research on awareness and implementation of corporate social responsibility in a multinational company in vietnam case study nestle vietnam

RESEARCH ON AWARENESS AND IMPLEMENTATION OF CORPORATE SOCIAL RESPONSIBILITY IN A MULTINATIONAL COMPANY IN VIETNAM CASE STUDY: NESTLE VIETNAM BY TRUONG THI THU THANH Graduation Pro

RESEARCH ON AWARENESS AND IMPLEMENTATION

OF CORPORATE SOCIAL RESPONSIBILITY IN

A MULTINATIONAL COMPANY IN VIETNAM

CASE STUDY: NESTLE VIETNAM

BY

TRUONG THI THU THANH

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

October 2011

Declaration of Originality and Word Count

DECLARATION

I hereby declare that this 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 courses/degrees at

HELP University College or other institutions

Word Count: 11,725 words

TRUONG THI THU THANH

Date: 28/10/2011

Acknowledgements

As a student, our main responsibility is to absorb and learn as much as we can from

the assistance, support and encouragement of many people such as our mentors and

teachers around us They help us to learn, to apply our knowledge and to grow And

this project would not have been made without them I wish to take this opportunity

to thank all the people who have guided me in the right direction and kept me

motivated during the time of completing the dissertation

First and foremost I would like to express my deep gratitude to my supervisor, Dr Le

Van Lien from International School at Vietnam National University, Hanoi who

guide me in my choice of assignment His guidance throughout and inspiration for

me to create new ideas has helped me to learn and grow personally

I also would like to express my thank to Ms Sumathi and Ms Shenba at Help

University College, who initiated the project and give so much instruction and

support

Abstract

RESEARCH ON AWARENESS AND IMPLEMENTATION

OF CORPORATE SOCIAL RESPONSIBILITY IN

A MULTINATIONAL COMPANY IN VIETNAM

CASE STUDY: NESTLE VIETNAM

By

TRUONG THI THU THANH

October 2011

Supervisor: Dr Le Van Lien

Corporate Social Responsibility (CSR) has become even more important for the

developing countries It has developed through the long history and nowadays many

business entities over the world want to carry out the CSR in their business

operation Vietnam is one of the world‟s fastest-growing economies Therefore, there

are many multinational companies want to invest in Vietnam market This paper

aims to discover the awareness of multinational organizations in Vietnam on CSR,

and the consumer attitude to social responsibility is positive or not Besides, another

objective understands the implementation, CSR reporting of CSR in a multinational

company operating in Vietnam by asking respondents‟ understanding and opinion

From conducting research, it can show the understanding and awareness of CSR

concept of multinational companies operating in Vietnam is unlimited, but the

performance is limited The multinational companies have found difficult to use CSR

as a tool to value companies, the implementation of CSR in Vietnam as much as they

