A study on corporate social responsibility of Vietnamese Corporations (Nghiên cứu về trách nhiệm xã hội của Tổng Công ty Việt Nam) : Luận văn ThS.Kinh doanh và quản lý: 60 34 05

Le Thi Quynh Anh A STUDY ON CORPORATE SOCIAL RESPOSIBILITY OF VIETNAMESE CORPORATIONS 2008 Le Thi Quynh Anh * Master of business administration thesis * VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Master of business administration thesis Hanoi - 2008 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 i TABLE OF CONTENT ACKNOWLEDGEMENT i ABSTRACT ii TÓM TẮT iv TABLE OF CONTENT vi LIST OF ABBREVIATIONS viii LIST OF TABLES ix LIST OF FIGURES AND GRAPHS x CHAPTER INTRODUCTION 1.1 Statement of the study .1 1.2 Objectives and Aims 1.3 Research questions 1.4 Scope of Work 1.5 Data Sources and Processing 1.6 Method 1.7 Significance and implications 1.8 Limitations 1.9 Expected Results .4 1.10 Disseminations 1.11 Follow-up 1.12 Short Introduction CHAPTER THEORETICAL FOUNDATION 2.1 The meaning of Corporate Social Responsibility .6 2.2 History of Corporate Social Responsibility 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 RESEARCH AND DISCUSSIONS 23 vi 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 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 .65 APPENDIX .66 READING REFERENCES 67 vii LIST OF ABBREVIATIONS ACB Asia Commercial Bank AFTA ASEAN Free Trade Area APEC Asia-Pacific Economic Cooperation CBT Computer-Based Training CEO Chief Executive Officer CoCs Code of Conducts CSR Corporate Social Responsibility EU European Union FDI Foreign Direct Investment FPT FPT Corporation IFC International Finance Corporation ITA Tan Tao Group MOLISA Ministry of Labor, Invalids and Social Affair SAP Social Action Program SMEs Small and Medium Enterprises VNM Vinamilk Corporation UNIDO United Nations Industrial Development Organization WTO World Trade Organization viii 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 Table 3.3 Comparisons among case studies 53 Table 3.4 Similarities and Differences 54 ix LIST OF FIGURES AND GRAPHS Figure 2.1 All about CSR 22 Figure 3.1 CSR tools and instruments in Vietnam 25 Figure 3.2 Organization chart of FPT 28 Figure 3.3 Corporate structure of Vinamilk 35 Figure 3.4 Revenue vs CSR cost of FPT 56 Figure 3.5 ACB’s Funds for social activities 58 x CHAPTER 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 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: Understanding the definition of CRS and its elements in term of theory Figuring out what modern activities related to CSR all over the world Analyzing CRS activities of certain Vietnamese corporations and their achievements 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 Vietnam? • How have Vietnamese corporations applied CSR in their businesses? • What these corporations aware about CSR and what they gain from CSR implementation? 1.4 Scope of Work Four case studies will be taken in the research to describe and to discuss on CSR implementation in Vietnamese Corporations They include: • 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 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 different industries, represented by leading corporations, there are limitations on data sources for analyzing and giving benefit Besides, enterprises also built a good relationship with authorities and communities so that they can easier to expand their business Besides, most of big Corporations have had a good social and health care for their staff by organizing many outdoor activities and annual heath check-up These activities likely create the loyalty of the staff to the companies as well as help to build a friendly working environment among companies’ members All enterprises are same to others because all have joined in charity or human care activities (for the poor, disaster’s victims, veterans or children) and supporting education by giving aids to students and schools; and all have applied national health insurance for its workers and staffs Some CSR activities like Urban renewal and development and Conservation and recreation are still at the very first stage of implementation However, some high-level CSR activities like Pollution abatement, Employment and training and Government are still lacking This can be explained by the lack of financial resource, experience and the old track of thinking among Vietnamese enterprises about CSR Coming along with the increasing Revenue is the increasing CSR budget However no clear evidence shows that CSR cost effects positively to the Revenue improvement For example, every year, FPT set a budget for CSR activities from the revenue (about 1% of annual revenue) VNM, ACB or ITA has never recorded annual CSR cost instead of total funds for CSR activities It is said that, after one year working, the CSR budget (then comes to CSR funds) will be approved by Board of Directors from Profit after Tax As a conclusion that the research on labor-related practices of CSR held by MOLISA, it is said that “CSR has come into exist in Vietnam for past -7 55 years, therefore it has not yet been able to attract large number of enterprises to go along with; some companies felt hesitated to respond and provide information sufficiently, especially in terms of cost for CSR’s implementation Therefore, it is very difficult to quantitative the relationship among CSR cost and the benefits that companies have gain by implementing CSR CSR’s implementation requires big changes in