study on corporate social responsibility of Vietnamese Corporations (Nghiên cứu về trách nhiệm xã hội của Tổng Công ty Việt Nam)

VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Le Thi Quynh Anh A STUDY ON CORPORATE SOCIAL RESPOSIBILITY... VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS LE THI QUYNH

VIETNAM NATIONAL UNIVERSITY, HANOI

SCHOOL OF BUSINESS

Le Thi Quynh Anh

A STUDY ON CORPORATE SOCIAL RESPOSIBILITY

VIETNAM NATIONAL UNIVERSITY, HANOI

SCHOOL OF BUSINESS

LE THI QUYNH ANH

A STUDY ON CORPORATE SOCIAL RESPOSIBILITY OF

VIETNAMESE CORPORATIONS

Major : Business Administration

Code : 60 34 05

Master of business administration thesis

Supervisor: Dr VU XUAN QUANG

Hanoi – 2008

TABLE OF CONTENT

ACKNOWLEDGEMENT i

ABSTRACT ii

TÓM T ẮT iv

TABLE OF CONTENT vi

LIST OF ABBREVIATIONS viii

LIST OF TABLES ix

LIST OF FIGURES AND GRAPHS .x

CHAPTER 1 INTRODUCTION .1

1.1 Statement of the study .1

1.2 Objectives and Aims .2

1.3 Research questions .2

1.4 Scope of Work .2

1.5 Data Sources and Processing .3

1.6 Method .3

1.7 Significance and implications .3

1.8 Limitations .3

1.9 Expected Results .4

1.10 Disseminations .4

1.11 Follow-up .4

1.12 Short Introduction .5

CHAPTER 2 THEORETICAL FOUNDATION .6

2.1 The meaning of Corporate Social Responsibility .6

2.2 History of Corporate Social Responsibility .9

2.3 Fundamental Principles of Corporate Social Responsibility .10

2.4 The significance of Corporate Social Responsibility .12

2.5 Modern Forms of Corporate Social Responsibility .14

2.6 Benefits of CSR .17

2.7 Overview of Corporate Social Responsibility in the World .18

CHAPTER 3 RESEARCH AND DISCUSSIONS .23

3.1 Review of Corporate Social Responsibility studies .23

3.2 The Case study of FPT .27

3.2.1 The case of FPT 27

3.2.2 CSR in FPT 29

3.3 The case study of Vinamilk .34

3.3.1 The case of VNM 34

3.3.2 Social activities in VNM 37

3.4 The case study of Asia Commercial Bank (ACB) .40

3.4.1 The case of ACB 40

3.4.2 CSR in ACB 42

3.5 The case study of ITA Group .46

3.5.1 The case of ITA Group 46

3.5.2 CSR in ITA Group 49

3.6 Discussions .52

3.6.1 Overview of CSR implementation in Vietnamese Corporations 52

3.6.2 Comparisons among case studies 53

3.6.2.1 Similarities 54

3.6.2.2 Differences 57

CHAPTER 4 CONCLUSIONS AND RECOMMENDATIONS .60

4.1 Conclusions .60

4.2 Recommendations .61

4.2.1 For the Studied Corporations 61

4.2.2 For the Vietnamese Government and Social –oriented organizations 62

APPENDIX 1 .65

APPENDIX 2 .66

READING REFERENCES .67

LIST OF ABBREVIATIONS

APEC Asia-Pacific Economic Cooperation

CEO Chief Executive Officer

CSR Corporate Social Responsibility

FDI Foreign Direct Investment

IFC International Finance Corporation

MOLISA Ministry of Labor, Invalids and Social Affair

SMEs Small and Medium Enterprises

UNIDO United Nations Industrial Development Organization

LIST OF TABLES

Table 2.1 Foundation principles of CSR and their modern expressions 14 Table 3.1 Challenges at different levels to CSR application in Vietnam 24 Table 3.2 Highlight from social activities of FPT Corporation 32

LIST OF FIGURES AND GRAPHS

Figure 3.1 CSR tools and instruments in Vietnam 25

CHAPTER 1 INTRODUCTION

1.1 Statement of the study

Corporate Social Responsibility (CSR) has become an inescapable demand made by society for businesses all over the world Whether the business is large or small, makes goods or provides services, operates at home

or abroad, always tries to be socially responsible Many companies have already done much to improve the social and environmental consequences of their activities and are being encouraged by the society, government and related organization to become more socially responsible As a result, these companies gain more and more benefits from CSR such as being more productivity, more loyalty of employees and fame without spending much money on advertising

