CORPORATE SOCIAL RESPONSIBILITY (CSR): A STUDY ON FACTORS EFFECTING CSR IMPLEMENTATION AND CSR DISCLOSURE IN VIETNAM-CASE AND EVIDENCE BY GIANG THI YEN 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 October 2011 Declaration of originally and word count DECLARATION I declare that this graduation project is based on my original work except for quotations, theories and citations which have been duly acknowledged I also declare that it has not been previously or concurrently submitted for any other course/degrees at HELP University College or other institutions The word count is 10,220 Giang Thi Yen Date: ACKNOWLEDGEMENT First of all, I would like to thank Dr Pham Duc Hieu for his direction, assistance and guidance throughout my project He guides meaningful suggestions and constructive ideas for me to complete this thesis Secondly, I special thank to all managers, employees and consumers of both companies Long Tech Precision and NHABE Company in Vietnam They helped me a lot in completely survey about CSR awareness and its impact on the Vietnam business nowadays Without their co-operation, I could not be able to collect fully information to support the research Finally, I would like to express my sincere to all my friends for their encouragements and contributions which have been important for my presentation of this project A STUDY ON FACTORS AFFECTING CSR IMPLEMENTATION AND CSR DISCLOSURE IN VIETNAM CASE AND EVIDENCES BY GIANG THI YEN OCTOBER 2011 Supervisor: Dr Pham Duc Hieu Abstract: This project aims to examine how managers and employees from different Vietnamese companies represent their knowledge and their perceptions of Corporate Social Responsibility (CSR), also the behavior of Vietnamese consumers towards CSR positive The resulting framework based on an expansion of qualitative research to clear the CSR performance of each situation It also provides evidence that there are large proportions of managers and employees express a highly positive attitude towards CSR and its reporting but consumer’s perception is rather low in statements and questionnaire It stills a discrepancy between what managers say they and what action they However, the willingness to learn and gain more understanding about CSR found from survey, it will make the bright future of Vietnam CSR implementation and CSR disclosure Table of Contents Declaration of originality and word count…………………………………………2 Acknowledgement…………………………………………………………………3 Abstract…………………………………………………………………………….4 Table of contents………………………………………………………………… CHAPTER 1: INTRODUCTION……………………………………… .9 1.1 The important of research…………………………………………………….10 1.2 Problem statement…………………………………………………………….12 1.3 Objective of research…………………………………………………………12 1.4 Range of research…………………………………………………………… 13 1.5 Research methods…………………………………………………………….14 1.6 Structure of research………………………………………………………….15 CHAPTER 2: LITERATURE REVIEW………………………………… 16 2.1 Theory framework………………………………………………………… 16 2.1.1 What is CSR? .16 2.1.2 Stakeholder theory………………………………………………………….17 2.1.3 CSR implementation and CSR disclosure………………………………… 18 2.2 Research and Studies……………………………………………………….21 2.2.1 The factors effecting on CSR implementation and CSR disclosure……… 21 2.2.2 Business ethics in Vietnam…………………………………………………23 2.3 Research Summary…………………………………………………………25 CHAPTER 3: RESEARCH METHODOLOGY………………………….26 3.1 Overview of Methodology………………………………………………… 26 3.1.1 Quantitative research…………………………………………………… 26 3.1.2 Qualitative research……………………………………………………… 27 3.1.3 Conclusion………………………………………………………………….28 3.2 Data collection…………………………………………………………… 28 CHAPTER 4: RESULTS AND ANALYSIS…………………………… 31 4.1 Results and discussion from survey……………………………………… 31 4.1.1 Sampling……………………………………………………………………31 4.1.2 Description of results……………………………………………………….33 4.1.3 Result from managements’ survey………………………………………….35 4.1.4 Results from employees’ survey…………………………………………….37 4.1.5 Results from consumers’ survey……………………………………………45 4.2 Summary…………………………………………………………………….48 CHAPTER 5: CONCLUSION AND RECOMMENDATION………….49 5.1 Conclusion………………………………………………………………… 49 5.2 Recommendation……………………………………………………………51 5.3 Limitations and Future Development…………………………………… 53 5.3.1 Limitations………………………………………………………………….53 5.3.2 Future Development……………………………………………………… 55 REFERENCES………………………………………………………………… 56 APPENDICES………………………………………………………………… 59 LIST OF FIGURES AND TABLES Table 1: Age…………………………………………………………………… 33 Table 2: Gender………………………………………………………………… 34 Table 3: Position of people response…………………………………………… 34 Table 4: Distribution of manager survey towards statements…………………….36 Table 5: Descriptive statistics from manager’s survey………………………… 36 Table 6: Question –Result and Analysis……………………………………… 39 Table 7: Question –Result and Analysis……………………………………… 40 Table 8: Question –Result and Analysis……………………………………… 42 Table 