management procedure and method Besides, it needs taking bold measures in terms of investment and specific work plan and suitable steps This depends much on leadership, especially the director The enterprise management board must be clearsighted and ready to face with risk to wisely evaluate the trade-off between short-term cost (usually big) and long-term benefits (difficult to define) in performing CSR The determination of leadership should be motivated by commitment and agreement of workers and trade union Such co operations should be based on the knowledge, understanding, adequate and reliable information and right awareness of CSR of enterprise managers and related stakeholders Moreover, 56 CSR implementation is also one way to realize the vision and mission of enterprises It means companies that have good social visions and missions will implement CSR more frequently and actively than others 3.6.2.2 Differences It is not difficult to realize that each company chooses the most suitable CSR activities based on their industrial differentials FPT is a company working in technology, in which human resource is considered as the precious asset, therefore the company focus much on CSR activities that relate to human development like training, supporting IT students, supporting schools and colleges and developing the IT knowledge in community VNM is totally different because it is working in food industry, where children are target customers So most of its social activities is firstly helping children, or supporting mothers, who are going to give birth ACB is working in banking industry and trying to use CSR as the best way to spread out their name to community, and it has been very successful by joining many charity activities or becoming sponsors to many CSR activities Last but not least, ITA uses CSR as the way to build a strong relationship with local community where its real estate projects are running, so that it can easily to spread out its business scale Once they have found the most beneficial CSR activities to their business, they implement them again year after year It is very difficult to find a creativeness in CSR activities of big corporation Corporation prefer to follow traditional CSR activities including such charity activities as support for invalid, orphan, poor children and disabled people and so on This obligation promotes the image in “social activities” with the society as the whole 57 Because of different focus, expense to every kind of CSR activities is different from this corporation to others About 50% of CSR expense of FPT in 2007 is for helping IT students and supporting IT development in rural areas 80% of VNM’s CSR fund has been spent for children ACB’s funds for social activities in 2007 was VND billion, of which 60% went to children, 20% to educational programs, 10% to the disabled and the poor, 5% to merited families, and 5% to victims of natural calamity Figure 3.5: ACB’s Funds for Social activities The difference of CSR implementation among corporation is also caused by the period of CSR implementation and the experience of CSR implementers ITA is the first of four corporations implementing CSR along with the business After 10 years of joining in CSR, it has gained a lot of experience, especially the organization and budget management ITA is the only corporate which has separate funds for different targets and has set independent Boards of management for these CSR funds By doing this, ITA has implemented CSR more efficiently than most of Corporation for example more people have been help and most of CSR activities have brought benefit to ITA’ business like good relationship with local community, high satisfaction of employees and good working environment Coming after ITA is VNM which firstly focused on charity activities By implementing CSR for many years, it has chosen the most suitable CSR activities and maintained 58 these activities year after year: focusing on CSR activities related to children For FPT and ACB, it is likely that the shorter time of CSR implementation, the less experience of CSR they are Sometimes these corporations misunderstand between PR activities and CSR activities In other words, they still consider CSR as a PR tool to build a good brand or image on the customers’ mind Reporting of CSR for review is the last difference in CSR implementation in big corporation Some have just reported with PR activities, which appeared on newspaper, magazine and companies’ websites to build up a good image of the company FPT, ACB are examples VNM have reported its CSR activities in annual report, where most of the activities are only listed Best of all is ITA that has a separate online website for CSR activities called ITAExpress In this online newspaper, all related information about three CSR foundations of ITA Group is daily updated Supporters also can find the register part to join in CSR activities As a result, CSR is not only implemented by ITA Group but also taken part by all people in the community CSR, therefore, become part of life and usual activities and become more and more publicity 59 CHAPTER CONCLUSIONS AND RECOMMENDATIONS 4.1 Conclusions CSR has a long history all over the world but it is a new story in Vietnam With the development of the economy and the society’s knowledge, Vietnamese enterprises, especially big Corporations, have to be more social responsible Based on advantages of finance, human resource, leading