the impact of corporate social responsibility (csr) in vietnam case and evidences

THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY (CSR) IN VIETNAM: CASE AND EVIDENCES BY NGUYEN HA QUYEN 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 April 2011 Declaration of Originality and Word Count DECLARATION I declare that this graduation project is based on my original work except for quotations, theories and citations 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 The word count is 10228 words –––––––––––––––– Nguyen Ha Quyen Date ACKNOWLEDGEMENT First of all, I would like to express my sincere apprecition to my supervisor, Dr Pham Duc Hieu who has guided me throughtout this thesis His constant guidance, insightful suggestions, and constructive ideas are the essential inputs and encouragement for me inorder to complete this thesis Next, I would like to acknowledge to manager as well as all of employees in enterprises of Vietnam about the impact of Corporate Social Responsibility (CSR) by cases and evividences.Without their contribution, I could not be able to gather much information for my research Lastly, I would like to extemd my heartfelt gratitude to my friends for their continuous support, encouragement and contribution, which have been crucial during the presentation of this report My thesis cannot be finished without your supports THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY (CSR) IN VIETNAM: CASE AND EVIDENCES BY NGUYEN HA QUYEN April 2011 Supervisor: Dr Pham Duc Hieu Corporate Social Responsibility (CSR) has been the subject of substantial academic debate for over two decades In recent year, Corporate Social Responsibility (CSR) becomes the term that might be familiar with developed countries especially capital countries However in Vietnam, Corporate Social Responsibility is not popular with most of enterprises although some businesses have adopted CSR policies and rules of ethics, but they are often based on approaches from the top down Suppliers apply moral rules upon request from customers rather than developing their own CSR to expand the market share And this could require many businesses to adopt rules and ethics vary, depending on the number of customers that their transactions, and sometimes they have contradictory Moreover, the understanding of the concept of CSR in Vietnam has significant changes, both nationally and in enterprises However in recent years when the economy is more open and there are many critical cases and evidences concerning with Corporate Social Responsibility as the result of the economic crisis and in additional, understanding the importance as well as the role of CSR in hence the competitiveness of Vietnamese enterprises against foreign enterprises That is the motivation for the researcher to conduct the survey about the importance and perception of CSR Through conducting the research, this research is able to indicate that the understanding the definition of CSR and its real value 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 Vietnam find not easy to use CSR as a tool to value firm and it is also difficult for them to make investment decision when CSR issues are considered Table of contents Declaration of Originality and Word Count Abstract Table of contents CHAPTER 1: INTRODUCTION 10 1.1 Research Background 10 1.2 Problem Statement 12 1.3 Objective of research 13 1.4 Range of Research 14 1.5 Research Methods 14 1.6 Structure of Research 15 CHAPTER 2: LITERATURE REVIEW 16 2.1 Research’s related concepts 16 2.1.1 CSR definition 16 2.1.2 Investment Decision 17 2.1.3 CSR reporting 17 2.2 Researches and Studies 18 2.2.1 Business Ethics in Vietnam 18 2.2.2 CSR, PR of Foreign Invested Companies 20 2.3 Researches Summary 22 CHAPTER 3: RESEARCH METHODOLOGY 24 3.1 Research Objectives 24 3.2 Theoretical Framework and Measurement 24 3.2.1 CSR Importance 25 3.2.2 CSR perception 25 3.2.3 Investment Decision 26 3.2.4 CSR Reporting 27 3.3 Measurement and Quality Design 28 3.3.1 Section 28 3.3.2 Section 29 3.3.2.1 CSR Perception 29 3.3.2.2 Investment Decision 29 3.3.2.3 CSR Reporting 30 3.4 Research Method 30 3.4.1 Sampling 31 3.5 Hypothesis Statement 32 CHAPTER 4: RESULTS ANALYSIS 33 4.1 Collection of Questionnaires 33 4.2 Description of Result 33 4.2.1 Age 33 4.2.2 Gender 34 4.2.3 CSR Awareness 34 4.2.4 Investment Decision 40 4.2.5 CSR Reporting 45 4.3 Result Analysis 47 CHAPTER 5: CONCLUSION AND RECOMMENDATION 48 5.1 Summary 48 5.2 Recommendation 50 5.3 Limitation 52 5.4 Direction for Future Research 54 Reference 55 APPENDICES 58 List of Figures and Tables Table 1: Age 33 Table 2: Gender 34 Table 3: Question - Result and Analysis 35 Table 4: Question - Result and Analysis 37 Table 5: Question - Result and Analysis 38 Table 6: Question - Result and Analysis 39 Table 7: Question - Result and Analysis 40 Table 8: Question - Result and Analysis 42 Table9: Question - Result and Analysis 43 Table 10: Question - Result and Analysis 44 Table 11: Question - Result and Analysis 46 Table12: Question 10 - Result and Analysis 47 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 CHAPTER 1: INTRODUCTION 1.1 Research Background As we know, in business, profit is placed on top but besides profit, we should to consider the interests of the community and society So, to understand this aspect, one question is set up about “What is Corporate social responsibility” and “How does it impact on Vietnam perspective?” Corporate Social Responsibility – CSR is not strange anymore to the developed world In the United States has club with named 'One PERCENT Club' is a collection of businesses committed to using at least 1% of their profits into social work In France also, a series of cultural funds of enterprises such as France Télécom (France Telecom), RATP (Subway Company) is the sponsoring unit of contemporary French art and many other countries around the world in general Beside that Corporate Social Responsibility is the commitment of business to business ethics and contribute to sustainable economic development, improve the quality of life for workers and their families, local communities and the society at large (World Council on Sustainable Development - WBCSD) Customers interested in CSR, responsible investors, policy makers and nongovernmental organizations around the world increasingly concerned about the impact of globalization on the lives of workers, environmental and community development CSR is considered an important factor as the other traditional factors such as cost, quality in business CSR is integrated into business strategy and becomes mandatory conditions for enterprises to survive and grow CSR become the main factor to consider in the decisions of responsible investment In addition to good reputation, businesses also get other 10 4.2.5 CSR Reporting Question Frequency Percent Strongly Agree 11 20.37% Agree 18 33.33% Disagree 14 25.93% Disagree 12.96% Strongly Disagree 7.41% Total 54 100.00% Neither Agree Nor Data Analysis Mean 3.462963 Standard Error 0.160173 Median Mode Standard Deviation 1.177028 Sample Variance 1.385395 Kurtosis -0.5046 Skewness -0.4847 Range Minimum 45 Maximum Sum 187 Count 54 Table 11: Question - Result and Analysis In question 9, respondents were asked about the understanding of the term of “CSR reporting” Most of the respondents answer this question by choosing “strongly agree” or “agree” accounted for 53.7% of the sample size Question 10 Frequency Percent Strongly Agree 13 24.07% Agree 18 33.33% Disagree 16 29.63% Disagree 9.26% Strongly Disagree 3.70% Total 54 100.00% Neither Agree Nor Data Analysis Mean 3.648148 Standard Error 0.14517 Median Mode Standard Deviation 1.066778 46 Sample Variance 1.138015 Kurtosis -0.21193 Skewness -0.50004 Range Minimum Maximum Sum 197 Count 54 Table12: Question 10 - Result and Analysis The last question was used to inspect the importance of CSR reporting for the respondents to make investment decision Most of the respondents choose “strongly agree” or “agree” which can show the need of CSR reporting for the respondents (57.4%) 4.3 Result Analysis The average means imply the relationship between independent variables and dependent variable The result will give a conclusion about the determined factors for CSR importance and perception of individual officers 47 CHAPTER 5: CONCLUSION AND RECOMMENDATION 5.1 Summary To sum up, the researcher focuses on the impact of CSR base on the cases and evidences not only in Vietnam but also in other countries Looking back to Vietnam, after what happened to Vedan, Tung Kuang, Vinamit, or untreated effluent from San Miguel Pure Foods Viet Nam Company into the 30km Thi Tinh River, which flows into the Sai Gon River, causing serious environment damage for hundreds of thousands of households in Binh Duong Province and HCM City etc probably need to go back to the problem formulation and implementation of social responsibility of business, or can say is that corporate culture in our country At the same period long time ago, CSR is may be something new and strange to Vietnam‟s enterprises but in the integration perspective, should be aware of how a global problem such as CSR? Corporate Social Responsibility- CSR is increasingly mentioned much on these forums Sociological perspective, Prof Bui Chi Trung, Aichi Shukutoku University (Japan), “that persistence, efficiency and