9: Question –Result and Analysis……………………………………… 43 Table 10: Question –Result and Analysis…………………………………… 45 Table 11: Distribution of consumer towards statements…………………………45 Table 12: Description statistics from consumer’s survey……………………… 47 LIST OF ABBREVIATIONS CSR Corporate Social Responsibility VCCI Vietnam Chamber of Commerce and Industry WTO World Trade Organization WBCSD World Council on Sustainable Development PR Public Relations NGOs Non Government Organizations CHAPTER 1: INTRODUCTION 1.1 THE IMPORTANT OF RESEARCH In the last 10 years, Corporate Social Responsibility (CSR) is a more concern in the business world and a growing number of corporations that began to think about their impacts on society, first and foremost because consumers became more interested in corporate activities around the world It is also the commitment of one company to perform ethically and contributes an economic development at the same time as improving the quality of life Besides, corporate social responsibility also creates a way of business responsibility to an extensive of the relationship between stakeholders, shareholders and investors This is the result of growing requirement for corporate disclosure and increased customer demands In the recent survey, there is a lot of consumers reported having either rewarded or punished companies based on their perceived social performance In particularly, Vietnam is one of the country which getting more awareness about CSR in business In 2005, Vietnam has a join of CSR towards the sustainable development that set up by Vietnam Chamber of Commerce and industry (VCCI) to payment the companies that actively implementation CSR in the international economics According to Mr Nguyen Quang Vinh- depute director of the enterprises for sustainable development consider “Enterprise of Vietnam need to be backed implement CSR, manufacturing business toward sustainable development is prerequisite, Vietnam’s enterprise survival in the context of international economic integration” There fore, through the award of business 10 importance of CSR and they are not willing to pay for goods and services of socially responsibility companies 4.2 SUMMARY Base on the relationship between the independent variables and dependent variables, the research give a result of the factors for CSR importance and perception of managers, officers and consumers At the same time, this also provides clearly survey of each individual and description its statistics as well as discussion from these results In conclusion, this chapter is fully giving the evidence from distribution of the survey which divided into three sections are CSR awareness, CSR perception and CSR reporting with managers, officers and consumers generally It’s likely affect the importance of CSR in business today and description of the factors effecting on CSR implementation and CSR disclosure 48 CHAPTER 5: CONCLUSION AND RECOMMENDATION 5.1 CONCLUSION The research results have provides interesting findings on three factors affecting CSR implementation and CSR reporting of corporations in Vietnam Those are focuses on the analysis of two typically case and evidences not only in Vietnam but also in over the world More specifically, there are a lot of scandals that happened in 2008 such as Vedan, Tung Kuang, and Long Tech precision in 2011 causing serious environment damage many families in Binh Duong and Ninh Binh province However, the research also has the evidence in studying of the good company in CSR implementation as NHABECO Company All of them are different circumstances but has effect of the factors that include in CSR implementation and CSR reporting in Vietnam companies In additionally, corporate social responsibility is broadly brought up much on the online forum as well as the study books Through the conduct of survey and investigation of awareness of CSR and what’re factors effecting on CSR implementation? It just knows of a large concern of manager and officer in Vietnam enterprises On the other hands, there are also have many people who quite strange with the CSR definitions It’s also having many companies that perception about CSR because they don’t understand and actually practice thus there are a lot scandals in Vietnam economics At the same time, in this research, it also shows more details in study of CSR awareness of each level For managers, a high level of concerns of CSR may not be a factor to ensure that enterprises in 49 Vietnam will fulfill their CSR obligations and requirements For consumers and officers, although they net have clear attitude, the research results also show that the awareness of Vietnamese consumers and their purchasing decision influence significantly on the CSR implementations as well as CSR disclosure of companies While the firm commit provide a high quality goods and services at low prices