Corporations have implemented CSR since their first time of establishing the business Leaders’ knowledge and employees’ support are key factors in successful CSR application Visions and missions have become guiding stars for enterprises to follow the new road of CSR Traditional CSR such as Charity activities; Healthcare and Education are all well-implemented by studied Corporation Some new CSR activities like urban renewal and development (ITA Group); Conservation and recreation (VNM); and Cuture and Art support are firstly applied with many difficulties and challenges to Vietnamese Corporations The rest of CSR activities like Employment and training, Civil rights and equal opportunity; Pollution abatement and Government are still left behind Although there are still many arguments on the benefit and cost of CSR, the study has found that Vietnamese corporations have gained good results from their CSR implementation like creating better working environment, closer relationship with local authority and community and maintaining a better image on customers’ mind These benefits cannot be calculated into increase in annual revenue or profits but they are valued assets 60 of the Corporation The CSR budgets is positive with the annual revenue and profits as they are calculated based on a fix percentage of revenue or profit after tax CSR is somewhere misunderstood with advertising, marketing or PR activities In some Corporations, the aim of CSR implementation is to build a good social image for customers and partners Lack of experience and budgets resulted in repeated CSR activities without no creativity CSR reporting system is still lack and simple Under the pressure of the society and the globalization, Vietnamese enterprises are day by day learning more about CSR In the near future, enterprises will become more social responsible and will implement CSR more and more effectively 4.2 Recommendations 4.2.1 For the Studied Corporations a) Analyze and recognize inner ability of enterprise, market demands and customer's requirement Should carefully elaborate immediate cost and long-time benefits and guarantee to harmonize the benefits of enterprise and stakeholders b) Choose potential customers to promote the advantages of enterprise, thereby to set up strategy for CSR's implementation with appropriate steps For example, what goods, for whom, which markets and potential buyers, to make plan for negotiating c) Select consultants, or connect to necessary and reliable information to prepare specific planning and feasibility on CSR Experience learnt from 61 many enterprises is to meet requirement of CoCs rather than to get up certificate d) Implement improvement activities in corresponding ways under the capacity of existing infrastructures, finance and human resource The lesson is priority given for improvement of working condition, environment, and internal M & E system e) Set up trade union organization with effective activity under the functions and responsibilities provided in law on trade union and labor legislation Enterprise management should have commitment and assistance for trade union activities f) Continue implementing evaluation, supervision and organization improvement activities Should refer supervision of buyer or third parties as beneficial push for enterprise g) Implement and observe national law with high priority in order to serve CSR's implementation 4.2.2 For the Vietnamese Government and Social –oriented organizations a Provide consultant and information All enterprises expected to access promptly to information on current trend of CSR’s implementation nationally and internationally, CSR performance module It is stated that Government should consider a agency/inter-institution committee to study, disseminate, supply information and guide on CSR’s implementation CSR is a new conception, not only for enterprises but also for state management organizations, associations 62 and many other organizations in Vietnam, therefore, it should be clearly studied in prior to make public, propagate and instruct enterprises It can use different channels such as: workshops, seminars, television, radio, magazines and so on to handle with this task MOLISA can design an website on CSR to update information, exchange ideas and propagate on CSR, or association can open forum on CSR b Completion of legal system It should continue improving legal system, timely promulgate the guidelines documents, provide overseeing and apply prompt sanction on implementation to create equality in legal enforcement Those are essential helps and assurance to enterprises from Government For instance, in order to help enterprise to avoid unnecessary disputes with buyers, legal provisions should be more strictly, specifically, clearly and promptly c Incentive policy Many enterprises recommended that State should have referential regime to encourage CSR’s implementation such as loan policy, land use policy , rewards for best practices, weekly CSR’s implementation… d Human resource development training Skills, techniques and methods for CSR’s implementation such as evaluation method, standards for evaluating, selection of subject and construction of improvement projects, design of internal management and supervision system and so on are questions beyond the ability of enterprises; therefore, Government should support enterprises to develop competent manager staff that have good understanding of CSR as well as skilled