can, and especially have to according with law and environmental protection and

better community in Vietnam Willingness to learning and gaining more knowledge

about CSR found from the survey has drawn a bright future for the implementation

of CSR and awareness of CSR in Vietnam

TABLE OF CONTENTS

Declaration of Originality and Word Count 1

Acknowledgements 2

Abstract 3

TABLE OF CONTENTS 5

LIST OF FIRGURES AND TABLES 7

CHAPTER 1: INTRODUCTION 9

1.1 Research Background 10

1.1.1 CSR in the world 10

1.1.2 CSR in Vietnam 11

1.1.3 CSR in multinational companies operating in Vietnam 12

1.2 Problem Statement 13

1.3 Objectives and Sphere Research 15

1.3.1 Objective of research 15

1.3.2 Sphere of research 16

1.4 Research Methods 16

1.5 Structure of Research 16

CHAPTER 2: LITERATURE REVIEW 17

2.1 The Concepts Related to CSR 18

2.1.1 Conceptual Framework 18

2.1.2 Carroll‟s 1979-1991 conceptualizations 19

2.1.3 Wood 1991 conceptualization 21

2.1.4 Elkington‟s 1997 Triple Bottom Line 22

2.1.5 Stakeholder theory 24

2.2 Social accounting 26

2.3 Hypothesis 27

2.3.1 Managers‟ perception of CSR 27

2.3.2 Consumer‟s perception of CSR 29

2.3.3 Employee‟s perception of CSR 31

CHAPTER 3: RESEARCH METHODOLOGY 33

3.1 Research Objectives 34

3.2 Research Methodology 34

3.3 Data source 34

3.3.1 Secondary data 34

3.3.2 Primary data 35

3.4 Research method 35

3.5 Research tool 36

3.5.1 Questionnaire 36

3.5.2 Annual report 36

3.6 Data collection 36

3.7 Sampling 37

3.7.1 Sampling population 37

3.7.2 Sampling frame 37

3.7.3 Sampling size 37

3.7.4 Sample techniques 37

3.8 Limitations 38

CHAPTER 4: ANALYSIS 39

4.1 Responds summary 40

4.2 Management 42

4.2.1 Finding from questionnaire survey and interview 42

4.2.2 Overall evaluation of management's responses 49

4.3 Consumers 50

4.3.1 Finding from questionnaire survey 50

4.3.2 Overall evaluation of consumer's responses 52

4.4 Employees 55

4.4.1 Finding from questionnaire survey 55

4.4.2 Employees' stated support for social responsible businesses 56

4.4.3 Overall evaluation of employees‟ responses 57

4.5 Discussion 59

CHAPTER 5: CONCLUSION 60

5.1 Conclusion 61

5.2 Recommendation 62

5.3 Limitation of Study 63

5.4 Suggestion for Future Research 63

References (Harvard referencing system) 65

APPENDIX: QUESTIONAIRE 70

LIST OF FIRGURES AND TABLES

Figure 2.1: Pyramid of CSR (Carroll, 1979) ……… 19

Figure 2.2: The Wood's CPS Model (adapted from Wood, 1991)……….22

Figure 2.3:Elkington‟s 1997 Triple Bottom Line……… 23

Figure 2.4: The relationship between firm and its stakeholders……….25

Figure 2.5: The important factors for employees (Ewin.com survey)………32

Figure 4.1: Respondent ……….……… …….40

Figure 4.2: Consumer category……… …41

Figure 4.3: Employee of category……… ………41

Figure 4.4: Distribution responses of manager's perception of CSR……….42

Figure 4.5: Distribution of response of management's perception toward of CSR 45

Figure 4.6: Distribution of responses from consumer survey……… 50

Figure 4.7: Distribution of responses from consumer survey (percentage)… ……52

Figure 4.8: Distribution of responses from employee‟s survey………55

Figure 4.9: Distribution of responses from employee‟s survey (chart)………56

LIST OF ABBREVIATIONS

CSR Corporate Social Responsibility

VBLI Vietnam Business Links Initiative

VCCI Vietnam Chamber of Commerce and Industry

WTO World Trade Organization

WBCSD World Business Council for Sustainable Development

CSP Corporate Social Performance

VND Viet Nam Dong

CSP Corporate Social Performance

TBL Triple Bottom Line

GRI Global Reporting Initiative

1.1 Research Background

1.1.1 CSR in the world

Nowadays, Corporate Social Responsibility is one of the hot topics; it becomes a

contemporary issue not only for companies but also for customers in the world

Companies use CSR as a tool to spread their reputation in the worldwide market

Investors use CSR as a main factor to consider in the decision of enterprises to invest

responsibility Customers consider CSR as a part of important to determine the cost,

progress and the quality of an enterprise Because of CSR can create the competitive

advantage, there are many giant corporations can pay a lot of money in order to

developing, become perfect business and social responsibility Typically, Nestle, the

world‟s leading nutrition, healthy, wellness Company, also has many activities for

community, distributing their products in environment-friendly packing materials

Besides, Nokia Corporation has CSR report annually, moreover, 100% of the

materials in their phone can be recovered and used to make new products or generate

energy Also, Best Buy Co., Inc, a retailer of consumer electronics in USA and

Canada, has applied recycled goods program Deputy Manager of public relations of

Best Buy Company says, “We only feel that we still succeed in the market if we take

responsibilities for society” (Saga Vietnam, 2008) On the hand, there are many

companies has quality assurance of staffs‟ living standard, protect the environment, and making useful products for customers and environment On the other hand, some

companies are still not aware of the importance of CSR; they have caused damage to

the environment, clients and themselves (effect on their reputation) Typically, Bp is

one of the biggest oil corporations in the world However, Bp has encountered a

problem that is serious oil spill in the Gulf of Mexico It leads to the lives of birds,

fish, turtles and other sea animals became ever more fragile by the oil spill disaster in

the Gulf of Mexico The cause of this incident is due to the lack of supervision, poor safety… Living environment is threatened seriously have caused more sickness, poverty for the people In addition, marine organizations can not survive, caused

ecological imbalance

1.1.2 CSR in Vietnam

Although CSR do not strange in the world, but also it is still a relative new concept

in Vietnam The reason of it is the lack of awareness of the issue from the public and

