CORPORATE SOCIAL RESPONSIBILITY IN THE VIETNAMESE FOOD INDUSTRY SITUATION AND POLICY RECOMMENDATIONS

FOREIGN TRADE UNIVERSITYMASTER THESIS CORPORATE SOCIAL RESPONSIBILITY IN THE VIETNAMESE FOOD INDUSTRY: SITUATION AND POLICY RECOMMENDATIONS Specialization: International Trade Policy and

FOREIGN TRADE UNIVERSITY

MASTER THESIS

CORPORATE SOCIAL RESPONSIBILITY IN THE VIETNAMESE FOOD INDUSTRY: SITUATION AND

POLICY RECOMMENDATIONS Specialization: International Trade Policy and Law

LE THI KIM PHUNG

FOREIGN TRADE UNIVERSITY

MASTER THESIS

CORPORATE SOCIAL RESPONSIBILITY IN THE VIETNAMESE FOOD INDUSTRY: SITUATION AND

POLICY RECOMMENDATIONS Specialization: International Trade Policy and Law

Student ID’s number : 1606060030

I hereby declare that this master thesis is the scientific research of my ownwhich made on the basis of the theoretical studies, field surveys and under thedirection and supervision of Dr Ly Hoang Phu The research contents and results ofthis thesis is completely honest These data and documents for the analysis, reviewand evaluation were collected from various sources which are fully listed in thereference list

I am fully responsible for the content of this master thesis as well as thisdeclaration

Hanoi, 14 March 2019

Author

Le Thi Kim Phung

TABLE OF CONTENTS DECLARATION i

TABLE OF CONTENTS ii

ACKNOWLEDGEMENT v

LIST OF ABBREVIATIONS vi

LIST OF TABLES vii

LIST OF FIGURES vii

ABSTRACTviii

INTRODUCTION 1

1 Research Rationale 1

2 Literature Review 3

3 Research objectives 6

4 Research questions 6

5 Scope of research 7

6 Research methodology 7

7 Thesis outline 7

CHAPTER 1: THEORETICAL BACKGROUND OF CORPORATE SOCIAL RESPONSIBILITY 9

1.1 Background 9

1.1.1 Definition 9

1.1.2 Determinants of CSR 11

1.2 Models of CSR 13 1.2.1 Carroll’s CSR pyramid 13

1.2.2 Wayne Visser’s CSR 2.0 Model 15

1.2.3 The Consumer-driven Corporate Responsibility (CDCR) Model 16

1.3 CSR Practices in Developing Countries 18 1.3.1 Content Theme 18

1.3.2 Knowledge Type 18

1.3.3 Various drivers for CSR in developing countries 19

1.3.4 CSR Pyramid for developing countries 23

CHAPTER 2: CSR APPLICATION IN VIETNAMESE FOOD INDUSTRY 26

2.1 Overview of Vietnamese food industry 26

2.2 Vietnam research context 29

2.2.1 CSR in Vietnam 29

2.2.2 Key stakeholders in CSR in Vietnam 35

2.3 CSR in Vietnamese food industry 37 CHAPTER 3: CASE STUDIES 40 3.1 Vietnam Dairy Products JSC 40 3.1.1 Overview of Vietnam Dairy Product JSC 40

3.1.2 Human nutrition and safety 40

3.1.3 Environment and energy 42

3.1.4 Local economic development 43

3.1.5 Employees 44

3.1.6 Support and community development 45

3.2 C.P Vietnam Corporation 46 3.2.1 Overview of CP Vietnam 46

4.2.2 Heart 47

3.2.3 Health 49

3.2.2 Home 50

3.3 Heineken Vietnam 51 3.3.1 Overview of Heineken Vietnam 51

3.3.2 Prosperity of people 51

3.3.2 Prosperity of planet 53

3.4 Vedan Vietnam 54 3.4.1 Overview of Vedan Vietnam 54

3.4.2 Social responsibility activity 54

3.4.3 Environmental protection 54

3.4.4 Employee activity 55

CHAPTER 4: POLICY IMPLICATION 56

4.1 Evaluation of CSR application in Vietnam food industry 56

4.1.1 Achievements 56 4.1.2 Existing issues 64 4.2 Future CSR development and challenges in Vietnamese food industry 65

During the completion of this master thesis, I received the guidance andvaluable help from the lecturers, siblings and friends With great respect and deepgratitude, I would like to express sincere thanks to:

Dr Ly Hoang Phu, who wholeheartedly helped, supported and encouraged mefrom the initial to the final level of this dissertation He provided me withcomprehensive guide from choosing the topic, outlining the thesis and editing thisresearch

Professors and lecturers, who not only spread profound knowledge andinformation in the fields of economy and law but generated strong motivation for

me while I was taking this course as well

Last but not least, I would like to express my sincere thanks to my family, mycolleagues and my friends, who have always by my side encouraging, supporting,contributing valuable ideas and giving me favourable conditions for me to completethis scientific research

LIST OF ABBREVIATIONS

Abbreviation Full name

LIST OF TABLES

Table 3.1: Occupational health and safety index in Vinamilk 43

Table 3.2: Occupational health and safety index in Vinamilk 45

Table 4.1: Summary of CSR system and activities of Vinamilk 57

Table 4.2: Summary of CSR system and activities of CP Vietnam 59

Table 4.3: Summary of CSR system and activities of Heineken Vietnam 61Table 4.4: Summary of CSR system and activities of Vedan Vietnam63

LIST OF FIGURES

Figure 1.1: Era of CSR 9

Figure 1.2: Carroll's CSR Pyramids 14

Figure 1.3: Visser’s CSR 2.0 Model (Visser 2012) 15

Figure 1.4: The Consumer-drive Corporate Responsibility model (Claydon 2011)

