CORPORATE SOCIAL RESPONSIBILITY: STRATEGIC INTEGRATION AND COMPETITIVENESS FOR VIETNAM COMPANIES BY NGUYEN THANH HUYEN E0600081 Graduation Project Submitted to the Department of Business Studies, Help University College, in Partial Fulfillment of Requirements for The Degree of Bachelor of Business (Accounting) Hons OCT 2010 DECLARATION I hereby declare that the graduation project is based on my original work except for quotations and citations which have been duly acknowledged I also declare that it has not been previously or concurrently submitted for any other course/degree at Help University College or other institutions The word count is 10,007 words NGUYEN THANH HUYEN 28 Oct, 2010 CORPORATE SOCIAL RESPONSIBILITY: STRATEGIC INTEGRATION AND COMPETITIVENESS FOR VIETNAM COMPANIES By NGUYEN THANH HUYEN Oct 2010 Supervisor: Dr Pham Duc Hieu ABSTRACT In the process of integration of international economy, besides the advantages for social and economic development, Vietnam enterprises are faced with great challenges in the fiercely compete for continued stability and development This paper aims to examine how executives and managers from different Vietnam industries represent their conduct on Corporate Social Responsibility (CSR) and its reporting, as well as whether the attitude of Vietnam customers toward CSR is positively The results of the study indicate that while a large proportion of managers express a highly positive attitude toward CSR and its reporting, consumers perception is at low state and questionable; it point out a week of companies’ communication on consumers’ perception Nevertheless, the willingness to learn and gain more knowledge about CSR found from the survey have drawing a bright future for CSR in Vietnam “Well implement social responsibility in business” is effective strategy to enhance the competitiveness of products on international markets, and also the conditions for Vietnam companies TABLE OF CONTENTS Page Declaration of originality and word count ii Abstract iii Table of Content iv List of Figures v List of Abbreviations vi CHAPTER 1 INTRODUCTION 1.1 CSR in the world 1.2 CSR in Vietnam 1.2.1 Government actions 1.2.2 Vietnamese Accounting Standards 1.2.3 CSR practice and challenges 1.3 Reason for Future Research CHAPTER LITERATURE REVIEW 2.1 Definition and conceptualization of CSR 9 2.1.1 Elkington's 1999 triple bottom line conceptualization 10 2.1.2 Carroll’s 1979 conceptualization 12 2.2 Stakeholder theory 14 2.3 CSR reporting 16 2.4 Hypothesis 18 2.4.1 Management’s perception of CSR and its reporting 18 2.4.2 Consumer’s perception of CSR information and disclosure 19 CHAPTER RESEARCH METHODOLOGY 21 3.1 Research objective 21 3.2 Research methodology 21 3.3 Data source 21 3.3.1 Primary data 22 3.3.2 Secondary data 22 3.4 Research method 23 3.5 Research tool 23 3.5.1 Questionnaire 23 3.5.2 Personal interview 24 3.5.3 Annual reports 24 3.6 Data collection 25 3.7 Sampling 25 3.7.1 Sample population 25 3.7.2 Sample frame 26 3.7.3 Sample size 26 CHAPTER ANALYSIS AND DISCUSSION 4.1 Management 27 27 4.1.1 Results of questionnaire survey 27 4.1.2 Actual CSR reporting 32 4.1.3 Results of managers interview 33 4.1.4 Overall management’s responses analysis 4.2 Consumers 34 35 4.2.1 Results of questionnaire survey 35 4.2.2 Consumer’s responses analysis 38 4.3 Overall discussion 40 4.4 Limitations of the Study 41 CHAPTER CONCLUSION 43 REFERENCES & 46 APPENDICES 57 LIST OF FIGURES Figure Title Page Chapter N/A N/A Chapter Figure 2.1 Triple bottom line of CSR (adapted from Crane & Matten, 11 2004) Figure 2.2 A hierarchy of CSR (adapted from Carroll, 1991) 12 Chapter N/A N/A Chapter Figure 4.1 The number of managers response 27 Figure 4.2 Distribution of managers’ responses towards statements 28 Figure 4.3 Percentage of manager’s response towards CSR by five scale 29 Figure 4.4 Descriptive statistics from management survey (1) 30 Figure 4.5 The number of consumer response 31 Figure 4.6 Consumer category 35 Figure 4.7 Descriptive statistics from management survey (2) 35 Figure 4.8 Distribution of consumers’ responses towards statements 36 Figure 4.9 Percentage of consumer’s response towards CSR by five scale 37 Figure 4.10 Descriptive statistic from consumer survey (1) 38 Figure 4.11 Descriptive statistic from consumer survey (2) 39 LIST OF ABBREVIATIONS Abbreviation Full name CSR Corporate Social Responsibility CSP Corporate Social Performance