the relationship between corporate social responsibility implementation and the development of five selected companies in hanoi

Many companies in the world have recognized this relationship, and in order to join international business environment, Vietnamese companies should pay attention to CSR implementation...

HO PHAM QUYNH NGA

28 March, 2011

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ACKNOWLEDGEMENT

This study would not have been made without the assistance, support and

encouragement of many people I greatly appreciate their kindness and want to take this opportunity to thank all people who help me during the time I carry out this study

First of all, I would like to express my gratitude to my supervisor, Dr.Pham Duc Hieu, in Viet Nam Commercial University He has kindly guided, supported, and encouraged me from the very beginning of this study

Furthermore, I would like to give my thankfulness to Ms Sumathi and Ms Shenba at Help University College, who initiated the project and give me instruction and

support

Lastly, I also want to thanks my friends, who support and encourage me to finalize this research, and managers of Tam Viet Ltd., and Vietnam Dairy Products Joint – Stock Company, and other people who spend time to answer my questionnaire

of the companies And in order to collect data for the research, questionnaire will be used as helpful method After that, some recommendation for selected companies and future research is presented

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TABLE OF CONTENTS

DECLARATION OF ORGINALITY AND WORD COUNT……… i

ACKNOWLEDGEMENT………ii

ABSTRACT………iii

CHAPTER 1: INTRODUCTION……… …10

1.1 Research background……… ………11

1.2 CRS in Vietnam……… ………12

1.3 Problem statement………13

1.4 Research questions……… ……14

1.5 Research objectives……… …14

1.6 Research structure……….… …15

CHAPTER 2: LITERATURE REVIEW………16

2.1 Definition and components of CSR……… … ……17

2.2 The concepts related to CSR……… ….………18

2.2.1 Business Ethics……….……….…………18

2.2.2 Environment Protection……….……19

2.2.3 Sustainability Development……… ….………19

2.2.4 Public Relation……… ………20

2.3 Theories related to CSR……… ………21

2.3.1 Carroll’s “Pyramid of CSR” ………21

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2.3.2 Stakeholder theory………23

2.3.3 Triple bottom line theory……… ………24

2.3.4 Three P's theory……….………26

CHAPTER 3: RESEARCH METHODOLOGY………28

3.1 Research Objectives……….…29

3.2 Research methodology……… … ……….…29

3.3 Data source……… ……….…30

3.3.1 Primary data……… ………30

3.3.2 Secondary data……….……… ……31

3.4 Research strategy……….……… ….………32

3.5 Research instruments……… …………32

3.6 Data collection……….……33

3.7 Sampling……… ….… …………33

3.8 Limitation of research……… …… ……33

CHAPTER 4: DESCRIPTION AND ANALYSIS OF RESULT………….… ……35

4.1 Introduction about Vinalmilk and Tam Viet………38

4.1.1 Introduction about Vinamilk………38

4.1.2 Introduction about Tam Viet……….………39

4.2 Description of Respondents’ information……….……… ………39

4.2.1 Description of respondents’ age ……….………… ………40

4.2.2 Description of respondents’ gender……… ………….……40

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4.3Description and Analysis of respondents’ understanding about CSR concept.41