workers The training activities should be strengthened, along with great support from States, vocational-training system, Associations and other agencies 63 Government labor management organizations, institutes, universities and associations should participate in specific programs e Co-operation with other stakeholders Buyers and certifying companies suggested that Government should strengthen cooperation with other stakeholders in accessing and sharing information with a view to reduce the burden of labor inspection for enterprises, for example, Government should enable different stakeholders to access to or search for legal documents easily and conveniently Government also has possibility to collaborate with consultation organizations, buyers, especially big corporations in CSR human training for Vietnamese enterprises f Focus on social affairs Government should develop policy orientation to manage workers and apartments for workers in industrial zones; to ensure the security and handle with social evils in surroundings of the site and stables labor force; settle social affairs 64 APPENDIX 65 APPENDIX QUESTION FOR INTERVIEW Part 1: About the Company Name of the Company? When did the company start? Who is the owner of the company? Who is the Chair man? CEO? CSR officer? Describe the company’s business concept? What is the company’s strategy for the future? What are Company’s vision and mission? Can you describe the structure of the organization? Which different departments you have? How many employees you have? 10.What products are you producing? 11.What are annual revenue and profit? Part 2: CSR What you understand about CSR? How about others Does your Company have social activities? Please list How long have your Company join in social activities? What is the company’s view on Corporate Social Responsibility (CSR)? Where is CSR budget from? How much is it annual? Or total? What you think are the benefits of CSR? Do you think CSR could help you improve your production? Do you see any obstacles for your company when it comes to working with CSR? Do you like join in CSR activities 66 READING REFERENCES Online resource • Centre for Social Markets papers available at www.csmworld.org • CSR Asia Weekly Newsletter, www.csr-asia.com Documents Annual reports of FPT, ACB, Vinamilk and ITA Groups from 2002 to 2007 Chambers, E, W Chapple, J Moon and M Sullivan, 2003, CSR in Asia: A seven country study of CSR website reporting, ICCSR Research Paper series No 09-2003 Chatham House, February 2005, “Following up the World Summit on Sustainable Development Commitments on Corporate Social Responsibility: Options for action by governments”, Final report, Fanny Calder, Royal Institute of International Affairs “Corporate Social responsibility in South Asia: Mapping the Ground”, Proceedings of the CII-PiC Conference, Eric Bergelin and Martin Wastesson, 2005, “Corporate Social Responsibility in Vietnam: A study of the Relationship between Vietnamese Suppliers and their International Customers” Internals annual report of Social Funds of ITA Group from 1998 to 2008 Mark Schacter Consulting ,“ What Directors Need to Know about Corporate Social responsibilities” MOLISA, February 2004,“Study on Corporate Social Responsibility labor-related practices” Nigel Twose and Tara Rao , December 2003, “Strengthening Developing Country Governments’ Engagement with Corporate Social Responsibility: 67 Conclusions and Recommendations from Technical Assistance in Vietnam”, World Bank 10.OECD, “Roundtable on Corporate Responsibility: Encouraging the Positive Contribution of Business to Environment “, Paris, France, June 2004 11.OECD, “The OECD Guidelines for Multinational Enterprises: A Key Corporate Responsibility Instrument”, OECD Policy Brief, June 2003 12.Tamara Bekefi, 2006 “Vietnam: Lesson in Building linkages for competitive and responsible entrepreneurship”, UNIDO and Kennedy School of Government, Harvard University 13.The Economist, Survey: “Corporate Social Responsibility, The Good Company , 20 January 2005” 14.The Business and Human Rights Center, February 2005 “Compilation: Full text of responses to Economist survey on Corporate Social Responsibility” 15.“Theory of Corporate Social Responsibility: Its Evolutionary Path and the Road Ahead “ 16.UNCTAD, “Disclosure of the Impact of Corporations on Society, Current Trends and Issues” , UNCTAD, 2004, United Nations Publication, Sales No E.04.II.D.18, New York and Geneva 17.UNIDO, Vienna 2002, ”Corporate Social Responsibility: Implications for SMEs in Developing Countries” 18.UNIDO, “Corporate Social Responsibility and the Development Agenda: Should SMEs care?” Working paper no 13, May/June 2004 19.UNRISD, Conference News “Corporate Social Responsibility and Development: Towards a New Agenda?” 68 20.UNRISD, Conference News ,“Promoting Socially Responsible Business in Developing Countries: The Potential and Limits of Voluntary Initiatives”, Report of the UNRISD Workshop 23-24 October 2000, Geneva 69 ...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. .. implementation of CSR in Vietnamese enterprises CHAPTER THEORETICAL FOUNDATION 2.1 The meaning of Corporate Social Responsibility Corporate Social Responsibility (CSR) means that a corporation should... Associate,  Compatriots Associate; Leader Opinion: ? ?Corporate Social Responsibility is always at the central concern of FPT In 2007, FPT continually endeavors to conduct the corporate social responsibility