development of the activities for the community should benefit from awareness of the business” Through conducting the survey and investigation of what is CSR? And How does it impact on Vietnam? It can said that, Vietnam‟s enterprises just know the simple definition or its concepts even CSR is strange term with them May be, CSR just emphasis in big businesses or joint venture business with Vietnam but in small and medium business they totally not care Even, many firms have wrong perception about CSR because they not research in depth or not practice in right way so that cause many scandals are such economic boom or crisis 48 After reviewing various sources of literature from different countries and within Viet Nam; the researcher has come up with the some factors which have been chosen for this study as follows: - CSR definition - CSR concepts and its importance - CSR perception - Investment Decision - CSR Reporting The result of the research has shown that, not all factors are affecting the CSR importance for the individual investors This project is to help the companies operating in Vietnam approach the concept of Corporate Social Responsibilities Accordingly, most of these companies need to increase the long-term competitive advantages through the adaption of these particular areas in their operating Furthermore, this result provides the employees‟ perspective about the Corporate Social Responsibilities to make sure that the consistence of applying CSR smoothly from the top to the bottom in each organization This comes from the fact that the concept of CSR just only equipped for manager or relating people, and quite new for employees, however they mainly contribute into business organization This result also help to support the universities more concentrate in to these particular areas in accounting study programs This will encourage awareness of Vietnamese accounting students relating CSR lead to the increase the quality of accountants in the next time to adapt the social needs And last but not least, CSR reports will the regulation, the standard for implication for making financing decision for investors, they know that CSR implementation 49 and activities are good for firm, themselves and the society as the whole on the longterm basis 5.2 Recommendation After finding impact of CSR in Vietnam, it is necessary to supplement and complete the legal frame of Viet Nam to create firm legal foundation for CSR activities This is good measure because law is the most obvious frame for CSR In Viet Nam now it is necessary to complete the related Acts such as Investment Act, Labour Act, Enterprise Act, and Environment Act and so on An important reason for weakness of CSR starts from the incompleteness in Viet Nam‟s laws Complete and rational regulations will prevent firms from conducting the wrong things by exploiting the law slot Beside that, instead of receptive knowledge about CSR, Vietnam should have own and certain standard or regulation for firms in any form of business such as many developed countries They have grown to specify the responsibilities of business by the rules of conduct and international standards of quality The provisions of this standard have been adopted as mandatory conditions of trade Therefore, the developing country like us that want economic integration, we need to have the same view like them In typical, in countries where have the developed of CSR activities, major of entrepreneurs not see it as charity work, but considered CSR as such a duty of the business to the community Enterprise is also a factor in society, as citizens with rights and obligations, is a part of society because of belonging to society, living off society Although, CSR is not yet in widespread development and social work and evaluate businesses in Vietnam still weak so that to raise community awareness is the task of communication and education Vietnam should remain the basic sense of 50 the business If Vietnam‟s businesses were aware of our duties and really want to do, we will use the mind to be more creative ways to suit our conditions Enhancing the awareness of CSR can be the most work for all of the firms as a whole to avoid the wrong activities and leave bad consequences even serious that cause harm and damage for community and themselves Like serious case and scandals can be stated 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 This incident has almost ruined the industry in Vietnam Since this time all soy sauce companies are required to put a statement on every product: “No 3-MCPD” in their product to ensure customers of the safety of the product This mistake causes the serious consequences for industry that is