A STUDY ON INCORPORATING CORPORATE SOCIAL RESPONSIBILITY IN A TEA MANUFACTURING COMPANY: A CASE STUDY ON HUNG CUONG TRADING LIMITED COMPANY BY DO XUAN TRUONG Graduation Project Submitted to the Department of Business Studies, HELP University College, in Partial Fulfillment of the Requirements for the Degree of Bachelor of Business (Accounting) Hons i MARCH 2011 Declaration of Originality and Word Count DECLARATION I here by 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 10,065 words DO XUAN TRUONG 28 March, 2011 ii Acknowledgement To accomplish this research, I have received help from many people I extend my sincere thanks to several people the following: Firstly, I would like to deeply thank to my supervisor Dr Le Van Lien, International School He helped me to develop the research and support me in analyzing the results Secondly, I also would like to express my thanks to Ms Sumathi, Help University College, who initiated the project and give me so much instruction and support Lastly, I would like to express my gratitude to managers and employees of Hung Cuong Trading Limited Company DO XUAN TRUONG iii Abstract A STUDY ON INCORPORATING CORPORATE SOCIAL RESPONSIBILITY IN A TEA MANUFACTURING COMPANY: A CASE STUDY ON HUNG CUONG TRADING LIMITED COMPANY BY DO XUAN TRUONG March 2011 Supervisor: Le Van Lien Corporate Social Responsibility (CSR) is a trend in the world today, but it is still relative new in Vietnam Companies want to compete, to grow, they need to implement CSR CSR is a competitive tool for them The main aim of this research is to find the level of awareness and the implementation of CSR of a tea company Researcher will use both of primary and secondary data to achieve this aim In the primary data, researcher uses questionnaire sample to collect data from managers and employees of the company After the analyzing of the results, researcher also gives some recommendations for the company iv TABLE OF CONTENT Declaration of Originality and Word Count .ii DECLARATION ii Acknowledgement .iii Abstract iv TABLE OF CONTENT v LIST OF FIGURRES AND TABLE .viii LIST OF ABBREVIATIONS ix CHAPTER 1: INTRODUCTION 1.1 Research background 1.1.1 CSR in the world 1.1.2 CSR in Viet Nam 1.1.3 CSR in the tea industry 1.2 Problem Statement 1.3 Objective and Sphere of Research 1.3.1 Objective of Research 1.3.2 Sphere of Research 1.4 Research methods CHAPTER 2: LITERATURE REVIEW 2.1 Definition of CSR 2.2 Pyramid Concept of CSR 11 2.3 The Concepts Related to CSR 12 2.3.1 Stakeholder Theory 12 2.3.2 Tripple Bottom Line 13 2.3.3 Business Ethic 14 v 2.3.4 Sustainable Development 14 2.3.5 Investment Decision 15 2.3.6 Responsible Investment 15 2.3.7 CSR Reporting 16 CHAPTER 3: RESEARCH METHODOLOGY 17 3.1 Research Objective 18 3.2 Theoretical Framework and Measurement 18 3.2.1 Managers 18 3.2.1.1 Level of Awareness 18 3.2.1.2 Implementation 19 3.2.2 Employees 19 3.2.2.1 Level of Awareness 19 3.2.2.2 Implementation 20 3.3 Research Methodology 20 3.4 Data Source 20 3.4.1 Primary Data 20 3.4.2 Secondary Data 21 3.5 Research Method 21 3.6 Research tool 21 3.7 Sampling 22 3.7.1 Sample Population 22 3.7.2 Sample Frame 22 3.7.3 Sample Size 22 3.8 Limitations 22 3.9 Hypothesis Statement 22 vi CHAPTER 4: ANALYSIS 24 4.1 Collection of Questionnaires 25 4.2 Description of Result 25 4.2.1 Age 25 4.2.2 Gender 26 4.2.3 Managers 27 4.2.3.1 Level of Awareness 27 4.2.3.2 CSR Implementation 31 4.2.4 Employees 35 4.2.4.1 Level of Awareness 35 4.2.4.2 CSR Implementation 38 4.3 Result Analysis 42 4.3.1 Level of Awareness of CSR 42 CHAPTER 5: CONCLUSION AND RECOMMENDATION 47 5.1 Conclusion 48 5.2 Recommendation 49 5.3 Limitation of Study 50 5.4 Suggestion for Future Research 50 REFERENCE (Harvard referencing system) 51 APPENDICES 53 Appendix A: Questionnaire Sample 53 vii LIST OF FIGURRES AND TABLE Table 1: Elements and its items related to CSR 10 Figure 2.2: Pyramid model of CSR (Archie B Carroll, 1979) 11 Figure 2.3: The relationship between firm and its stakeholders 13 Table 2: Age 25 Table 3: Gender 26 Table 4: Question - Description of Result 27 Table 5: Question - Description of Result 28 Table 6: Question - Description of Result 29 Table 7: Question - Description of Result 30 Table 8: Question - Description of Result 31 Table 9: Question - Description of Result 32 Table 10: Question - Description of Result 33 Table 11: Question - Description of Result 34 Table 12: Question - Description of Result 35 Table 13: Question - Description of Result 36 Table 14: Question - Description of Result 37 Table 15: Question - Description of Result 38 Table 16: Question - Description of Result 39 Table 17: Question - Description of Result 40 Table 18: Question - Description of Result 41 viii LIST OF ABBREVIATIONS CSR Corporate Social Responsibility VND Viet Nam Dong TBL Tripple Bottom Line RI Responsible Investment SNV Netherlands Development Organization ADB Asian Development Bank CoC Code of Conduct ISO International Organization for Standardization OHSAS Occupational Health & Safety Advisory Services ix x really deep Perhaps, only lower level managers were not really understand or unsure about CSR The second part is the level of awareness of employees The result of this part is not similar to the level of awareness of managers