CORPORATE SOCIAL RESPONSIBILITY IN VIET NAM: A STUDY OF STAKEHOLDERS’ PERCEPTIONS OF CORPORATE SOCIAL RESPONSIBILITY BY PHAM VAN THUAN 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 October 2010 Declaration of Originality and Word Count DECLARATION I declare that this graduation project is based on my original work except for quotations and citation which have been duly acknowledged I also declare that it has not been previously or concurrently submitted for any other courses/degrees at HELP University College or other institutions Word Count: … Words Pham Van Thuan Date ii Abstract CORPORATE SOCIAL RESPONSIBILITY IN VIET NAM: A STUDY OF STAKEHOLDERS’ PERCEPTIONS OF CORPORATE SOCIAL RESPONSIBILITY BY PHAM VAN THUAN October 2010 Supervisor: Dr Nguyen Thi Phuong Hoa Corporate Social Responsibility has developed through the long history and it is also expected to be implemented by any business entities in the world It is no longer a new term for developing countries such as Viet Nam However, in recent year, when the economic is opened, there are a lot of scandals and critical cases concerning about the Corporate Social Responsibility and ethical business as the result of the economic boom So, there appear a lot of researches on that field; however the understanding of Corporate Social Responsibility is limited in Viet Nam Therefore, it may be a result of motivation for the researcher to conduct the survey about the perceptions of CSR among Vietnamese individual investors in TL Securities Company’s office (TLS) In this study, the researcher aims at assessing the understanding of Vietnamese individual investors on the topics of CSR Further more, the researcher tries to define three factors which contribute to the CSR perceptions namely CSR awareness, investment decision and CSR reporting base on the understanding and opinion of the investors iii By conducting the research, the research is able to indicate that the understanding of CSR concepts and its perceptions is limited; because the investors have little basic knowledge about the CSR So, investors in Viet Nam are very hard to use CSR information as a tool to value firm and it is also difficult for them to make investment decision iv Table of contents Declaration of Originality and Word Count ii DECLARATION ii Abstract iii Table of contents v List of Figures and Tables viii List of Abbreviations .ix CHAPTER 1: INTRODUCTION x 1.1 Research Background 1.1.1 CSR in the world 1.1.2 CSR in Vietnam 1.2 Problem Statement 1.3 Objectives and Sphere of Research 1.3.1 Objectives of Research 1.3.2 Sphere of Research 1.4 Research Methods 1.5 Structure of Research CHAPTER 2: LITRERATURE REVIEW 2.1.3 Investment Decision 2.2.1 Business Ethics in Viet Nam – Reality and Solutions 2.2.2 CSR in business entities in Viet Nam – Reality and Solutions 2.2.3 CSR – The Investors’ Perspective 2.2.4 CSR, PR of Foreign-Invested Companies 2.3 Researches Summary v 2.1 Research’s related concepts 2.1.1 Carroll's 1979-1991 conceptualization 2.1.2 Stakeholder theory 11 2.1.3 Investment Decision 12 2.1.4 Responsible Investment 13 2.1.5 Investor Relation 13 2.1.6 CSR Reporting 14 2.1.7 CSR practice and challenges 16 2.2 Researches and Studies 18 2.2.1 Business Ethics in Viet Nam – Reality and Solutions 18 2.2.2 CSR in business entities in Viet Nam – Reality and Solutions 19 2.2.3 CSR – The Investors’ Perspective 20 2.2.4 CSR, PR of Foreign-Invested Companies 21 2.3 Researches Summary 22 CHAPTER 3: RESEARCH METHODOLOGY 25 3.1 Research Objectives 26 3.2 Theoretical Framework and Measurement 26 3.2.1 CSR perceptions 27 3.2.2 CSR Awareness 27 3.2.3 Investment Decision 28 3.2.4 CSR Reporting 28 3.3 Measurement and Quality Design 28 3.3.1 Section 29 3.3.2 Section 29 3.3.2.1 CSR Awareness 30 vi 3.3.2.2 Investment Decision 31 3.3.2.3 CSR Reporting 31 3.4 Research Method 32 3.4.1 Sampling 33 3.5 Hypothesis Statement 33 3.5.1 Correlation of Independent Variable 34 CHAPTER 4: RESULT ANALYSIS 35 4.1 Collection of Questionnaires 36 4.2 Description of Result 36 4.2.1 Age 36 4.2.2 Gender 37 4.2.3 CSR Awareness 38 4.2.4 Investment Decision 42 4.2.5 CSR Reporting 46 4.3 Result Analysis 48 4.3.1 Hypothesis 49 4.3.2 Hypothesis 51 4.3.3 Hypothesis 52 CHAPTER 5: CONCLUSION AND RECOMENDATION 53 5.1 Conclusion 54 5.2 Recommendation 55 5.3 Limitation of Study 56 5.4 Suggestion for Future Research 57 Reference (Harvard referencing system) 58 APPENDICES 61 