THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ABOUT THE ENVIRONMENT ISSUE OF VIETNAMESE LIMITED COMPANIES BY TRAN BAO NGOC E0700052 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 MARCH 2011 DECLARATION OF ORIGINALITY AND WORD COUNT 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 9397 words TRAN BAO NGOC 28 March, 2011 ACKNOWLEDGEMENT First of all, I would like to express my sincere appreciation to my supervisor, Dr Le Van Lien International School, Vietnam National University Hanoi who has guided me throughout this thesis Because of his constant guidance, insightful suggestions, and constructive ideas, those can be helpful and encourage for me to complete my project Furthermore, I also would like to express my thank to Ms Sumathi and Ms Shenba, Help University College, who initiated the project and give so much instruction and support durng this process Next, I would like to acknowledge to two managers who join in my interview: Mr Tran Thanh Hai- Direct Manager of Thach Bich Mineral Water company and Mr Nghuyen Van Thuan- Manager of Human Resouces in Banh mut Keo Ha Noi spent their precious time to help me to conduct the interview In adition, I also would like to extend my special thanks to managers, Government Staffs, my friends, and other people who have help me to carry out the survey because they gave me their support, interest and valuable hints Without them, I can not complete my project Lastly, I would also like to extend my heartfelt gratitude to my family who always are on my side for loving me, supporting me and beliving in me TRAN BAO NGOC THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITIES ABOUT THE ENVIRONMENT ISSUE OF VIETNAMESE LIMITED COMPANIES By TRAN BAO NGOC MARCH 2011 Supervisor: Dr Le Van Lien ABSTRACT CSR and it components have become important issues in the world also in Vietnam Vietnam is developing country with developing economy, thus CSR and environment issue are the key term for the country to develop sustainably This paper aims to discover how limited companies in Vietnam view CSR and environment duties, whether those have any effect on the Vietnam citizens behavior, how they can have impact in Limited compay, and the attitude of Vietnam Governemtn staff toward them After we can see that, there is strong support for CSR and its component: environment from managers and a growing awareness among citizens and Government staffs Nevertheless, there is expectation gap between how manager think and how they act because there are lack of honesty CSR disclosure from firm or manager, inactive support actions from consumers due to the barriers in living expenses, and the way company chose to communicate CSR In contrast, with highly positive attitude toward the important impact of CSR and environment duties and the strong belive finding from the survey have drawing potential bright future for CSR and environment duties in Vietnam TABLE OF CONTENTS DECLARATION OF ORIGINALITY AND WORD COUNT ACKNOWLEDGEMENT ABSTRACT TABLE OF CONTENTS LIST OF FIGURES LIST OF ABBREVIATIONS INTRODUCTION 1.1 1.2 CSR and CSR about environment issue in Vietnam 1.3 Government actions 10 1.4 CSR and CSR about environment issue in the world CSR practice and challenges 11 LITERATURE REVIEW 12 2.1 2.1.1 Carroll's 1979-1991 conceptualization 13 2.2 Responsibility of the firm 15 2.3 Limited companies 16 2.4 CSR reporting 17 2.5 Hypothesis 17 2.5.1 Management‟s attitude toward CSR and environment duties 17 2.5.2 Citizen‟s attitude toward CSR information and environment duties 18 2.5.3 Definition and conceptualization of CSR 12 Government staffs‟ attitude toward CSR and environment duties 19 RESEARCH METHODOLOGY 20 3.1 Research objective 20 3.2 Problem statement 21 3.3 Reasearch methodology 21 3.4 Data source 21 3.4.1 Primary data 21 3.4.2 Secondary data 22 3.5 Research method 23 3.6 Research tool 23 3.6.1 Questionaire 23 3.6.2 3.6.3 Annual report …………………………………………………………………………………………………………23 3.7 Data collection 24 3.8 Sampling 24 3.8.1 Sample population 24 3.8.2 Sample frame 24 3.8.3 Sample size 24 3.8.4 Sample technique 24 3.9 Personal interview 23 Limitation 24 FINDINGS AND ANALYSIS 26 4.1 4.1.1 Findings from questionnaire survey 27 