IAS International Accounting Standard VSA Vietnamese Accounting Standard VCCI Vietnam’s Chamber of Commerce and Industry SMEs Small and Medium-sized companies NGO Non-governmental Organization WTO World Trade Organization PR Public Relation TBL Triple Bottom Line MOF Ministry of Finance CHAPTER INTRODUCTION 1.1 CSR in the world Corporate Social Responsibility (CSR), also known as Social responsibility of business, is no stranger to the developed world, and it has become increasingly gaining important with enterprises, shareholders and investors, employees, customers and entire society Over the world, giants companies are devoting their time and resources to incorporate CSR activities in their overall strategies to become an ideal business model, and to be accountable to society In the United States there is “One PERCENT Club” that is a collection of businesses committed to use at least 1% of their profits into social work; the Group's U.S manufacturing light bulbs, Haitech Group investment $ 4.3 billion on controlling environmental pollution Also in France, a series of cultural funds of enterprises such as France Télécom (France Telecom), RATP (Subway Company) were among the sponsors of contemporary French art In addition, “Google”- Web search engine- with headquarters called Googleplex behaves their employees like gold pearl General Electric uses $2 billion annually for researching technologies to protect the environment World Bank, World Bank and Merck pharmaceutical company has launched an initiative to develop a fund of U.S $ 50 million to donate the Mectizan medicine to help 28 countries in Africa Shell Co set up a Shell Foundation to help educate the community’s children and adults (Saga Vietnam, 2008) The billionaires such as Bill Gates also built a charity fund to the development of community Prahl Paul, Deputy Head of Public Relations of Best Buy, has stated that „We are successful in the marketplace because we take social responsibility into business operation” (Saga Vietnam, 2008) In short, more and more companies in the world are getting involved in CSR activities strategy to ensure the quality of life for employees, environmental protection and development of products that create benefits for consumers and the society Schiebel and Pöchtrager (2003) reported that “it makes good business sense to fully integrate the interests and needs of customers, employees, suppliers, communities, and our planet - as well as to those of shareholders - into corporate strategies” 1.2 CSR in Vietnam CSR is a 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socially responsible can improve industry-labor relation CSR is good for strategic competitive advantage CSR reporting will have positive impact on investor’s decision CSR reporting will become general practice in near future Any other comments or suggestions: _ _ _ _ 65 CONSUMER SURVEY Your personal information Gender (Male/ Female): Age (20-30/ 30-40/ 40-50/ 50-60/ above 60): Current employment: _ Please answer these questions on a scale from to 5= strongly agree, 4= agree, 3= neutral, 2= disagree, 1= strongly disagree Statements You know the meaning of the term “Corporate Social Responsibility” Companies should conduct social responsibility initiatives Donation to charitable and public welfare organizations are obligations of a company If I bought products of a company with good social responsibility practices, I would be more likely to continue buying that company’s products I would avoid buying products from immoral companies I am willing to pay a premium for goods from socially responsible companies I think it is important to examine companies’ CSR strategies I will make some changes in behavior for social responsibility Any other comments or suggestions: _ _ _ 66 Appendix II Sample companies Industrial sector No Name of the companies Banking Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) Saigon-Hanoi Commercial Joint Stock Bank (SHB) Vietnam Bank for Agriculture and Rural Development (Agribank) Vietnam Dairy Products Joint Stock Company (Vinamilk) Hanoi Trade Corporation (Hapro Group) Clothing & Textiles Food & Drink Asia Commercial Bank (ACB) Lavie LLC An Phuoc Garment Embroider and Shoes Company LTD Nha Be Garment Corporation - Joint Stock Company (NBC) 10 Legamex Corporation 67 Appendix III Statistic test The chi-square statistic in this study, which we can use with data at the nominal