vii List of Figures and Tables Table 1: Researches and Studies Summary 24 Table 2: Age 36 Table 3: Gender 37 Table 4: Question - Result and Analysis 38 Table 5: Question - Result and Analysis 39 Table 6: Question - Result and Analysis 40 Table 7: Question - Result and Analysis 41 Table 8: Question - Result and Analysis 42 Table 9: Question - Result and Analysis 43 Table 10: Question - Result and Analysis 44 Table 11: Question - Result and Analysis 45 Table 12: Question - Result and Analysis 46 Table 13: Question 10 - Result and Analysis 47 Table 14: Question 10 - Result and Analysis 48 Table 15: Hypothesis 49 Table 16: Hypothesis 51 Table 17: Hypothesis 52 viii List of Abbreviations FPTS FPT Securities Company CSR Corporate Social Responsibility RI Responsible Investment IR Investor Relations WTO World Trade Organization VCCI Viet Nam Chamber of Commerce and Industry NIRI National Investor Relations Institute PR Public Relations ix CHAPTER 1: INTRODUCTION 1.1 Research Background 1.1.1 CSR in the world 1.1.2 CSR in Vietnam 1.2 Problem Statement 1.3 Objectives and Sphere of Research 1.3.1 Objectives of Research 1.3.2 Sphere of Research 1.4 Research Methods 1.5 Structure of Research x conclusion about the determined factors for CSR importance and perception of individual investors 4.3.1 Hypothesis In order the researcher has been mentioned, the first hypothesis is used to inspect the relation ship between the CSR perception and CSR awareness According to the five points Liker Scale method, the average point (3) is use to determine the relationship between variables And, it is considered that no correlation between two variables if the value of mean is less than Mean Standard Deviation Question 3.15517 1.3219 Question 4.24138 1.04815 Question 3.32759 1.04944 Question 2.67241 1.16058 Average Mean 3.34914 Table 15: Hypothesis From the table above, we can see that the average mean for those questions have value is (3.34914) which are greater then Because of this, the null hypothesis of these is no relationship between CSR perception and CSR awareness is rejected and alternative hypothesis is accepted 49 Under the result of the question and question2, we are easily seen that most of the investors are aware of the term “corporate social responsibility” However, the number of the investors think that they full understanding about the term of CSR is less under question The implication behind these numbers the researcher thinks that the investors may be heard or read about the term of CSR issue in the media and they not have taken any formal courses on CSR Further more, wit the join of Viet Nam to the WTO, most of investors are consider about the CSR as the important issue in Viet Nam, according to result of question In the result of question 3, with the mean of 3.32759 and have a highest percentage of investors who chosen “neither agree nor disagree”; we can see that there is confusing among respondents in this issue So, this question also gives us the more detailed limitation on awareness and understanding of CSR concept Because of this, they not care about the CSR activities and they may believe that following the regulation made by the government is good enough In the last but not least question, the researcher also wants to ask the investors in real case In that case, there is company has to discharge directly waste water into river to save cost With the result collected (mean = 2.67241), we can see that the number of investors think that the firm should that way in order to survive without any ethical conducts 50 4.3.2 Hypothesis Mean Standard Deviation Question 2.05172 1.13048 Question 3.89655 1.13462 Question 2.82759 1.39092 Question 2.89655 1.25222 Average Mean 2.91810 Table 16: Hypothesis In this section, the average mean of those questions is 2.91810 less than So, the null hypothesis is accepted However, it does not mean that there is no relationship between the CSR perception and investment decision It only indicated that the limited of individual investors concerns about CSR when they make investment decision Because of low means for the 5th question, we can see that the responsible investment in short is quite a new terminology In the question and 7, the researcher wants to access the perception of CSR for investor to make investment decision According to this, we can see that using financial ratio is easier for investor to evaluate a firm rather than