above The employee plays an important role in the company; they are directly productive, generating profits for the company So they must be protected, encouraged and treated fairly To learn the implementation of CSR of the company, first we go to research on the level of awareness of employees on CSR Ha Giang is one of the poorest provinces of Vietnam, the lives of workers still face many difficulties, exposure to the media and the internet is still restricted So from the table above we can see the level of awareness of employees' relatively low, most of them are not sure or not know about it Only a few know about CSR, but the numbers of people truly understand the CSR are very low Maybe from the lack of awareness of CSR, the company will have opportunity to take the wrong actions So it is dangerous to employees, they will not really know the impact of companies on the environment, society and themselves This will affect their lives and those around From the analyzing above, we can see that there is a big difference in the level of awareness of CSR among managers and employees Managers in the company really understand the concept of CSR and its importance, but most of them not know CSR reporting This shows that the manager did not respect the use of CSR reporting, perhaps their level of understanding of CSR is indicative of individual, and there is no unity Workers, by contrast, they have very little knowledge about CSR This result is the same with two hypotheses at previous chapter 4.3.2 The Implementation of CSR This part also divided into two sections: Managers and Employees 43 After learning about the awareness of managers, in this sequel researcher continues to analyze the implementation of CSR through the results obtained above Most managers agree that they have engaged in activities such as environmental protection, employees' living care and other social activities The first is about the social activities of the company Most participants agreed that the company has made positive contributions to society, especially the poor The company has partnered with nongovernmental organizations to implement business models and poor Specifically, the business project increases value chain of tea of Hung Cuong with the poor and minorities Organizations such as the Netherlands Development Organization (SNV), Asian Development Bank (ADB) has found the projects for the poor of Hung Cuong that are suitable, so they joined with Hung Cuong to implemented projects They have invested money, and Hung Cuong Company shall use this money to implement projects effectively Non-governmental organizations have provided about four billions VND to support the poor people Hung Cuong spent this money for buying equipment, seedlings… In addition, the company also has projects to support clean tea plant, quality assurance, organic fertilizer and clean water - no pollution to people in Cao Bo, Vi Xuyen district, Ha Giang province According to Nguyen Thanh Hung, the chairman of the company, Hung Cuong has provided more than one million seedlings for tea farmers in Cao Bo (600 VND per seedling) The next is environmental protection of the company Up to two thirds of the respondents said that company was actually involved in environmental protection, has undertaken measures to reduce their impact on the environment The company understands the pollution of external environment also means company is also pollution, so the company will focus on solving problems within the company The company has applied environmental protection projects, company must examine areas such as 44 places of production, workplace to prevent the occurrence of pollution and hazardous The company wanted to ensure that the workplace is always cool, clean Moreover, they have built water purification system standards, waste treatment systems, to participate in tree planting programs, greening vacant land, denuded hills The company has complied with the provisions of state about environmental protection and now, they are completing ISO 14001 (environmental management system) The last is about responsibility of the company for employees Like the two parts above, managers have said that company has performed their responsibilities to employees The company has provided equipment and labor protection, increased wages for overtime, rest in accordance with the provisions of law, support for workers who are disadvantaged For example, Hung Cuong will pay more salary for employees that called thirteenth monthly salary at the end of the year or if employees who work full 26 days in a month, they will be rewarded one day Company has added lunch for the employees (20,000 VND per employee) Hung Cuong also organizes regular health checks for staff, traveling for employees That works of the company that will create comfort for employees Doing this would increase labor productivity, employee loyalty Besides, Hung Cuong completed Code of Conduct (CoC) from a Germany’s customer The second section is about employees In this section, the researchers want to study through employees to know the implementation of CSR of the company As mentioned above, the employee is an integral part of the company, their role is very great Therefore the company is responsible for the