In Vietnam, CSR is still reported mostly being applied by textile and shoe production companies as a way to enter international market like USA or European Union These activities are supported with many training courses held by organizations like World Bank, UNIDO and Ministry of Labor and Social Welfare In fact, CSR has been applied more widely in business community under multiple kinds from sponsorship or philanthropy activities

to environment protection or social works For a better knowledge, this study will look into the theory of CSR, compare it with undergoing CSR activities and then give a full picture of CSR application in Vietnam However, CSR is still a very new concept to many Vietnamese enterprises; a few large corporations have enough willingness and financial conditions to implement

it As a result, four leading corporations representing for 4 industries like Information Technology - FPT Corporation, Food and Beverage -Vinamilk, Banking - Asia Commercial Bank and Real estate - ITA Group will be taken

as examples to identify how Vietnamese corporations have applied CSR along with their business and what benefits they have achieved through CSR

1.2 Objectives and Aims

In order to get a full knowledge of CSR application in Vietnam, the study will aim to achieve the following objectives:

1 Understanding the definition of CRS and its elements in term of theory

2 Figuring out what modern activities related to CSR all over the world

3 Analyzing CRS activities of certain Vietnamese corporations and their achievements

4 Giving conclusions and recommendation for promoting CSR activities

in Vietnamese business community

1.3 Research questions

To fulfill the objectives of the study, the following research questions need to

be answered:

• What is CSR and what are its forms?

• How does CSR develop and achieve all over the world and in

• Information Technology – represented by FPT Corporation (FPT)

• Food and Beverage – represented by Vinamilk (VNM)

• Banking – represented by Asia Commercial Bank (ACB)

• Real Estate – represented by Tan Tao Group (ITA Group)

1.5 Data Sources and Processing

• Documents/Reports of UNDP/World Bank/ UNIDO on CSR from

2002 to 2008

• Reports of Vietnamese government on CSR in 2003, 2005 and 2007

• Documents of FPT, VNM, ACB and ITA Group from 2002 to 2005

1.6 Method

This study is an empirical research which applied 2 methods:

• Review of related literature/documentation

• Interviewing relevant person

Review of Related Literature/Documentation: This will examine the multidisciplinary theories of and empirical studies on corporate social responsibility in the literature Beside, it will help to compare between theory and practical activities

Interview: Questions will be developed and structured interviews are conducted

1.7 Significance and implications

This study will contribute to the body of knowledge and understanding on CSR in Vietnam It will also help Vietnamese enterprises enrich their knowledge on CSR for better application in cooperation with business activities

1.8 Limitations

While the study examines 4 different industries, represented by 4 leading corporations, there are limitations on data sources for analyzing and giving

out discussions and conclusions Besides, the inconsistent reporting system of different corporations on CSR is also another limitation for the study

1.9 Expected Results

The study will give a better understanding on the CSR definition and its elements as well as the modern CSR activities in the World and in Vietnam Vietnamese corporations’ CSR awareness, implementation and achievements

is also figured out through successful case studies Moreover, some suggestions for promoting CSR in Vietnamese enterprises and the management of the Vietnamese government and social-oriented organizations are recommended at the end of the study

1.10 Disseminations

The result of study will be useful for many target groups

Many Vietnamese enterprises might be interested in the recommendations and the conclusions of the study, from which they can get useful information on how to react in CSR-related issues and how to benefit from them

The frame of reference on the other hand could be interesting for NGOs and Vietnamese government because of the more general information about CSR and different view of enterprises on CSR The findings in the theory will help them to set up a more suitable and appropriate scheme for their CSR training and evaluating programs

1.11 Follow-up

Further study will be taken on improvement of CSR understanding and implementation among Vietnamese enterprises based on the experience and achievements of large corporations Other way of study will be analyzing the impact of understanding level to CSR implementation in Vietnamese enterprises in some provinces particularly and all over Vietnam generally

1.12 Short Introduction

The research is divided into 3 parts which are including:

Chapter 2: Theoretical Foundation: will give a relevant theoretical

background to the study

Chapter 3: Research and Discussions: In this chapter, CSR

application in Vietnam will be reviewed Four leading corporations representing for four industries will be analyzed on their awareness,

real activities, cost and benefits They are including FPT Corporation,

Vinamilk, Asia Commercial Bank and Tan Tao (ITA) Group At the

end of this part, discussions will be given out after comparisons

Chapter 4: Conclusions and Recommendations: Conclusions and

recommendations will be noticed for better implementation of CSR in Vietnamese enterprises

