Doctoral thesis summary factors afecting the application of social responsibility accounting of fdi enterprises in vietnam

STRY OF EDUCATION FOREIGN DOCTORAL TRADE AND TRAINING UNIVERSITY THESIS SUMMARY FACTORS AFFECTING THE APPLICATION OF SOCIAL RESPONSIBILITY ACCOUNTING OF FDI ENTERPRISES IN VIETNAM Major: Business management Code: 9340101 Ha Noi, 2023 THE THESIS IS COMPLETED FOREIGN TRADE IN: UNIVERSITY Supervisor: 1- Associate Professor, Dr Nguyen Thi Thu Hang 2- Dr Nguyen Phuc Hien Reviewer 1: Reviewer 2: Reviewer 3: The thesis will be defended in front of the University level Council of Thesis Assessment at ear The thesis can be found at the National Library and Library of Foreign Trade Universisy RELEVANT No PUBLICATIONS Product's name Research on factors affecting the application of social responsibility accounting in enterprises in Hanoi city Publication] _ Magazine’s name time 772020 | Journal for Economic Forecasting | Factors affecting the implementation | of social responsibility in FDI enterprises in Bac Ninh province 2/2021 3_ | 3/2022 | Joumal of Accounting, Auditing & Finance Implementing social responsibility of | FDI enterprises in Vietnam | Factors affecting social responsibility | 2020-2022 | accounting in enterprises in the plastic industry in Vietnam | Accounting for social responsibility in plastic enterprises in Vietnam Journal for Economic Forecasting Ministry-level Science and Technology Project (participants) 2022 Monographs (participants) INTRODUCTION 1.Rationale Vietnam's economy is on the way to growth and development in recent years Besides the improved quality of life, Vietnam has been facing many problems of overexploitation of natural resources, environmental destruction, social imbalance, etc Since 2015, the Government has also set a very clear goal: not to trade off the environment for growth, to realize the goal of sustainable economic development Therefore, CSR and SRA should be paid attention to and implemented by businesses as soon as possible Enterprises implementing social responsibility use SRA as a tool to help enterprises record, reflect, effectively manage and publicize CSR activities with stakeholders The application of SRA helps businesses solve many key issues in their sustainable development goals, including (1) Helping businesses to manage internal issues well, managers always need project information Report on risks and responsibilities that may arise causing damage to businesses or effective methods of CSR cost management (2) Help businesses communicate images, improve reputation with customers, and increase trust information to investors (3) Help the functional management agencies of the state capture information of enterprises to implement measures to manage and manage enterprises In Vietnam, after more than 30 years of opening up and integrating into the world economy, many opportunities have been opened for foreign businesses to invest in Vietnam Currently, foreign-invested enterprises (FDI) have been present in all 63 provinces and cities across the country and are increasingly expanding in many fields, from mining, and agro-forestry to the processing industry and other industries service sectors such as real estate, healthcare, education, hotels, the processing industry accounted for the highest proportion (53.8%), followed by real estate services (20.9%) , the rest of other industries have the proportion of less than 5% (GSO, 2020) A total of 101 countries and territories have invested in Vietnam, of which Korea, Japan, Singapore, Taiwan, and Hong Kong are at the top There are more than 20,000 FDI enterprises, accounting for more than 3% of the total number of enterprises in the country in 2019, but the FDI enterprise sector attracts 4.5 million employees - accounting for more than 31.1% of the total labor force of the country; total net revenue reached VND 5.8 million billion - accounting for 28.1% of enterprises nationwide, accounting for about 25% of total social investment; contribute 18.7% GDP, about 10% of total state budget revenue; annual export tumover of FDI enterprises accounts for 70% (Foreign Investment Department, 2020) creating a positive impetus to improve the export structure and balance of foreign trade in Vietnam However, besides the contributions of FDI enterprises to the economy, there are still major shortcomings related to the social responsibility of enterprises with stakeholders in the process of production and business activities such as FDI projects invested in Vietnam have average technology compared to the world (80%), a significant part has outdated technology (14%) and only 6% has high technology (GSO, 2020) Many FDI projects have put on outdated technology lines and are not self-conscious about complying with regulations on environmental protection, thus having negative impacts on the environment The benefits of employees in terms of salary, bonus, overtime regime, arrears of insurance also take place in many enterprises The criteria for sustainable development: environmental protection, social security assurance, employee welfare are not well implemented To achieve the goal of sustainable development, SRA in FDI enterprises in particular and enterprises in general needs to be concerned and implemented This is one of the important sources of information that must be provided by businesses to meet the increasing needs of business administrators in management and administration activities as well