4.4 Assessment on CSR implementation……… ………41

4.4.1 Description and Analysis of Questionnaire about Vinamilk……….……41

4.4.2 Description and Analysis of Questionnaire about Tam Viet……….……44

4.4.3 Description and Analysis of Questionnaire for managers of Vinamilk and Tam Viet……….…………46

4.5 Assessment on the development of company and CSR implementation.……47

4.5.1 Description and Analysis of Questionnaire about Vinamilk………….…47

4.5.2 Description and Analysis of Questionnaire about Tam Viet……….49

4.5.3 Description and Analysis of Questionnaire for managers of Vinamilk and Tam Viet……….………52

CHAPTER 5: CONCLUSION AND RECOMMENDATION………… …………55

5.1 Conclusion……… ………56

5.2 Recommendation……… …… …………57

5.3 Limitation of study……… ………57

5.4 Suggestion for future research……… ……… …58

REFERENCE……….………59

APPENDICES………62

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LIST OF FIGURES AND TABLES

Figure 2.1 The Carroll’s “Pyramid of CSR” 12

Figure 2.2 The triple bottom line 15

Figure 2.3 Planet – People- Profit in three P’s theory 17

Table 4.1 General information about Vinamilk 29

Table 4.2 General information about Tam Viet 30

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LIST OF CHARTS

Chart 4.1 Age frequency of respondents 31Chart 4.2 Gender frequency of respondents 31Chart 4.3Description of Result – Question 1 32Chart 4.4 Description of Result – Question 2 – Questionnaire for consumers of Vinamilk 33Chart 4.5Description of Result – Question 3 – Questionnaire for consumers of

Vinamilk 34Chart 4 6Description of Result – Question 2 – Questionnaire for consumers of Tam Viet 35Chart 4.7Description of Result – Question 3 – Questionnaire for consumers of Tam Viet 36Chart 4.8Description of Result – Question 4 – Questionnaire for consumers of

Vinamlik 38Chart 4.9Description of Result – Question 5 – Questionnaire for consumers of

Vinamilk 39Chart 4.10Description of Result – Question 6 – Questionnaire for consumers of Vinamilk 39Chart 4.11Description of Result – Question 4 – Questionnaire for consumers of Tam Viet 40Chart 4.12Description of Result – Question 5 – Questionnaire for consumers of Tam Viet 41Chart 4.13Description of Result – Question 6 – Questionnaire for customers of Tam Viet 42Chart 4.14Description of Result – Question 4 – Questionnaire for managers of Tam Viet and Vinamilk 43Chart 4.15 Description of Result – Question 5 - Questionnaire for managers of Tam Viet and Vinamilk 44

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LIST OF ABBREVIATION

CSR WTO WBCSD

SD

PR TBL

Corporate Social Responsibility World Trade Organization World Business Council for Sustainable Development Sustainability development

Public relation Triple bottom line

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CHAPTER 1: INTRODUCTION

In this chapter, the whole picture of this research is presented in order to help readers feel easy to understand This chapter includes six parts, which are summarized as follows:

do not A company which cares about employees, their lives, and their working environment can raise employees’ loyalty, increase productivity By protecting environment and contributing back to society, the company makes itself more well-known and more reliable Therefore, the company guarantees shareholders’ profit from their investment From these benefits, it can be said that there is a relationship between CSR and sustainability development of company Many companies in the world have recognized this relationship, and in order to join international business environment, Vietnamese companies should pay attention to CSR implementation

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1.2 CSR in Vietnam

Since Vietnam joined World Trade Organization (WTO) in 11th January 2007, the competition between foreign companies and local companies becomes stronger than

ever According to Dr Le Dang Doanh, Member of the Board and Senior Research

Fellow of the Vietnam Institute of Development Studies, joining WTO, Viet Nam has to accept higher level in competition, but this competition will enhance economic development So, in order to survive in the strong competition, Vietnamese

companies should have more understanding about CSR, and apply CSR in making business decision

However, the concept of CSR is quite new to Vietnamese companies and their

managers, so the application of CSR in Vietnam still limit, and people who

understand the concept is not so much Only after cases of business fraud appeared, attention about CSR is raised These cases are related to environmental pollution (case of Vedan Vietnam, the sewage disposal goes directly to Thi Vai river, polluted this river, and affected to people who lives along Thi Vai river); food poisoning (case

of Melamine infected in infant milk); and other cheating in selling products to

customers (the fraud in selling fuel)

After suffering these cases, society requires company to perform CSR, and

Government also amended and supplemented some Acts and Regulations to adapt the requirements of public The replacement of Environmental Protection Law 1994

in 2005, and the investigation of polluting cases made by the Environmental Police Department (C36) can be considered as one of the changes Together with

regulations issued by Government, the propaganda about CSR via mass media

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channels also improves the awareness of Vietnamese companies about CSR In near future, there are positive changes expected to appear in business performance of Vietnamese companies