Corporate social responsibility is the corporates commitments for stableeconomic development through that improve the quality of life of workers, theirfamily, community, and society in a manner that benefits both corporate and socialdevelopment The good application of CSR by the companies does not only ensuretheir sustainable development but also the society Today big enterprises in Vietnamoften brings the CSR into their own business strategy and the ones with exportmarket Meanwhile, opportunities and benefits of the CSR have not been seen bythe medium and small enterprises, some of them have even misunderstood orintentionally misunderstood the importance of CSR It is the fact that for publicbusinesses who implement social responsibility well, their benefits do not decreasebut increase The benefits that businesses gain when implementing socialresponsibility include reducing costs, growing revenue, increasing brand value,decreasing the rate of quitting jobs, improving productivity and more possibilities toaccess the new markets This thesis focused on analyzing the corporate socialresponsibility, roles of the implementing the CSR and some matters ofimplementing the CSR in Vietnam food industry

Using qualitative methodology with a multiple case-study approach, this thesis explores the driving factors of CSR strategies and implementation in the

Vietnamese food industry, which is intended to conduct only four cases of big corporations The thesis contributes to the body of knowledge and slight reality

on CSR practices in a developing-country context as well as Vietnamese food industry

1 Research Rationale

Corporate social responsibility (CSR) has attracted the unprecedentedattention of governments, non-government agencies, civil society and businesses indeveloping countries The interest was heightened when recent significant economicgrowth has been accompanied by unsustainable and irresponsible business practicesand their consequent environmental and social problems in these countries Formore than a decade, the number of companies all over the world recognizes theeconomic benefits of CSR practices CSR commitments go beyond the desire ofprofit growth and show that the company is fully aware of its responsibility toemployees, customers, communities and the environment A variety of companieshave used CSR as a new business strategy when they realize that it can helpimprove the financial situation, employees' motivation and boost customer loyalty

as well as company trademark When markets become more and more difficult andconsumers become "smarter", products are not only required to ensure quality butalso require to ensure environment

In the context that Vietnam is integrating more and more deeply into the worldeconomy, the issue of CSR needs even more attention Now, companies not onlycompete with price and quality of products but also compete with commitments totake care of life, working environment for employees, activities that contribute tothe development of community, protecting consumers' interests, protecting thenatural environment towards sustainable development Although CSR is a relativelynew concept for many Vietnamese enterprises, it is really an urgent requirementtoday In order to successfully penetrate large but fastidious markets such as Japan,the United States and Europe, companies need to strengthen their research into theability to apply international standards of CSR such as the ISO14000, SA8000 ornear standards This is ISO26000 to express our responsibility to society ManyVietnamese enterprises believe that CSR standards are technical barriers to enter theinternational market and they are reluctant to implement CSR (Twose and Rao,2003) However, the benefits of CSR bring to businesses are very big The

immediate benefit is to have more orders from purchasing businesses that requireCSR standards, and long-term benefits for businesses themselves such as improvingbusiness relations, reducing costs and increasing productivity, reducing recruitmentcosts and train new employees, increasing revenue, brand value and access to newmarkets Therefore, enterprises need not only to raise awareness of CSR but also toimplement CSR effectively in enterprises.

In fact, CSR awareness of Vietnamese enterprises is not comprehensive andthe implementation of CSR in Vietnamese enterprises appear passive and reluctant

in the uptake of CSR because foreign partners requires compliance with their code

of conduct (Twose and Rao, 2003) Some businesses understand that CSR is forcharity purpose Some businesses hesitate to implement CSR because they assumeCSR programs are very expensive There are not many businesses being fully aware

of CSR and integrate CSR activities effectively in the production process of theenterprise They still view CSR as a cost or a compliance issue pushed by globalbuyers rather than a sustainable investment to gain a competitive advantage.Therefore, in the last few years, we have seen many cases of violation of CSRexposed and condemned by the social community There is a need for CSR studies

in Vietnam to promote the implementation of CSR in the business communitybecause CSR have been a part of increasing importance in the development process

of enterprises CSR programs can be considered in the strategic managementprocess of the business, which can be integrated into the daily operations of thebusiness and thereby create a competitive advantage for the business

The Vietnamese food industries are the focus of this research because of theireconomic and social significance as well as prevalent social issues These industriesplay a significant role in the economy of Vietnam Vietnam’s food sector accountsfor 20% of GDP and Vietnam’s food manufacturing sector grew at 9.0 percent in

2016 (General Office of Statistics, 2017) However, current production andmanagement practices of industry players have worrying social implications.Concerns related to human rights, labour issues (minimum wages, insurance,occupational safety) and environmental problems have been raised by international

governance agencies (Vietnam, 2010) Therefore, raising awareness and promotingCSR implementation in the Vietnamese food industry is really an urgent issue Themost typical cases include violations of CSR in food safety.

The thesis contributes to the body of knowledge on CSR practices in adeveloping-country context First, the prominent form of implicit and informalinternally-focused CSR in labour strongly reflects the national institutional contextand political economy in which the notion of employee and social welfare isembodied in socialist ideology and the perceived role of businesses as job andincome generators in a developing country Moreover, the thesis adds a nuancedunderstanding of CSR development in a developing-country context in which CSRconcept is diffused, translated and adapted at the State, industry, company andmanager levels and manifested in variations of CSR expressions

From the above reasons, the author selected the topic "Corporate socialresponsibility in the Vietnamese Food Industry: situation and policyrecommendations"

2 Literature Review

While a significant amount of researches have been conducted in the fields ofCSR, there are not many researches focusing on CSR in Vietnamese Food Industry.The main reason is that the current literature on CSR in Vietnam reveals a sketchypicture of how CSR is conceptualised, driven and implemented by business.However, researches on international CSR as well as CSR in Vietnam are reallyhuge collection This section shall make a general assessment on several typical andprominent researches