as those of the Government, relevant ministries and agencies in joint activities to implement social responsibility SRA is still an open field, not yet regulated in the legal framework of accounting such as the Law on Accounting, accounting standards and accounting regime in Vietnam In enterprises in general and FDI enterprises in Vietnam in particular, SRA especially is the recognition of assets for CSR activities, social responsibility expenses, provision of information on social responsibility liabilities, and provision of information on CSR activities Income/incentives for social responsibility activities are almost new content in terms of awareness, theory and practice The SRA, if any, is only considered as a number of transactions arising, recorded and reflected, integrated or implemented in the enterprise's accounting system Stemming from that research gap, the PhD student chose to carry out his doctoral thesis: "Factors affecting the application of social responsibility accounting in FDI enterprises in Vietnam" Aim of the study: Firstly, the dissertation focuses on studying the factors affecting the application of social responsibility accounting in FDI enterprises in Vietnam Second, the dissertation builds a model and tests to discover the factors affecting the application of SRA in FDI enterprises in Vietnam Third, the dissertation offers some recommended solutions to enhance the application of SRA in FDI enterprises in Vietnam Research question Question I: What factors affect the application of SRA in FDI enterprises in Vietnam? Question 2: How is the application of SRA in FDI enterprises in Vietnam from 2015 up to now? Question 3: How are the factors affecting the application of SRA in FDI enterprises in Vietnam? Question 4: What solutions are needed for businesses and what recommendations should be made to state management agencies to promote FDI enterprises in Vietnam to apply SRA in the coming time? Object and range of Research 4.1 Research object The research object of the dissertation is the factors affecting the application of SRA in FDI enterprises in Vietnam, 4.2 Research Range Range of content: The dissertation deeply analyzes the current state of SRA of FDI enterprises in Vietnam and the factors affecting the application of SRA in FDI enterprises in Vietnam Spatial Range: Research dissertation on FDI enterprises in Vietnam Range of time: The scope of the dissertation is the period 2015 - 2021, and the time of the survey is 2021 5, Research Methods The qualitative research method with the main technique is desk research Quantitative research methods: questionnaire, assessment of reliability and relevance of the scale, testing of research models and research hypotheses through exploratory factor analysis (EFA) and analysis of the linear model PLS-SEM Data is processed on Excel software, Smart PLS version 3.0 and Stata version 16.0 New contributions of the dissertation 6.1 Theoretical significance Firstly, the dissertation has synthesized an overview of domestic and foreign studies and systematized the theory of SRA Second, the dissertation builds the model; tests the research hypothesis; identified 06 factors affecting the application of SRA by FDI enterprises, including awareness of managers, awareness of accountants, characteristics of FDI enterprises, legal framework, social pressure, and industry competitive pressure 6.2 Practical implications Firstly, the dissertation has analyzed and evaluated the current SRA status of FDI enterprises in Vietnam Secondly, the research results of the dissertation help researchers, managers of FDI enterprises and Vietnamese managers identify the factors affecting the application of SRA in FDI enterprises in Vietnam This is the basis for continuing to carry out applied research in the future to come up with solutions to enhance the application of SRA in FDI enterprises in the coming time Third, the dissertation has proposed solutions based on its research results to recommend to business administrators and managers to enhance the application of SRA in FDI enterprises in Vietnam in the coming time Structure of the dissertation Chapter 1: Overview of research related to the dissertation Chapter 2: Theoretical basis of factors affecting the application of SRA in FDI enterprises and research hypothesis Chapter3: Research Methods Chapter 4: Research results on factors affecting the application of social responsibility accounting in FDI enterprises in Viet Nam Chapter 5: Proposing solutions to strengthen the implementation of social responsibility accounting in FDI enterprises in Vietnam CHAPTER OVERVIEW OF RESEARCH I TO THE DISSERTATION 1.1 Research on social responsibility of enterprises: Social responsibility for employees Studies have shown the role and contents of this CSR activity with employees Turban and Greening (1997); Tsoutsoura (2004); Bauman and Mashruwala (2007) have the same conclusion: businesses with strong CSR commitment are often able to attract talent and retain employees, leading to reduced recruitment and training costs CSR for customers Research by Sen and Bhattacharya (2011) shows a positive relationship between customers’ attitudes and behaviours towards the products of companies performing CSR activities (Shapiro,1983) Xueming Luo & Bhattacharya (2006), Saei et al., (2015), Fatma and Rahman (2016), and Karaosmanoglu et al., (2016) indicate that CSR helps increase satisfaction, and loyalty and increases sales