business community has been considered as the key factors affecting on the

implementation of CSR Typically, the pollution in Thi Vai River, Thanh Cong

River, or contaminated China milk, conflict between employees and their bosses

have proved that implementing CSR is very important for sustainable economy

Nowadays, many companies in Vietnam have found that social responsibility of

companies has become one of the indispensable requirements for companies, because

of the context in globalization and international integration, if the business does not

comply with social responsibilities, they will not be able to gain access to world

markets For instance, Vietnamese shoe manufactures and textile industries began

respecting CSR norms of conduct The Vietnamese government later began

promoting corporate efforts to improve labor conditions and protect the environment,

as part of its Vietnam Agenda 21 program Private sector CSR efforts have recently

begun, supported by the Vietnamese government The Vietnam Business Links

Initiative (VBLI), launched under the auspices of the Vietnam Chamber of

Commerce and Industry (VCCI), promotes closes ties with international

organizations, and enterprises financed with foreign capital VBLI offers consulting

services and training programs that will improve the labor environment at small and

medium-size shoe manufactures and textile industries, and raises CSR awareness

among such enterprises In 2004 VBLI began giving out CSR awards to the most

conscientious enterprises According to Nguyen Hong Ha, deputy director of the VCCI in Ho Chi Minh City, “CSR must be placed on the business strategies of each business It was, is and will be an essential part to the success of the enterprise”

Beside, there are still many challenges in implementing CSR in Vietnam First, there

is lack of law enforcement as well as the cooperation Companies are facing the

challenges of adapting effectively to the changing environment in the context of

globalization Second, Vietnamese‟s knowledge about CSR is still limited We need

to increase the awareness that CSR can be of direct economic value Companies can

contribute to social and environmental objectives, through integrating CSR as a

strategic investment into their core business strategy, management instruments and

operations This is an investment, not a cost, much like quality management

Therefore, business organizations can thereby have an inclusive financial,

commercial and social approach, leading to a long term and strategy minimizing

risks linked to uncertainly

1.1.3 CSR in multinational companies operating in Vietnam

Vietnam is a member of the World Trade Organization (WTO) The Doi Moi

reforms and open-door policies have achieved high economic growth in Vietnam - in

2006, GDP grew by 8.2% It is cause why nowadays there are many multinational

companies invest in Vietnam market, such as Honda, Ford, Toyota, Nestle, Vedan,

etc Though they are multinational corporations but their acceptance and

performance about CSR does not pay attention and concern; and it is the caused of

many damages and disasters for environment and social In recent time (august 4,

caught the wastewater treatment plant of JSC Sonadezi services (Long Thanh

Industrial Zone, Dong Nai) theft of waste discharge into Dong Nai river According

to initial estimates, the plant was discharged into the environment with the amount of

14 millions m3 In there, at high tide, the company will mix with the wastewater to

dilute the tide, and when the tide go down, water and waste was mixed colors, and

flows into the Dong Nai river People living around said that the sewage canals have

a black color and a very unpleasant odor Sadly, this is a company specializing in

environmental services The incident was discovered as the warning to the awareness

of enterprises on CSR Another Vietnamese company which is well known for soy

sources has been claimed for 3-MCPD chemical contained in its products This

chemical is one of the factors which can cause people cancer As was the case

broken, the agency aggressively seek new management plan for resolving the

consequences of the consumer and society has suffered Therefore, the multinational

companies operating in Vietnam businesses should adopt CSR After applying CSR,

some businesses have established environments more stable and higher labor

productivity Moreover, they received many supports from consumers and society in

the common interests that bring businesses to the community

1.2 Problem Statement

With the rapidly growing of Vietnam economic, it has attracted many multinational

corporate operating in Vietnam So, CSR draws attention from not only the business

but also the government, media, investors, and the social as the whole Nowadays,

the business is expected not only to make profit but also care for the whole society‟s

welfare Therefore, companies want to succeeds, they must do well on implementing

CSR

Nevertheless, there are many wrong-doing things that have been discovered recently

related to CSR which made by multinational companies First, the hottest problem is

the polluting of the environment A typical example is polluting Thi Vai River of

Vedan International Company This company has been discharge untreated waste

water into the Thi Vai River in Dong Nai province It used two pumping systems;

one is direct while other goes through refining progress It affects nearly 2.700ha

farming area along the Thi Vai River basin Level of pollution was 90% with the

range of about 10km affected along the river (Dantri, 2009) However, the later is

rarely used and it is made just for inspection and supervision from the local

governmental office (invest in Vietnam, 2008) Another case is that a Taiwan-owned

firm, namely Tung Kuang, was caught by the environmental police for discharging

directly water into the environment, concentrations of hazardous substances

exceeding specified thresholds These are two typical examples of serious violations