as important factors in being social responsibility, there are also opening in CSR disclosure and management belief Even though the fact that is not enough national standards and requirements from investors and customers, the Vietnamese companies also are not care about CSR reporting for their activities Therefore, clients have not fully information achievement about CSR implementation and CSR practice of companies And thus they not recognize the importance and benefits of CSR Generally, the consumers usually focuses on the prices than CSR when they making purchase decision Hence, government should be more concern about CSR, its results of a bright future for Vietnam companies to become general practices After looking the various sources of literature from different countries and Vietnam corporations as well, the researcher contributed with some factors as following: the definition and CSR concepts and its key role in business today Besides, the study also focuses on the CSR perception and CSR reporting in Vietnamese companies by the interview of managers, officers and consumers As the result, this project helps them approach the concept of Corporate Social 50 Responsibility as well Following, almost enterprises have to enlarge the long term CSR strategy in their activities 5.2 RECOMMENDATION During the research as well as the analysis processes several other ideas turned up that could be interest and worthwhile to investigate more thoroughly Those findings has a lot of challenges for companies to resolve the CSR problems in which how to operate effectively to bring more value to customers, and how to improve the attitude and awareness of customers toward CSR to gain their loyalty At the same time, it is important to increase and accomplish the administrator of Vietnam to make an underground of CSR implement This is good evaluate regulation is the most understandable enclose for CSR in Vietnam Besides, in order to achieve these target objectives, CSR should be focus on the social responsibility It means that, they must offer the issue of safety goods and services or provide health and working condition for employees This also tends to ensure the human rights and improve customers and workers satisfaction The social responsibility also focus on establish a good relationship between government and community Secondly, companies should be interested in environmental responsibility that means protect and improve environment and special reduce resources consumption such as materials, electricity, toxic,…and improve waste management Additionally, they should be care about economic responsibility which support by investors, pay taxes, creates jobs, and improve risk management 51 As well as the companies should specific strategies by making decision and contribution of the step such as questions like what, where, why and how to support, how to improve it, ect… In the fact that, there are a lot of enterprises as well as international organization that located in Vietnam, thus we have more opportunities than others in learning and study about the development of CSR problem in Vietnam business general Further more, the results of research also give that there is a perception gap in CSR issues between managers and customers The survey of CSR awareness of positive management is important but still limit for the whole success of CSR implementation and disclosure Hence, the clients that have able in to the effect profits of competing firms and indirectly as well as the direction of the economy need to pay more attention on whether companies’ activities are responsible to society or not Besides, the government should take several steps in supporting and encouraging the raise of CSR practice In this issue, the government need to setting up a policy to govern commercial transactions and distribution between business and customers That will be considered as a standard practice that covers various aspects of running business that include CSR disclosure requirement What’s more, the government should establish a learning program that related to CSR, this may help grow the knowledge and concern in the public This also leads to the prevention with the environmental and social scandals when people have strong react with CSR issue At the same time, it will encourage firms to act and to perform responsibility and ethically 52 Another central and important issue for further study is focus on investors So what should they and care about? After findings of CSR in Vietnam have some encouraging indicates that are the concerning of Vietnamese investors still some serious problem This can be creating a bad performance for organization and society which make the losing of long-term benefits of investors Therefore, understanding of CSR will help the investors have better information of companies and making decision for their