CHAPTER 2 THEORETICAL FOUNDATION

2.1 The meaning of Corporate Social Responsibility

Corporate Social Responsibility (CSR) means that a corporation should

be held accountable for any of its actions that affect people, their communities, and their environment It implies that negative business impacts

on people and society should be acknowledged and corrected if at all possible

It may require a company to forgo some profits if its social impacts are seriously harmful to some of its stakeholders or if its funds can be used to promote a positive social good Although the concept of CSR has been developing since the early 1970s, there is no single, commonly accepted definition of CSR Below some examples of CSR definitions are showed:

"CSR is defined as operating a business in a manner that meets or exceeds

the ethical, legal, commercial and public expectations that society has of business CSR is seen by leadership companies as more than a collection of discrete practices or occasional gestures, or initiatives motivated by marketing, public relations or other business benefits Rather, it is viewed

as a comprehensive set of policies, practices and programs that are integrated throughout business operations, and decision-making processes that are supported and rewarded by top management."

Source: Business for Social Responsibility (http://www.bsr.org)

"CSR is the continuing commitment by business to behave ethically and

contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”

First definition of CSR in WBCSD CSR dialogue in The Netherlands

"CSR is a public movement, which has gained more momentum as citizens

demand corporations to be accountable for their impacts Consumers, investors and employees alike are recognizing the power held by corporations and efforts are being made on several levels to create global change with the hope that earth will become a better place."

Source: CSR Wire

“CSR is the concept that an enterprise is accountable for its impact on all relevant stakeholders It is the continuing commitment by business to behave fairly and responsibly and contribute to economic development while improving the quality of life of the work force and their families as well as of the local community and society at large.”

Source: European Union

“CSR is a term describing a company's obligation to be accountable to all of

its stakeholders in all its operations and activities Socially responsible companies consider the full scope of their impact on communities and the environment when making decisions, balancing the needs of stakeholders with their need to make a profit.”

Source: Ethics in Action

“CSR is concerned with treating the stakeholders of the firm ethically or in

a socially responsible manner Stakeholders exist both within a firm and outside Consequently, behaving socially responsibly will increase the human development of stakeholders both within and outside the corporation.”

Source: Michael Hopkins: A Planetary Bargain: CSR Comes of Age

(Macmillan, UK, 1998)

Based on all of the above definitions, CSR generally refers to:

1 A collection of policies and practices linked to relationship with key stakeholders, values, compliance with legal requirements, and respect for people, communities and the environment; and

2 The commitment of business to contribute to sustainable development, commonly understood as sustainable development is the ability of the current generation to meet its needs without compromising the ability

of future generations to meet theirs

The social responsibilities of business grow directly out of two features

of the modern corporation: the essential functions it performs for a variety of

stakeholders, and the immense influence it has on the lives of the stakeholders However, being socially responsible does not mean that a

company must abandon its other primary missions The challenge for management is the blending of many responsibilities (e.g.: economic, legal, and social) into a comprehensive corporate strategy while not losing sight of any of its obligations At times, the responsibilities will clash; at other times they will work together to better the firm Thus, having multiple and sometimes competing responsibilities does not mean that socially responsible firms cannot be as profitable as others less responsible; some are and some are not In other words, social responsibility requires companies to balance the benefits to be gained against the costs of achieving those benefits

2.2 History of Corporate Social Responsibility

Even though CSR is becoming more and more important these days, the idea of companies having a social responsibility goes back much further

The history of CSR is almost as long as that of companies Concerns about the excesses of the East India Company were commonly expressed in the seventeenth century There has been a tradition of benevolent capitalism

in the UK for over 150 years Quakers, such as Barclays and Cadbury, as well

as socialists, such as Engels and Morris, experimented with socially responsible and values-based forms of business And Victorian philanthropy could be said to be responsible for considerable portions of the urban landscape of older town centers today

The idea of companies taking a broader responsibility for their actions can be traced as far as to the 19th century (Smith 2003) In 1851 Sir Titus Salt (1803-1876) founded the industrial community Saltaire just outside Bradford, England Bradford was on that time the world’s textile capital but also one of the most polluted towns in England with an average life expectancy of 20 tears for its inhabitants By moving his factory to Saltaire the workers’ conditions improved considerably but it wasn’t only out of philanthropically reasons that Sir Salt moved his factory, he also realized that the workers were more productive if the working environment and living standards improved