using the CSR information to understand the potential viability of the firm So, they find it hard to use that type of information in valuing firm In the last question of this section, the researcher was asked for a specific situation in which the investor should make a decision According to the result of this question, the 51 researcher seen that the investors were very hard to choose to invest or not into a wrongdoing firm which general a lot of profit It also makes them many confused 4.3.3 Hypothesis Mean Standard Deviation Question 3.5 1.15849 Question 10 3.67241 1.08236 Question 11 3.84493 1.10504 Average Mean 3.67245 Table 17: Hypothesis From the table above, we can easier to see that the average mean of this section is greater than 3(3.67245) So, the null hypothesis of there is no relationship between CSR perceptions and CSR reporting is rejected and the alternative hypothesis is accepted From the result of question and 10, the researcher see that a larger number of investors want to have CSR reports to help them easier and safer for investment decision Beside that, the CSR reporting also help the firm to build up its image which will be financial benefits for investor on long-term basis Further more, according to the result of last question, most of investors think that the CSR report will be more develop and become more important in the future 52 CHAPTER 5: CONCLUSION AND RECOMENDATION 5.1 Conclusion 5.2 Recommendation 5.3 Limitation of Study 5.4 Suggestion for Future Research 53 5.1 Conclusion In this research, the author has been focuses on the CSR perceptions and these other factors which contribute to the CSR perceptions and understanding by the conduct of a research among Vietnamese individual investors in TLS office, Ha Noi, Viet Nam After having review various sources about the CSR topic from different countries especial Viet Nam, there are three factors which the researcher have been chosen for the study They are including: CSR awareness, Investment decision, and CSR reporting However, the researcher has been recognized that the individual investor not effect all three factors of the CSR perception There are two factors which individual investors most care about such as CSR awareness and CSR reporting The individual investor is not care much about the investment decision when they decided to investing in one firm From that, the author seems that CSR is quite irrelevant for the investors to make investment decision Further more, it’s also having the more detailed following implication In the first one, the investors are aware of the CSR concept and related term; however, the investors are not care much about the responsible investment because it is quite new concepts From the result, the researcher seen that the understanding of investor on those term is quite limited In the next one, the researcher recognized that the large numbers of investors may be confused about the CSR and regulation; because, their understanding about CSR activities and objective are limited Furthermore, most the investors not used the CSR information and based on it’s to valuing and make investment decision to the firms Actually, they are known that the CSR activities and report are good for themselves as the firm on the long-term basis Lastly, the researcher recognized that most the investors 54 were confused to investment decision when the researcher given a real life case in the survey such as in question In this study, the dependent variable CSR perception was affects and relationship with two independents variable such as CSR awareness and CSR reporting Its does not had relationship and effect with investment decision independent variable 5.2 Recommendation After the study, the researcher seen that there are so many seriously shortcomings to investors about the CSR related issue These shortcomings not only harm with investor as long-term benefits but also lead to bad image for company and society as the whole In this research, the author has been showed some limited of investors on their understanding about the CSR related terms Therefore, the CSR perception is the issue which they need to enhance in the future As you know that, law is the most obvious frame for CSR in Viet Nam as the world So, it is necessary to supplement and complete the legal frame to create firm legal foundation for CSR activities Now it is necessary to complete some related Acts in