First of all, Social Responsibilities of the Businessman (Howard R Bowen,1953) is a book which the term CSR officially appeared for the first time for thepurpose of propaganda and appealing to property managers and charity to reimbursedamages caused by businesses harming society

The A to Z of Corporate Social Responsibility (Wayne Visser) is really amust-have textbook in economics of lecturers, students, economists and lawyers Itdraws on the literature of a unique publication and is the culmination of over a

hundred of the world's leading thinkers, opinion formers, academic and businesspeople providing an easy-to-use guide to CSR: from general concepts such assustainability, stakeholder management, business ethics and human rights to morespecific topics In addition to definitions of the most important terms across thewide range of CSR associated topics, this book also covers all the most importantcodes and guidelines, such as the Equator Principles, the UN Global Compact andISO standards, as well as providing background on organizations such as the WorldBusiness Council for Sustainable Development and Transparency International andprofiles of CSR in particular industries and regions.

The research that must mentioned is Ackerman R.W (1973), “How companiesrespond to social demands”, Harvard Business Review This is one of the firststudies on the field of corporate social responsibility, and this is also an importantreference, laying the foundations for many later studies in the field of CSR ingeneral and CSR in the food industry in particular Research shows the ways thatevery business often does to fulfill its social responsibilities in different ways,consistent with their particular circumstances

Other paper can be mentioned is “The Effect of Environmental CorporateSocial Responsibility on Consumer Behavior, Andel W., Voogd S (2010)” to focus

on assessing the impact of social enterprises on consumer behavior The study alsoshows a vivid picture of how businesses take advantage of their social obligations tocreate benefits for their core businesses, and build business relationships -consumers use together to benefit

“Consumers Perception of Corporate Social Responsibility in a DevelopingCountry” Arli D.I., Lasmono H.K (2010) is a study from a consumer perspective toassess and analyze corporate social responsibility The paper also shows thatconsumers' perception of corporate social responsibility is often very low, therebyurging consumers to raise their voice to enhance corporate social responsibility andprotection consumer rights

“Exploration of corporate social responsibility (CSR) in multinationalcompanies within the food industry” Rana, Padmakshi, Platts, Jim & Mike Gregory

(2009), illustrates the exploration of CSR and sustainability literature with thedevelopment of the conceptual framework, followed by a brief overview ofsustainability in the food industry, the adopted research design and a short summary

on preliminary findings from case studies

Besides these above mentioned books focusing on CSR, there have been anumber of papers specialized in CSR in Vietnam - “The Corporate SocialResponsibility in Vietnam today” Phu-Hop Mai (2017) - Journal of Business andEconomic Development This is a short study that has presented a very generalstatus of social responsibility of enterprises in Vietnam today This paper says thatVietnam today who are bringing the CSR into their own business strategy often arebig enterprises and the enterprises with export market Meanwhile, the medium andsmall enterprises have not been seen opportunities and benefits of the CSR, some ofthem have even misunderstood or intentionally misunderstood the importance ofSCR This article focused on analyzing the corporate social responsibility, roles ofthe implementing the SCR and some matters of implementing the SCR in Vietnam

To more detail, Corporate Social Responsibility in the Vietnamese Garmentand Food Industries: Antecedents, Strategies and Performance (Do Thi Ha Lan,2018) is one of those papers The paper explore motivations that shape CSRpractices at the institutional, organizational and individual levels It is, particularlyintriguing to understand how CSR is conceptualised and implemented in the context

of Vietnam with its hegemony of the State Party, the increasing power of differentstakeholders and businesses, demographics, and relevant features To conclude, itsuggests several recommendations for Vietnamese companies and authorities toadopt for CSR

“Does Corporate Social Responsibility (CSR) matter to VietnameseConsumers? A Qualitative Study of Modern Food Retailers” Vo Thi Mai Ha - HueUniversity (Vietnam), looking at CSR practices of modern food retailers (MFRs) inVietnam, the aim is to obtain first insights into the relevance of CSR for Vietnameseconsumers Some findings of this research are product responsibility is perceived to

be the primary concern of urban consumers in Vietnam In contrast, animal welfare,

fair trade, and child labor, the aspects which are intensively discussed in westerncountries, are of little relevance for Vietnamese consumers Vietnamese consumersvalue firms that behave socially responsibly, but they do not react to CSR at thesame manner.

These are several of the studies that I filtered out and suggested that these arequite detailed studies and references in many other studies However, there aremany very useful and in-depth studies that I cannot name such as corporate socialresponsibility (CSR) in Vietnam: a conceptual framework - “Corporate socialresponsibility of the production and processing food enterprises in Vietnam” –Nguyen Phuong Mai, 2015 are also very useful references

3 Research objectives

The thesis aims to analyze the situation of how CSR has been applied in theVietnamese food industry and provide some personal as well as collected opinionsfrom different publications about policy recommendations can be taken to make theCSR situation in in the Vietnamese food industry better The objectives are:

- To identify how some Vietnamese food enterprises implement CSR practicesinto their operation;

- To evaluate the successes; limitations; opportunities and challenges of CSRsituation in some representatives of Vietnamese food enterprises

- To recommend some suggestions to the food companies and governmentbodies

- What are the current CSR practices and strategies adopted by Vietnamesefood companies?