1.3 Problem statement

Since the concept of CSR is newly in Vietnamese business environment, the

Government encourages domestic companies to self-search about CSR, and award companies, which well applied CSR in business operation, in “CSR award towards sustainable development” since 2005 Vietnam CSR Forum are also created in

websites such as the address http://trachnhiemxahoi.net or

http://www.vietnamforumcsr.net, these forums bring CSR understandings not only for company’s managers but also for employees and customers, thus it helps

domestic companies building and implementing CSR easier

Besides research of international organizations, CSR research in Vietnam is quite few Then this project is formed with the willingness to contribute in Vietnamese CSR research However, in Vietnam there are many companies, with limited time and capacity, the scope of this research only focuses on five selected companies in

Ha Noi

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1.4 Research question

With the purpose of analyze the relationship between CSR implementation and the development of company, sub-problem of the research is considered as follows:

Sub-problem 1: Why and how does CSR related to company’s growth?

Sub-problem 2: What actions considered as CSR actions did these selected

companies do?

In order to accomplish this research, primary data source and secondary data source will be used as data to analysis

1.5 Research Method

In order to reach above objectives, the research will answer the following questions:

1, In general, how does CSR implementation affect business development?

2, In detail, how does CSR implementation affect business development of

selected companies in Ha Noi or have branch in Ha Noi?

Together with figuring out the answer, the research will help selected companies to:

3, Realize the strong relationship between CSR implementation and business development

4, Reconsider and make more reasonable plans to perform their CSR

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1.6 Research structure

In this research, there are five (5) chapters as follows:

 Chapter 1: Introduction

 Chapter 2: Literature review

 Chapter 3: Research methodology

 Chapter 4: Description and analysis result

 Chapter 5: Conclusion and recommendation

The first chapter is the introduction Chapter two mentions literature of CSR concept, which brings CSR definition, components of CSR and theories related After that, the third chapter presents the research methodology used to conduct this study In

chapter three, the research objectives, research method, research instruments,

research data will be stated Chapter four describes and analyzes collected data through primary and secondary data source Lastly, in chapter five, conclusion for this study and suggestion for future research is gave out Besides that, each chapter is divided into sub-headings in order to make it easier to follow These sub-headings are listed in the beginning of each chapter

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CHAPTER 2: LITERATURE REVIEW

Chapter 2 provides information about CSR, concepts and theories related to CSR as a background of the research Structure of chapter 2 is as follows:

2.1 Definition and components of CSR

2.2 The concepts related to CSR

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2.1 Definition of CRS

The concept of CSR has appeared for a long time, but it is hard to find one common definition about CSR In different continents, people define CSR in different ways; even in different countries, there are ways to define CSR Even there is a research

about thirty-seven (37) ways to define CSR in “How Corporate Social Responsibility

is Defined: an Analysis of 37 Definitions” of Alexander Dahlsrud, a PhD fellow in

Department of Industrial Economics and Technology Management, Faculty of Social Science and Technology Management, Norwegian University of Science and

Technology, Trondheim, Norway According to Alexander Dahlsrud, there are “37 definitions of CSR were found and analyzed, among them definitions were primarily

of European and American origin, but definitions from India and Canada were also included”, they “originated from 27 authors and covered a time span from 1980 to

2003, although most definitions were published from 1998 onwards” So in this research, definition of CSR, which are stated, can be considered as the popular

definition

CSR can be defined simply by Mallen Baker, a writer, speaker and strategic advisor

on corporate social responsibility and Founding Director of Business Respect as

“how companies manage the business processes to produce an overall positive

impact on society” CSR also can be understood as "social responsibility of

enterprises, including the expectations of society on economic, legal, ethics and philanthropy for organizations in a given time" (Archie.B Carroll, 1979) Or the World Business Council for Sustainable Development (WBCSD) defined

"Corporate social responibility is the continuing commitment by business to

contribute to economic development while improving the quality of life of the

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workforce and their families as well as of the community and society at large" (CSR: Meeting changing expectations, 1983, pg.3)