Viet Nam such as Investment Act, Labour Act, and Environment Act and so on Further more, it is needed to build up awareness and understanding of investors and society about the CSR issue It also helps investors have better understanding about the firm and also use it as a good measure in valuing firms In order to that, it is required to have various information channels In the first channel the researcher would like to mention is universities and colleges because it will be the good channel to educate and express information to student, post-graduates and especially the MBA student who are dong the job as directors, supervisors and managers in the company 55 With the firms, they should be able to provide better about the CSR information and CSR reporting to the investors From that they can build up the good image of the organization and also having good relationship in the long-term with the investors When they provide the good CSR information to investors, it will help firms have better communicate with shareholders Beside that, with the better understand of investors about the firm will enhance trust of investors in investing in that firm 5.3 Limitation of Study There are some limitations in this research which also make the research not sufficient, accurate and wide scale enough Firstly, the limitation comes when the research is conducted with Vietnamese individual investors only It may lead to the narrow and limited understanding of the population; because of there are some others types of investors such as the foreign investors in Viet Nam Secondly, the research was face with the limited time so the small sample size was using; its lead reason why the research not represent sufficiently the population Furthermore, the research does not pay any attention to characteristics of investors such as gender and age Beside that, there are not many young investors in the office So, the mostly old sample size may not be good for understanding the whole population as there may be difference in understanding and perception due to age In this research, gender also plays as an important role; however, because of limitation in time and budget, the research find hard to expand the research into other aspects Last but not least, as the researcher mentioned above, there are only three factors such as CSR awareness, investment decision and CSR reporting may be not enough for understanding the CSR importance and the perception of investors 56 5.4 Suggestion for Future Research In this section, the researchers also want give some suggestions for other researchers in order to the same topic as CSR in the future Firstly, the researchers should pay attention to characteristics of investors or they should research more other objects of the research besides individual investors to have an overall picture of the CSR topic Further more, the future research should have larger size of sample which also having more accurate result The sphere of research should be bigger which can be conducted in Hanoi or in the North of Vietnam 57 Reference (Harvard referencing system) Carroll, A., 1979 A three-dimensional conceptual model of corporate performance The Academyof management review 4(4), pp 497-505 Carroll, A., 1991 The pyramid of corporate social responsibility toward the moral management of organizational stakeholders’ Business Horizon 34, pp 39-48 CSR Vietnam Forum, 2009 Trach nhiem xa hoi cua doanh nghiep tai Vietnam: Tu ly thuyet den thcu tien Available at http://www.vietnamforumcsr.net/default.aspx?portalid=1&tabid=17&itemid=4703 [Accessed 17 August, 2010] Economist Intelligence Unit (2005), the importance of corporate responsibility London: Economist Intelligence Unit Freeman, E., 1984 Strategic management: A stakeholder approach Pitman Publishing, Bostom Freeman, E and L Reed, 1983 Stockholders and stakeholders: A new perspective on corporate governance California Management Review 15(3), pp 88-106 Friedman, A and Miles, S (2002) Developing stakeholder theory Journal of Management Studies 39(1), pp.1-21 Ho Thien Nga (2008), CSR, PR of Foreign-Invested Companies, Da Nang University publication Invest in Vietnam (2008), Dong Nai: Foreign-invested firm killing Thi Vai River, available at http://investinvietnam.vn/Default.aspx?ctl=CD&tID=2&pID=332&aID=570 [accessed September, 2010] Kevin Wilhelm (2009), Return on Sustainability, Dog Ear Publishing, 2009, pp 157 – 159 58 Louche