Management perception of the impact of corporate social responsibility on corporate reputation in Vietnam

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY  BÙI THỊ DIỄM NGA MANAGEMENT PERCEPTION OF THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON CORPORATE FINANCIAL PERFORMANCE AND CORPORATE REPUTATION IN VIETNAM MASTER THESIS HO CHI MINH CITY – 2013 MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY  BÙI THỊ DIỄM NGA MANAGEMENT PERCEPTION OF THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON CORPORATE FINANCIAL PERFORMANCE AND CORPORATE REPUTATION IN VIETNAM Subject: Master of Business Administrator Code: 06.34.01.02 MASTER THESIS SUPERVISOR: DR NGUYỄN THỊ NGUYỆT QUẾ HO CHI MINH CITY – 2013 I ACKOWLEDGMENT First of all, I would like to indicate my deep gratitude to Dr Nguyen Thi Nguyet Que, my promoter Throughout the entire research, she offered valuable advice, helpful guidance and comments as well as encouragement during difficult times I sincerely appreciate you, both personally and professionally I am also grateful to my classmates who were unfailingly kind, offered ongoing encouragement, and helped me whenever it was necessary In addition, I‟d like to send my special thanks to all of my colleagues- Ms Tien, Ms Loan, Ms Thu and my director- Ms Nguyen Vu Thanh Uyen at Dang Hung Chemical Company for your persistent support, encouragement Without your help, my dissertation couldn‟t be finished in time I will be forever indebted to my beloved family members, especially my parents and my parents-in-law They have supported me in a consistently loving manner I am especially grateful to my husband, Kim Do, for his love, thoughtfulness, and endless support Thanks for looking after our daughter- Lucie so well whenever I were busy and focus on this dissertation Lucie, thank you so much for your precious existence in my life! While it is true that you make my life increasingly busy Without you, my life would have no meaning at all Once again, I extend my profound thanks to all of you, as well as to others whose names are not mentioned here but who also contributed directly or indirectly to this thesis Bui Thi Diem Nga Ho Chi Minh City, 26 September, 2013 II COMMITMENT I certify that the ideas, analyses, and conclusions reported in this thesis “Management Perception Of The Impact Of Corporate Social Responsibility On Corporate Financial Performance And Corporate Reputation In Vietnam” are entirely my own effort The data was collected in reality and it has clear origins I also certify that the work is original and has not been previously submitted for any other award III TABLE OF CONTENT ACKOWLEDGMENT I COMMITMENT II LIST OF FIGURES VI LIST OF TABLES VII ABSTRACT .1 CHAPTER 1: INTRODUCTION 1.1 Research background 1.2 Research Issues, Objectives & Questions 1.3 Research methodology 1.4 Significance of study 1.5 Structure of study CHAPTER 2: LITERATURE REVIEW: 2.1 Introduction 2.2 Concept of Corporate Social Responsibilities 2.2.1 Definition of Corporate Social responsibility 2.2.2 CSR components 11 2.3 Review of previous studies on CSR and organization performance 12 2.3.1 Related CSR and financial performance .13 2.3.2 Related to CSR and corporate reputation 15 2.4 Development of theoretical model and research hypothesis 21 2.4.1 CSR and Financial performance 22 IV 2.4.2 CSR and corporate reputation 25 2.5 Summary 28 CHAPTER 3: RESEARCH METHOD 29 3.1 Introduction: 29 3.2 Research design 29 3.3 Questionnaire development .31 3.3.1 Scale of independent variables 31 3.3.2 Scale of dependent variables 32 3.3.3 Translation of the Questionnaire 35 3.4 The pilot study 35 3.5 Main survey .36 3.5.1 Target population 36 3.5.2 Sample method .36 3.5.3 Sample size 37 3.5.4 Questionnaire administration .37 3.6 Methods of data analysis 38 3.7 Summary 40 CHAPTER 4: DATA ANALYSIS 41 4.1 Introduction .41 4.2 Descriptions of sample .41 4.3 Reliability and validity of the measurement scale .42 4.3.1 Reliability (Cronbach Alpha) .42 4.3.2 Exploratory factor