In short, CSR can be considered as the interaction of three dimensions, social,

environment, and economic A modern company has to understand CSR concept, balance these three dimensions, and adapt this concept into business strategy Then the company can satisfy higher and higher demands of customers, and be able to sustainability development in business competition environment

2.2 The concepts related to CSR

In order to understand more clearly about CSR, some concepts related to CSR will be mentioned These concepts are (1) Business Ethics, (2) Environment Protection, (3) Sustainability Development, and (4) Public Relation

2.2.1 Business Ethics

As mentioning above, a company should perform actions according to the

expectations of society in societal mores and ethical norms This means business ethics is considered as vital factor to gain success in operating business Through business ethics performance of a company, the attitude of company to basic values can be figured out, thus, the company may be considered as honest, fairness, or deceitful, unfair Each values of company will be reflected in its decision-making,

2.2.3 Sustainability Development

“Sustainability development” (SD) has related to CSR concept, SD means taking actions to guarantee better life quality for every people at the moment and next generations SD contains three components which are social equity, economic

growth, and environment, when these three components are intersected, SD is

reached Social equity means the needs of people in society is recognized, and basic human rights is protected A company can contribute to SD by issuing supporting policies and protecting employees’ rights Economic growth is a sustainable way to

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increase living standard of people in society, and companies has responsibility to create wealth contributing to society, increase life quality of company’s staffs

People cannot survive in low quality environment, where there is tsunami,

earthquake, flood, or drought Therefore, environment needs improving, companies and society should use recycled productions and input materials instead of natural resources

2.2.4 Public Relation

Public relation (PR) is familiar concept in marketing environment, and with the time business man has realized the relationship between PR and CSR CSR is about

performing social responsibility of company, company should fulfill responsibilities

to employees, shareholders, customers, society, the environment Naturally, company wants to announce these good actions to the world, then PR is used as one of useful tools PR will be used to report these actions, make company be more well-known in community, and in society But as in the interview done by Matthew Rochte in 4thMay 2009, PR can be “both a blessing and a curse to CSR” PR can bring company either famous or harmful when company misunderstands about CSR and has mistake

in PR campaign

of a company in four aspects, which are economic, legal, ethical, and philanthropy

Figure 2.1 The Carroll’s “Pyramid of CSR”

(Source: Crane et al, 2008, pp 57-58; Carroll, 1991, pp 39-48)

In Figure 2.1, Carroll pointed out four responsibilities of a company, they are: (1) Be profitable, (2) Obey the law, (3) Be ethical, (4) Be a good Corporate citizen The first responsibility, be profitable, is the goal of any company when establishing, it also considered as the priority target because any company wants to earn profit Being profitable is illustrated by the effective growing of the company But the economic aspect in Carroll’s concept mentions about other things rather than only the profit

of company, and carries out the promise of maximize the investment of shareholders

In short, one company should fulfill responsibilities in economic aspect before

moving to other aspects

The second aspect which sets responsibility of company is legal aspect In this field, company has responsibility to obey the law, implement all related Laws, Provisions, Regulations, Articles, or any other legal documents issued by the Government and local authorities Similarity, the process of manufacturing or performing products and services of company are also meet legal requirements A company which throws all disposal of production process directly into environment cannot be considered as well-performed responsibility in legal aspect By obeying the law, company will contribute in customers’ rights protection, environment protection, building fair competition business environment And it will help company stay longer in fierce competition

Business ethics is mentioned many times, especially in today business environment where customers are harm by business frauds This situation appears because some companies accept to do anything to increase profit, earn more money, even basic business ethics is crossed Therefore, besides obeying the laws, company has to be ethical So, what is ethics, and how to be ethical? These questions are hard to answer because ethics is intangible, and set by the understanding about just and fair of the society Then a company should take actions which are expected by societal mores

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and ethical norms, and not break ethical norms to reach any goals Moreover,

company should pay attention to the changing or supplementing in societal mores and ethical norms, because, like other things, the society changes time to time