4.1.2 Actual CSR disclosures by firms 31 4.1.3 Findings from managers interview 33 4.1.4 Overall evaluation of management‟s responses 34 4.2 Citizens 35 4.2.1 Findings from questionnaire survey 35 4.2.2 Overall evaluation of citizen‟s responses 37 4.3 Government staff 40 4.3.1 Findings from questionnaire survey 40 4.3.2 Overall evaluation of Government staff‟s responses 43 4.4 Management 27 Overall discussion 44 CONCLUSION 47 REFERENCES 51 APPENDIX A: QUESTIONNAIRE 55 APPENDIX B: STATISTICAL TEST 60 LIST OF FIGURES Figure 2.1 CSR basic knowledge ……………………………………………………….13 Figure 2.2 A hierarchy of CSR (adapted from Carroll, 1991) 13 Figure 2.3 The CSP Model (adapted from Wood, 1991) 16 Figure 4.1 Respondents 26 Figure 4.2 Citizens and Government staff categories 26 Figure 4.3 Distribution of responses from management survey 27 Figure 4.4 Distribution of responses from management survey (percentage) 29 Figure 4.5 Descriptive statistics (management survey) 30 Figure 4.6 Descriptive statistics (management survey) 31 Figure 4.7 Distribution of responses from citizen survey 35 Figure 4.8 Distribution of responses from citizen survey (percentage) 37 Figure 4.9 Descriptive statistics (citizen survey) 38 Figure 4.10 Descriptive statistics (citizen survey) 39 Figure 4.11 Distribution of responses from Government staff 40 Figure 4.12 Distribution of responses from Government staff (percentage) 41 Figure 4.13 Descriptive statistics (Government staff survey) 42 Figure 4.14 Descriptive statistics (Government staff survey) 42 LIST OF ABBREVIATIONS CSR Corporate Social Responsibility IQR Inter-Quartile Range VSA Vietnamese Accounting Standard INTRODUCTION 1.1 CSR and CSR about environment issue in the world Nowadays with the booming of Internet and Information Technology (IT), the world become closer and the economy in over the world also become more global As the result, to gain advantages of this chance all companies in the world need to have the perfect image to the society to ensure that they can run their business well with the support of public As the result, they spend a lot of money to achieve that and responsible for society that means a huge number of money are used to complete their Corporate Social Responsibility For example, General Electrics uses more than two billion USD per year for ensure its CSR In addition the most important aspect need to consider when talking about CSR is environment aspect It can not be denied that nowadays the environment of the world become more and more polluted by the human harm thus to have better imagine in society all companies need also protect our environment Typically, Uno one of the biggest company in Japan has applied recycled goods program The other example is Coca- cola the biggest beverage company has many activities for community: recycling bottle, distributing its product in environment friendly water bottled 1.2 CSR and CSR about the environment issue in Vietnam In contrast, Vietnam is a developing country and it has a potential economy with the growth rate is high thus this country also try its best to join in the world‟s economy to have more advantages and privilege After a lot of negotiation and efforts, now it has already been formal members of Word Trade Organization (WTO) which open a new gate for all companies in this country try their best to efficiently and effectively to take part in the global economy and make their development better with more profitable chances With this global trend, and the rapidly development in this harmony of economy, Vietnamese companies need to care about a lot of issues Among a lot of issue the main issue which they need to care most is CSR However in Vietnam, CSR is a new concept It newly introduced by internal corporations sourcing in Vietnam under the form of Code of Conduct or social standard requirements since Vietnam dos not have much experience about this filed Presently, a lot of events: Vedan polluted Thi Vai river, China milk contain minamin, conflict between parties inside company make this term especially environment aspect become more necessary for all sustainable economies in Vietnam 1.3 Govenrment action Because of the above necessary, Vietnamese Government