By the time of Sir Salt’s death, Saltaire had 850 houses served with fresh water as well as a park, church, hospital and a library (Smith, 2003)

CSR appeared round the turn of the twentieth century in the United States Corporations at that time came under attack for being too big, too powerful and guilty of antisocial and anti competitive practices Critics tried to curb

corporate power through antitrust laws, banking regulations, and protection laws Faced with this kind of social protest, a few farsighted business executives advised corporations to use their power and influence voluntarily for broad social purposes rather than for profits alone Some of the wealthier business leaders – steelmaker Andrew Carnegie is a good example – became a great philanthropist who gave much of their wealth to educational and charitable institutions Others, like automaker Henry Ford, developed paternalistic programs to support the recreational and health needs of their employees The point to emphasize is that these business leaders believed that business had a responsibility to society that went beyond or worked in parallel with their efforts to make profits

consumer-2.3 Fundamental Principles of Corporate Social Responsibility

Because of these early ideas about business’s expanded role in the society, two broad principles emerged These principles have shaped business thinking about social responsibility during the twentieth century and are the foundation stones for the modern idea of CSR

The Charity Principle: the idea that the wealthier members of society

should be charitable toward those less fortunate is a very ancient notion Royal through the ages has been expected to provide for the poor The same is true for those with vast holdings of property, from feudal times to the present

There were many kinds of charity like: endowing public libraries, supporting settlement houses for the poor, giving money to educational institutions, and contributing funds to many other community organizations This kind of private aid to the needy members of society was especially important in the early decade of the century because at that time, there was no

Social Security system, no Medicare for the elderly, no unemployment pay for the jobless, and no United Way to support a broad range of community needs When the wealthy industrialists reached out to help others, they were accepting some measure of responsibility for improving the conditions of life

in their communities In doing so, their actions helped counteract the critics who claimed that business leaders were uncaring and interested only in profits

Beginning in the 1920s, much of the charitable load was taken on by business firms themselves rather than by the owners alone The symbol of this shift from individual philanthropy to corporate philanthropy was the Community Chest Movement in the 1920s, the forerunner of today’s United Way drivers that are widespread throughout the United States Business leader have vigorous support to this form of corporate charity, urging all firms and their employees to unite their efforts to extend aid to the poor and the needy Business leaders established pension plans, employee stock ownership and life insurance programs, unemployment funds, limitations on working hours, and higher wages They built houses, churches, schools, and libraries, provided medical and legal services, and gave to charity For some of today’s business firms, CSR means participating in community affairs by making paternalistic, charitable contribution However, charitable giving is not the only form that CSR takes

The Stewardship Principle: Many of corporate executives today see

themselves as stewards, or trustees, who act in the general public’s interest Although their companies are privately owned and they try to make profit for the stockholders, business leaders who follow the stewardship principle believe they have an obligation to see that everyone – particularly those in need- benefits from the company’s actions According to this view, corporate

managers have been placed in a position of public trust They control vast resources whose use can affect people in fundamental ways Because they exercise this kind of crucial influence, they incur a responsibility to use those resources in way that are good not just for the stockholders alone but for society generally In this way, they have become stewards, or trustees, for society As such, they are expected to act with a special degree of social responsibility in making business decisions

2.4 The significance of Corporate Social Responsibility

CSR as a strategy is becoming increasingly important for businesses today because of three identifiable trends:

• Changing social expectations

Consumers and society in general expect more from the companies whose products they buy This sense has increased in the light of recent corporate scandals, which reduced public trust of corporations, and reduced public confidence in the ability of regulatory bodies and organizations to control corporate excess

• Increasing affluence

This is true within developed nations, but also in comparison to developing nations Affluent consumers can afford to pick and choose the products they buy A society in need of work and inward investment is less likely to enforce strict regulations and penalize organizations that might take their business and money elsewhere

• Globalization

The growing influence of the media sees any ‘mistakes’ by companies brought immediately to the attention of the public In addition, the Internet

fuels communication among like-minded groups and consumers—empowering them to spread their message, while giving them the means to co-ordinate collective action (i.e a product boycott)