too sensitive of Vietnam So that, CSR with quality of product or consumer protection becomes more focus Another way, business has no committee in charge of social work, so they should cooperate with non-government organizations / non-profit professional and which has professional way for their contribution to social in the most effective associations Enterprises should has clear strategy by determining the step as such questions like Where, need what , how much, how supported, how are these question snot only with the heart that can answer that need investigation and research Because of joining WTO, there are many organizations in over the world and many foreign enterprises cooperate with Vietnam so that we have more opportunities to learn and receptive their method about related CSR According to Mr Le Anh Tuan, Director Vietnam have of External Cooperation of the National Prudential shared his opinion with Youth on CSR “enterprises may not need to establish a department in charge of CSR, but business 51 leaders must be aware of the existence of CSR in the process of strategic planning and business decisions.” It means with any kind of business, CSR must be care as right and obligation, as their duty And how does the investors? After the findings about CSR in Viet Nam reveal some positive signals, the awareness of Vietnamese intellectual and investors about CSR still has some seriously shortcomings The shortcomings not only harm investors but also cause a bad image for organization and society as the whole which will affect long-term benefits of investors We can see that the understanding of CSR related concepts and terms are limited; therefore, there is a need to raise the awareness and perception of CSR related issues It is also needed to enhance awareness of investors and society as the whole of CSR Awareness and understanding of CSR will help the investors have better understanding of firm and use it as a good measure in valuing firms Moreover, not only investors or businessmen but also the whole society should be aware of CSR To so, it is required to have various information channels Having that, the firm will be more attractive for investors as they are able to find information about the firm easily and accurately Better understanding of firm will enhance trust of investors in investing in that firm 5.3 Limitation In any aspect of issue, there are also has advantage and disadvantage so that deal with this research, there are some limitations which make the research not sufficient, accurate and wide-scale enough Because of lacking perception about CSR so that enterprises have the deviance view or wrong understanding of its As many small businesses may have accumulated large, they think that they may have to implement social responsibility, including ethical perspective but on a smaller scale, making the factories is diverse There are a lot of businesses that applied to 52 me as a highly effective campaign, that campaign fund or support the implementation of social responsibility in the form of "matching gift" In this way, the company will contribute an amount equal employees, partners and their to or more than the total amount mobilized from customers Moreover, in reality in the country still has many small businesses said that they were too small, very weak so that they has no opportunities to care CSR and develop it But in fact, small sized companies the profit have to show responsibility for society, if not enough power, sharing at least products and business operations of services the company and as well is as production and not detrimental to workers, to communities, including human factors, natural environment and society It still belongs to the CSR perception, many business opinions that make social responsibility is to polish brand name According Trung, Aichi Shukutoku University (Japan), “Large not implement the responsibility to society, to Prof Bui Chi companies that then sooner or later also lost reputation So, naturally, as good things, the brand and corporate image becomes more beautiful, nothing critical mass Trends if there is criticism because many people think PR (Public Relations external communication) merely MR (Media Relations - communication via the press).” Lack of awareness will guide to make misunderstanding so that it is difficult to conduct the survey on Vietnamese officers The limited objects could lead to the narrow and limited understanding of the population There are some other types of officers such as institutional and foreign ones Next, there is the small sample size used in the research Beside that, the research does not pay attention to characteristics of officers such