to the environment, as well as a lack of understanding, poor of awareness about the

harm caused by environmental pollution

Second, there are many unsafe products in market nowadays A wrong-doing is a

different company in Vietnam which is well-known for soy sources has been claimed

for 3-MCPD chemical contained in its products The chemical is one factor that can

cause cancer of people The interesting thing is that this product of company is

compliant with Vietnam requiring standard However, it is not the case in the

Europe The question is of ethical rather than legal issue and it draws lots attention

from media and the public (Vietnamnet, 2007) Another example is the

melamine-contaminated milk which is known all over the world Although there is not much

contaminated milk in Vietnam, it still makes people scared to use these products

Third, another problem is the working conditions, health, and safety of employees

There are many researches about the working condition which show that health and

safety at work has become a serious and hot problem that need to be solved An

example of a multinational company - Marumitsu, the workers protest strike

simultaneously at the door of the company in Quang Minh Industry Zone, Hanoi city

The reason of strike are the unfavorable working conditions, bad air quality affect to

the health, time of work is too much but the wage is too lower, the employees can not live with this wage, “The boss was hires the police with hooligans, using batons and put a gun to scare the workers, to force them into the company and brutally beaten, losing all spirit of the workers” (baokhongle.wordpress, April, 2011) It is a part of the working conditions of employees Vietnam is one of the countries which the

health and safety in the working environment are not good and need to be improved

better

As the results, CSR issue is the matter in growing economic in Vietnam It can affect

the enterprise, the shareholders and the stakeholders in the society as the whole The

investors are those being strongly affected as their capital invested may be lost

Therefore, awareness and implementation of CSR are very necessary for the individual investors who care for their own, realtives‟ and society‟s benefits

1.3 Objectives and Sphere Research

1.3.1 Objective of research

- Provide a framework about the CSR, including the definitions, and concepts related

to CSR

- Inspect the awareness and implementation of multinational companies operating in

Vietnam about the concept and it‟s important

- Establish the solutions for multinational companies entering in Vietnam to raise the

awareness and implementation about the CSR

1.3.2 Sphere of research

- Research conducting place: Nestlé Vietnam, Ha Noi city, Vietnam

- Objective of the research: Multinational Company in Vietnam

- Time duration of conducting the research: from August 15, 2011 to October 27,

2011

1.4 Research Methods

Investigation and survey will use for this project:

The qualitative research is the questionnaire and conduct through the managers,

employees, and consumers in Nestlé Vietnam, Hanoi city The researcher comes to

each individual to ask them to answer and fill in the survey The previous researches

and studies are used for making the questionnaire The measurement is made in

accordance with the past researches By surveying the managers and employees in

Nestlé Vietnam; consumers in Hanoi, the researcher can analyze the collected data

by Microsoft Excel software to see the awareness and implementation of managers,

employees, and consumer

1.5 Structure of Research

This project will be divided into five following chapters:

Chapter1: Introduction

Chapter 2: Literature Review

Chapter 3: Research Methodology

Chapter 4: Result Analysis

CHAPTER 2: LITERATURE REVIEW

2.1 The Concepts Related to CSR

2.1 The Concepts Related to CSR

2.1.1 Conceptual Framework

The concept of CSR is found on two key questions: The first one is for whom are

they responsible? And the second one is for what are corporations responsible?

(Friedman, 1970) These questions have engendered much philosophical and legal

debate A precise, universally accepted definition of CSR is therefore difficult to achieve, with views on where a firm‟s responsibility to society starts and finishes as various as the names given used to describe such a notion, including corporate

citizenship (e.g., Maignan, Ferrell, and Hult, 1999), stakeholder management (e.g.,

Freeman, 1984), corporate social responsiveness (e.g., Miles, 1987), corporate social

performance (e.g., Wood, 1991), and corporate social responsibility (e.g., Carroll,

1979)

There are many definitions of CSR in many researchers and organizations all over

the world; however, according to World Business Council for Sustainable

Development (WBCSD), CSR is defined as “the commitment of business to contribute

to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life, in ways that are both good for business and good for development” (WBCSD, 2004)

In literature, various theories of CSR have been growth; four concepts of CSR will

be introduced for this study, namely: Carroll (1979) four-part definition of CSR, the

Corporate Social Performance (CPS) model by Wood (1991), the Triple Bottom Line

(Elkington, 1997), and the Stakeholder theory (Freeman, 1984)

2.1.2 Carroll’s 1979-1991 conceptualizations

According to Archie Carroll (1947), there are four categories of social responsibility:

Economic, Legal, Ethical, and Discretionary And 1999, he introduced the Pyramid

that is the most comprehensive hierarchy of CSR

Figure 2.1: Pyramid of CSR (Carroll, 1979)

The first category Carroll is economic responsibility The business institution is the

basic economic unit before it was anything else As such it has a responsibility to

produce goods and services that society needs and sell them to make profit

Moreover, the enterprise roles are predicated on the assumption of fundamental

The second part is legal responsibility It indicates the business is expected to the

societies that comply to fulfill their economic mission with the framework of the

legal system Just a society has sanctioned the economic system by permitting

business to assume the productive role, as a partial fulfillment of the “social

contract”, they have laid down the ground rules - the laws and regulations - under

that the enterprise is expected to operating (Carroll, 1979) For example, in the case

of Vedan Vietnam, company has been discharge untreated waste water into the Thi

Vai River As the result, they must paid compensation of 120 billion VND for people

of the local The opportunity for the business to be proactive is limits by the reactive

nature of the laws Therefore, although the laws attempt to circumscribe the limits of

tolerable business behavior, but they neither define neither ethics nor they “legislate

morality” (Solomon, 1994)

The third category Carroll is the ethical responsibility It expresses a concern that firm meet the Business‟s expectations of society conduct that are not codified into law, but rather are reflected in unwritten standards, norms, and values implicitly

derived from society (Carroll, 1999) Ethical responsibility is often represented

through principles and moral values in the mission and strategies of the

organizations

The last category of Carroll is the discretionary responsibility It relates about the

society which has no clear-cut message for business-even less so than in the case of

ethical responsibility They are left to individual judgment and choice Besides,

discretionary responsibility refers that the firms contribute resources to the

community and improve quality of life to be good corporate citizens It is more

voluntary for the firms even there is always expectation that the business provide it

For example, the voluntary activities can be making the philanthropic contribution,

making effort to decrease the greenhouse effect This responsibility causes a lot

controversy of its wide scope and its implications may conflict with the firms‟ economic missions

Many firms have already discovered the competitive advantage of claiming to be

socially responsible The four responsibilities of Carroll‟s conceptualization are

useful and necessary for any company

2.1.3 Wood 1991 conceptualization

In 1991, Wood revised the Corporate Social Performance (CSP) model and

introduced the important and refinements of it Wood had defined as -a firm organization‟s configuration of principles of social responsibility, progress of social responsiveness, programs, policies, and observable outcomes as they relate to the

business‟s relationship of society The key factor of this particular theory is the

observable outcomes which related to the business‟s relationship of society In fact

that Wood (1991) embraces corporate responsiveness as a component of her CSP‟s

conceptualization Moreover, in 1991, Wood had believed that there were three

behavioral characteristics of a responsive firm: (1) it monitors and assesses

environmental conditions, (2) it attends to the many stakeholder demands placed on

it, and (3) it designs policies and plans to respond to changing conditions all of which

were originally proposed by Ackerman (1975) In conceptualization of Wood (1991),

she viewed corporate responsiveness as contributing an action dimension to CSP and

in turn, CSR The following is the model of Wood:

Principals of CSR 1

Institutional principal: legitimacy

Organizational principal: Public responsibility

Individual principal: managerial discretion

Figure 2.2: The Wood's CPS Model (adapted from Wood, 1991)

Even though the model of Wood had completed great strides in CSR research, the

important of stakeholder impacts, Waddock (2004) stated that, there had not been

considered fully According Meehan et al (2006) said that: “While the model of

Wood (1991) represents a significant piece of scholarship, it nevertheless failed to address the needs of practicing managers charged with the implementation CSR/CSP programs and crucially measuring their impacts”

2.1.4 Elkington’s 1997 Triple Bottom Line

The Triple Bottom Line (TBL) was founded by John Elkington in 1987, which mean

to be a way of thinking about CSR The TBL not only focuses on the economic

value, but also on the social value and environmental that they add The term of TBL

is used as a framework for measuring and reporting corporate performance against

economic, social, and environmental parameters Moreover, it is also used to capture

the whole set of values, progresses, and issues that firms must address in order to

minimize any harm refusing from their activities, and to create the value of economic, social and environmental value This includes being clear about the firm‟s purpose and taking into consideration the demands for the firm‟s shareholders, stakeholders, employers, customers, governments, business partners, local

communities and the public, (Sustainability 2003: website)

Figure 2.3: Elkington’s 1997 Triple Bottom Line

(Source: Elkington, J apud Almeida, M (2006))