5 Scope of research

Regarding the content of the dissertation, it focuses on the real situation ofCSR in the Vietnamese Food Industry and policy recommendation The scope ofthis thesis is as follows:

As for geographical scope, the research is intended to conduct only the case ofbig corporations, either Vietnam – originated or multinational corporationsoperating in the market However, as approximately 80% of the Vietnamesebusinesses are small and medium sized, this thesis will only contribute to theunderstanding of the topic on a small scale

As for time scope, the research focuses on analyzing the case companies in theperiod from 2016 to 2019, the author can draw more reasonable results from theanalysis As for the general theoretical framework, there will be no limits of time

6 Research methodology

The author has chosen a qualitative approach towards this thesis becauseunlike the quantitative approach, qualitative approach will allow the author to studyand analyze the data acquired and come to a conclusion based on them, hence bettersuits the main aim of this thesis

The collected data throughout this research are based on the primary andsecondary sources The primary data are collected from the interviews of staff fromtwo studied cases as well as the author’s observation through companies’ reports.Subsequently, the articles, books, and reports focusing on the CSR topic areconsidered the secondary source Most of the information is issued in 2010-2017which likely provide the most up-to-date data in this specific field

Chapter 2: “CSR Application in Vietnamese Food Industry” analyzes thesituation in Vietnamese food industry and some case studies to present more detail

on CSR practices applied by the companies

Chapter 3: “Case Studies” presents more detail on CSR practices applied bythe food companies

Chapter 4: Policy Implication draw a general picture of how CSR has beenapplied in the Vietnamese food industry and also point out some recommendations

CHAPTER 1: THEORETICAL BACKGROUND OF CORPORATE SOCIAL

RESPONSIBILITY 1.1 Background

1.1.1 Definition

If the concept of "corporate social responsibility" (CSR) is relatively new andmentioned a lot since the 1950s, however, attention to the consequences arises fromthe enterprise activities in particular and economic activities in general have existedfor a long time in the world (Capron and Quairel-Lannoizelee, 2009) In otherwords, the need to implement social responsibility in business is not a new concept.Chinese, Egyptian, and Xume ancient records emphasized trade rules to promotetrade and concern interests of the wider community Since then, public interest insocial and business interactions as well as the development of business activities hasbeen gradually growing

In the early 1950s, the first official CSR studies were published The termCSR officially appeared for the first time in 1953 in the book "SocialResponsibilities of the Businessmen" by Howard Rothmann Bowen for the purpose

of propagating and appealing to managers who should not harm the rights andinterests of others, and should do charity to compensate for damages caused bybusinesses

According to Patrick Murphy (University of Michigan Business Review,1978), the concept of CSR has progressed through four main eras It is illustrated inthis following figure:

Issue era(1968-1973)

Responsivenessera (1974-1978)

With such a prolonged origin, the concept of CSR that is being integratednowadays within the strategic procedures of assorted business entities has, however,grown, manifested and flourished as a product of the twentieth century The termCSR is being understood in many different ways The meaning of CSR can beunderstood from the meaning of the three words contained in this phrase:responsibility, society and cooperation According to Capron and Quairel-Lanoizelee (2009), refering to "responsibility", enterprises need to answer thequestion "what are corporations responsible for? and to whom are theyresponsible?" With the question "who is responsible?", There may be manydifferent answers, depending on the concept of corporations and the position of thecorporations in society Corporations are only responsible for shareholders becausethe role of business is maximizing profits for the mutual benefit of shareholders(Friedman, 1993) The second type of response, according to the European Union,should be concerned with individuals or groups that may be affected by theiractivities, or groups or individuals The third answer is that corporations must beresponsible for the common interests of the community At present, when commoninterest issues have crossed the borders of national states, the issue of businesscontribution to the common interests should be placed in the context ofglobalization, but this issue has so far There are only sketches or limitedexperiences of regulatory mechanisms.

The question of "to whom are they responsible?" refers to the criteria on whichpeople will assess whether a corporations applies certainly social responsibility.These criteria are extremely diverse, difficulty in making assessment objectively,because the evaluator cannot be affected by his own values as well as his position inthe relationships or the benefits of organizations for which he is a member

Despite the impressive number of formal writings on the topic of CSR, all ofthem, bear some similarities All of them point out to the need of maintaining asmuch integrity in terms of social, environmental and ethical values as possible alongthe way of businesses making profit For the purpose of this study, the termcorporate social responsibility (CSR) will be used to describe how business acts to

implement the broad societal responsibility of going beyond economic criteria, such

as creating products, employment, and profits, to meet broader social andenvironmentalexpectations The term CSR is preferred as it maintains the focus onthe issue of responsibility to society as a whole, and it is a term that corporations areincreasingly using, both internally and in their communication efforts with externalaudiences

1.1.2 Determinants of CSR

CSR is a broad category so that there are also a number of related categories inits development process including: business ethics, civic enterprises, accountability.business process, and corporate sustainability (Carroll, 2008)

Business ethic:

According to the Oxford dictionary, business ethics is "the application ofmoral principles to the status of business organizations" Although the concept ofCSR has a moral aspect, these two concepts are not identical According to Carroll,business ethics is part of the CSR This author has argued that enterprises have fourtypes of responsibilities including economic responsibility, legal responsibility,moral responsibility and charity responsibility Accordingly, business ethic is

”responsibility to do things rightly, appropriately and fairly” (Branco, 2007).Therefore, this is an inseparable part of the concept of CSR because if the enterpriseimplements the other three types of responsibilities without fulfilling thisresponsibility, the enterprise cannot fulfill its contribution to society (Carroll, 2001)

Corporate citizenship

Corporate citizenship is a concept that is often used instead of the term CSR.The term civic enterprise began to appear in the 1950s and then became popular inEuropean countries in the 1990s Its prevalence was associated with waves ofopposition to globalization such as criticizing businesses' outsourcing strategy,concerns about climate change and other serious environmental problems caused bybusinesses, and parallely being urged by policies introduced by global institutionssuch as the World Trade Organization (WTO), the World Bank (WB), and theInternational Finance Organization (IFC)

