A CASE STUDY OF CORPORATE SOCIAL RESPONSIBILITY A SUSTAINABLE TOOL OF COMPANIES’ DEVELOPMENT IN VIETNAM

1 DECLARATION OF ORGINALITY AND WORD COUNT I declare that this graduation project is based on my original work except for quotations and citation which have been duly acknowledged. I also declare that it has not been previously or concurrently submitted for any other courses/degrees at HELP University College or other institutions. The word count is 8946 words. HOANG THUY HANG October 2011 2 ACKNOWLEDGEMENT As to complete this graduation project, I was granted a lot of support, guidance and assistance from mentors and lecturers. Therefore, I want to thank to all who support, direct and motivate me during the process of completing the research. 1. First, I would like to express my deep gratitude to my supervisor, Dr. Pham Duc Hieu from International School at Vietnam National University, Hanoi who guide me in my choice of assignment 2. I also would like to thank to Ms. Sumathi and Ms. Shenba at Help University College, who initiated the project and give so much instruction and support. 3. Thank all the respondents in Panasonic company who have helped me complete the survey with their enthusiastic and supporting manner. 3 A CASE STUDY OF CORPORATE SOCIAL RESPONSIBILITY: A SUSTAINABLE TOOL OF COMPANIES’ DEVELOPMENT IN VIETNAM By HOANG THUY HANG October 2011 Supervisor: Dr. PHAM DUC HIEU ABSTRACT With the increasing effects of ASEAN over the world, Vietnam is an ideal market for corporations. Furthermore, becoming the member of WTO since 2007 is an opportunity as well as the threats for local companies. Following the globalization trend, corporate social responsibility (CSR) has been the vital issue in both national and global market. CSR has recently emerged in Vietnam’s market, however, the knowledge and actions of CSR is limited. Many scandals occurred relating to CSR issues such as the case of Vedan Co. Ltd, Sabeco Song Lam Co., and Tung Khuang Co. Ltd. Public now pays more attention to CSR. The objective of the research is to analyze the relationship between CSR and the company’s stainable development in the case of Panasonic Vietnam Co. Ltd. From conducting the research, it is able to show the understanding and awareness about CSR concept, how the company treat its different layers of stakeholders, CSR implementation process, and give the conclusion about the connection of CSR and the company’s sustainable development. 4 TABLE OF CONTENTS DECLARATION OF ORGINALITY AND WORD COUNT 1 ACKNOWLEDGEMENT 2 ABSTRACT 3 LIST OF FIGURES 6 LIST OF ABBREVIATIONS 8 CSR: Corporate Social Responsibility 8 1. INTRODUCTION 9 1.1 Corporate social responsibility: an overall view 9 1.2. CSR in Vietnam 11 1.3 Panasonic Vietnam Co. Ltd. 12 1.4 Problem statement 13 1.5 Research objective 14 2. LITERATURE REVIEW 16 2.1 Definition of CSR 16 2.2. CSR models 18 2.2.1 Social-Economic Model of CSR 18 2.2.2 The two-dimension model 17 2.2.3 Carroll pyramid 18 2.3 Stakeholder model of CSR 21 2.4 Other theories 23 2.5 CSR reporting 24 2.6 Sustainability 24 2.7 CSR in Vietnam 25 3. RESEARCH METHODOLOGY 26 3.1 Research objective 27 5 3.2 Research methodology 27 3.3 Data source 28 3.4 Research tool 28 3.5 Data collection and processing 29 3.5.1 Sampling Error! Bookmark not defined. 3.5.2 Questionnaires 29 3.5.3 Personal Interviews 31 3.5.4 Data Treatment 31 4. RESULT ANALYSIS 33 4.1 Respond summary 33 4.2 Description of result 33 4.2.1 Age 34 4.2.2 Gender 34 4.3. Questionnaires analysis 35 4.3.1 CSR perception 35 4.3.2 Stakeholder interest 40 4.3.3 CSR Implementation 42 4.4 Interview analysis 46 5. CONCLUSION AND RECOMMENDATION 51 5.1 Conclusion 51 5.2 Recommendation 53 5.3 Limitations 54 REFERENCES 56 APPENDIX 60 6 LIST OF FIGURES Figure 1: A two-dimensional model of CSR (Quazi and O’Brien, 2000) 19 Figure 2: Carroll’s Pyramid of CSR (1991) 21 Figure 3: Market stakeholders 22 Figure 4: Non-market stakeholders 22 Figure 5: Distribution of CSR perception 39 Figure 6: CSR Implementation 46 Table 1: Age 34 Table 2: Gender 34 Table 3: Answers for question 1 35 Table 4: Answers for question 2 36 Table 5: Answers for question 3 37 Table 6: Answers for question 4 38 Table 7: Answers for question 5 40 Table 8: Answers for question 6 41 Table 9: Answer for question 7 42 Table 10: Answer for question 8 43 7 Table 11: Answers question 9 44 Table 12: Answers for question 10 45 8 LIST OF ABBREVIATIONS CSR: Corporate Social Responsibility GPC: Global Panasonic Corporation 3Ps: Planet, People, and Profit PR: Public Relation PVCL: Panasonic Vietnam Co. Ltd. VCCI: Vietnam Chamber of Commerce and Industry WTO: World Trade Organization WBCSD: World Business Council for Sustainable Development 9 1. INTRODUCTION 1.1 Corporate social responsibility: an overall view The term “Corporate Social Responsibility” (CSR) has popularly been applied over the world and is still on aggressive debates among corporations, governments, professionals, and communities. CSR is the further development of business ethics being promoted in 1980.At first, CSR is a performance about good actions but today it becomes the common thinking of most people and organizations. For society as a whole, CSR benefits the global market by increasing the competition among organizations across borders to comply with the standards. For policy makers, CSR is the obligation of companies with customers, employees, authority agencies, and any related parties. In Europe, CSR is used as an economic tool or the trade barrier in Western countries (Breitbarth et al, 2011). For corporations, CSR is the responsibility of conducting business activities based on the commitment to balance stakeholders’ interests and contribute to the sustainable development of organizations. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, CSR-focused businesses would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. Together with other traditional factors as costs, products’ 10 quality, shares price, after introduced, CSR is also considered in evaluating company’s performance. Moreover, bbusinesses expressed their concern for social welfare on the basis of the whole. CSR was established and flourish for several reasons. One is that companies must be more difficult to protect its reputation and expansion - they protect the environment where business and government must be more aggressive with them. Second, the spread of non-governmental organizations and the organization is willing to fight with multinational companies as these companies have made a mistake. Thirdly, a series of evaluation and ranking organizations put pressure on companies to report both financial and non-financial results CSR has three layers. The first layer is charity activities. Returning something to the community is considered as a "right thing to do." The second layer is the risk management. Beginning in the 1980s, when environmental disasters happened such as explosions in the pesticide factory in Bhopal (India), and Exxon case of broken Valdex ship causing oil spill near Alaska, the reputation of industrial companies had been damaged. The big pharmaceutical companies were criticized for refusing to provide drugs for people infected with HIV / AIDS in developing countries. In clothing and footwear companies like Nike or GAP was attacked for using child labor. The companies responded by trying to manage risks. They discussed with non- governmental organizations and the government to set up rules of behavior (code of conduct) and to commit to greater transparency in their activities. They met with their rivals in the same industry to establish general rules, sharing of risks and opinions. Implementing CSR will create value for the company. In general, CSR’s issues related to protect environment, save society’s benefits and consumers’ one, commit to the safety and the rights of employees in company, and [...]... emerged in Vietnam in recent years Since Vietnam is till a developing economy, most businesses in small and medium-scale adoption and 25 implementation of social responsibility of business has not been interested and broadly applied Vietnam' s economy mainly centers around agricultural and forest products apart from mining and manufacturing The CSR awareness and perception are vague and many companies... 1.3 Panasonic Vietnam Co Ltd Panasonic AVC Network Vietnam was firstly established in 1996 in Ho Chi Minh City as a member of Global Panasonic Corporations (GPC) In 2005, Panasonic Vietnam Co Ltd (PVCL) was known as the holding company of Panasonic Group in Vietnam It has been expanded rapidly since the establishment and controlled 6 subsidiaries including Panasonic Sales, Panasonic R&D Center, Panasonic... reliable form of data and supplies less biased form of data By using primary data, researchers can have direct interaction with the customers Beside the primary data, secondary data are also an effective source of information Secondary data consist of information that already exists, having been collected for another purpose (Amstrong & Kotler, 2007) Secondary data can come from newspaper, journal or internet... implementation is still limited because of the unawareness of “How important is CSR?” and “How can CSR affect the long-term growth?” as well as the lack of technical and financial resources (especially small and medium companies) This is the reason for the occurrence of damaging cases in recent years According to latest statistics, out of more than 100 industrial parks in Vietnam, up to 80% are violating... through the caught and accusation of Environmental Polices Beside the Vedan case, food poisoning cases of Melanine Milk imported from China and 3-MCPD contained sauce, fraud in selling fuel, or hiring adolescents to manufacturing Nike shoes are the whistle blowing for the Vietnamese government Although a lot of research has been conducted about CSR, very few studies are taken place in Vietnam Because CSR... improving financial performance; enhancing brand image and reputation; increasing sales and customers loyalty; increasing ability to attract and retain skilled employees; risk management; reducing regulatory oversight; and somehow reducing operating costs (Fernando, 2010) 17 2.2 2.2.1 CSR models Social- Economic Model of CSR This model has two distinctive arguments on social and economic dimensions of. .. conceptualization (Saunders et al 2009) In the research, the mix of quantitative and qualitative methods is more used 3.3 Data source Primary data consist of information collected for the specific purpose at hand (Amstrong & Kotler, 2007) Primary data can be obtained from survey, observation or experiment Primary data has lots of advantages Although primary data is usually expensive and time consuming,... environmental report for sustainable development (including issues of social, environmental and economic) Businesses with annual CSR reports agree that business should look at CSR as one of two aspects for business solutions such as reducing risk and create competitive advantage CSR has just such an exception in social ethics and an exception to exist and compete in business 2.6 Sustainability The objective of. .. methods as interviews or focus groups” On one hand, quantitative method obtains meanings from numbers All collected data are numerical and standardized, and then are used to conduct diagrams and statistics On the other hand, qualitative method 27 mainly derives meanings through words Qualitative data which are non-standardized are classified into different categories The analysis results from the use of conceptualization... public and media, some companies improving their responsibility by building parks and holding social events like preservation environment campaigns The final aspect contribute to the sustainability of firms is profit By acting ethically, firms save fined costs and gain opportunities cost from an ethical reputation This is an increase for the firm profit 2.7 CSR in Vietnam The literature of CSR has been . supporting manner. 3 A CASE STUDY OF CORPORATE SOCIAL RESPONSIBILITY: A SUSTAINABLE TOOL OF COMPANIES’ DEVELOPMENT IN VIETNAM By HOANG THUY HANG October 2011 Supervisor: Dr. PHAM DUC. environmental disasters happened such as explosions in the pesticide factory in Bhopal (India), and Exxon case of broken Valdex ship causing oil spill near Alaska, the reputation of industrial companies. aspects because CSR will benefit the firm by improving financial performance; enhancing brand image and reputation; increasing sales and customers loyalty; increasing ability to attract and