analysis (EFA) 44 V 4.4 Testing the research model and the hypotheses .47 4.4.1 Testing correlations of constructs 48 4.4.2 Regression Analysis .51 4.4.3 Test the violations of assumptions in linear regression 58 4.5 Conclusion 58 CHAPTER 5: CONCLUSION AND IMPLICATION 60 5.2 Discussion of findings 60 5.2.1 The impact of CSR activities in term of employee responsibilities on financial performance and corporate reputation 61 5.2.2 The impact of CSR activities in term on community responsibilities on financial performance and corporate reputation 62 5.2.3 The impact of CSR activities in term of customer responsibilities on financial performance and corporate reputation 63 5.2.4 The impact of CSR activities in term of environment responsibilities on financial performance and corporate reputation 64 5.3 Practical implications and contribution of study 64 5.4 Limitation and future research 66 5.5 Conclusion 67 LIST OF REFERENCE 67 APPENDIX A 73 APPENDIX B 78 APPENDIX C 81 APPENDIX D 83 VI LIST OF FIGURES Figure Description Page Figure 2.1 Research Model 28 Figure 2.2 Research process 30 Figure 4.4 The revised research model 57 VII LIST OF TABLES Table Description Page Table 2.1 Definitions of CSR – academic research Table 2.2 Definitions of CSR based on representatives organizations Table 2.3 Abstract of CSR researches 17 Table 3.1 Items of variables in the study 33 Table 4.1 Sample characteristics 42 Table 4.2 Reliability of scales 43 Table 4.3 KMO and Barlett's Test of independent variables 45 Table 4.4 Rotated Component Matrix(a) 45 Table 4.5 Item-Total Statistics 46 Table 4.6 KMO and Bartlett's Test 47 Table 4.7 Rotated Component Matrixa 47 Table 4.8 Correlations of MLR (1) 49 Table 4.9 Correlations of MLR (2) 50 a Table 4.10 Variables Entered/Removed Table 4.11 Model Summary 51 Table 4.12 ANOVAa 52 Table 4.13 Coefficientsa (MLR -1) 52 Table 4.14 Model Summaryb 54 Table 4.15 ANOVA a 51 55 a Table 4.16 Coefficients Table 5.1 Research Purposes, Hypotheses and Results 55 61 73 Taneja, S S., Taneja, P K., & Gupta, R K (2011) Researches in corporate social responsibility: A review of shifting focus, paradigms, and methodologies Journal of Business Ethics, 101(3), 343-364 Tho, N D (2011) Scientific research methodology in business Hanoi: LaborSociety Publisher Uddin, M B., Hassan, M R., & Tarique, K M (2008) Three dimensional aspects of corporate social responsibility Journal of Business and Economics,Volume 3,Issue 1,January 2008 Undén, C (Spring 2007) Multinational Corporation and Spillovers: Adding to Corporate Social Responsibility Master Thesis, Institution of Economies, Supervisor: Yves Bourdet, Lunds University Van Marrewijk, M 2003, 'Concepts and definitions of CSR and corporate sustainability: between agency and communion', Journal of Business Ethics, vol 44, no 2, pp 95-105 Vietnam Chamber of Commercial and Industry (VCCI), 2011, “Corporate social responsibility in Vietnam: perspectives from a visit in February 2011” Associate ACCSR Waagstein, P R (2011) The mandatory corporate social responsibility in indonesia: Problems and implications Journal of Business Ethics, 98(3), 455-466 74 APPENDIX A Kính thưa q Anh/Chị Chúng tơi nhóm nghiên cứu thuộc trường Đại học kinh tế TPHCM Chúng thực nghiên cứu Nhận thức lãnh đạo ảnh hưởng việc thực “trách nhiệm xã hội Doanh Nghiệp (CSR)” đến Doanh nghiệp Rất mong anh chị trả lời giúp câu hỏi Chúng xin cam đoan tất thông tin cá nhân anh/chị bảo mật hoàn toàn Cuộc vấn quan trọng cho nghiên cứu nên chúng tơi kính mong anh/chị dành chút thời gian để hỗ trợ Định Nghĩa Trách nhiệm xã hội Doanh Nghiệp (CSR): Trách nhiệm xã hội Doanh nghiệp" (CSR) cam kết không ngừng Doanh nghiệp việc đóng góp cho việc phát triển kinh tế bền vững, thông qua việc tuân thủ chuẩn mực bảo vệ mơi trường, bình đẳng giới, an tồn lao động, quyền lợi lao động, trả lương công bằng, đào tạo phát triển nhân viên, phát triển cộng đồng… theo cách có lợi cho cơng ty phát triển chung xã hội (World Business Council For Sustainable Development) A Xin Anh/Chị cho biết