influence of corporate social responsibilities (csr) on small and medium enterprises (smes) in vietnam

-1- DECLARATION OF ORGINALITY 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 10.217 words. NGUYEN HONG NHUNG October 2011 -2- ACKNOWLEDGEMENT This study would not have been made without the assistance, support and encouragement of many people. I wish to take this opportunity to thank all people who helped me during the time I carried out this project. First of all, I would like to express my gratitude to my supervisor, Dr.Pham Duc Hieu, in Viet Nam Commercial University. He has kindly guided, supported, and encouraged me from the very beginning of this study. Furthermore, I would like to give my thankfulness to Ms. Sumathi and Ms. Shenba at Help University College, who initiated the project and give me instruction and support. Additionally, I would like to thank the interview participants: Mr. Dao Hung Dung, Deputy Manager of planning & investment Department of VIPACO and Mr. Phan Thanh Ngoc - Deputy Manager of planning & investment Department of Vinaconex-ITC, who helps me conduct the interview. I also would like to extend my special thanks to manager, customers, students, employers of both VIPACO and Vinaconex-ITC, and my friends to help me carry out the survey. Finally, I would like to thank all family members to support and encourage to complete my project. -3- INFLUENCE OF CORPORATE SOCIAL RESPONSIBILITIES (CSR) ON SMALL AND MEDIUM ENTERPRISES (SMEs) IN VIETNAM BY NGUYEN HONG NHUNG E0700276 OCTOBER 2011 Supervisor: Dr. Pham Duc Hieu ABSTRACT For many years ago, the concept and component of Corporate Social Responsibility (CSR) was recognized and implemented commodiously by international business environment, however this concept is quite new to Small and Medium Enterprises (SMEs) in Vietnam. Because Vietnam is the developing country and new member of WTO, thus CSR issue becomes the necessary and sufficient. Therefore, the main purpose of this study wants to discuss about the assessment of understanding of the concept, components, and implementation of CSR with (SMEs) in Vietnam. Moreover, this study wants to find out the impact of CSR within the development process of company. The result of this study is the clearly evidences by collecting data from the advisory of company, researching process and questionnaires. -4- TABLE OF CONTENT DECLARATION OF ORGINALITY AND WORD COUNT 1 ACKNOWLEDGEMENT 2 ABSTRACT 3 TABLE OF CONTENT 4 LIST OF FIGURES 7 LIST OF CHARTS 8 LIST OF ABBREVIATIONS 9 CHAPTER 1: INTRODUCTION 10 1.1 CSR in Vietnam 10 1.2 CSR in SMEs company 11 1.3 Government actions 12 1.4 CSR practice and challenge 14 1.5 Research questions 15 CHAPTER 2: LITERATURE REVIEW 16 2.1 Definition and components of CSR 16 2.2 Theories related to CSR 17 2.2.1 Carroll’s “Pyramid of CSR” 17 2.2.2 Wood 1991 conceptualization 21 2.2.3 Stakeholder theory 23 2.2.4 Triple bottom line theory 24 2.3 Responsibility of the SMEs 27 CHAPTER 3: RESEARCH METHODOLOGY 29 -5- 3.1 Research Objectives 29 3.2 Research methodology 29 3.3 Data source 30 3.3.1 Primary data 30 3.3.2 Secondary data 30 3.4 Research strategy 31 3.5 Research instruments 31 3.5.1 Questionnaire 31 3.5.2 Personal interview 31 3.6 Data collection 32 3.7 Sampling 32 3.8 Limitation of research 32 CHAPTER 4: DESCRIPTION AND ANALYSIS OF RESULT 33 4.1 Introduction about Vinaconex - ITC & VIPACO - JSC 34 4.1.1 Introduction about Vinaconex Investment and Tourism Development Joint – stock Company (Vinaconex – ITC) 34 4.1.2 Introduction about VIPACO Joint Stock Company ( VIPACO - JSC) 35 4.2 Description of Respondents’ information 36 4.2.1 Description of respondents’ age 36 4.2.2 Description of respondents’ gender 37 4.2.3 Description of respondent’s education level 37 4.3 Description and Analysis the understanding CSR concept of respondents 38 4.4 Evaluation of CSR implementation 39 4.4.1 Description and Analysis of Questionnaire about Vinaconex – ITC 39 4.4.2 Description and Analysis of Questionnaire about VIPACO 41 -6- 4.4.3 Description and Analysis of Questionnaire for managers of Vinaconex – ITC and VIPACO 43 4.5 