] Tran Ngoc Chau (2009), CSR in business entities in Viet Nam – Reality and Solutions, Ha Noi University of Commerce publication UN (2008), Joint statement on melamine milk contamination, available at http://www.un.org.vn/index.php?Itemid=1&id=671&lang=vn&option=com_content&tas k=view [accessed 30 April, 2010] Vietnamnet English (2007), Soya sauce stirs worry and discontentment among public, available at http://english.vietnamnet.vn/reports/2007/05/699774/ [accessed May, 2010] WBCSD (1998), CSR: Meeting changing expectations, pg.3, available at http://www.wbcsd.ch/includes/getTarget.asp?type=d&id=ODgwMw [accessed May, 2010] WTO website (2006), General Council approves Viet Nam’s membership, available at http://www.wto.org/english/news_e/pres06_e/pr455_e.htm [accessed 17 April, 2010] 61 APPENDICES Appendix A: Questionnaire Sample The Survey on Importance of CSR in FPTS office, Ha Noi, Viet Nam Please choose the most appropriate answer: Age: Gender: CSR awareness: Question1: I fully understand the term “corporate social responsibility” a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree Question 2: The CSR is considered to be important issue in Vietnam? a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree Question 3: Corporate social responsibility is NOT only limited to regulation compliance a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree Question 4: To overcome the financial crisis in the recent year, a company said that it has to discharge untreated waste water to the environment to cut the refining cost This action is NOT appropriate a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree Investment decision: Question 5: I fully understand the term “responsible investment” 62 a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree Question 6: I use CSR to access potential viability of firm a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree Question 7: I use CSR related information in valuing firm a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree Question 8: I will NOT invest in a wrong-doing firm even though the firm is making high profit a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree CSR reporting: Question 9: I fully understand the term “CSR reporting” a Strongly Agree b Agree d Disagree c Neither Agree nor Disagree e Strongly Disagree Question 10: I would like to invest in a firm which issues CSR reports a Strongly Agree b Agree d Disagree c Neither Agree nor Disagree e Strongly Disagree Question 11: I think the CSR reporting will be more develop and important in the future in Vietnam a Strongly Agree b Agree d Disagree e Strongly Disagree 63 c Neither Agree nor Disagree ... Commerce and Industry, Ministry of Labor-Invalids and Social Affairs, Vietnam Ministry of Industry and Trade, together with Vietnam Leather & Footwear Association, and The Vietnam National Textile and... Abstract CORPORATE SOCIAL RESPONSIBILITY IN VIET NAM: A STUDY OF STAKEHOLDERS’ PERCEPTIONS OF CORPORATE SOCIAL RESPONSIBILITY BY PHAM VAN THUAN October 2010 Supervisor: Dr Nguyen Thi Phuong Hoa Corporate. .. is defined 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