level, used to compare the observed frequency of some observation with an expected frequency The comparison of observed and expected frequencies is to calculate the value of the chi-square statistic, which in turn can be compared with the distribution of chi-square to make an inference about a statistical problem MANAGEMENT SURVEY This case is the two-variable chi-square test, also known as the test of independence The two variables we are considering here are industrial sector (Banking, Food & Drink and Clothing & Textiles) and five-point scale where 5= strongly agree, 4=agree, 3=neutral, 2=disagree, 1= strongly disagree : Managers’ attitude toward CSR and CSR reporting is positive The data is in the following table: Banking Food & Drink Clothing & Textiles Total 20 14 40 49 19 30 98 30 14 23 67 21 11 14 46 1 2 Total 121 60 75 256 The formula for Chi-square test statistic: Where, is the observed frequency, and The degree of freedom: df = is the expected frequency = applied) Where, r is the number of rows and c is the number of columns 68 (the rule of five is *Note: This page is the first half of the calculation ……….Continued Level of significant: α = 0.05 Decision rule: Reject if There are some cells have expected values of less than five that lead the chi-squared distribution provides an inadequate approximation of the sampling distribution Then, there is need to combine column and column to satisfy the rule of five in the table above Banking Food & Drink Clothing & Textiles Total 20 14 40 49 19 30 98 30 14 23 67 2&1 22 13 16 51 Total 121 60 75 256 Expected Frequency for a Cell = (Column Total × Row Total)/ Grand Total Value of 20 14 49 19 30 30 14 23 22 13 16 Total 18.90 9.375 11.72 46.32 22.97 28.71 31.67 15.70 19.63 24.11 11.95 14.91 1.1 4.625 -5.72 2.68 -3.97 1.29 -1.67 -1.7 3.37 -2.11 1.05 1.09 69 1.21 21.390625 32.7184 7.1824 15.7609 1.6641 2.7889 2.89 11.3569 4.4521 1.1025 1.1881 0.064021 2.281667 2.791672 0.015506 0.686152 0.057962 0.088061 0.184076 0.578548 0.184658 0.092259 0.079685 7.104267 Conclusion: Since , not reject the CONSUMER SURVEY : Consumer behavior is influenced by companies’ CSR practices and disclosures The data is in the following table: 29 32 15 12 93 20-30 30-40 40-50 50-60 Above 60 Total 89 95 48 36 10 278 16 29 40 100 35 37 48 59 52 231 10 12 18 20 14 74 Total 179 184 136 156 121 776 The formula for Chi-square test statistic: Where, is the observed frequency, and The degree of freedom: df = is the expected frequency = (the rule of five is applied) Where, r is the number of rows and c is the number of columns Level of significant: α = 0.05 Decision rule: Reject if There are some cells have expected values of less than five that lead the chi-squared distribution provides an inadequate approximation of the sampling distribution Then, there is need to combine column and column to satisfy the rule of five in the table below: 20-30 30-40 40-50 50-60 Above 60 Total 29 32 15 12 93 89 95 48 36 10 278 16 29 40 100 2&1 45 49 66 79 66 305 Expected Frequency for a Cell = (Column Total × Row Total)/ Grand Total 70 Total 179 184 136 156 121 776 *Note: This page is the first half of the calculation ……….Continued Value of 29 32 15 12 95 48 36 10 16 29 40 45 49 66 79 66 Total Conclusion: Since 21.45 22.05 16.30 18.70 65.92 48.72 55.89 43.35 23.07 23.71 17.53 20.10 15.59 70.35 72.32 53.45 61.31 47.56 7.55 9.95 -1.3 -6.7 29.08 -0.72 -19.89 -33.55 -7.07 -15.71 -10.53 8.9 24.41 -25.35 -23.32 12.55 17.69 18.44 , reject the 71 57.0025 99.0025 1.69 44.89 845.6464 0.5184 395.6121 1112.2225 49.9849 246.8041 110.8809 79.21 595.8481 642.6225 543.8224 157.5025 312.9361 340.0336 2.657459 4.489909 0.103681 2.400535 12.828374 0.01064 7.078406 25.656805 2.166662 10.409283 6.325208 3.940796 38.219891 9.134648 7.519668 2.946726 5.104161 7.149571 163.941618 72 ... 2010 CORPORATE SOCIAL RESPONSIBILITY: STRATEGIC INTEGRATION AND COMPETITIVENESS FOR VIETNAM COMPANIES By NGUYEN THANH HUYEN Oct 2010 Supervisor: Dr Pham Duc Hieu ABSTRACT In the process of integration. .. name CSR Corporate Social Responsibility CSP Corporate Social Performance IAS International Accounting Standard VSA Vietnamese Accounting Standard VCCI Vietnam? ??s Chamber of Commerce and Industry... aims to explore how companies in Vietnam view CSR and its disclosure as a strategic integration and competitiveness, and whether Vietnam consumer behavior is affected by CSR information 16 CHAPTER