C Tagger J (2005), socially responsible investment - now and looking forward, Public Service Review, (9): 20 -22 Louche C (2009), Corporate Social responsibility: The investor's perspective, in Idowu, S.O & Filho, W., Professional’s Perspectives of Corporate Social Responsibility, 211 -232 Marcus, B.W and S.L Wallace (1997), New Dimensions in Investor Relations: Competing for Capital in the 21st Century, John Wiley & Sons, New York Nguyen Hoang Anh (2008), CSR in business entities in Viet Nam – Reality and Solutions, Foreign Trade University, Ha Noi NIRI (2001), NIRI Mission and Goals, available at http://www.niri.org/about/index.cfm [accessed 12 September, 2010] Richard Butler (1993), Strategic investment decisions: theory, practice, and process, Taylor & Francis publisher, page Saigon Businessman Newspaper (2009), CSR Award 2009, available at http://doanhnhansaigon.vn/online/tin-tuc/xa-hoi/2009/07/1035471/giai-thuong-trachnhiem-xa-hoi-doanh-nghiep-nam-2009-csr-award-2009/ [accessed 26 August, 2010] Saga Vietnam, 2008 Trach nhiem xa hoi cua doanh nghiep: Van de nguyen tinh hap dan Available at http://www.saga.vn/view.aspx?id=9582 [Accessed 29 July 2010] Securities Investment Newspaper (2008), CSR – still an interesting matter, issued January, 2008 ThanhNien News (2010), Polluter blames crisis for untreated wastewater release, available at http://www.thanhniennews.com/2010/Pages/20100419151214.aspx [accessed August, 2010] Tran Ngoc Chau (2009), CSR in business entities in Viet Nam – Reality and Solutions, Ha Noi University of Commerce publication 59 UN (2008), Joint statement on melamine milk contamination, available at http://www.un.org.vn/index.php?Itemid=1&id=671&lang=vn&option=com_content&tas k=view [accessed 30 July, 2010] Vietnamnet English (2007), Soya sauce stirs worry and discontentment among public, available at http://english.vietnamnet.vn/reports/2007/05/699774/ [accessed September, 2010] WBCSD (1998), CSR: Meeting changing expectations, pg.3, available at http://www.wbcsd.ch/includes/getTarget.asp?type=d&id=ODgwMw [accessed September, 2010] WTO website (2006), General Council approves Viet Nam’s membership, available at http://www.wto.org/english/news_e/pres06_e/pr455_e.htm [accessed 17 Octorber, 2010] 60 APPENDICES Appendix A: Questionnaire Sample The Survey on Importance of CSR in FPTS office, Ha Noi, Viet Nam Please choose the most appropriate answer: Age: Gender: CSR awareness: Question1: I fully understand the term “corporate social responsibility” a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree Question 2: The CSR is considered to be important issue in Vietnam a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree Question 3: Corporate social responsibility is NOT only limited to regulation compliance a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree Question 4: To overcome the financial crisis in the recent year, a company said that it has to discharge untreated waste water to the environment to cut the refining cost This action is NOT appropriate a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree 61 Investment decision: Question 5: I fully understand the term “responsible investment” a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree Question 6: I use CSR to access potential viability of firm a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree Question 7: I use CSR related information in valuing firm a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree Question 8: I will NOT invest in a wrong-doing firm even though the firm is making high profit a Strongly Agree b Agree c Neither Agree nor Disagree d Disagree e Strongly Disagree CSR reporting: Question 9: I fully understand the term “CSR reporting” a Strongly Agree b Agree d Disagree e Strongly Disagree c Neither Agree nor Disagree Question 10: I would like to invest in a firm which issues CSR reports a Strongly Agree b Agree d Disagree e Strongly Disagree 62 c Neither Agree nor Disagree Question 11: I think the CSR reporting will be more develop and important in the future in Vietnam a Strongly Agree b Agree d Disagree e Strongly Disagree 63 c Neither Agree nor Disagree [...]