through the mediating variable of customer perception CSR for the community Okuda (2012) found a positive relationship between CSR and benefits for the whole society CSR for the environment: CSR activities for the environment emphasize issues such as responsible waste treatment and emission standards, conservation of “green” resources, and training and development of environmental technology Nguyen Dinh Cung and Luu Minh Duc (2009) Social Responsibility to Investors: Research by Gillis and Spring (2001) confirms that investors want to invest in socially responsible businesses 1.2 Research on social responsibility accounting The world's SRA studies appeared in the 1970s when the trend of green and sustainable economic development was of worldwide interest The contents of the research on social responsibility accounting fully cover the concepts, roles, nature, recording, measurement and preparation of financial statements The period of the 1970s: the scientists introduced the concept Ramanathan, 1976) The period from the 1980s research by scientists on the concept, period when the first research on SRA appeared, of socio-economic accounting (Mobey, 1970; to the 1990s: a period of development of much role, measurement, recording and reporting of SRA Guthrie & Parkker (1989) Harte and Owen (1991) Gray et al (1993) Akabar Sadeghzadeh (1995) Mathews (1997) The period from 2000 to the present SRA studies are linked to sustainable development goals The important role of SRA tools in sustainable development goals is proven in many studies Camen et al (2011) Sajad Gholami et al (2012) More research on new development trends of the SE Anna Wildowicz-Giegiel (2014) appeared In Vietnam, studies on SRA began to appear in 2014 with the study of Nguyen Thi Huong Lien (2014) New studies only focus on conceptual analysis and the important role of SRA in enterprises with the growth trend associated with sustainable development Huynh Duc Long (2015) Duong Thi Thanh Hien (2016), Besides, there are also some studies analyzing the experience of applying CSR in enterprises in some countries around the world Nguyen Thi Thu Hang (2017) Tran Ngoc Hung and Nguyen Thi Thuy Hanh (2021) 1.3 Research on factors affecting the application of social responsibility accounting Research on factors affecting the application of SRA in enterprises appeared in the 2000s and focused on developing countries There are groups of factors inside and outside the business ‘Authors Sabha & Shoubaki (2013) Salam N Al-Moumany, Mohammad A AlMomani, Mohammed I Obeidat (2014) give the factors of corporate reputation and added value of enterprises Doherty and Meehan (2004), Amos Otuma Nkaiwatei (2011), Makori & Jagongo (2013), Asit Bhattacharyya (2014), CollineGwone (2016) again pointed out that profitability factors and profitability of enterprises affect the adoption using SRA in enterprises The factor of managers! perception and awareness of accountants is also mentioned by the authors Nik, Razana, Muzlaina (2004), Nongnooch Kuasirikun (2004), Suleiman & Youns (2013) Nguyen Minh Phuong (2017) Nagib (2012), Asit Bhattacharyya (2014) and Nguyen Minh Phuong (2017) indicate that the factor of type and size of enterprises also has an impact on the application of SRA in enterprises Besides, the legal factor is also mentioned by the authors in their research Nik, Razana, Muzlaina (2004) Suleiman, Youns (2013) Nguyen Minh Phuong (2017) Industry competitive factors are also pointed out by Amos Otuma Nkaiwatei (2011), and CollineGwone (2016) in their research results 1.4 Research gaps ‘An overview of research works in the world shows that research on factors affecting the application of SRA has been carried out a lot in developing countries while in Vietnam this topic is still very limited Especially, there has been no previous research on the factors affecting the application of SRA in FDI enterprises Therefore, the dissertation is the first scientific research on this issue in Vietnam, analyzing the current situation and finding out the factors affecting the application of SRA in FDI enterprises in Vietnam, from the results The study provides valuable solutions and recommendations to promote the application of SRA in FDI enterprises in the coming time CHAPTER THEORETICAL BASIS OF FACTORS AFFECTING THE APPLICATION OF SOCIAL RESPONSIBILITY ACCOUNTING IN FDI ENTERPRISES AND RESEARCH HYPOTHESIS 2.1 Theoretical basis of corporate social responsibi 2.1.1 Overview of corporate social responsibility According to Thomas and Lee (1995); Mishra and Suar (2010) CSR is the responsible actions of enterprises towards stakeholders such as employees, community, environment, suppliers, investors, and customers In this view, CSR activities that will be directly linked to stakeholders are specific activities that can be measured and compared between businesses According to the theory of stakeholders, when a business is accountable to its stakeholders, the stakeholders will have a positive impact on the business At this time, CSR is measured according to each aspect of CSR for employees, environment, community, suppliers, customers, investors/lenders Thus, CSR is quite comprehensive, easy to define and easier to compare than Carroll's CSR pyramid Therefore, the author's concept of social responsibility also follows this approach "Corporate social responsibility is understood as the voluntarily responsible actions of the enterprise towards its stakeholders such as employees: activities, suppliers, customers, investors/lenders, communities, the environment to achieve sustainable development goals in the future” According to the OECD definition of FDI “Foreign Direct Investment (FDI) reflect the goal of an entity domiciled in one economy (direct investor) wanting to acquire a longterm interest (interest) in an entity resident investment enterprises) When in another economy investors (direct a foreign investor has a controlling interest in an enterprise in the home country that is created or acquired by the investor, such investment is understood as foreign direct investment (FDI) 2.4.2 Characteristics of FDI enterprises FDI enterprises can be formed in the host country in two different ways: through new investment or through the merger or acquisition of an existing enterprise in the host country FDI enterprises have the characteristics of being controlled by foreign investors (which are TNCs) TNCs will decide what FDI enterprises produce, with what technology and where to produce ‘As a multinational organization, FDI enterprises always have a connection to many international trade markets and financial markets The policies in the host country will directly regulate the investment activities of FDI enterprises FDI enterprises formed from TNCs with brand and reputation when investing in host countries, will not only receive capital investment but also transfer other assets and resources such as technology, management skills, market access, business capacity, etc 2.4.3 The role of FDI enterprises Increase financial resources and investment Technological capacity enhancement Promote export and trade competitiveness Create jobs and strengthen vocational skills for workers in the host country 2.5 Research hypotheses Hypothesis HI: The perception of business managers (Board of Directors, Board of Directors, parent company) about SRA has a positive impact on the application of SRA in FDI enterprises Hypothesis H2: Characteristics of FDI enterprises have an impact on the application of SRA in FDI enterprises 12 Hypothesis H3: Social pressure on corporate social responsibility has a positive impact on the application of SRA in FDI enterprises Hypothesis H4: The legal framework for foreign investment activities in Vietnam has a positive impact on the application of SRA in FDI enterprises Hypothesis HS: The accountant's perception of SRA has a positive impact on the application of SRA in FDI enterprises Hypothesis H6: Industry competitive pressure has a positive impact on the application of SRA in FDI enterprises Agency Theory, Legitimacy Theory 2.6 Proposing expected research model Figure 2.2: The author's proposed research model 13 CHAPTER3 RESEARCH METHODS 3.1 Research process The thesis uses a combination of qualitative research and quantitative research Qualitative research was carried out by in-depth interviews with economic experts, and representatives of FDI enterprises to adjust the model, scale and re-adjust the questions in the questionnaire before conducting research on quantitative and formal validation of the model Formal quantitative research was conducted with 439 FDI enterprises through the survey method Collected data is used to test the reliability of the scale, exploratory factor analysis, OLS regression analysis and PLS - SEM analysis to test the research hypotheses Research Steps Preliminary research: Using qualitative research methods, used to discover, adjust and supplement observed variables and measure research concepts On the basis of relevant theoretical research, look up previous research documents to come up with preliminary models and scales, thereby building a preliminary questionnaire (1) Conduct a survey of 60 respondents (representatives of FDI enterprises) to detect errors in the preliminary questionnaire (2) distilled from qualitative research Then continue to correct the errors to have a complete interview table for inclusion in the official quantitative research Formal Research: Formal research is carried out using a quantitative research method This study was carried out through the method of direct interviews with the research subjects using a formal questionnaire after being corrected from the qualitative research results Three main contents were carried out in this formal quantitative research step: (1) exploratory factor analysis (EFA); (2) Least Squares regression method ~ OLS; (3) partial least squares method applied to structural modelling (PLS-SEM - Partial Least Square Structural Equation Modeling) 3.2 Scale design and Questionnaire design Likert Scale: Uses a 5-point format that asks survey participants to indicate their degree of agreement or disagreement with survey questions The scale is built for independent variables and | dependent variable 14 Design of the questionnaire: After having built the scale and the component observed variables based on expert opinion, the author built the questionnaire The content of the questionnaire is divided into two parts Part 1: General information about FDI enterprises Part includes questions for the scale of factors affecting the application of SRA in FDI enterprises in Vietnam; Likert scale with levels (level 1: strongly disagree, level 5: strongly agree) 3.3 Sampling method Determining the research crowd: The sampled subjects in the study are business executives, with titles such as Director/Deputy Director of the enterprise, Director/Deputy Executive Director, Head/Deputy Head