livelihood and health of workers However, the level of awareness of CSR is low, so most of the employees are not sure about requiring company performing CSR Although the employees are not required but the company still has the supporting activity for workers There are a large 45 number of respondents were told that the company has programs to assist them in life As in the previous section, some respondents also raised company has programs that support them For example, every year the company has organized travel for employees or reward their children with good academic achievements In addition, some workers said that they are not subject to any pressure and unfair treatment in workplace This proves that the company has tried to create comfort for employees, and very good execution of the provisions of law From the analysis above, researcher said that the company had made good their responsibility to the environment, employees and social Although this study only focused on two subjects (managers and workers) but showed a relatively complete picture of the company's CSR activities But the company also revealed that the implementation of CSR is the lack of uniformity, single, highly spontaneous So the company has not obtained the complete CSR reporting which is highly appreciated 46 CHAPTER 5: CONCLUSION AND RECOMMENDATION 5.1 Conclusion 5.2 Recommendation 5.3 Limitation of Study 5.4 Suggestion for Future Research 47 5.1 Conclusion Corporate Social Responsibility is a hot topic in the world; it includes such activities as environmental protection, contribution to society, employees, customers, and suppliers Today, companies are concerned with CSR because the huge benefits that it brings CSR gives the company a sustainable development, reputation and profitability In Vietnam, CSR is still relatively new, but will be a trend of companies in the near future Companies wants to participate in global markets, they need to implement CSR because customers and investors want access to the company which has potential and sustainable development After analyzing the results, although the survey showed that company implemented a part of corporate responsibility such as environment protection, social projects or care about worker lives This also shows that made sense of social responsibility of company is relatively high However, to implement CSR in a uniform, the company must overcome the following difficulties Researcher found that while managers may know the concept of CSR, but not really understand it Contrary, workers have very little information about CSR, so they lack the understanding of it They not understand about CSR, so the implementation of CSR also faced many difficulties Besides, financial is also a problem in the implementation of CSR Maybe company can not afford to it because of the CSR implementation is very expensive, especially small and medium enterprises in Vietnam In addition, Vietnam has no regulations forcing companies to implement corporate social responsibility, so there will be certain difficulties in implementing CSR Because of CSR awareness and implementation is still restricted, it causes difficulties for the tea company in accessing international markets This is general situations of enterprises in Vietnam 48 5.2 Recommendation As stated above, the perception and implementation of CSR in Vietnam is relatively low After the study, researcher has some ideas to solve these problems Firstly, the need to propaganda and education for enterprise, all the business owners should know about the social responsibility of enterprise, must make them understand that social responsibility of business is not only compact bundle in charity work Propaganda, education are important, because all human behavior is through the consciousness of human beings, are by their sense of control Secondly, the company needs to apply international standards such as ACERT (converting the waste into usable source for re-use), OHSAS 18000 (occupational health and safety), ISO 26000 (Social Responsibility of Business) Thirdly, companies need to be encouraged to find out what business partners want (about product quality and CSR) Therefore, company can better meet their needs Next, CSR is important, but it is not paper certificate It is the implementation process of CSR If done correctly, company will gain benefits such as improving management efficiency, increase loyalty and enthusiasm of employees, reduced training costs, increased labor efficiency, etc in Vietnam, sometimes companies get too serious about the certificate, but the certificate is meaningless if not enforced seriously Finally, In Vietnam, most of the implementation of CSR is passive when the purchaser is required So some manufacturers are feeling forced to implement CSR, but not fully understand the nature of it or not commitment The researcher suggested that most successful businesses in the implementation of CSR are companies that have active commitment to implement CSR, turning it into a company culture In the long term, CSR is a tool to help Hung Cuong improving competitiveness These are important issues now because the competition in a growing area Hung Cuong can 49 competitive if they have all three factors: quality, price and compliance