TBL has achieved considerable imprimatur because corporations such as Shell and

BP Company have adopted it (see BP Australia’s Triple Bottom Line Report) The

world Business Council for sustainable Development, a coalition of 160 international

companies, has also given strong endorsement to the concept (see Holliday et al

2002) Various government agencies at all levels have been required to

implementation of TBL, and have struggled because the social and some cases of

environmental indicators have not been determined But they have lost sight of the

intention TBL should be a philosophy, not a set of accounts As the results, the TBL

conceptualization sets principles and directly to evaluate and report the CSR

achievements

2.1.5 Stakeholder theory

Stakeholder theory has grown in 1963 by R Edward Freeman The theory of

stakeholder was defined as embracing “those groups without whose support the

organization would cease to exist.” Some research about the stakeholder theory take

that managers who wish to maximize their firm‟s potential will take broader stakeholder interest into account This gives increased to a number of research on

how managers, stakeholders, and business do in the fact interact

Stakeholder Theory has been raising mentioned as the common frame of reference in

the CSR debate According to Freeman and Reed (1983), Stakeholder theory defined

as “any identifiable group or individual who can affect the achievement of an

organization’s objectives, or is affected by the achievement of an organization’s objectives” Stakeholder Theory has two branches: ethical and managerial Below the

stakeholder theory‟s ethical perspective, all of these have the true to be treated fairly

through the organization (Deegan, 2009), which can not managed the interest of

shareholders alone, but a wide range of stakeholders who have a legitimate interest in

the corporation as well If the stakeholder conflict of interest, the firm has a duty to

achieve optimal balance among them For instances, the Body Shop‟s CSR activities

famously focus on promoting human rights and environmental sustainability of its

wholesalers, while those of Starbucks more narrowly target employee target

employee welfare A business can be responsive towards one stakeholder group and

simultaneously exploitative of another, making somewhat of a mockery of the ethical

lineage of the CSR concept The managerial brands of stakeholder theory argues that

the alternative of responding to all equally of stakeholders, the organization will only

respond to stakeholders that are deemed to be “powerful” (Buhr, 2002) Basing on

Friedman and Miles (2002) said hat the greater the probability that the operation of

organization will include that particular expectations of stakeholders Figure 2.3 in

the following will present about the relationship between firm and its stakeholders

Figure 2.4: The relationship between firm and its stakeholders

Stakeholder theory express that the purpose of a firm is to create the value more and

more for stakeholders Therefore, to give the CSR to the stakeholders, there are

important to have the knowledge and commitment of, not just for managers, but also

accountants

2.2 Social accounting

Social accounting is developed as the dynamic concept, and is the best viewed as a

tool for continuous improvement in order to understanding CSR communication

Moreover, social accounting and reporting are the management tools which able to

bring the changing of culture needed to expand the financial bottom line to embrace

the social Social accounting in the world is not new; it has been the subject of

extensive debate The last major interest in the area was occurred in the 1970s For

instance, according to Lindsey from 1979, retrieved in a debase research contained

the bellowing abstract, “Hospitals, as a part of the complex health care delivery

system, are the same as any other firm when it comes to being socially responsible, and they soon will be singled out for social accounting This change will mean a commitment to a systematic assessment of and reporting on areas on the hospital’s activities that have a social impact” The basing of environmental and social

accounting had increased the complexity of the traditional view by embracing both

external and internal stakeholders, along with performance viewing of

multidimensional

Social accounting was defined as “the process of communicating the social and

environmental effects of organizations’ economic action to particular interest groups within society and to society at large, beyond the traditional role of providing a financial account to the owners of capital, in particular shareholders Such an extension is predicated upon the assumption that companies do have wider responsibility than simple to make money for their shareholder” (Gray et al 1987); or

“social accounting is about understanding the impact of organizations on out

society…the overarching context is…sustainability: both sustainability of the

organization itself (the interrelation of the social, the environmental, the cultural and the financial) and sustainability of behavior which contributes to a future for the people and the planet” (Pearce 2011); and as “voluntary disclosures of information, both qualitative and quantitative made by organizations to inform or influence a range of audiences The quantitative disclosures may be financial or non-financial terms” (Mathews, 1993) The necessary of social accounting for what we do and

listening to what others have to say so that future performance can be more

effectively targeted at achieving the selected objectives

2.3 Hypothesis

2.3.1 Managers’ perception of CSR

According to Hill and Jones from 1992 express the relationship between stakeholders

and managers as “Managers are the only group of stakeholders who enter into a

contractual relationship with all other stakeholders Managers are also the only group of stakeholders with direct control over the decision making process of the firm” In the view point of stakeholders to some extent is affected by the behavior of

managers In the substance of CSR issues, it is important to have managers‟

awareness and commitment to carry out and improve the initiative of CSR If the

managers are at least partly the proponent of the corporate culture, and integrating