After all, the highest aspect of social responsibility of a company is Philanthropy By doing philanthropy, company can improve people’s life, and make their reputation be more well-known There are many ways for company performs responsibility in this aspect, for example company can raise a fund or contribute in other funds to do charity for people who need help Or in better way, company managers and staffs do volunteer activities in local community, it helps closer the relationship between company and people in the community, between people and people By any action company takes, the most important responsibility of company in this aspect is to increase life quality for people

wealth as possible for shareholders, the managers should maximize profit for

shareholders However, recently, stakeholder view is appeared and attracted theorists and researchers In contrast to shareholder view, stakeholder view argues that

company should increase the benefits of other parties rather than only focus in

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shareholders Stakeholder theory states that besides relationship with stockholders, company also has relationship with employees, suppliers, customers, government, and society as a whole Without any of these relationships, company cannot exist for

a long time in competitive business Therefore, managers of company should include the goals of increase welfare policies for employees, increase products or services quality for customers, protect environment, and others into company strategy

2.3.3 Triple bottom line theory

The meaning of “Triple bottom line” (TBL) was firstly mentioned in 1981, by Freer

Spreckley, but until 1998, in a book of John Elkington “Cannibals with Forks: the

Triple Bottom Line of 21st Century Business” concept of TBL was coined In TBL

concept, theorist mentions three bottom lines, which are economic line, social line and environmental line

Figure 2.2 The triple bottom line

(Source: Susan Patel, Triple Bottom Line and Eco-Efficiency: Where to Start?1)

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In traditional view of company managers and theorists, a company was established

in order to serve only profit making objective which is related to financial line But company managers should think above financial issue, they had better figure out how

to earn long term profit, sustainable profit It is the time to consider social line and environmental line together with financial line

As everyone knows, a company cannot develop without good relationship with employees and with local community, therefore considering social line is very

important For short term, company can encourage employees by improving current working conditions But for long term, company should develop welfare policies, apply activities or awards for hard-working employees, build corporate culture in order to attract and employ high skills employees In one research, company is

advised that with the purpose of having close relationship with local community, company should do volunteer and communicate with local people Taking actions under this aspect, company creates healthy working environment, and ensures the sustainability development of its business

Environment line in TBL related to how companies reduce their negative impacts into environment, and what actions companies take to reduce them Company can protect environment, which is the same priority of entire society, by applying

strategies These strategies may be saving raw materials, reducing exhaust to the air, recycling disposals The International Association for Impact Assessment issued a process to assess impacts of company to environment which called as Environmental Impact Assessment (EIA) EIA is used to assess effects of actions, policies, projects,

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programs into environment before carrying them out Based on EIA report,

managers, government, and society will decide whether to bring these actions,

policies, projects, programs into real-life This process is helpful when company wants to be “green business”

environment line However, based on how company managers place each P, the priority of company is changed accordingly They can be placed as Planet-People-

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Profit, which means making profit for company is put after protecting environment, and caring of people in society Or the order of three Ps changes into Profit-People-Planet, which means the biggest goal of company is to maximize profit even

environment and society are harm Modern company also thinks about how to

increase profit but this increasing should respect to People and Planet benefits

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CHAPTER 3: RESEARCH METHODOLOGY

This chapter is explained method to conduct the research and method to collect data Moreover, this chapter also stated sampling results of questionnaire and the

limitations Chapter 3 has structure of:

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3.1 Research objectives

As stated in the title, this study aims to analyze the relationship between CSR

implementation and the development of company This study will figure out how clearly company managers understand this relationship, and how the relationship affects to five selected companies in Ha Noi CSR is about how company act as a good citizenship corporation During doing this study, the researcher collects and summaries data, mentions and discusses theories, researches, articles related to CSR theory, CSR concepts, and link of CSR to other theories CSR can be looked at many perspectives but within the scope of this study, the researcher points out three aspects

of CSR, which are responsibility to environment, social, and employees of company Moreover, the study is expected to fill up the short of CSR study not only in Ha Noi but also in Vietnam It is also expected to point out advantages of well performing CSR to company’s managers And because CSR should be included in business strategy of each company, studied companies’ managers and other companies’

managers can find this research useful Besides the managers, people who want to study CSR or who are interested in CSR also find this research valuable In short, this research is brought to real with the hope that it can help studied companies carry

on new and better CSR plans, and it can be reference for further studies about CSR