These three trends combine with the growing importance of brands and brand value to corporate success (particularly lifestyle brands) to produce a shift in the relationship between corporation and consumer, in particular, and between corporation and all stakeholder groups, in general The result of this mix is that consumers today are better informed and feel more empowered to put their beliefs into action From the corporate point of view, the market parameters within which companies must operate are increasingly being shaped by bottom-up, grassroots campaigns NGOs and consumer activists are feeding, and often driving, this changing relationship between consumer and company

CSR is particularly important within a globalizing world because of the way brands are built—on perceptions, ideals and concepts that usually appeal

to higher values CSR is a means of matching corporate operations with stakeholder values and demands, at a time when these values and demands are constantly evolving

CSR, therefore, can best be described as a total approach to business CSR creeps into all aspects of operations Like quality, it is something that everyone knows when he sees it It is something that businesses today should

be genuinely and wholeheartedly committed to The dangers of ignoring CSR are too dangerous when it is remembered how important brands are to overall company value; how difficult it is to build brand strength; yet how easy it can

be to lose brand dominance CSR is, therefore, also something that a company should try and get right in implementation

2.5 Modern Forms of Corporate Social Responsibility

The two establishing principles have evolved to form the modern idea of CSR as below:

Table 2.1: Foundation principles of CSR and their modern expressions

Charity Principle Stewardship Principle

Definition

Business should give voluntary aid to society’s needy persons and groups

Business, acting as a public trustee, should consider the interests

of all who are affected

by business decisions and policies

Modern

Expression

 Corporate philanthropy

 Voluntary actions to promote the social good

 Acknowledging business and society

interdependence

 Balancing the interest and needs of many diverse groups in society

Examples

 Corporate philanthropy foundations

 Private initiatives to solve social

problems

 Employee

 Enlightened self-interest

 Meeting legal requirements

 Stakeholder approach

to corporate strategic planning

volunteerism

 Social partnership with needy groups

Based on these modern forms of CSR, some social responsibility actions are recommended to companies:

• Economic growth and efficiency: improving productivity and

cooperating with government

• Education: Giving aid to schools and colleges; Assisting in managing

schools and colleges

• Employment and training: training disadvantaged workers; retraining

displaced workers

• Civil rights and equal opportunity: Ensuring equal job opportunities;

building inner-city plants

• Urban renewal and development: Building low-income housing;

Improving transportation systems

• Pollution abatement: Installing pollution controls; developing

recycling programs

• Conservation and recreation: Protecting plant and animal ecology;

restoring depleted lands to use

• Culture and the arts: Giving aid to art institutions

• Medical care: Helping community health planning; designing low-cost

medical care programs

• Government: improving management in government; modernizing and

reorganizing government

Besides, there are many others expression of the two foundation principles such as Corporate Philanthropy and Corporate Employee Volunteerism

Corporate Philanthropy is the modern expression of the charity principle

The stewardship principle is given meaning today when corporate managers recognize that business and society are intertwine and interdependent This mutuality of interests places a responsibility on business, to exercise care and social concern in formulating policies and conducting business operations

Corporate Employee Volunteerism is relatively new phenomenon Many

large corporations developed charitable contribution programs but left employee involvement in community service up to the individual In the early 1970s, companies began to see communities service as the way to improve their images- internally and externally – as well as to serve the communities

in which the business operates Today, workplace employee volunteer programs generally take two forms:

• The team model, in which a team of employees plan and implement group volunteer activities

• The volunteer clearinghouse model, in which a full-time coordinator or

a part-time employee provides volunteer opportunities to employees According to a study conducted by Conference Board of US, employee volunteer programs help companies attract and retain good employees They also help to develop characteristics such as creativity, trust, teamwork, and persistence Moreover, skills and attitudes that foster commitment, company loyalty, and job satisfaction are built

often favor suppliers who demonstrate responsible policies as this helps them

to minimize the risk of any damage to their own reputations Some customers don't just prefer to deal with responsible companies, but insist on it For example, sales of "environmentally friendly" products continue to grow - and these products often sell at a premium price

Reducing waste and emissions doesn't just help the environment - it saves companies’ money too It's not difficult to cut utility bills and waste

disposal costs, bringing immediate cash benefits

There are other benefits like:

and retraining

opportunities to generate positive press coverage

up profitable new products and services

• CSR can make companies more competitive and reduces the risk of sudden damage to the reputation (and sales) Investors recognize this and are more willing to finance the business

2.7 Overview of Corporate Social Responsibility in the World

Social responsibility, however, reflects cultural values and traditions and takes different forms in different societies What may be the accepted customs in the United States, Japan, or South Korea may not be in Germany, Brazil, Indonesia, or the Ukraine Determining what is social acceptable around the world often is a difficult process