This concept is understood as a business considering its responsibility to thewhole society as a responsible citizen There are many definitions of civicenterprises such as the United Nations that corporate citizenship is the integration ofsocial and environmental concerns into corporate policies The American Societyfor Social Responsibility defines that citizenship responsibility as the operation of abusiness in a certain way that satisfies both legal and religious expectations as well

as ethics and social trade for businesses The Boston Business Center at BostonUniversity argues that "a good corporate citizenshipneeds to integrate basic socialvalues into its daily business activities and policies It allows these values toinfluence daily decisions regarding all aspects of business and consider its impact

on stakeholders, including employees, customers, plus copper, suppliers and naturalenvironments ”

It can be said that the two concepts of corporate citizenship and CSR havesomething in common However, the difference that can be noticed between thesetwo concepts is that while CSR relates to the economic, legal, moral and charitableresponsibilities of the business, corporate citizenshipfocuses more on attaching theoverall corporate responsibility to corporate’s strategies and policies Carroll (2008)argues that corporate citizenship are narrower than the concept of CSR because heconsiders that the term ”corporate citizenship”only implies that enterprisesconducting charitable activities are already a ”good”enterprises Therefore, it isclear that CSR will be a broader category because it includes all corporateresponsibilities, from economic responsibility, legal responsibility, moralresponsibility to charity responsibility

Social entrepreneurship

Social entrepreneurship is a type of business established to create social valuethrough a certain business model to solve social problems This is a new type ofbusiness that appeared in 1980 The first social enterprise in the world isAshokafounded by Bill Drayton After that, this type of business gradually appearedmore in European countries and especially in India

The term social enterprise can be confused with the term CSR because usuallywhen an enterprise performs CSR, it means that it is on the way to become a socialentrepreneurship But in fact they are different because social entrepreneurship are abusiness model and CSR is a category that covers responsible actions thatbusinesses take to meet the expectations of stakeholders.

Corporate accountability

Corporate accountability is the foundation for the concept of CSR Therefore,

it is used quite often to replace the term CSR According to Branco (2007), duediligence relates to the perception of enterprises on its impacts on the externalenvironment Thus, the most important thing is that businesses need to beresponsible for the effects that it creates for all stakeholders In addition, duediligence also requires the willingness of the company to report on the situation ofthe company in a transparent manner to the stakeholders In other words, thecorporate accountability represents the responsibility of the business to explain itsactions in a logical and meaningful way to the parties However, Branco (2007)argues that corporate accountability is actually only part of the concept of CSR If acompany wants to perform CSR well, it must first ensure the implementation ofaccountability

1.2 Models of CSR

1.2.1 Carroll’s CSR pyramid

The Pyramid of CSR model (Figure 2) was first introduced by Carroll in 1991and this has been through empirical observation tested and supported by severaldifferent author (e.g Aupperle, Carroll & Hatfield, 1985; Pinkston & Carroll,1994) Carrol’s CSR pyramid pointed to shed light on how imperative it is forbusinesses to completely react to all aspect of the social world, naming economic,legal, ethical and philanthropic (Figure 2) According to Carroll, economicresponsibilities of business should perform an obligation to be productive andprofitable and meet the consumer needs, which is the first responsibility of thebusiness as it is to be a properly functioning economic unit and stay in business.And this is the base of the pyramid, only when these condition is met, the other

layers of responsibility appear The second aspect of the pyramid focuses on thelegal responsibilities of businesses, which emphasize a concern that economicperformance should be conducted along with the written laws If companies choose

to “bend” or even ignore their legal responsibilities, the price can be very high forthe business For example, US software giant Microsoft has faced a long runninganti-trust case in Europe for abusing its monopolistic position to disadvantage itscompetitors which resulted in tough settlements against the company The thirdlayer - the ethical level, in which businesses are expected to treat their stakeholdersfairly and rightfully and reasonably, without any harmful intentions Ethicalresponsibilities are not necessarily imposed by law, but they are expected fromethical companies by the public and governments At the top of the pyramid lies thephilanthropic level, which indicates the responsibility of businesses to act as a goodcitizen to the community, and provide resources where needed (Carroll, 1991) Itfocuses on more extravagant things such as developing the quality of life ofemployees, local communities and ultimately society in general A few focusesofthe philanthropic responsibilities of the businesses can be controversial andrequires separate studies aimed to it For instance, who should decide on whatreason to spend the money, how much, and on what basis these decisions should bemade

Figure 1.2: Carroll's CSR Pyramids

(Source: Corporate Social Responsibility blogspot 2015)

However, the model faces various of critics For example, Campbell (2007)claims that the SMEs enterprises are likely less engaging in CSR activitiesbecausethey have fewer resources to contribute in In this way, their execution might notmeet the thresholdof socially responsible behavior Moreover, he pleadsthat therelationship between the economic conditions and corporate behavior is affected by:public and private regulations; non-governmental institutions and organizations thatmonitor corporate behavior; institutional norms regarding appropriate corporatebehavior; associative behavior amongst corporates themselves; and organiseddialogues among corporations between them and their stakeholders (Campbell,2007) Thus, the straightforward structure of pyramid proposed by Carroll is notsastisfied to clarify the complicated relationship between business, society, andenvironment

1.2.2 Wayne Visser’s CSR 2.0 Model

Visser (2005) makes a critic of Carroll’s pyramid that it is need of

consideration of environmental management and corporate sustainability.