3.2 Research methodology

The aim of this study is to figure out the relationship between CSR implementation and the development of five selected company in Ha Noi from the viewpoint of

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managers and employees of these companies Between two research methods,

qualitative method and quantitative method, the method which is more appropriate for the study is qualitative method This method is chosen because the study is

mostly based on textual data, which are surveys, articles, journals, and

announcements For articles, journals, and announcements, the researcher can find in library, in Internet And in order to get data from survey, the researcher will do questionnaire with customers of companies to understand the effect of CSR

implementation to company’s image in society The researcher also have separated questionnaire with company managers in order to explore their idea about CSR and the relationship between CSR implementation and the development of company

Primary data consists of information collected for the specific purpose at hand

(Amstrong & Kotler, 2007), and it is collected by the researcher his/herself There are some ways to collect primary data, for example: by conducting survey, interview, direct observation, etc Each method will be useful in different circumstance To happening events/ tasks/ activities, researchers should use direct observation to

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collect data The collecting method of direct observation allows researchers to pay attention to what they are interested, to real aspect of phenomenon In case

interviews method is chosen, researchers have to face the fact that the cost to

collecting data is expensive, and the result comes slowly But in contrast, by

interviews, in-depth questioning and follow-up questions can be asked to collect more value information By using surveys, researchers can know idea of many

people about the concept that researchers concerned And in order to have well-done survey, researchers should set clear and simple questions so as not to make

respondents confusing and misunderstanding the questions In summary, primary data seems costly, but it is more credible

3.3.2 Secondary data

While primary data is collected first time by researcher, secondary data can be

collected from internal and external sources Secondary data includes existing

information, and it is collected for another purposes than only for solving happening problem (Amstrong & Kotler, 2007) Secondary data is easier to acquire because there are many ways to collect it at low cost, such as through TV, internet,

newspaper, etc

Internal source of secondary data can be collected from the organization itself, this source may serve researchers’ purpose immediately or researchers have to analyze the data in order to meet their intention Other source of secondary data, external source, can be collected in published materials, in computerized data bases, or in syndicated services

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3.4 Research method

In order to collect primary data for this study, survey research is a suitable method which can be chosen By using this method, a questionnaire will be released to

collect ideas of people after testing its reliability

For secondary data, it seems to be easier to gather In this study, secondary data will

be collected in website of selected companies, in news both in TV, newspaper, or magazines

3.5 Research instruments

Questionnaire is a set of questions using to obtaining information from respondents And in this study, the questionnaire consists of questions related to CSR, to CSR implementation of the company, and its relationship to the company development For sample of questionnaire, please refer to Appendices

In the answer of each question, respondent can choose the answer as “Strongly

agree”, “Agree”, “Neutral” “Disagree”, “Strongly Disagree” which are respectively

as five points Likert Scales (1= “strongly disagree”; 5= “strongly agree”) Based on the choice of respondents, the researcher will analyze their idea about CSR

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3.6 Data collection

As stated above, primary data will be collected by doing survey, through

questionnaire Questionnaire will be released to people randomly in order to collect un-bias ideas about selected companies The respondents may be students,

housewives, company’s managers, staffs, workers, etc, and during answer the

questionnaire, they can be in university, at home, in office But first of all, a

sampling of questionnaire will be tested in small group

3.7 Sampling

The questionnaire is going to be released to a group of ten (10) people before it is made public This sample of questionnaire is performed as a test to see whether the questionnaire is easy to understand, whether it makes respondents misunderstand or confuse when choosing answer Based on the comments of this group, the researcher will revise, and reconsider questions in questionnaire in order to make it more