... which was organized by Vietnam Chamber of Commerce and Industry, 16 Ministry of Labor-Invalids and Social Affairs, Vietnam Ministry of Industry and Trade, together with Vietnam Leather & Footwear Association, and The Vietnam National Textile and Garment Group, in order to honor enterprises that well done of CSR in context of global integration In 2006, there are more than 50 companies of Vietnam Leather... this matter And, as one of the high potential market in the world, Vietnam cannot eliminate itself from the global trend Achieving one worldwide accepted framework for CSR reporting will clearly affect Vietnam economy and the way in which Vietnam companies operate 2.1.7 CSR practice and challenges In the current time, we can see that Vietnam also has CSR practice From 2005, Vietnam had CSR Awards,... From that, there are a lot of companies having actions related to CSR activities such as paying a lot of money in order to help the poor and disadvantaged persons However, there are some companies having wrong-doing things which have been found out in recent time The worst case is the Taiwan-owned company named as Vedan International It’s conducted bad action that discharged directly waste water in to... to raise is thought as regulation CSR understanding compliance only - and implementation in Viet Nam Tran - Ngoc Chau - (2009) - Viet Nam CSR Viet Nam The join of Viet Nam to context WTO is major factor by The join of Viet Nam which CSR is widely to WTO and CSR understood and required requirements The current CSR scandals Responsible raise the understanding and investment awareness of investors and... Footwear Association, and The Vietnam National Textile and Garment Group took part in this prize According to PhD Doan Duy Khuong - Vice-Director of Vietnam Chamber of Commerce and Industry, “CSR has become necessary requirement for each company, if the company does not embrace CSR, they can not approach the global market” (Saga Vietnam, 2008) However, there are still lots of challenges in implementing... show that instead of being at one or other of the absolute extremes of the ethical or managerial branch, many managers are driven by both ethical considerations and market considerations (Deegan, 2009) 2.1.3 Investment Decision According to Richard Butler (1993), the investment decision making is the process whereby all resources are allocated in organization in anticipation of future gain However, in. .. and other theory relative - Investigate the understanding of Vietnamese individual investors about CSR concept, its perceptions and implementation - Establish theoretical models and investigate the relationship between CSR perceptions for Vietnamese individual investors and other contributions such as CSR awareness, investment decision and CSR reporting 4 - Enhance the understanding of individual investors... produced in the way of protecting the environment or making useful products for customers and developing of community and society 1.1.2 CSR in Vietnam In this study, the author recognizes that Corporate Social Responsibility (CSR) is a new concept in Viet Nam; because of limited understanding of directors’ on the CSR information used in business Therefore, international organizations have introduced... Relation According to NIRI (2001), Investor relation (IR) is defined as a strategic management responsibility using the disciplines of finance, communication and marketing to manage the content and flow of company information to financial and other constituencies to 13 maximize relative valuation” During the research, the researcher see that NIRI as the first recognized profession investor relations... stakeholders, including non-governmental organization (NGOs) that focus upon human rights issues, have called for a legal framework to make CSR programs mandatory They are concerned that existing CSR obligations are insufficient and voluntary CSR programs are inadequate” The GRI is a possible global framework for an accepted CSR reporting standard The years ahead will be very important for achieving ... Commerce and Industry, 16 Ministry of Labor-Invalids and Social Affairs, Vietnam Ministry of Industry and Trade, together with Vietnam Leather & Footwear Association, and The Vietnam National Textile... companies operate 2.1.7 CSR practice and challenges In the current time, we can see that Vietnam also has CSR practice From 2005, Vietnam had CSR Awards, which was organized by Vietnam Chamber of Commerce... Abstract CORPORATE SOCIAL RESPONSIBILITY IN VIET NAM: A STUDY OF STAKEHOLDERS’ PERCEPTIONS OF CORPORATE SOCIAL RESPONSIBILITY BY PHAM VAN THUAN October 2010 Supervisor: Dr Nguyen Thi Phuong Hoa Corporate