investment Besides, the firm also link with investor by more attractive themselves to find out information about the firm easily and fastest As the results, the investors will be enhanced in investing of that company 5.3 LIMITATION AND FUTURE RESOLEMENT 5.3.1 Limitations As we know, CSR as a tactic for the long term practice of one company Therefore, because the climate of economics changing, whether corporations continue to estimate their business responsibility image? CSR will improve a companies’ reputation or access to capital if the public is convinced that they really are having a positive impact on society In any aspect of issue, there are also has a lot of advantages as well as disadvantages for the companies which want towards CSR Back to this research, because it focuses on a small sample of companies in Hanoi, Ninh Binh and Ho Chi Minh cities, the general of the research finding is limited It is also plays an important role in research but due to 53 not enough time and budget, it difficult to expand interview into aspect These are only provided a basic for more study, particularly appropriately designed quantitative in combination with qualitative studies to conduct the findings of this research The companies also face a lot of limitations when they practices CSR These usually relate either to political issues or to organizational level concerns and are often embedded in culture As a roles and responsibilities of government are being redefined and the limitations between business and government become more complex, the framework shows that business leaders are facing a discouraging of challenges In the new circumstance of CSR in Vietnam, the needs of best relationship between the stakeholders, consumers and employees, national and international regulators, NGOs, and activist groups will become more development Additionally, because lack of perception bout CSR thus companies have the deviance view or incorrect understanding of its There are many firms that has not confidence in adopt CSR so they think that there no opportunities as well This also is a commonly challenges for Vietnam companies Moreover, lack of understanding will lead to make mistake so that it is difficult to carry out the survey on Vietnamese managers Besides, the biggest limitation in the field of CSR implementation to be the development of leaders for a sustainable global society, asking what kind of leader is needed for building a sustainable global society and how we can best develop individuals with these leadership capabilities Here, the limit is to develop leaders who can relate in different ways, who are able to align different values into 54 a common vision, who can listen to and care for others and ultimately serve them Meeting these challenges requires the joint efforts of a global society and responsible leadership committed to diversity, ethics and values 5.3.2 Future development With many limitations that mentioned above, the companies in Vietnam should have future plant to improve their performance and gain the credibility of customers There is raising knowledge that business must to run its relationship with the wider society Besides, enterprises managers should plant for responsible for their corporations’ impact on society and the natural environment beyond legal compliance and the liability of individuals More experienced leaders can obtain new perspectives on how to make the way that they will use to access sustainability and how to develop new business models in accord with the triple bottom line Further more, organizations of Vietnamese companies should consider their pattern of behavior in the structure and start their rewarding a sustainable approach that is integrates into business strategy 55 References Definitions of CSR http://www.ehow.com/list_7584926_factors-lead-corporate-socialresponsibility.html http://www.sbs.ox.ac.uk/achilles/downloads/notes/making_sense_of_csr.pdf http://www.csrglobe.com/pdf/Report.pdf http://www.vietnamforumcsr.net/default.aspx?portalid=5&tabid=70&docid=623 Making Good Business Sense by Lord Holmes and Richard Watts, CSR definition Deegan, C.2009, Financial Accounting Theory Thirdly edition Mc Graw-Hill Australia Pty Ltd Friedman, A and Miles, S (2002) Developing stakeholder theory Journal of management studies Stakeholder agency theory, journal of management studies (March), p131 World Business Council for Sustainable Development, 2004, cross cutting themescorporate responsibility, 30-november-2009 http://www.wbcsd.org 56 Elkington, the triple bottom line of 21 century business Business ethics- reality and solution- Dr Nguyen Hoang Anh –Trade Hanoi University http://www.hids.hochiminhcity.gove.vn/Hoithao/VNHOC/TB5/anh.pdf http://business-ethics.com/2010/07/4298-in-their-own-words-how-businessesview-sustainability-and-csr-reporting/ Verbatim: how business