have already taken actions to ensure that all companies in over the country must to complete their CSR especially environment issue For example, Vietnamese Government use “Sustainable development and protecting the environment” which set in the national strategy SRV 1993:45, along with most nations in the world (O‟Rourke,1995) They also made new regulations, “Environmental Protection Law and the Vietnam Agenda 21” for sustainable development Besides, the Government also established Environmental Police and special fees levied on the emission of waste water to strengthen enforcement measures against companies that polluted 10 Buhr, N., 2002 A structuration view on the initiation of environmental reports Critical Perspectives on Accounting, 13(1), pp 17-38 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 Civil Law Network, 2009 Trach nhiem xa hoi cua doanh nghiep: Nhan thuc va thuc te o Vietnam Available at http://thongtinphapluatdansu.wordpress.com/2009/05/01/2792-2/ [Accessed 17 March, 2010] Clarke, K and O‟Neill, S., 2006 Is the environmental professional an accountant? Greenleaf Publishing, pp 111-24 Clarkson, M., 1995 A stakeholder framework for analyzing and evaluating corporate social performance the Academy of Management Review 20 (1), pp 92-117 Cone Inc, 2004 Cone corporate citizenship study Extract from Pomering & Dolnicar 2009 Cooper, S.M and Owen, D.L., 2007 Corporate social reporting and stakeholder accountability: The missing link Accounting, Organizations and Society 32, pp 649-67 Cormier, D and Magnan, M., 1997 Investors’ assessment of implicit environmental liabilities: An empirical investigation Journal of Accounting and Public Policy 16, pp 215-41 CSR Vietnam Forum, 2009 Trach nhiem xa hoi cua doanh nghiep tai Vietnam: Tu ly thuyet den thuc tien Available at http://www.vietnamforumcsr.net/default.aspx?portalid=1&tabid=17&itemid=4703 [Accessed 17 March, 2010] Crowther, D and Hosking, D.M., 2009 Accounting for the sacred: Toward an inclusion of ethics in social accounting Journal of Knowledge Globalization 2(1) 53 Dawkins, J., 2004 The public’s views of corporate responsibility, 2003 White Paper Series, MORI Dahl, R.A., 1972 A prelude to corporate reform Business & Society Review, Spring 1972, pp 17-23 Doane, D., 2002 Market failure: The case for mandatory social and environmental reporting In Presentation at IPPR seminar 2002 Doane, D., 2005 The myth of CSR- The problem with assuming that companies can well while also doing good is that markets don’t really work that way Stanford Social Innovation Review, Graduate School of Business Fall 2005 Elkington, J., 1997 Cannibals with forks: The triple bottom line of 21st Century business Oxford: Capstone Eshleman, A., 2004 Moral responsibility In E.N.Zalta (ed.) Stanford Encyclopedia of Philosophy Filios, V.P., 1984 Corporate social responsibility and public accountability Journal of Business Ethics 3, pp 305-14 Franklin, D., 2008 Just good business: A special report on corporate social 54 APPENDIX A: QUESTIONNAIRE MANAGEMENT SURVEY Personal Information Company: Years in holding current position: _ Questionnaire To what extent you agree with those statements? 5= strongly agree, 4= agree, 3= neutral/no opinion, 2= disagree, 1= strongly disagree Statements 1 When using new system in producing, companies need to take care of its impact on environment The image of companies and their stakeholder will be better if they really care much about environment issue Protecting environment companies should be received prevail capital policies from Government Customers will buy product of company which have good reputation of protecting environment The impact of CSR about environment issue in Vietnamese limited company is stronger than ever before Incurring costs to protect environment and solve relating social issues is the social responsibility of the company Take care of environment is become more and more important for companies in near future Additional personal comments (option): _ 55 CITIZENS SURVEY Personal Information Marital status:  Married   20-30 Age: Single   30-40  Number of children:  None  40-50 1  50-60 2  Above 60  Above Education: _ Current employment: Questionnaire To what extent you agree with those statements? 