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

MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY MASTER THESIS CORPORATE SOCIAL RESPONSIBILITY IN THE VIETNAMESE FOOD INDUSTRY: SITUATION AND POLICY RECOMMENDATIONS Specia

MINISTRY OF EDUCATION AND TRAINING

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

Hanoi – 2019

MINISTRY OF EDUCATION AND TRAINING

FOREIGN TRADE UNIVERSITY

MASTER THESIS

CORPORATE SOCIAL RESPONSIBILITY IN THE VIETNAMESE FOOD INDUSTRY: SITUATION AND

POLICY RECOMMENDATIONS

Specialization: International Trade Policy and Law

Hanoi – 2019

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DECLARATION

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

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

Hanoi, 14 March 2019

Author

Le Thi Kim Phung

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TABLE OF CONTENTS

DECLARATION i

TABLE OF CONTENTS ii

ACKNOWLEDGEMENT v

LIST OF ABBREVIATIONS vi

LIST OF TABLES vii

LIST OF FIGURES vii

ABSTRACT viii

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

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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

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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

4.3 Recommendations 67

4.3.1 Recommendations to the companies 67

4.3.2 Recommendations to the government bodies 70

CONCLUSION 72

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ACKNOWLEDGEMENT

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

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

Professors and lecturers, who not only spread profound knowledge and information 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, my colleagues and my friends, who have always by my side encouraging, supporting, contributing valuable ideas and giving me favourable conditions for me to complete this scientific research

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LIST OF ABBREVIATIONS

ASEAN Association of South East Asian Nations

CIEM Central Institute for Economic Management

CDCR Consumer-Driven Corporate Responsibility

ISO International Organization for Standardization

HACCP Hazard Analysis and Critical Control Points

VCCI Vietnam Chamber of Commerce and Industry

VGCL Vietnam General Confederation of Labour

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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 61

Table 4.4: Summary of CSR system and activities of Vedan Vietnam 63

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)17 Figure 1.5 CSR Pyramid for developing countries (Visser, 2008, 489) 23

Figure 3.1: Production cycle of Vinamilk 41

Figure 3.2: The supply chain system of CP Vietnam 47

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ABSTRACT

Corporate social responsibility is the corporates commitments for stable economic development through that improve the quality of life of workers, their family, community, and society in a manner that benefits both corporate and social development The good application of CSR by the companies does not only ensure their sustainable development but also the society Today big enterprises in Vietnam often brings the CSR into their own business strategy and the ones with export market Meanwhile, opportunities and benefits of the CSR have not been seen by the medium and small enterprises, some of them have even misunderstood or intentionally misunderstood the importance of CSR It is the fact that for public businesses who implement social responsibility well, their benefits do not decrease but increase The benefits that businesses gain when implementing social responsibility include reducing costs, growing revenue, increasing brand value, decreasing the rate of quitting jobs, improving productivity and more possibilities to access the new markets This thesis focused on analyzing the corporate social responsibility, roles of the implementing the CSR and some matters of implementing 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

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

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

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immediate benefit is to have more orders from purchasing businesses that require CSR standards, and long-term benefits for businesses themselves such as improving business relations, reducing costs and increasing productivity, reducing recruitment costs and train new employees, increasing revenue, brand value and access to new markets Therefore, enterprises need not only to raise awareness of CSR but also to implement CSR effectively in enterprises

In fact, CSR awareness of Vietnamese enterprises is not comprehensive and the 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 for charity purpose Some businesses hesitate to implement CSR because they assume CSR programs are very expensive There are not many businesses being fully aware

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

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

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

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

2016 (General Office of Statistics, 2017) However, current production and management 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

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

The thesis contributes to the body of knowledge on CSR practices in a developing-country context First, the prominent form of implicit and informal internally-focused CSR in labour strongly reflects the national institutional context and political economy in which the notion of employee and social welfare is embodied in socialist ideology and the perceived role of businesses as job and income generators in a developing country Moreover, the thesis adds a nuanced understanding of CSR development in a developing-country context in which CSR concept is diffused, translated and adapted at the State, industry, company and manager levels and manifested in variations of CSR expressions

From the above reasons, the author selected the topic "Corporate social responsibility in the Vietnamese Food Industry: situation and policy recommendations"