vài thông tin thân cơng ty: Giới tính:  Nam Vị trí:  Giám Đốc phận, chi nhánh, cấp cao) Số lượng nhân viên:  > 1000  Nữ  Trưởng phòng  Vị trí khác (Trưởng  500 – 1000  < 500 Loại hình Doanh nghiệp (DN) :  Nhà nước  Nước  Liên Doanh  Loại khác Lĩnh vực hoạt động Doanh nghiệp:  Giày da  Loại khác  May mặc  Dược phẩm Thời gian Doanh nghiệp thực CSR:  < năm  > năm  – năm  2-5 năm  Khác B Xin Anh/Chị cho biết mức độ đồng ý hay không đồng ý Anh/Chị nội dung sau liên quan đến "Trách nhiệm xã hội Doanh nghiệp" cơng ty với quy ước: (1) Hồn tồn khơng đồng ý, (2) Không đồng ý, (3) Trung lập, (4) Đồng ý, (5) Hồn tồn đồng ý Hồn tồn khơng đồng ý I CSR cộng đồng nơi doanh nghiệp hoạt động Doanh nghiệp đóng góp tài cho Tổ chức từ thiện cộng đồng Hoàn toàn đồng ý 75 Doanh nghiệp giúp đỡ cải thiện chất lượng sống Cộng đồng 3 Doanh nghiệp hỗ trợ tài cho hoạt động cộng đồng (nghệ thuật, văn hóa, thể thao) Doanh nghiệp hỗ trợ tài cho hoạt động giáo dục cộng đồng II CSR môi trường Các kế hoạch Doanh nghiệp bao gồm mục tiêu hoạt động mơi trường Doanh nghiệp hồn tồn tự nguyện thực trách nhiệm mơi trường ngồi quy định pháp luật bảo vệ môi trường Doanh nghiệp hỗ trợ tài cho phát động, chương trình mơi trường 5 Doanh nghiệp tiến hành đánh giá hiệu từ hoạt động môi trường Doanh nghiệp CSR người lao động doanh nghiệp 5 5 5 IV Doanh nghiệp đối xử công tôn trọng người lao động, khơng phân biệt giới tính, sắc tộc Doanh nghiệp mang lại cho tất người lao động chế độ tiền lương phù hợp, công tương ứng với sức lao động người Doanh nghiệp hỗ trợ cho người lao động có nhu cầu học thêm, đào tạo chuyên sâu Doanh nghiệp giúp đỡ người lao động cân sống gia đình cơng việc Doanh nghiệp gắn kết định kinh doanh với lợi ích quyền lợi người lao động CSR khách hàng Doanh nghiệp 14 Doanh nghiệp cung cấp dịch vụ với chất lượng cao cho khách hàng 15 Doanh nghiệp cung cấp cho khách hàng thông tin cần thiết để đưa định mua hàng Doanh nghiệp đáp ứng tất yêu cầu, khiếu nại khách hàng dịch vụ, sản phẩm Doanh nghiệp Doanh nghiệp điều chỉnh sản phẩm dịch vụ để gia tăng mức độ thỏa mãn khách hàng Liên quan đến kết tài Doanh nghiệp 5 So với đối thủ lớn công ty chúng tơi, năm qua chúng tơi có thị phần lớn So với đối thủ lớn công ty chúng tôi, năm qua lớn quy mô Về hiệu hoạt động tổng quan, năm qua Doanh nghiệp đạt hiệu cao so với đối thủ So với đối thủ cạnh tranh lớn công ty chúng tôi, năm qua chúng tơi có mức lợi tức (ROI) cao đáng kể So với đối thủ cạnh tranh lớn công ty chúng tôi, năm qua chúng tơi có tỉ lệ lợi nhuận ròng tài sản (ROA) cao So với đối thủ cạnh tranh lớn công ty chúng tôi, năm qua chúng tơi có mức tăng trưởng lợi nhuận cao So với đối thủ cạnh tranh lớn công ty chúng tôi, năm qua 5 5 5 III 10 11 12 13 16 17 V 18 19 20 21 22 23 24 76 VI chúng tơi có mức tăng trưởng bán hàng cao Liên quan đến danh tiếng Doanh nghiệp 25 Nhìn chung, doanh nghiệp có danh tiếng tốt 26 Doanh nghiệp người biết đến tổ chức đáng tin cậy 27 Doanh nghiệp người biết đến cung cấp sản phẩm dịch vụ chất lượng cao CHÂN THÀNH CẢM ƠN SỰ HỢP TÁC CỦA QUÝ ANH/CHỊ 77 Dear Sir/ Madam, We are student group of Ho Chi Minh city University of Economics We are conducting a Study on “management perception of the impact of CSR on financial performance and corporate reputation in Vietnam” We need your help by answering the following questions We guarantee that all your personal information will be secured This survey is very critical to our study We hope that you could save your precious time to help us Definition of “Corporate Social Responsibility” (CSR): Corporate Social Responsibility (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 (World Business Council For Sustainable Development) A A couple of questions about you and your company: Gender:  Male Posision: senior )  Director Your company size:  > 1000 Type of business:  State-own Business sector:  Footwear  Female  Manager  Other (Head of division/branch,  500 – 1000  Foreign company  Apparel  < 500  Joint venture  Other  Pharmaceutical  Other How long your company has been implementing