5= strongly agree, 4= agree, 3= neutral/no opinion, 2= disagree, 1= strongly disagree Statements 1 You know what CSR and what environment issue are Business especially limited companies must help society to solve environmental problems Even when economic performance is negatively affected, business (limited companies) still must complete their environmental responsibilities All limited companies around us complete their responsibility in social matter well or perfectly They are having good programme to enhance the environment around their companies If there are two companies: polluted environment company which provide cheap product and impoluted company which provide expensive product, you will chose to buy cheap product 56 If the companies pollute the environment, people who live around them and in other part of country will not continue buying their product Through which channels you know about CSR especially environmental activities of companies? How you think about quality of the information? _ Additional opinion (option): 57 GOVERNMENT AGENCY SURVEY Personal information Position: _ Years of holding current position: Gender: Male  Female  Responsibilities: Questionnaire To what extent you agree with those statements? 5= strongly agree, 4= agree, 3= neutral/no opinion, 2= disagree, 1= strongly disagree Statements 1 CSR is important in Vietnam Vietnamese Government has policies to ensure all companies complete their environmental responsibility All above policies are strong enough or they need to change There is sufficient guidance for all to deal with CSR issue and environment issue It is easy to check and control how companies complete their CSR and environment duties When companies breach their duties, they will be willing to pay remedy easily CSR disclosure by companies should be required by government Governement might have more supporting capital policies for all companies which have completed environment duties Additional personal comments (option): _ 58 QUESTIONS USED IN INTERVIEWS Under your view, what is CSR? Does your company have activities to fulfill its social responsibilities especially environment responsibilities? Under which field that those activities is taken place? Do you think CSR is considered to be important issue in Vietnam? What are motivations for your company to embrace CSR and environmental duties? As the experienced leader in food industry/ As the manager of the leading beverage industry, you think CSR and CSR about environment issues play important role in Vietnam investors‟ decision making? Do your customers care about CSR and it component? Does CSR and it components have any impacts on their decision making? Under your view, are there further actions need to add to complete CSR and environment duties? How you think about the future of CSR and environment impact in Vietnam? 59 APPENDIX B: STATISTICAL TEST To test the hypothesis developed in the study, the Chi-squared test is used to investigate any association between two different sets of observations This test can test the actual number of people that answered a particular value and compare it to the expected or “random” value, where each value has an equal chance of appearing Each statement in each survey is designed in positive manner which means “strongly agree” (5) give the strongest support for the hypothesis The results of all questions in each survey are aggregated to test the hypothesis to generate overall decision MANAGEMENT SURVEY : Managers‟ attitude toward CSR and environment issue is positive Test statistic: Degree of freedom: = (the rule of five is applied) Level of significant: α = 0.05 Decision rule: Reject if Value of the test statistic: Beverage industry Food industry Total 21 12 33 61 29 90 40 24 64 28 15 43 Total 157 81 238 5= strongly agree, 4=agree, 3=neutral, 2=disagree, 1= strongly disagree 60 Beverage industry Food Industry Total 21.76891 11.23109 33 59.36975 30.63025 90 42.21848 21.78152 64 28.36555 14.63445 43 5.27731 2.72269 Total 157 81 238 The expected value should be at least five to ensure that the chi-squared distribution provides an adequate approximation of the sampling distribution In this