2 Literature Review

While a significant amount of researches have been conducted in the fields of CSR, 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 sketchy picture of how CSR is conceptualised, driven and implemented by business However, researches on international CSR as well as CSR in Vietnam are really huge collection This section shall make a general assessment on several typical and prominent 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 the purpose of propaganda and appealing to property managers and charity to reimburse damages caused by businesses harming society

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

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hundred of the world's leading thinkers, opinion formers, academic and business people providing an easy-to-use guide to CSR: from general concepts such as sustainability, stakeholder management, business ethics and human rights to more specific topics In addition to definitions of the most important terms across the wide range of CSR associated topics, this book also covers all the most important codes and guidelines, such as the Equator Principles, the UN Global Compact and ISO standards, as well as providing background on organizations such as the World Business Council for Sustainable Development and Transparency International and profiles of CSR in particular industries and regions

The research that must mentioned is Ackerman R.W (1973), “How companies respond to social demands”, Harvard Business Review This is one of the first studies on the field of corporate social responsibility, and this is also an important reference, laying the foundations for many later studies in the field of CSR in general and CSR in the food industry in particular Research shows the ways that every 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 Corporate Social Responsibility on Consumer Behavior, Andel W., Voogd S (2010)” to focus

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

“Consumers Perception of Corporate Social Responsibility in a Developing Country” Arli D.I., Lasmono H.K (2010) is a study from a consumer perspective to assess and analyze corporate social responsibility The paper also shows that consumers' perception of corporate social responsibility is often very low, thereby urging consumers to raise their voice to enhance corporate social responsibility and protection consumer rights

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

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(2009), illustrates the exploration of CSR and sustainability literature with the development of the conceptual framework, followed by a brief overview of sustainability 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 a number of papers specialized in CSR in Vietnam - “The Corporate Social Responsibility in Vietnam today” Phu-Hop Mai (2017) - Journal of Business and Economic Development This is a short study that has presented a very general status of social responsibility of enterprises in Vietnam today This paper says that Vietnam today who are bringing the CSR into their own business strategy often are big enterprises and the enterprises with export market Meanwhile, the medium and small enterprises have not been seen opportunities and benefits of the CSR, some of them have even misunderstood or intentionally misunderstood the importance of SCR This article focused on analyzing the corporate social responsibility, roles of the implementing the SCR and some matters of implementing the SCR in Vietnam

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

of Vietnam with its hegemony of the State Party, the increasing power of different stakeholders and businesses, demographics, and relevant features To conclude, it suggests several recommendations for Vietnamese companies and authorities to adopt for CSR

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

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

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

These are several of the studies that I filtered out and suggested that these are quite detailed studies and references in many other studies However, there are many very useful and in-depth studies that I cannot name such as corporate social responsibility (CSR) in Vietnam: a conceptual framework - “Corporate social responsibility 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 the Vietnamese food industry and provide some personal as well as collected opinions from different publications about policy recommendations can be taken to make the CSR situation in in the Vietnamese food industry better The objectives are:

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

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

- To recommend some suggestions to the food companies and government bodies

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

As for time scope, the research focuses on analyzing the case companies in the period from 2016 to 2019, the author can draw more reasonable results from the analysis 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 because unlike the quantitative approach, qualitative approach will allow the author to study and analyze the data acquired and come to a conclusion based on them, hence better suits the main aim of this thesis

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

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Chapter 2: “CSR Application in Vietnamese Food Industry” analyzes the situation 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 by the food companies

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

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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 and mentioned a lot since the 1950s, however, attention to the consequences arises from the enterprise activities in particular and economic activities in general have existed for a long time in the world (Capron and Quairel-Lannoizelee, 2009) In other words, the need to implement social responsibility in business is not a new concept Chinese, Egyptian, and Xume ancient records emphasized trade rules to promote trade and concern interests of the wider community Since then, public interest in social and business interactions as well as the development of business activities has been gradually growing

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

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

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

Issue era (1968-1973)

Responsiveness era (1974-1978)

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With such a prolonged origin, the concept of CSR that is being integrated nowadays within the strategic procedures of assorted business entities has, however, grown, manifested and flourished as a product of the twentieth century The term CSR is being understood in many different ways The meaning of CSR can be understood 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 the question "what are corporations responsible for? and to whom are they responsible?" With the question "who is responsible?", There may be many different answers, depending on the concept of corporations and the position of the corporations in society Corporations are only responsible for shareholders because the 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 their activities, or groups or individuals The third answer is that corporations must be responsible for the common interests of the community At present, when common interest issues have crossed the borders of national states, the issue of business contribution to the common interests should be placed in the context of globalization, but this issue has so far There are only sketches or limited experiences of regulatory mechanisms