CSR requires culture change, so, it is not easy to imagine the CSR becoming

institutionalized in the organization without the managements‟ active support (Harris

investors or significant creditors Moreover, the managers are also affected by

community pressures that require them to meet the expectations set up by the

community A recently example for the responsibility of managers in a multinational

company, the exploit oil giant between British and Royal Dutch Shell on August 15

2011, they communicate that the amount of oil from Gannett Alpha oil rig, had

spilled in the North Sea Shell said that about 216 tonnes (1,300 barrels) of oil from

Gannett Alpha rig started leaking from August 8 in the region has an area 31km long

and 4.3 km wide, and continue to spread The oil spills equivalent to 1 ton / day The

oil spill was closed on August 10, and Shell is continuing to prevent oil spills The

environmental protection notice criticized that Shell oil spill is too late They are

investigating the managers who are responsible for the incident

Today, there are two questions of the awareness of management are very important

with respect to initiatives‟‟ CSR: Does the managers really consider the

responsibilities of corporate towards society? and Why managers address CSR as their strategic competitiveness and integration? The meaning of CSR is being

understood different in different firms Managers can use CSR as a tool to raise the

reputation of business; or to improve the relationship with the stakeholder,

consumers, and employees; or to raise the efficiency and effectiveness on their

performance The managers of multinational companies have more advantages than

the managers of Vietnam, they have more conditions to awareness of CSR Some

managers of business in Vietnam are not enough knowledge to understand the

necessary of CSR, but it is a little amount of business operating in Vietnam integrates

CSR However, some multinational companies operating in Vietnam have fully of

knowledge about CSR, they still violated and did not carry out CSR well Therefore,

managers is very important, who make the right decision to build the reputation for

the business Basing on the survey of corporate managers, there are only ten percent

of all firms integrate CSR in their core operation (Lacy and Salazar, 2006) It is clear

that there are many businesses continue to be longer on CSR worlds than action

(Moskowitz, 2002; Waddock, 2002) Although excellent progress in a substantial

number of businesses, there is still a long way from seeing CSR becoming fully

adopted by firms (Franklin, 2008) Therefore, integrating CSR in day-to-day

operation is a key CSR issue for management

From the above argument, the first hypothesis is formulated:

H1: Managers’ perception of CSR is positive

2.3.2 Consumer’s perception of CSR

Nowadays, consumers can be aware of the CSR by better education and influence of

the media The consumers‟ ability to “differentiate between corporate economic

responsibilities on one hand and corporate legal, ethical, and philanthropic responsibilities in the other hand” (Maignan, 2011) is known as consumer‟s

awareness of CSR CSR has recently shifted to the field of marketing, and in

particular the CSR-consumer relationship, to know how business social, ethical, and

environmental initiatives can affect marketplace outcomes

The exploring whether the consumers consider a company‟s CSR initiatives before

making decisions for any purchase of the product and services Several researches

have agreed that that there is a positive relationship between consumers‟ perception and a business‟s CSR activities towards that business and its products (Brown & Dacin, 1997; Creyer Ross, 1997; Ellen, Webb, and Morhr, 2000) Basing on Creyer

and Rosss (1997) indicated that consumers regard ethical behavior as a necessary

consideration during their purchase decisions The finding of Tay (2005) indicated

that as society becomes more affluent and faces a raise in the level of perception

among consumers These customers become more sensitive to the ways in which

business behave, which in turn can affect their buying decision behavior

Surprisingly previous researches explain mixed results of CSR awareness on

consumer purchase intentions For instance Nelling and Webb (2006) found that the

actions of CSR do not have any influence on business performance Mohr et al

suggested use of Bandura‟s theory of self-efficacy and self-response to analyze

consumer behavior towards purchase intention and retention This theory has been

used by a lot of researchers to give details human behavior in different scenarios

(Biran and Wilson, 1981; McAuley et al., 1994; Weinberg et al., 1979; Chin and

Kameoka, 2002; Schyns, 2004) Self-efficacy can be used to give details behavior

change that occurs in different situations According to Bandura (1982) found

self-efficacy as believe of consumers that they can make knowledgeable purchase

decision based on the actions of a firm‟s CSR and response-efficacy as outcome of

their purchase decision Mohr et al (2001) discussed the contradiction between

self-efficacy and response-self-efficacy due to the construct that consumer have in their mind regarding company‟s honesty about CSR To measure this, instrument of self-efficacy and response-efficacy have been used developed by Bandura‟s (1977; 1982)