with CSR standards In a developing country like Vietnam, CSR is an important competitive tool 5.3 Limitation of Study This research has some limitations that make it not accurate and efficient The first limitation is that the research scope is narrow, only examine on a firm This will lead to the accuracy of this research are affected It is difficult to know exactly the extent of level of awareness and implementation of CSR in tea industry in Vietnam The second limitation is sample size It is too small for this research This also affects the accuracy of research The next limitation is that researcher only focused on two objects (managers and employees) without research to customers of the company, communities surrounding the company Therefore, it is difficult to understand clearly the implementation of CSR of the company, its impact on the environment, satisfying the requirements of customers 5.4 Suggestion for Future Research With all of limitations above, researcher has some suggestions for future research Firstly, future researches should expand the scope of research to get a complete picture about CSR Future researchers should try to examine on two or three companies that will help their research papers are more accurate, more vivid Secondly, future research should send more questionnaires to improve a larger sample size This will lead to the results are more accurate The last suggestion is that future researches should focus on many objects to have deep understanding about CSR such as investors, suppliers, communities… 50 REFERENCE (Harvard referencing system) Dantri, 2009 Vedan la thu pham chinh gay o nhiem song Thi Vai Available at http://dantri.com.vn/c20/s20-366651/vedan-la-thu-pham-chinh-gay-o-nhiem-song-thivai.htm [accessed 10 December, 2009] Carroll, A., 1979 A three-dimensional conceptual model of corporate performance The Academy 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Global practices of CSR Spinger publishing 52 APPENDICES Appendix A: Questionnaire Sample The survey on the term “Corporate Social Responsibility” in Hung Cuong limited company, Ha Giang province Company name: _ Address: _ Age: Gender: _ Please choose the most appropriate answer (tick ۷) For managers I CSR awareness: Question 1: I know the term “Corporate Social Responsibility” (CSR) Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly Disagree Disagree Strongly Disagree Disagree Strongly Disagree Disagree Strongly Disagree Question 2: I really understand the term “CSR” Strongly Agree Agree Neither Agree nor Disagree Question 3: Company has benefits from CSR disclosure Strongly Agree Agree Neither Agree nor Disagree Question 4: I know CSR reporting Strongly Agree Agree Neither Agree nor Disagree 53 II CSR implementation: Question 5: As part of its CSR work, your company has undertaken community projects, volunteering or sponsorship locally Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly Disagree If your answer is (Strongly Agree) or (Agree), please show below: Question 6: Company has tried to reduce your enterprise’s environmental impact Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly Disagree If your answer is (Strongly Agree) or (Agree), please show below: Question 7: Company has suitable arrangement for health, safety and welfare that provide sufficient protection for your employees Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly Disagree If your answer is (Strongly Agree) or (Agree), please show below: 54 Question 8: Company has been disclosure CSR reporting to society Strongly Agree Agree Neither Agree nor Disagree 55 Disagree Strongly Disagree For employees I CSR awareness: Question 1: I know the term “Corporate Social Responsibility” (CSR) Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly Disagree Disagree Strongly Disagree Disagree Strongly Disagree Disagree Strongly Disagree Question 2: I really understand the term “CSR” Strongly Agree Agree Neither Agree nor Disagree Question 3: CSR is necessary for me Strongly Agree II Agree Neither Agree nor Disagree CSR implementation: Question 4: I require company to implement CSR Strongly Agree Agree Neither Agree nor Disagree Question 5: Company has programs to support your living conditions (health, safety, children…) Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly Disagree If your answer is (Strongly Agree) or (Agree), please show below: Question 6: I have never worked under any pressures (working time, salary…) Strongly Agree Agree Neither Agree nor Disagree 56 Disagree Strongly Disagree Question 7: I have never been discriminated in my workplace Strongly Agree Agree Neither Agree nor Disagree 57 Disagree Strongly Disagree ... Trading Limited Company DO XUAN TRUONG iii Abstract A STUDY ON INCORPORATING CORPORATE SOCIAL RESPONSIBILITY IN A TEA MANUFACTURING COMPANY: A CASE STUDY ON HUNG CUONG TRADING LIMITED COMPANY BY... tea exporting company in Vietnam Hung Cuong was established in 1998 Headquarter is an area of two hectares in Ha Giang province Company has five plants and a warehouse which are located in Ha... Vietnam, Ministry of Labour, Invalids and Social Affairs, Ministry of Trade and Industry along with Association Footwear, Textiles awarded “the Corporate Social Responsibility towards sustainable