Japanese firms have proven themselves to be model citizens on many dimensions of CSR Their support of local community activities and other philanthropic endeavors has led to increase goodwill in the community activities where they operate The firms help society in areas directly related

to the operations of the business Thus, Japanese firms clearly help themselves while helping others, showing a strong commitment to the harmonious relations between the corporation and society However, as Japanese firms have become more integrated with the international community, a broader view of CSR has begun to emerge

CSR has assumed a different form in European countries Governments have provided many social services often received as benefits from private employers For example, debate by government representatives over social responsibility issues resulted in the adoption of a social policy for the European Union countries, called the Social Charter Rather than lying on private corporate initiatives, governments represented in the EU drafted a public policy that provided initiatives and rewards for corporate social actions

within the EU Embodied within the Social Charter is the social action Program (SAP) The SAP established health and safety guidelines, regulations

on working hours, Europe-wide rules for worker consultation, and rules for gender equality at work Thus, Europe businesses’ response toward social responsibility is actually often a matter of compliance with various government policy guidelines and program initiatives

In many developing nations, where property is widespread or civil strife is frequent, economics goals and military activities tend to be given a higher priority than the pursuit of social goals Environmental protection, for example, may be considered less critical than having a polluting steel plant that creates jobs In these cases, social responsibility initiatives by business may be slow in coming

The form that CSR takes differs between industries, partly as a reflection of the relative importance of different issues, but also as a reflection

of industry structure An important factor is the nature of the relationship between different parts of the value chain and the major brand owners that have both the power to influence CSR standards within the value chain and the vulnerability to reputation damage, which can drive this concern

a In industries where there is an arm’s-length relationship between brand

owners and producers, such as in the case of agricultural commodities like

coffee and chocolate, industry level initiatives tend to dominate These mainly comprise product standards, and monitoring and certification systems 23 developed either for the whole industry or for niche markets within it Examples of this approach include the industry protocol on child labor within the cocoa industry, and the fair trade and organic standards

b In the buyer-driven value chains

c

, which predominate in fast moving intensive consumer goods such as garments, footwear, toys and home wares, brand owners have closer relationships with a smaller number of manufacturers In these industries company level Codes of Conduct backed up by individual monitoring systems have predominated, reflecting the power of major brand name labels to influence their suppliers However, economic forces and fashion changes mean that relationships between buyers and manufacturers are not static and a single supplier may produce for a number of different labels This has caused problems of multiple codes of conduct and monitoring systems burdening suppliers Therefore partnerships such as the Ethical Trading Initiative and the Fair Labor Association as well as the supplier product certification scheme SA8000 have been developed to ensure that codes of conduct are effective and manageable

labor-In producer-driven value chains, producing consumer durables with a

higher technology input such as automobiles and computers, relationships between brand owners and their suppliers are closer with major suppliers

as essential partners in design, quality and customer service, often sharing sites and just-in-time production systems with the producer brand company To an outside eye, the individual companies in the value chain are often indistinguishable While companies such as Ford have issued supplier environmental requirements which are similar to a buyer-driven code of conduct approach, they also engage closely with their suppliers to ensure that standards are met The focus is not so much on product-level standards as on company level management Shared management systems, mentoring to reach ISO14000 certification standards, training, web-based support and strategic alliances are part of this approach This may include

changing the basis of the relationship from one of buying products to one

of buying services, as with the agreement between Ford and DuPont to move from paying for volume of paint to paying for number of cars painted In this case the economic incentive to reduce wastage and increase eco-efficiency is built into business relationships So it was in DuPont’s interest to work with Ford to use less paint In foreign direct investment (FDI) ventures such as in the mining and oil industries, where the main social and environmental impacts are generated within the company itself, there has been less focus on value chain CSR and more focus on the conduct of the company itself Wider influence on enterprise development

is seen in terms of counteracting the honey-pot effect of major FDI ventures and through social and community investment, which is not directly linked to the corporate value chain

Chapter Summary:

 CSR means that the corporation should be held accountable for any of its actions that affect people, their community, and their environment Businesses must recognize their vast power and wield it to better society

 The idea of CSR was as long as the appearance of companies and then spread all over the world under two foundation principles: the charity principle and the stewardship principle

 CSR relevant today because the social expectations are changing as the development of the economy, the pressure from the communities and authorities are more influent and globalization has been an indeed trend