as gender and age Hence, the mostly old sample size may not be good for understanding the whole population 53 as there may be difference in understanding and perception due to age Gender also plays an important role in any research; however, due to limitation in time and budget, the research find hard to expand the research into other aspects 5.4 Direction for Future Research Deal with many various limitation mentioned above, there will be some suggestions for the future researches on the similar or related topics The range of research should be bigger which can be conducted in Hanoi or other city of Vietnam, of course the time duration need more than that Furthermore, other contributing factors may be included for further understanding of the topic 54 Reference CSR Report of Yokohama Tyre Vietnam Inc http://www.yrc-pressroom.jp/env_en/pdf/10/10e_vietnam.pdf Corporate Social Responsibility, Public Relation of Foreign- Invested Companies and case study in Bong Mieu gold mining co.Ltd- Ho Thien Nga- Economy Da Nang University http://www.kh-sdh.udn.vn/zipfiles/sv2008tb16/08R%20ho%20thien%20nga30K01.2.pdf Business Ethics- Reality and Solution- Dr Nguyen Hoang Anh- Trade Hanoi University http://www.hids.hochiminhcity.gov.vn/Hoithao/VNHOC/TB5/anh.pdf Culture, Governance, Structure and CSR reporting Quality Evidence from China, Malaysia and the UK http://www.afaanz.org/openconf/2010/modules/request.php?module=oc_program&a ction=view.php&id=269 Verbatim: How Businesses View Sustainability & CSR Reporting- by Tim Smith Walden Asset Management- July 27, 2010 55 http://business-ethics.com/2010/07/27/4298-in-their-own-words-how-businessesview-sustainability-and-csr-reporting/ Corporate Social Responsibility http://www.mallenbaker.net/csr/definition.php PR: CSR awareness and advantages of Vietnam enterprise- Feb 26, 2007 http://www.massogroup.com/cms/vi/kien-thuc/thuong-hieu-truyen-thong-tiepthi/3076-pr-nhn-thc-va-li-th-csrtrong-dn-vit-nam.html CSR Lessons from China's Milk Scandal- November 3, 2008 http://csrinternational.blogspot.com/2008/11/csr-lessons-from-chinas-milkscandal.html CSR in developing Countries- Wayne Visser http://www.waynevisser.com/chapter_wvisser_csr_dev_countries.pdf The role of CSR- June 1, 2009 http://www.massogroup.com/cms/content/view/5892/290/lang,en/ Business Social Responsibility (CSR) http://www.bpsc.com.vn/csr.asp 56 WBCSD (1998) - CSR: Meeting changing expectations, pg.3- May 5, 2010 http://www.wbcsd.ch/includes/getTarget.asp?type=d&id=ODgwMw 57 APPENDICES Appendix A: Questionnaire Sample The Survey on Impact and Important of CSR in Vietnamese officers Ha Noi, Vietnam Please choose the most appropriate answer: Age: Gender: Question 1: I am percept of the term “Corporate Social Responsibility” a Strongly Agree d Disagree b Agree c Neither Agree nor Disagree e Strongly Disagree Question 2: I understand the term “Corporate Social Responsibility” a Strongly Agree d Disagree b Agree c Neither Agree nor Disagree e Strongly Disagree Question 3: Corporate social responsibility is NOT only limited to regulation compliance a Strongly Agree d Disagree b Agree c Neither Agree nor 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 d Disagree b Agree c Neither Agree nor Disagree e Strongly Disagree 58 Question 5: I understand the term “responsible investment” a Strongly Agree d Disagree b Agree c Neither Agree nor Disagree e Strongly Disagree Question 6: I use CSR to access potential viability of firm a Strongly Agree d Disagree b Agree c Neither Agree nor Disagree e Strongly Disagree Question 7: I use CSR related information in valuing firm a Strongly Agree d Disagree b Agree c Neither Agree nor 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 d Disagree b Agree c Neither Agree nor Disagree e Strongly Disagree Question 9: I understand the term “CSR reporting” a Strongly Agree d Disagree b Agree c Neither Agree nor Disagree e Strongly Disagree Question 10: I will be more likely to invest in a firm which issues CSR reports a Strongly Agree d Disagree b Agree c Neither Agree nor Disagree e Strongly Disagree 59 ... 1981 to find “business ethics” how is defined? in the research papers and in the consciousness of the business After finding the common point of the concept, he synthesized and introduced the concept... Sampling The study‟s focus is on gathering the understanding and perception of Vietnamese officers The sample is chosen randomly among officers going there with n = 60 Since the officers there... However, they are given the common theory about CSR “responsibilities of the institutions in shaping, directing and controlling the business in the direction of respecting individual rights and promote