Explaining his work, Wayne Visser provides a new model of CSR which indicate ashift from a mono-dimensional “CSR 1.0” to a multi-dimensional “CSR 2.0”

Figure 1.3: Visser’s CSR 2.0 Model (Visser 2012)

The figure 4 shows four DNA Responsibilities Bases, including valuecreation, good governance, societal contribution, and environmental integrity Valuecreation base displays the goal of economic development, which means not onlycontributingto the shareholders and executives, but also improve the economiccontext in which a company operates, including investing in infrastructure, creatingjobs, providing skills development, etc In another way, Visser emphasized thatthere can be any number of KPIs to measure a cooperation’s economicdevelopment, beneficial products, which figures out whether a company’s productsactually improve the quality of life or cause harm instead; and inclusive business,which figures out how the economic benefits are shared, the skillfullness ofemployees, SMEs in the supply chain and the poor communities genuinelyempowered Secondly, Good Governance base is determined by how well a firm isdoing in terms of institutional effectiveness If the institution fail to stay transparentand fairin daily operation, it would decline the effort that CSR is trying toachieve.Thirdly, Societal Contribution is an area that CSR is traditionally more used

to addressing, with its goal of stakeholder orientation It already deliver a wideracess to Carroll’s philanthropic responsibilities and clearing the other urgent task ofthe society such as child labour and more equal labour practices This area of

stakeholder engagement, community participation and supply chain integrityremains one of the most important elements of CSR Finally, EnvironmentalIntegrity sets the bar way higher than decreasing the damage of economicdevelopment and rather attempt to preserve the sustainability.

1.2.3 The Consumer-driven Corporate Responsibility (CDCR) Model

According to a variety of researches in recent years, consumers areincreasingly concerned with social and environmental issues, as well as they havegreater expectation for a company to act socially responsibly (Frederick, 2006).Smith (2007) in the research of consumer and CSR indicates consumers areincreasingly playing a more important role in promoting companies to implementCSR and very few consumers are affected by CSR issues when purchasing goods;but consumers tend to boycott the goods of companies recorded as violations ofCSR For instance, consumers want to assist their local farmers adapting greentechnology in manufacturing through their purchasein a project by Coca-Cola Inc.(2011)

Increased consumerdemand for

CSR=>businesses adopt CSR

Increased customer base =>

Increaased consumer demand for

CSR

Businesses adopt CSR lead

to increased customer base

=> More Profit

More Profit (coming fromCSR application) leads to higher reputation => increased customer base

Figure 1.4: The Consumer-drive Corporate Responsibility model

(Claydon 2011)

The model of Consumer-Driven Corporate Responsibility starts from theconsumers’ increased demand for CSR (Figure )as a guideline to how companiescan be profitable and socially aware and environmentally responsible Therefore,the corporation does not only make a huge profits, but also involve in socially andenvironmentally responsible behaviour, as a result, the company would get a higherreputation and esteem from the public, which create a competitive advantage andattract more customers to buy (Claydon, 2011) This model demonstrates to be aprevalent compared to the previous two models in a way that it emphasizes thevitalness of businesses frequently react, update and coordinate their CSR activities

to suit their everchanging demand of the customer bases

1.3 CSR Practices in Developing Countries

There are various ways to classify the literature on CSR in developingcountries, including in terms of content (thematic coverage), type (epistemologicalapproach), and level (focus of analysis) These will each be briefly considered inturn

1.3.1 Content Theme

Using the same classification of content as Lockett et al (2006), the CSRliterature can be grouped into four dominant CSR themes: social, environmental,ethics, and stakeholders What is immediately evident in applying thiscategorization to the literature on CSR in developing countries is that, in contrast toLockett et al.’s (2006) findings that most CSR articles in top management journalsfocus on ethical and environmental themes, most scholarly work on CSR indeveloping countries focuses on the social theme In part, this reflects the fact thatcorporate social responsibility is the preferred term in the literature to describe therole of business in developing countries, as opposed to, say, business ethics,corporate citizenship, corporate sustainability, or stakeholder management Morethan this, however, social issues are generally given more political, economic, andmedia emphasis in developing countries than environmental, ethical, or stakeholderissues (Schmidheiny, 2006) And there is also still a strong emphasis on thephilanthropic tradition in developing countries, which is often focused oncommunity development

1.3.2 Knowledge Type

Lockett et al (2006) also classify CSR papers by epistemological approachand find a roughly even split between theoretical and empirical research, which isalso the 476 CSR in global context case in the literature on CSR in developingcountries, although the latter has a slight weighting towards empirical work What isinteresting is that, whereas Lockett et al (2006) find that 89% of theoretical CSRpapers are non-normative, in the CSR in developing countries literature, the balance

is far more evenly split This is largely due to the relatively large number of papers

on the role of business in development, which tend to adopt a normative, critical

perspective (Blowfield and Frynas, 2005) In terms of empirical research, there arealso differences According to Lockett et al (2006), the CSR literature is dominated

by quantitative methods (80%) In contrast, CSR papers on developing countries aremore likely to be qualitative Lockett et al (2006) suggest that their findingsprobably reflect the positivist editorial tendencies of many of the top managementjournals, rather than the inherent epistemological preference of CSR scholars Andindeed, the CSR and development journals in which most developing countrypapers are published seem to have more interpretive or epistemologically flexibleeditorial policies

1.3.3 Various drivers for CSR in developing countries

(1) Cultural Tradition:

While many believe CSR is a Western invention (and this may be largely true

in its modern conception), there is ample evidence that CSR in developing countriesdraws strongly on deep-rooted indigenous cultural traditions of philanthropy,business ethics, and community binding Indeed, some of these traditions go back toancient times

(2) Political Reform

CSR in developing countries cannot be divorced from the socio-politicalreform process, which often drives business behavior towards integrating social andethical issues For example, De Oliveira (2006) argues that the political andassociated social and economic changes in Latin America since the 1980s, includingdemocratization, liberalization, and privatization, have shifted the role of businesstowards taking greater responsibility for social and environmental issues

In South Africa, the political changes towards democracy and redressing theinjustices of the past have been a significant driver for CSR, through the practice ofimproved corporate governance (Roussouw et al., 2002), collective business actionfor social upliftment (Fourie and Eloff, 2005), black economic empowerment (Fig,2005), and business ethics (Malan, 2005) Visser (2005a) lists more than a dozenexamples of socio-economic, environmental, and labor-related legislative reform inSouth Africa between 1994 and 2004 that have a direct bearing on CSR