 CSR is appeared in many forms in modern world However, it is different in different cultural community and in different industries

 Companies benefit a lot from CSR such as good reputation, cost saving, productivity improvement, loyalty of employees and good relationship with local authorities and communities as well

Figure 2.1: All about CSR

CHAPTER 3 RESEARCH AND DISCUSSIONS

3.1 Review of Corporate Social Responsibility studies

According to a study of World Bank in late 2003, CSR was firstly introduced by international corporations that went to Vietnam for out-sourcing in the early 1990s At that time, CSR was taken under the form of Code of Conducts (CoCs) or social standards requirements in those companies Along with the development of economy, especial the exporting, Vietnamese initial applicants for CSR are factories who have involved into global value chain such as companies in textile or footwear industries These domestic companies have considered CSR as the only way for them to get into international market However, the application of CSR seems go slowly because it is understood differently by every actor in the society Only export-oriented enterprises adapt CSR policies and practices (mainly quality & social standards) as they’re getting involved into the global value chain No separate department is in charge of CSR, instead, it belongs to HR and CSR is still

buyer-driven activity (World Bank research on CSR in 2005)

As the 2007 research of World Bank incorporation with VCCI, it was stated that a small number of Vietnamese companies had implemented CSR programs, mostly at the request of buyers But the number has increased day

by day because of three drivers Philanthropy, Customer driven and

Certification-led

A recent MOLISA survey of 24 garment and shoe producers found that CSR implementation had helped the companies increase sales by 25%, increase productivity from 34.2 to 35.8 million VND/laborer/year, and

benefited from a better image with customers and the ability to attract and

retain high quality staff Besides, CSR implementation could motivate employees in workplace so that companies can be more ordered placed, more competitive, and have better images Based on many researches from 2003 to

2007, it is said that there are many barriers to CSR implementation like:

 Lack of awareness of the concept;

 Production inefficiencies that result from implementing multiple CoCs at once;

 Lack of financial and technical resources to implement CSR standards (particularly true for SMEs);

 Confusion that arises due to differences between the national Labor Code and CoCs; and,

 National regulations that impede CoC implementation

Moreover, CSR implementation has to deal with many challenges from national level to corporate level:

Table 3.1: Challenges at different levels to CSR Application in Vietnam

Nation

 Not yet adapted concept of CSR to Vietnamese context

 Gap between national Labor Code and CoCs

 Lack of law enforcement

 Different economic performances create CSR disparities between factories

 Lack of understanding of benefits from the application of CSR at

factories

 Lack of support from employers

 Incapability of grass-root trade union

Last at not least, researchers have noticed different tools, used by the Vietnamese Government and social - oriented organizations, to push the application and implementation of CSR in Vietnam In general, there are 4 main groups of tools (Figure 3.1)

Figure 3.1: CSR Tools and Instruments in Vietnam

 Legislative tools: i.e Labor Code enforcement and Labor inspection

 Tools for capacity building:

o Training under different types like tailored to different target groups; mixed between employers and employees; ToTs; Team work; Computer-based training (CBT)

o Certification for management system

o Worker participation and involvement

o Monitoring and audit Business development services (consultancy)

 Tools for Public communication:

o Publicity campaigns

o Internal communication on CSR: company value statement, staff meeting, new employees’ orientation, suggestion box, poster, banner and newsletter

o Dialogues and roundtables

o CSR reporting

o CSR Award

 Tools for Information dissemination

o Info disseminating seminars, workshops

o Newsletters

o Business-government dialogues

o Industry business forum

o Website for CSR forum

However, the limitation of those researches is that they only focused

on CSR implementation at SMEs in some labor-oriented industries like textile

or footwear Therefore, in this study, four large corporations will be taken as examples to draw another picture about CSR in Vietnam They are all leaders

of different industries, from production to services; all have long experiences

in CSR implementation and have achieved many benefits through CSR application

3.2 The Case study of FPT

3.2.1 The case of FPT

FPT is a multinational company operating in fields such as systems integration, software solutions, software outsourcing, ERP services, etc and has 14 branch companies all over Vietnam FPT masters technologies in all its developments applied by ISO certificates in all fields; CMMi applied for software development and it has become the golden partner of Cisco, Microsoft, Oracle, and Checkpoint Value-added services developed by FPT deliver and satisfy customers’ and partners’ demands