The following hypothesis is used to gauge effects of purchase intention on consumer

retention/loyalty Different researches show that consumer satisfaction is having

positive influence on consumer purchase intentions Oliver (1994); Alexandris et al

(2002) and Harrison (2004) found positive relationship between consumer

satisfaction and purchase intention This study also assumes positive relationship

between consumer satisfaction and consumer purchase intention The following

hypothesis has been developed for this sake Finally, there are necessary to link

consumer satisfaction, consumer perception, and consumer loyalty to meet the

objectives of this study Number of studies has investigated effects of CSR on

consumer behavior with incongruous results (e.g Kim, 2004) Luo and Bhattacharya

(2006) investigated Fortune 500 companies, finding a positive link between CSR and

customer satisfaction However, literature lacks the investigation of linkage between

CSR actions and consumer satisfaction on consumer loyalty Yu et al (2005) also

found that overall customer satisfaction positively influences customer loyalty The

study of Dawkins (2004) in the UK point out 74% of respondents indicated that more information on the company‟s CSR behavior would affect their purchasing decisions These surveys‟ results show a strong consumer demand for CSR reporting and CSR information which can have significant impact on consumer behavior, leading to

what Hansen and Schrader (1997) describe as “consumer responsibility”

Basing on the discussion, the second hypothesis can be formulated:

H2: Consumers behavior is affected by companies’ CSR practices

2.3.3 Employee’s perception of CSR

Today, many multinational corporations engage in CSR activities, whereby

organizations take responsible for the influence of their activities special on

employees For employees, the evaluate standard for the carry out of CSR consist of

the high salary, treatment policy and good training, not discrimination, and

acceptable working condition Though all the above condition is simple, but there are

not so many companies can realize full This is the following table which reflects

three important factors to workers (Ewin.com survey):

Figure 2.5: The important factors for employees (Ewin.com survey)

The employees of multinational companies are being better trained, they are labor

protection However, because most of employees are poor people, they do not have

condition to contact with communities such: newspaper, internet, news on television,

therefore they are lack of the knowledge about their interest, and the level of

awareness about CSR is low

Employee‟s awareness of CSR reporting is very important as they are the one of

people who prepares the report If the employees exhibit a negative perception, there

can be difficult to complete CSR reporting without full support from them

The third hypothesis can be formulated:

H3: Employee’s perception of CSR is positive

CHAPTER 3: RESEARCH METHODOLOGY

3.1 Research Objectives

This research is designed to explore the awareness and implementation of CSR in

multinational companies operating in Vietnam It will show a view of society,

community, consumers, management about the CSR In addition, the project will

present about the level of awareness and implementation of CSR in multinational

companies operating in Vietnam And, the research is also done to collect the opinion

such as: from managers, consumers, and workers about implementation CSR of the

multinational company- Nestle Vietnam

3.2 Research Methodology

This research includes qualitative method The qualitative research is conducted

through the interview with managers and viewing the annual reports of Nestle

Vietnam as well as is implemented by the questionnaire survey on managers,

consumer, and employees

3.3 Data source

To meet the information needs, this project will use gather both secondary data and

primary data

3.3.1 Secondary data

The secondary data includes of the information that already exists, having been

collected for another purpose (Amstrong & Kotler, 2007) The sources of data

consist of the overall picture about application CSR of multinational companies

operating in Vietnam Moreover, the sources of second data have collected through

the books, websites, journals, newspaper Comparing with primary data, there are

may be more quickly and lower cost to obtain the secondary data However, there are

some disadvantages regarding to secondary data that is the needed information may

not be available Also, even when the data can be found, its usefulness is

questionable Therefore, in order to make the secondary information become

effective, the researchers must evaluate carefully

3.3.2 Primary data

The primary data include if the information collected for the specific purpose at hand

(Amstrong & Kotler, 2007) The primary data has collected through the experiments,

questionnaires, interviews and taking measurements, case studies, and critical

incidents The primary data has a lot of advantage Firstly, it is the most reliable form

of data; it designed less biased form of data Additionally, researchers can have direct

interaction with the customers On the other hand, the problems of primary data are

usually expensive and time consuming Moreover, it is difficult for researcher to

design the survey All questions in the survey must be simply and easy to understand

for others

3.4 Research method

In order to do this project, survey method will be used widely and best suited

approach which consist of the questionnaire and personal interview from the

managers, customers and employees about the implementation an awareness CSR of

Nestle Vietnam The research also collected the secondary information in the annual

reports of the company