CSR:  < year  – years  2-5 years  > years  Other B Please let us know your level of agreement on the following statement about CSR as discribed below: (1) Strongly disagree, (2) Disagree, (3) Neither agree nor disagree, (4) Agree, (5) Strongly agree Strongly disagree Strongly agree I CSR activities toward community where firm operate Give money to charities in the communities Help improve the quality of life in the communities where we operate Financially support community activities (arts, culture, sports) Financially support education in the communities where we operate 78 II CSR activities toward environment Incorporate environmental performance objectives in organizational plans Voluntarily exceed government environmental regulations Financially support environmental initiatives Measure the organization‟s environmental performance 5 11 Treat all employees fairly and respectfully, regardless of gender or ethnic background Provide all employees with salaries that properly and fairly reward them for their work Support all employees who want to pursue further education 12 Help all employees coordinate their private and professional lives 13 Incorporate the interests of all employees into business decisions IV CSR activities toward customer 14 Provide all customers with very high quality service 15 5 17 Provide all customers with the information needed to make purchasing decision Satisfy the complaints of all customers about the company‟s products or services Adapt products or services to enhance the level of customer satisfaction V Financial performance 18 5 5 5 VI Relative to our largest competitor, during the last year our company had a larger market share Relative to our largest competitor, during the last year our company were larger in size Regarding our overall performance, during the last year our company performed greatly relative to competitors Relative to our largest competitor, during the last year our company our return on investment has been substantially better Relative to our largest competitor, during the last year our company our return on assets has been substantially better Relative to our largest competitor, during the last year our company Our profit growth has been substantially better Relative to our largest competitor, during the last year our company our sales growth has been substantially better Corporate reputation 25 In general, our organization has a good reputation 26 We are widely acknowledged as a trustworthy organization 27 This organization is known to sell high quality products and services III 10 16 19 20 21 22 23 24 CSR activities toward employee THANK YOU VERY MUCH FOR YOUR COOPERATION! 79 APPENDIX B RELIABILITY Reliability test for community responsibilities Reliability Statistics Cronbach's N of Items Alpha 858 Item-Total Statistics Scale Mean if Scale Variance Item Deleted if Item Deleted Com1 Com2 Com3 Com4 10.50 10.55 10.74 10.63 Corrected Item-Total Correlation 7.124 6.839 7.204 6.895 680 728 719 688 Cronbach's Alpha if Item Deleted 829 809 814 827 Reliability test for environment responsibilities Reliability Statistics Cronbach's Alpha N of Items 907 Item-Total Statistics Scale Mean if Scale Variance Item Deleted if Item Deleted Env1 Env2 Env3 Env4 11.09 11.12 11.45 11.41 Corrected Item-Total Correlation 8.721 8.504 8.933 7.844 Reliability test for employee responsibilities Reliability Statistics Cronbach's Alpha 905 N of Items 769 815 740 842 Cronbach's Alpha if Item Deleted 888 871 897 861 80 Item-Total Statistics Scale Mean if Item Deleted Emp1 Emp2 Emp3 Emp4 Emp5 Scale Variance if Item Deleted 15.91 16.15 16.33 16.51 16.55 Corrected Item-Total Correlation 9.474 8.718 9.446 8.888 8.251 Cronbach's Alpha if Item Deleted 732 768 724 754 840 891 883 892 886 867 Reliability test for customer responsibilities Reliability Statistics Cronbach's Alpha N of Items 898 Item-Total Statistics Scale Mean if Scale Variance Item Deleted if Item Deleted Cus1 Cus2 Cus3 Cus4 12.33 12.41 12.48 12.43 Corrected Item-Total Correlation 