The question of "to whom are they responsible?" refers to the criteria on which people 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 in the 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 of them, bear some similarities All of them point out to the need of maintaining as much integrity in terms of social, environmental and ethical values as possible along the way of businesses making profit For the purpose of this study, the term corporate social responsibility (CSR) will be used to describe how business acts to

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

as creating products, employment, and profits, to meet broader social and environmentalexpectations The term CSR is preferred as it maintains the focus on the issue of responsibility to society as a whole, and it is a term that corporations are increasingly using, both internally and in their communication efforts with external audiences

1.1.2 Determinants of CSR

CSR is a broad category so that there are also a number of related categories in its 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 of moral principles to the status of business organizations" Although the concept of CSR 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 four types 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 enterprise implements the other three types of responsibilities without fulfilling this responsibility, 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 in European countries in the 1990s Its prevalence was associated with waves of opposition to globalization such as criticizing businesses' outsourcing strategy, concerns about climate change and other serious environmental problems caused by businesses, and parallely being urged by policies introduced by global institutions such as the World Trade Organization (WTO), the World Bank (WB), and the International Finance Organization (IFC)

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This concept is understood as a business considering its responsibility to the whole society as a responsible citizen There are many definitions of civic enterprises such as the United Nations that corporate citizenship is the integration of social and environmental concerns into corporate policies The American Society for Social Responsibility defines that citizenship responsibility as the operation of a business 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 Boston University argues that "a good corporate citizenshipneeds to integrate basic social values into its daily business activities and policies It allows these values to influence daily decisions regarding all aspects of business and consider its impact

on stakeholders, including employees, customers, plus copper, suppliers and natural environments ”

It can be said that the two concepts of corporate citizenship and CSR have something in common However, the difference that can be noticed between these two concepts is that while CSR relates to the economic, legal, moral and charitable responsibilities of the business, corporate citizenshipfocuses more on attaching the overall corporate responsibility to corporate’s strategies and policies Carroll (2008) argues that corporate citizenship are narrower than the concept of CSR because he considers that the term ”corporate citizenship”only implies that enterprises conducting charitable activities are already a ”good”enterprises Therefore, it is clear that CSR will be a broader category because it includes all corporate responsibilities, from economic responsibility, legal responsibility, moral responsibility to charity responsibility

Social entrepreneurship

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

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The term social enterprise can be confused with the term CSR because usually when an enterprise performs CSR, it means that it is on the way to become a social entrepreneurship But in fact they are different because social entrepreneurship are a business model and CSR is a category that covers responsible actions that businesses 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), due diligence relates to the perception of enterprises on its impacts on the external environment Thus, the most important thing is that businesses need to be responsible for the effects that it creates for all stakeholders In addition, due diligence also requires the willingness of the company to report on the situation of the company in a transparent manner to the stakeholders In other words, the corporate accountability represents the responsibility of the business to explain its actions 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 a company wants to perform CSR well, it must first ensure the implementation of accountability

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 1991 and this has been through empirical observation tested and supported by several different author (e.g Aupperle, Carroll & Hatfield, 1985; Pinkston & Carroll, 1994) Carrol’s CSR pyramid pointed to shed light on how imperative it is for businesses to completely react to all aspect of the social world, naming economic, legal, ethical and philanthropic (Figure 2) According to Carroll, economic responsibilities of business should perform an obligation to be productive and profitable and meet the consumer needs, which is the first responsibility of the business 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

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layers of responsibility appear The second aspect of the pyramid focuses on the legal responsibilities of businesses, which emphasize a concern that economic performance 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 for the business For example, US software giant Microsoft has faced a long running anti-trust case in Europe for abusing its monopolistic position to disadvantage its competitors which resulted in tough settlements against the company The third layer - the ethical level, in which businesses are expected to treat their stakeholders fairly and rightfully and reasonably, without any harmful intentions Ethical responsibilities are not necessarily imposed by law, but they are expected from ethical companies by the public and governments At the top of the pyramid lies the philanthropic level, which indicates the responsibility of businesses to act as a good citizen to the community, and provide resources where needed (Carroll, 1991) It focuses on more extravagant things such as developing the quality of life of employees, local communities and ultimately society in general A few focuses ofthe philanthropic responsibilities of the businesses can be controversial and requires separate studies aimed to it For instance, who should decide on what reason to spend the money, how much, and on what basis these decisions should be made