view sustainability & CSR reporting by Tim Smith – July 27, 2010 Corporate Social Responsibility, scandal companies and case study in Long Tech Precision of Vietnam http://www.cleanbiz.asia/story/vietnam-prosecutes-chinese-polluter Corporate Social Responsibility, case evidence of NHABECO Company of Vietnam http://www.vietnamforumcsr.net/default.aspx?portalid=5&tabid=70&docid=623 CSR lesson from Vedan Company and Chinas’ Milk scandal, November 3, 2008 http://csrinternational.blogspot.com/2008/11/csr-lessons-from-scandal.html The role of the CSR- June 1, 2009 57 http://www.massogroup.com/cms/content/view/5892/290/lang.en/ The web of Qualitative research: http://www.fhi.org/nr/rdonlyres/etl7vogszehu5s4stpzb3tyqlpp7rojv4waq37elpbyei 3tgmc4ty6dunbccfzxtaj2rvbaubzmz4f/overview1.pdf http://www.marketresearchworld.net/index.php?Itemid=64&id=10&option=com_ content&task=view Quantitative research method overview http://www.wisegeek.com/what-is-the-difference-between-quantitative-andqualitative-research.htm Business Social Responsibility http://www.bpsc.com.vn/csr.asp CSR in developing country- Wayne Visser http://www.waynevisser.com/chapter_wvisser_csr_dev_countries.pdf 58 APPENDICES Appendix A: Questionnaire sample The survey form of impact and important of CSR awareness in two companies Long Tech Precision Vietnam and NHABE COMPANY Please choose the most appropriate answers: AGE: GENDER: POSITION: Appendix B: Statements survey of management concern about CSR in business Statement 1: Organizing in public welfare activities are the social responsibility of company Strongly agree Agree Strongly disagree Neutral Disagree Statement2: Company has incurred extra costs for heath and safety working environment Strongly agree Agree Strongly disagree Neutral Disagree Statement 3: CSR provides a favorable public image Strongly agree Agree Strongly disagree Neutral Disagree Statement 4: CSR is good for strategic competitive advantage Strongly agree Agree Strongly disagree Neutral Disagree 59 Statement 5: CSR reporting will have positive impacts on investors’ decision Strongly agree Agree Strongly disagree Neutral Disagree Statement 6: CSR reporting will become general practices in near future Strongly agree Agree Strongly disagree Neutral Disagree Statement 7: Firm perceived a being social responsibility can improve industrylabor relationship Strongly agree Agree Strongly disagree Neutral Disagree Appendix C: questionnaire survey of employees concern about CSR in business Question 1: “Do you know the meaning of term corporate social responsibility” Strongly agree Agree Strongly disagree Neither Agree nor Disagree Disagree Question 2: “Do you think it is the no limitation of CSR in regulation compliance” Strongly agree Agree Strongly disagree Neither Agree nor Disagree Disagree Question 3: “Do you use CSR related information in measurement of firm” Strongly agree Agree Strongly disagree Neither Agree nor Disagree Disagree Question 4: “Do you understand CSR reporting” 60 Strongly agree Agree Strongly disagree Neither Agree nor Disagree Disagree Question 5: “Do you know the important role of CSR reporting” Strongly agree Agree Strongly disagree Neither Agree nor Disagree Disagree Appendix D: Statements survey of consumers concern about CSR: Statement 1: You understand the term of corporate social responsibility Strongly agree Agree Strongly disagree Neutral Disagree Statement 2: If I bought products of a good company in social responsibility practices, I would be more likely to continue buying that companies’ product Strongly agree Agree Strongly disagree Neutral Disagree Statement 3: Company should conduct social responsibility initiatives Strongly agree Agree Strongly disagree Neutral Disagree Statement 4: I would avoid buying product from immoral companies Strongly agree Agree Strongly disagree Neutral Disagree Statement 5: I am willing to pay for goods and services from socially responsibility companies 61 Strongly agree Agree Strongly disagree Neutral Disagree Statement 6: I believe that it important to examine company’ CSR strategies Strongly agree Agree Strongly disagree Neutral Disagree Statement 7: I will make some changes in behavior for social responsibility Strongly agree Agree Strongly disagree Neutral Disagree 62 ... and consumers generally It’s likely affect the importance of CSR in business today and description of the factors effecting on CSR implementation and CSR disclosure 48 CHAPTER 5: CONCLUSION AND. .. the CSR definitions It’s also having many companies that perception about CSR because they don’t understand and actually practice thus there are a lot scandals in Vietnam economics At the same... Vietnam, CSR implementation is consider as a strategic decision and a means for authority and it bringing new business opportunities According to Mr Pham Hoang Hai, Action Aid Programmed Officer in