Evaluation of Sustainability development and CSR implementation 44 4.5.1 Description and Analysis of Questionnaire about Vinaconex – ITC and VIPACO 44 4.5.2 Description and Analysis of Questionnaire for managers of Vinaconex – ITC and VIPACO 47 4.6 Overall Discussion 50 CHAPTER 5: CONCLUSION AND RECOMMENDATION 52 5.1 Conclusion 52 5.2 Recommendation 53 5.3 Limitation of study 54 5.4 Suggestion for future research 55 REFERENCE 56 APPENDIX 59 -7- LIST OF TABLES & FIGURES Figures 2.1 Carroll’s “Pyramid of CSR” Figures 2.2 Economic & Legal Component of CSR Figures 2.3 Ethical and Philanthropic Component of CSR Figures 2.4 Triple bottom line theory Figure 2.5 Planet – People- Profit in TBL theory Table I Corporate Social Performance model Table 4.1 General information about VINACONEXT - ITC Table 4.2 General information about VIPACO -8- LIST OF CHARTS Chart 4.1 Age frequency of respondents Chart 4.2 Gender frequency of respondents Chart 4.3 Education level frequency of respondents Chart 4.4 Description of Result – Question 1 Chart 4.5 Description of Result – Question 2 – Questionnaire for V – ITC Chart 4.6 Description of Result – Question 3 – Questionnaire for consumers of Vinaconex – ITC Chart 4.7 Description of Result – Question 2 – Questionnaire for consumers of VIPACO Chart 4.8 Description of Result – Question 3 – Questionnaire for consumers of VIPACO Chart 4.9 Description of Result – Question 4 – Questionnaire for consumers of Vinaconex – ITC and VIPACO Chart 4.10 Description of Result – Question 5 – Questionnaire for consumers of Vinaconex – ITC and VIPACO Chart 4.11 Description of Result – Question 6 – Questionnaire for consumers of Vinaconex – ITC and VIPACO Chart 4.12 Description of Result – Question 4 – Questionnaire for managers of Vinaconex -ITC and VIPACO Chart 4.13 Description of Result – Question 5 - Questionnaire for managers of Vinaconex – ITC and VIPACO -9- LIST OF ABBREVIATIONS SMEs SMALL AND MEDIUM ENTERPRISES CSR COPORATE SOCIAL RESPONSIBILITY TBL TRIPLE BOTTOM LINE WTO WORLD TRADE ORGANIZATION PR PUBLIC RELATION NGOs NON-GOVERNMENTAL ORGANIZATIONS CSP COPORATE SOCIAL PERFORMANCE EIA ENVIRONMENT IMPACT ASSESSMENT -10- CHAPTER 1: INTRODUCTION 1.1 CSR in Vietnam Corporate Social Responsibility (CSR) is more concentration in the world. However, the importance role of CSR has not really high evaluated in Vietnam. Due to the today’s global CSR, companies should focus on not only good and high quality products but also human rights, labor conditions and environment. According to the director of Vietnam Chamber of Commerce and Industry, PhD Doan Duy Khuong, “CSR has become necessary requirement for each company, if the company does not embrace CRS, they cannot approach the global market” (http://www.saga.vn) Nowadays, CSR is still new concept because of lack awareness of public and business community. This issue is the main factor influences much on the CSR practices. Due to the economic integration process, the awareness of the CSR issue has been changed but has not the most effective consequence. Recently, Vietnamese enterprises become more and more actively in their social responsibility in various areas include consumer’s satisfaction and employer’s health care, student’s scholarships and environmental protection activities. They realized the vital of CSR performance and carry out CSR application in their business, since they will receives more advantages than competitors. When the companies care about employees such as their life and working conditional, it leads to raise employees’ loyalty and more productivity. Moreover, together with good implementation of protection environment and society, they will make their brand name more popular and more reliable. One more important is attracting more investors and more shareholders’ belief. That is reason why many companies identified the relationship between CSR and sustainability and step-by-step complete [...]