To date, FPT has reserved trusts placed by thousands of enterprises and consumers FPT also honorably received the First Class Labor Medal granted

by the State of Vietnam in 2003 Over the years, FPT has been voted as the most prestigious IT Corporation in Vietnam by Vietnam PC World Magazine’s readers FPT developed-products and services always recorded top awards of Vietnam Informatics Association, HoChiMinh City Informatics Association and Vietnam Software Enterprises Association Positive contributions to the information and telecom industry in particular and the economy development in general, FPT deserved to receive the First Class Labor Medal granted by the State of Vietnam

Vision and strategy

FPT’s vision is “strives to be a company guided by technology innovations,

committing to the highest level of customer and shareholder satisfaction, contributing at best to the society, and having the most favorable working

environment for all employees that enables them to explore their maximum potential in professional career as well as spiritual life”

Figure 3.2: Organization chart of FPT

From mid 2007 until 2010, FPT Corporation has followed the 'E-citizen’ strategy which can be briefed as follows:

• FPT strives to be a leading corporation in terms of infrastructure development and e-services provision for e-citizen community among which information technology and telecommunication continue their essential foundation role in the digital convergence trend to provide the most convenient products and services for e-citizens This is the most important direction in the development strategy of FPT Corporation

• The strategy is based on the perception that Internet has made profound changes to the world and has become an opportunity for Vietnam on the

integration path into the world Essential needs of human remain unchanged but the ways these needs are fulfilled will never be the same with the wide spread of internet; e-services will be key tools that support organizations compete effectively to bring about comforts and conveniences in daily life

• FPT calls these organizations and consumers e-citizens and aims at creating added-values chains to fully satisfy needs of e-citizens

Company Culture

FPT is proud of being one of few companies who has its own company culture specific and typical The culture was formulated together with the foundation of company

That is the trust and value chains sharing among members FPT company culture has been a spiritual food, connection, playing field, encouragements and pride of individual FPTer The culture has been handed down from generations to generations of FPT who pay respect and join hands in contributing to more typical and dignity culture

The so-called general organization takes care of FPT company culture building Every year, the company spares resources for the general organization to give cultural and sports events with aim to bring a beautiful spiritual life for FPTers who will further place their trusts and belief in the future and success with FPT

3.2.2 CSR in FPT

For the last 5 years, CSR has been seriously considered by both FPT’s leaders and staff Many activities have been taken place in order to help communities and supported talented students

FPT has joined many charity activities such as helping poor people, Orange Agent Victims, poor and disable children and victims of natural disasters or national accident Some activities that have been created and

• Donating to victim families of Can Tho Bridge collapse

• Supporting pupils in flood areas of Thanh Hoa Province

• Presenting support to families of staff in the flood areas of Quang Nam Province and Danang City

• Incepting “The Blood Donation Day” in the Southern Vietnam, attracting hundreds of FPT staff and giving 110 blood units to critical patients

• Fundeding a project to establish a Living Encouragement Centre founded by Mr Nguyen Cong Hung This is an initiative under the

"Fund for Compatriots", which is voluntarily contributed by FPT employees intended to support social and charitable activities

• Donating 130 bulls and cows for households in the Northern mountainous provinces victimized by the recent low temperature system

• FPT International Academy held a music show night to raise fund to support people in the flood hit regions in December 6th 2007

Besides, FPT Corporation has become a popular sponsor to many events

to help young talented students The Corporation has sponsored not only

Technology-related activities but also Math and Business ones Some activities are listed below:

• Being a sponsor for the International Math Olympic 2007 in Vietnam, involving in organizing a launching ceremony for the Vietnamese Team

• Providing scholarships and sponsorship to young chess talents of Vietnam

• Sponsoring to ASEAN Capitals Business Forum (ACBF) – An official regional conference for all enterprises of ASEAN

• Co-organizing Robocon as a technology sponsor

• Co-organizing and co-sponsoring for “Vietnam Intellectual 2007” Contest,

• Becoming the official sponsor for the “Seven Days of Technology” Program of the Vietnam Television’s Science Education Division

• Deploying FPT Scholarship Program for poor students and those who excel at science research at Hanoi University of Technology

• Implementing the activities of FPT Technology Center for Young Talents (FYT) The center supports talented students from universities, International Olympic contests, National Talent contests

• Sponsors one gold scholarship for the “Lighting Young Business Talent” Contest held by Vietnam Young Entrepreneurship Association, Vietnam National University – Hanoi School of Business and Vietnam Television