Likewise, more recently, the goal of accession to European Union membershiphas acted as an incentive for many Central and Eastern European countries to focus

on CSR, since the latter is acknowledged to represent good practice in the EU

(3) Socio-economic Priorities

There is a powerful argument that CSR in developing countries is mostdirectly shaped by the socio-economic environment in which firms operate and thedevelopment priorities this creates

Amaeshi et al (2006), for example, argue that CSR in Nigeria is specificallyaimed at addressing the socio-economic development challenges of the country,including poverty alleviation, health-care provision, infrastructure development, andeducation This, they argue, stands in stark contrast to many Western CSR prioritiessuch as consumer protection, fair trade, green marketing, climate change concerns,

or socially responsible investments

(4) Governance Gaps

CSR as a form of governance or a response to governance challenges isdiscussed elsewhere in this book (Levy and Kaplan, Chapter 19) However, ofparticular relevance for developing countries is the fact that CSR is often seen as away to plug the ‘governance gaps’ left by weak, corrupt, or under-resourcedgovernments that fail to adequately provide various social services (housing, roads,electricity, health care, education, etc.) Matten and Moon (forthcoming) see this aspart of a wider trend in developing countries with weak institutions and poorgovernance, in which responsibility is often delegated to private actors, be theyfamily, tribe religion, or, increasingly, business Furthermore, ‘as many developingcountry government initiatives to improve living conditions falter, proponents of[CSR and bottom of the pyramid] strategies argue that companies can assume thisrole

(5) Crisis Response

Various kinds of crises associated with developing countries often have theeffect of catalyzing CSR responses These crises can be economic, social,environmental, health-related, or industrial For example, Newell (2005) notes that

the economic crisis in Argentina in 2001–2 marked a significant turning point inCSR, prompting debates about the role of business in poverty alleviation Others seeclimate change (Hoffman, 2005) and HIV/AIDS (Dunfee, 2006) as crises that aregalvanizing CSR in developing countries.

(6) Market Access

The flipside of the socio-economic priorities driver is to see these unfulfilledhuman needs as an untapped market This notion underlies the now burgeoningliterature on ‘bottom of the pyramid’ strategies, which refer to business models thatfocus on turning the four billion poor people in the world into consumers (Prahaladand Hammond, 2002; London and Hart, 2004; Rangan et al., 2007) As we havepreviously noted, this straying of business into the development arena is not withoutits critics or problems (Hardcourt, 2004)

(7) International Standardization

Despite the debate about the Western imposition of CSR approaches on theglobal South, there is ample evidence that CSR codes and standards are a key driverfor CSR in developing countries As already noted, Baskin’s (2006) survey of CSRpractices in emerging markets indicates growing adoption rates of ISO 14001 andthe Global Reporting Initiative’s Sustainability Reporting Guidelines

(8) Investment Incentives

In some developing countries, like South Africa, the SRI trend is welldocumented (AICC, 2002) In addition to featuring prominently in the SRImovement in the 1980s through the anti-apartheid disinvestment phenomenon, since

1992, South Africa has introduced more than 20 SRI funds nationally which trackcompanies’ social, ethical, and environmental performance (Visser, 2005a).According to research by the African Institute of Corporate Citizenship (AICC)(2002), the size of the South African SRI market in 2001 was already 1.55% of thetotal investment market In a significant development, in May 2004, theJohannesburg Securities Exchange also launched its own tradable SRI Index, thefirst of its kind in an emerging market (Sonnenberg et al., 2004) A similar indexhas also subsequently been introduced in Brazil

(9) Stakeholder Activism

In the absence of strong governmental controls over the social, ethical, andenvironmental performance of companies in developing countries, activism bystakeholder groups has become another critical driver for CSR Lund-Thomsen(2004) describes this as “an outcome of micro-level struggles between companiesand communities over the distribution of social and environmental hazards whichare created when global political and economic forces interact with local contextsaround the world” (page 106)

(10) Supply Chain

Another significant driver for CSR in developing countries, especially amongsmall and medium-sized companies, is the requirements that are being imposed bymultinationals on their supply chains This trend began with various ethical tradinginitiatives (Blowfield, 2003, 2004), which led to the growth of fair trade auditingand labelling schemes for agricultural products sourced in developing countries(Dolan and Opondo, 2005; Schrage and Ewing, 2005) Allegations of poor laborconditions and human rights abuses in several high profile multinational supplychains in the sporting and clothing sectors were also a significant catalyst for greaterattention to CSR requirements (Hussain-Khaliq, 2004; Kaufman et al., 2004;Nielsen, 2005)

Research into CSR in developing countries is still relatively underdevelopedand tends to be adhoc with a heavy reliance on convenience-based case studies ordescriptive accounts The focus is often on high profile incidents or brandedcompanies and a few select countries (e.g Brazil, China, India, South Africa), with

a general lack of comparable benchmarking data Hence, there is an urgent need forfurther research on CSR in developing countries at the international, regional,national and sectoral levels, as well as on theoretical constructs There is a dearth ofinternational research which surveys the nature and extent of CSR in developingcountries, as compared with developed countries Next to this need for more data ingeneral, there is need for more comparative work which analyses CSR betweenregions (e.g Africa, Latin America, Asia) and between countries within regions On

a more national or regional level, there is need for detailed national research onCSR, especially on the more than 100 developing countries that appear to have had

no academic papers published about them in CSR journals Alongside these effortsthere seems to be a specific need for more sectoral research on CSR codes andpractices, especially for the lesser covered industries like chemicals, financialservices, infrastructure (including construction), manufacturing (including motor),media, retail, telecommunications, and travel and leisure Finally, all these differentstreams of empirical research should inform more conceptual work on CSRconceptions, frameworks, or models that are more applicable to developingcountries What is clear from this section, therefore, is that CSR in developingcountries is a rich and fascinating area of enquiry, which is becoming ever moreimportant in CSR theory and practice And since it is profoundly under-researched,

it also represents a tremendous opportunity for improving our knowledge andunderstanding about CSR