of Accounting Department, Head/Deputy Head of Investment Planning Department, Head/Deputy Head of Marketing Department accountant Determination of sample size: Hair et al (1998) suggested that the sample size should be at least 50, preferably 100 and the ratio of observations/measure variables is 5/1, that is, for each measurement variable The measurement requires a minimum of observations The dissertation studies 30 variables Therefore, the minimum for EFA analysis requires 300 observations In addition, according to the 10-fold rule commonly used in PLS-SEM model analysis (Hair et al., 2012; Goodhue et al., 2012), the minimum, number of samples needed is 190 samples However, to ensure enough reliability for the topic, the author sets a sample target of 500 samples randomly distributed by region and capital size for 200 FDI enterprises Select sampling method: random sampling method because each element in the study population has the same chance of being selected (Pham Viet Thang, 2018) 3.4, Methods of collecting and processing information With primary data: the study conducted both face-to-face interviews and online interviews (via email or Google Form questionnaire) The survey period is from October 2021 to December 2021 The study uses the following methods to process quantitative data and test the research model: - Descriptive statistics 15 ~ ~ - Check the reliability of the scale by Cronbach's Alpha coefficient Exploratory factor analysis - EFA Next is to check the variance magnification factor Linear structural model PLS-SEM CHAPTER CURRENT STATUS OF SOCIAL RESPONSIBILITY ACCOUNTING IN FDI ENTERPRIES IN VIETNAMN AND INFLUENCING FACTORS 4.1 Context of FDI enterprises in Vietnam According to statistics from the Ministry of Planning and Investment (2022), by 2022 there are about 24,890 FDI enterprises in Vietnam which there are mainly enterprises with 100% foreign capital with about 20,000 enterprises, accounting for 80%; joint ventures with foreign countries at 20% The number of FDI enterprises investing in Vietnam tends to increase gradually in the period 2015-2022 25,000 20,000 15,000 10,000 5,000 20,508 18,762 nạo 16,178 14,002 10,238 1978 16878 4,015 4.755 J6.081 | m 2015 = Total FDI enterprises a 2016 Joint venture enterprises wit foreign counties a 2017 a 2018 R 2019 i 2020 ‘= Enterprises with 100% foreign capital Figure 4: 1: Number of FDI enterprises in Vietnam in the period of 2015 — 2020 Source: Statistical Report of the Ministry of Planning and Investment 2021 FDI enterprises in the past period have made positive contributions to the economic development of Vietnam 4.2 Current status of social responsibility accounting in FDI enterprises in Vietnam 4.2.1 Legal basis for social responsibility accounting in FDI enterprises Currently, Vietnam does not have any specific regulations or guidelines on recording and measuring the objects of the SE, so FDI enterprises also only record in the 16 notes to the financial statements as another accounting object to reflect reflect the annual reports, social responsibility reports or sustainable development reports of enterprises The first document referring to the requirements and guidelines for information disclosure related to the report on the performance of corporate social responsibility is Circular No 155/2015/TT-BTC dated October 6, 2015 of the Ministry of Finance Finance on guidance on information disclosure on the stock market This Circular guides enterprises to present general information about enterprises, including sustainable development goals in terms of environment, society and community In addition, FDI enterprises also use GRI standards to guide the preparation of sustainable development reports: Samsung, Lavie, Toyota Vietnam, Panasonic or guidelines on social responsibility reporting and annual reporting 4.2.2 Status of classification and recognition of social responsibility accounting objects in FDI enterprises The FDI enterprises all have CSR activities and identify the CSR objects in the reports on the CSR activities of the enterprises Enterprises all generate objects of CSR assets, CSR liabilities, CSR expenses and CSR income However, these objects have not been classified and recorded separately and independently: CSR assets and liabilities are still recognized together in other assets and liabilities of the company, and related CSR expenses There are also many issues related to the environment and community of the company, but they are still recorded in production and business expenses in the period, and are only disclosed in the company's annual report Inadequate and clear recognition of CSR objects makes the company's CSR information about CSR activities communicated to managers and related subjects inaccurate, from which they will not give out make accurate decisions for the company's long-term development plan, 4.2.3 The reality of social responsibility accounting information disclosure in FDI enterprises Case study on the application of social responsibility accounting of the top 50 FDI enterprises that won typical awards in CSR activities or sustainable development: These top 50 FDI enterprises are enterprises in the period 2015 - 2020 that have contributed Actively contributing in CSR activities and recognized and honoured by the social community through the awards of CSR or sustainable development enterprises Statistics on the case study sample, the percentage of enterprises disclosing CSR information 17