5.210 4.974 5.099 5.283 Reliability test for financial performance Reliability Statistics Cronbach's Alpha 937 N of Items 793 820 824 664 Cronbach's Alpha if Item Deleted 861 850 850 910 81 Item-Total Statistics Scale Mean if Scale Variance Item Deleted if Item Deleted Fp1 Fp2 Fp3 Fp4 Fp5 Fp6 Fp7 20.47 20.43 20.47 20.51 20.56 20.51 20.57 Corrected Item-Total Correlation 21.616 20.719 21.569 21.123 21.120 21.100 21.472 779 755 705 794 847 859 848 Cronbach's Alpha if Item Deleted 929 932 936 927 922 922 923 Reliability test for corporate reputation Reliability Statistics Cronbach's Alpha N of Items 900 Item-Total Statistics Scale Mean if Scale Variance Item Deleted if Item Deleted CR1 CR2 CR3 7.94 7.97 8.09 2.173 2.058 2.227 Corrected Item-Total Correlation 809 854 745 Cronbach's Alpha if Item Deleted 851 811 905 82 APPENDIX C EXPLORATORY FACTOR ANALYSIS (EFA) Independent variables: Appendix B - Total variance explained of independent variables Co mp one nt 10 11 12 13 14 15 16 17 Initial Eigenvalues Total 8.852 1.911 1.110 1.065 602 532 477 446 412 317 289 237 216 180 148 121 085 % of Variance 52.071 11.242 6.529 6.263 3.541 3.127 2.806 2.625 2.425 1.866 1.699 1.396 1.271 1.056 868 715 498 Cumulativ e% 52.071 63.314 69.843 76.105 79.647 82.774 85.580 88.205 90.630 92.496 94.195 95.591 96.862 97.919 98.787 99.502 100.000 Extraction Sums of Squared Loadings % of Varianc Cumulati Total e ve % 8.852 52.071 52.071 1.911 11.242 63.314 1.110 6.529 69.843 1.065 6.263 76.105 Rotation Sums of Squared Loadings Total 3.707 3.408 3.033 2.790 % of Variance 21.808 20.046 17.840 16.411 Cumulati ve % 21.808 41.854 59.694 76.105 83 Appendix B - Total variance explained of dependent variables (Financial Performance – FP and Corporate reputation – CR) Total Variance Explained Component Initial Eigenvalues Total % of Variance Extraction Sums of Squared Rotation Sums of Squared Loadings Loadings Cumulative Total % % of Variance Cumulative Total % % of Cumulative Variance % 6.361 63.606 63.606 6.361 63.606 63.606 4.814 48.142 48.142 1.332 13.320 76.926 1.332 13.320 76.926 2.878 28.784 76.926 546 5.457 82.383 451 4.510 86.892 349 3.486 90.378 285 2.850 93.228 228 2.277 95.506 176 1.759 97.264 145 1.448 98.712 10 129 1.288 100.000 Extraction Method: Principal Component Analysis 84 APPENDIX D MULTILINEAR REGRESSION ANALYSIS (MLR) Descriptive Statistics of MLR (1) Mean FP COM ENV CUS EMP Std Deviation 3.4169 3.5349 3.8178 4.1366 4.0721 76421 86276 99628 74326 73942 N 86 86 86 86 86 Collinearity Diagnosticsa of MLR (1) Model Dimension Eigenvalue Condition Index Variance Proportions (Constant) COM ENV CUS EMP 1 4.916 1.000 00 00 00 00 00 035 11.783 28 15 33 01 03 024 14.339 00 82 44 00 02 015 18.135 71 00 21 12 40 010 22.097 01 02 01 87 55 a Dependent Variable: FP 85 Appendix: Histogram of dependent variable: financial performance Scatterplot of dependent variable financial performance 86 Descriptive Statistics of MLR (2) Mean CR COM ENV CUS EMP Std Deviation 4.0000 3.5349 3.8178 4.1366 4.0721 71583 86276 99628 74326 73942 N 86 86 86 86 86 Collinearity Diagnosticsa Model Dimension Eigenvalue Condition Index Variance Proportions (Constant) COM ENV CUS EMP 1 4.916 1.000 00 00 00 00 00 035 11.783 28 15 33 01 03 024 14.339 00 82 44 00 02 015 18.135 71 00 21 12 40 010 22.097 01 02 01 87 55 a Dependent Variable: CR 87 Histogram of dependent variable: Corporate reputation Scatterplot of dependent variable Corporate reputation ...MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY  BÙI THỊ DIỄM NGA MANAGEMENT PERCEPTION OF THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON CORPORATE FINANCIAL... this thesis Management Perception Of The Impact Of Corporate Social Responsibility On Corporate Financial Performance And Corporate Reputation In Vietnam are entirely my own effort The data was... researches examining the impact of CSR activities on the organization performance in the world They are investigated not only in developed countries but also in developing countries The result of these