1.3.4 CSR Pyramid for developing countries

Figure 1.5 CSR Pyramid for developing countries (Visser, 2008, 489)

Economic Responsibilities

Most of developing countries suffer from an insufficiency of foreign directinvestment, from high unemployment rate, as well as widespread poverty It isobvious to recognize the government highly appreciates the economic contribution

of companies in developing countries (Visser, 2008, 490) Therefore, CSR practicesmust emphasize on the capability to get new investment and income, manufacturesafe products and services for consumers, create more jobs, construct infrastructure,etc (Nelson, 2003)

Philanthropic Responsibilities

As mentioned in the previous part “Drivers of CSR”, the socio-economicsituation and the crisis response that demand for CSR actions aiming atphilanthropic purpose is a regular norm This is seen as a direct path to improvefirm’s image and reputation within community Generally, developing countries are

in the early stage of maturity in CSR, they even consider CSR and philanthropyequally (Visser, 2008, 490)

Legal Responsibilities

As shown in the pyramid, legal responsibilities in developing countries place

at the third priority which is lower than in developed country The reason could bethe poorly developed legal infrastructure and many lacks of independence,resources, and administrative efficiency It does not necessarily mean thatcompanies thread the law, yet there is less pressure for good conduct (Visser, 2008,491) For instance, tax advance by companies is one of the most critical examples ofirresponsible business behavior in developing countries (Christensen and Murphy,2004)

Ethical responsibilities

Finally, ethics is put at the last priority on the CSR agenda which is avoluntary action encouraged by the government According to TransparencyInternational’s Annual Corruption Perception Index and Global CorruptionBarometer, developing countries usually have the poor rank Many surveyrespondents approve that corruption still affects business to a large extent Thus,

there is a long way to embed ethical responsibilities in developing countries (Visser,

2008, 492) In case of Vietnam, a developing country, the author use Visser’sPyramid model to explain the situation of CSR implementation by Vietnameseenterprise

CHAPTER 2: CSR APPLICATION IN VIETNAMESE FOOD INDUSTRY 2.1 Overview of Vietnamese food industry

Vietnam is determined as one of the fast-growing economy in ASEAN From

2016 to 2018, GDP growth rate of the country is grown from 6.2% to 7.1% and it isexpected at 6.8% in 2019 (The Asian Development Bank, 2019) GDP per capitagrowth is also highest compared to other countries in ASEAN region and it is stood

at 6.1% in 2018 while other countries like Thailand and Malaysia have GDP percapita growth rates at 3.5% (The Asian Development Bank, 2018) With sucheconomic development, Vietnam is transforming from low income to a lower-middle income country (The World Bank, 2019) ATKearney (2019) also rankVietnam at 6th position in term of global retail development index and Vietnamesegovernment has done remarkable activities in term of liberalizing investment laws

in order to move the country ahead in global retail market Beside of that, Vietnamreceives strong foreign direct investment, the raise of tourism industry, and strongdomestic demands (Nguyen, 2018) According to Business Monitor International(2018), unemployment rate of Vietnam is low at below 3.5% while the minimumwage of Vietnamese labors has been increasing over the time

Table 2.1: Overview of Vietnam's economy

Item Unit 2017 2018 2019

Source: The Asian Development Bank (2019)

Vietnamese food industry has been fueling by strong economic development.The industry witnesses a revenue of US$149 million in 2018 and it is projected atUS$149 million in 2019 and US$407 million in 2023 (The Statista, 2019) Therevenue growth rate in 2017 and 2018 is reported at 29.7% and 34.3% respectively(The Statista, 2019) It is explained by the fact that food is positioned as essentialspending and food and drink consumption accounts for more than 20% of totalhousehold consumption in Vietnam (Business Monitor International, 2018).Vietnamese consumer behavior towards food products have been changing Due to

the growing of household income which is translated to US$2,385 in 2017compared to US$2,115 in 2016 (Megan et al., 2018), Vietnamese people are morepreference towards higher-value products and they aim to purchase food productswith safe origination even if they must be purchased at higher prices (The BritishBusiness Group Vietnam, 2019) Local consumer preference towards imported foodproducts is surging with total imported value for food and agricultural products is

up to US$24 billion in 2017 and it is 4.7% higher compared to 2016 (Megan et al.,2018) General Statistics Office of Vietnam (2019) reports that the main importeditems in trade balance of the country is belonged to aquatic products, milk and dairyproducts, vegetable and fruits, and wheat and most of these items have importgrowth rate more than 10% compared to 2017

Table 2.2: Main imported items of Vietnam

Imported item Value in 2018, US$

million

2018 vs 2017, %

Source: General Statistics Office of Vietnam (2019)

According to Rama (2018), Vietnamese consumers are spending aboutUS$80-120 per month for local food stuffs and the primary food consumptionproducts are sticky rice, milk tea, and coffee The food consumption market alsowitnesses the raise of foreign food cultures from Japan and Korea and fast foodprovided by KFC and McDonald (The British Business Group Vietnam, 2019) Thelocal news reports that there are more than 1,000 Japanese food serving chain andnearly 400 fast food chains in Vietnam in which Lotteria has opened in more than

100 locations, followed by KFC with 140 locations and Jollibee with 100 locations(Vietnam Economics News, 2017) The world famous fast food chain, McDonaldalso open 20 chains in Vietnam and its plan is to increase the number of fast foodchain in Vietnam to 100 (Nguyen, 2018)