... conceptualization of CSR Firstly, there are various of definitions, conceptualization and relevant components of corporate social responsibilities In general, The European Commission's definition of CSR is "A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis." 1 Another definition include... performance, Vietnam attains some of CSR Awards that created Vietnam chamber of Commerce and Industry, Ministry of Labor- Invalids and Social Affairs, Vietnam Ministry of Industry and Trade since 2005 Because of the above discussion, the implementation of CSR in SMEs have much difficulties First of all, the awareness of managers about the social responsibility in the competition market, they just think voluntary... evaluate and demonstrate their strategies for sustainable growth TBL report takes into account the influence of company in social and environment valuations together with financial returns On one hand, the traditional TBL focus on profit and earning more profit as possible However, TBL accounting new models proved that a company not only server only profit objective but also consider combines financial, social. .. relationship of company (Table I) -21- This model is considered the principle which is the motivation of social responsibilities actions include three levels as instructional, organizational and individual Firstly, the motivation for company’s activities need base on the principle of legitimacy or institutional level For example, because of the the maintain of credibility and legitimacy likes responsible... financial statement However, many years recently, the accounting academics have been considered study and theory on social and environmental accounting practitioners, professional reporting reliable CSR information 1.3 Government actions CSR plays an important influence in developing of economic that is reason why the government always provides not only new Acts and Regulations but also editting and. .. questions Due to evaluate the impact of CSR in SMEs in Vietnam, there are many questions are developed and try to explain as:  What is the fact of CSR in SMEs in Vietnam?  How long does the issue relating CSR the term into Vietnamese society especially SMEs?  How does the small and medium enterprises operating in Vietnam relate to this area? -15- CHAPTER 2: LITERATURE REVIEW 2.1 Definition and conceptualization... http://ec.europa.eu/enterprise/policies/sustainable-business /corporate- socialresponsibility/index_en.htm 2 http://www.csr-weltweit.de/uploads/tx_jpdownloads/FDI_CSR _Vietnam. pdf 3 http://www.csrwire.com/reports -16- was defined by Elkington (1997) presented information about economic, environmental and social within three P’s: People, Planet and Profit In summary, almost the definition and conceptualization mention about the company... definition include Economic Responsibilities (Make a profit), Legal Responsibilities (Obey the law), Ethical Responsibilities (Be ethical) and Philanthropic Responsibilities (Good corporate citizen) Basing on figure 2.1, the first category mentioned about economic responsibilities which indicated that making profit is the principal role and evaluated as the top of the business organisation It can be said... to the component and the concept of CSR These theories will explore how CSR and CSR reporting influences the implementation and the development of the SMEs companies in general and individual in particular Besides, they help the company avoid breaching all the issue of CRS Moreover, the three main aspects of CSR mentions about the responsibilities to environment, social and human right of company,... capital, and number of employers In short, the analysis will be made for each aspect in order to follow easily -33- 4.1 Introduction about VINACONEX – ITC.,JSC & VIPACO.,JSC 4.1.1 GROUP 1: Services Company Introduction about VINACONEX – ITC.,JSC VINACONEX-ITC was established in March, 2008 The main task of company provides services of quality evaluation for construction works and services of construction and . Commission's definition of CSR is "A concept whereby companies integrate social and environmental concerns in their business operations and in their. Description and Analysis of Questionnaire about Vinaconex – ITC and VIPACO 44 4.5.2 Description and Analysis of Questionnaire for managers of Vinaconex