contingency table, there are some cells have expected values of less than five, there is need to combine column to satisfy the rule of five Thus, “disagree” column and “strongly disagree” column is combined So, the Berverage industry Food industry Total Berverage industry Food industry Total and 21 12 33 21.76891 11.23109 33 will be as follow: 61 29 90 59.36975 30.63025 90 40 24 64 42.21848 21.78152 64 2&1 35 16 51 2&1 33.64286 17.35714 51 Total 157 81 238 Total 125 49 238 61 Value of 21 21.77 -0.33 0.1089 0.005002 12 11.23 0.77 0.5929 0.052279 61 59.36 1.64 2.6896 0.045309 29 30.64 -1.64 2.6896 0.08778 40 42.22 -2.22 4.9284 0.11673 24 21.78 2.22 4.9284 0.22628 35 33.64 1.36 1.8496 0.05498 16 17.36 -1.36 1.8496 0.10654 0.6949 Conclusion: Since , not reject the 62 CONSUMER SURVEY : Consumer behavior is influenced by companies‟ CSR practices and disclosures Test statistic: Degree of freedom: = (the rule of five is applied) Level of significant: α = 0.05 Decision rule: Reject if Value of the test statistic: A1 A2 A3 A4 A5 Total 21 10 15 30 79 79 24 27 47 69 246 55 18 20 20 56 169 30 16 12 19 37 114 11 11 36 Total 196 77 63 105 203 644 10.96 4.30 3.52 5.87 11.35 36 Total 196 77 63 105 203 644 Age range: A1= 20-30, A2= 30-40, A3= 40-50, A4= 50-60, A5=above 60 = strongly agree, 4=agree, 3=neutral, 2=disagree, 1= strongly disagree A1 A2 A3 A4 A5 Total 24.04 9.44 7.73 12.9 24.9 79 74.87 29.41 24.1 40.11 77.54 246 51.44 20.20 16.53 27.55 53.27 169 34.69 13.63 11.15 18.59 35.93 114 63 The expected value should be at least five to ensure that the chi-squared distribution provides an adequate approximation of the sampling distribution In this contingency table, there are some cells have expected values of less than five, there is need to combine column to satisfy the rule of five Thus, “disagree” column and “strongly disagree” column is combined So, the and will be as follow: A1 A2 A3 A4 A5 Total 21 10 15 30 79 79 24 27 47 69 246 55 18 20 20 56 169 2&1 41 25 13 23 48 146 Total 196 77 63 105 203 644 A1 A2 A3 A4 A5 Total 24.04 9.44 7.73 12.9 24.9 79 74.87 29.41 24.1 40.11 77.54 246 51.44 20.20 16.53 27.55 53.27 169 2&1 45.65 17.93 14.67 24.46 47.28 146 Total 196 77 63 105 203 644 Value of 21 10 15 30 79 24.04 9.44 7.73 12.9 24.9 74.87 -3.04 0.56 -4.73 2.1 5.1 4.13 9.2416 0.3136 22.3729 4.41 26.01 17.0569 0.38442 0.03322 2.89429 0.34186 1.04457 0.22782 64 24 27 47 69 55 18 20 20 56 41 25 13 23 48 29.41 24.1 40.11 77.54 51.44 20.20 16.53 27.55 53.27 45.65 17.93 14.67 24.46 47.28 -5.41 2.9 6.89 -8.54 3.56 -2.2 3.47 -7.55 2.73 -4.65 7.07 -1.67 -1.46 0.72 29.2681 8.41 47.4721 72.9316 12.6736 4.84 12.0409 57.0025 7.4529 21.6225 49.9849 2.7889 2.1316 0.5184 0.99517 0.34896 1.18354 0.94056 0.24637 0.2396 0.72842 2.06905 0.1399 0.47365 2.78778 0.19011 0.08714 0.01096 15.36739 Conclusion: Since , not reject the 65 GOVERNMENT STAFF SURVEY : Government staff‟s attitude toward CSR and environment duties is positive Test statistic: Degree of freedom: = Level of significant: α = 0.05 Decision rule: Reject if Value of the test statistic: Male Female Total Male Female Total 22 25 47 30 55 85 18.42 28.58 47 33.31 51.69 85 13 34 47 38 40 78 13 26 39 Total 116 180 296 18.42 28.58 47 30.56 47.44 78 15.28 23.72 39 Total 116 180 296 Value of 22 25 30 18.42 28.58 33.31 3.58 -3.58 3.31 12.8164 12.8164 10.9561 0.69578 0.44843 0.32891 66 55 13 34 38 40 13 26 51.69 18.42 28.58 30.56 47.44 15.28 23.72 3.31 -5.42 5.42 7.44 -7.44 -2.28 2.28 10.9561 29.3764 29.3764 55.3536 55.3536 5.1984 5.1984 0.211957 1.5948 1.027865 1.811308 1.16681 0.3402 0.21915 7.84521 Conclusion: Since , not reject the 67 ... CSR The second aim of this project is to evaluate the impact of CSR especially environment issue in Vietnamese companies mainly in limited companies In other word, when these firms CSR, what they... protect environment and solve relating social issues is the social responsibility of the company Protecting environment companies should be be better if they really care much about 27 environment issue. .. performance of those companies as they affect the profit and activities of companies On the other hand, Government employee is called as the “agency of Government” as they exam the process of completing