Figure 1.2: Carroll's CSR Pyramids

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(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 activitiesbecause they have fewer resources to contribute in In this way, their execution might not meet the thresholdof socially responsible behavior Moreover, he pleadsthat the relationship between the economic conditions and corporate behavior is affected by: public and private regulations; non-governmental institutions and organizations that monitor corporate behavior; institutional norms regarding appropriate corporate behavior; associative behavior amongst corporates themselves; and organised dialogues among corporations between them and their stakeholders (Campbell, 2007) Thus, the straightforward structure of pyramid proposed by Carroll is not sastisfied to clarify the complicated relationship between business, society, and environment

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 a shift 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)

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The figure 4 shows four DNA Responsibilities Bases, including value creation, good governance, societal contribution, and environmental integrity Value creation base displays the goal of economic development, which means not only contributingto the shareholders and executives, but also improve the economic context in which a company operates, including investing in infrastructure, creating jobs, providing skills development, etc In another way, Visser emphasized that there can be any number of KPIs to measure a cooperation’s economic development, beneficial products, which figures out whether a company’s products actually improve the quality of life or cause harm instead; and inclusive business, which figures out how the economic benefits are shared, the skillfullness of employees, SMEs in the supply chain and the poor communities genuinely empowered Secondly, Good Governance base is determined by how well a firm is doing in terms of institutional effectiveness If the institution fail to stay transparent and fairin daily operation, it would decline the effort that CSR is trying to achieve.Thirdly, Societal Contribution is an area that CSR is traditionally more used

to addressing, with its goal of stakeholder orientation It already deliver a wider acess to Carroll’s philanthropic responsibilities and clearing the other urgent task of the society such as child labour and more equal labour practices This area of stakeholder engagement, community participation and supply chain integrity remains one of the most important elements of CSR Finally, Environmental Integrity sets the bar way higher than decreasing the damage of economic

development 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 are increasingly concerned with social and environmental issues, as well as they have greater expectation for a company to act socially responsibly (Frederick, 2006) Smith (2007) in the research of consumer and CSR indicates consumers are increasingly playing a more important role in promoting companies to implement CSR and very few consumers are affected by CSR issues when purchasing goods; but consumers tend to boycott the goods of companies recorded as violations of

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CSR For instance, consumers want to assist their local farmers adapting green technology in manufacturing through their purchasein a project by Coca-Cola Inc (2011)

Figure 1.4: The Consumer-drive Corporate Responsibility model

(Claydon 2011)

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

to suit their everchanging demand of the customer bases

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 from CSR application) leads to higher reputation => increased customer base

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1.3 CSR Practices in Developing Countries

There are various ways to classify the literature on CSR in developing countries, including in terms of content (thematic coverage), type (epistemological approach), and level (focus of analysis) These will each be briefly considered in turn

1.3.1 Content Theme

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

1.3.2 Knowledge Type

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

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 countries draws strongly on deep-rooted indigenous cultural traditions of philanthropy, business ethics, and community binding Indeed, some of these traditions go back to ancient times

(2) Political Reform

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

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

Amaeshi et al (2006), for example, argue that CSR in Nigeria is specifically aimed at addressing the socio-economic development challenges of the country, including poverty alleviation, health-care provision, infrastructure development, and education This, they argue, stands in stark contrast to many Western CSR priorities such 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 is discussed elsewhere in this book (Levy and Kaplan, Chapter 19) However, of particular relevance for developing countries is the fact that CSR is often seen as a way to plug the ‘governance gaps’ left by weak, corrupt, or under-resourced governments that fail to adequately provide various social services (housing, roads, electricity, health care, education, etc.) Matten and Moon (forthcoming) see this as part of a wider trend in developing countries with weak institutions and poor governance, in which responsibility is often delegated to private actors, be they family, tribe religion, or, increasingly, business Furthermore, ‘as many developing country government initiatives to improve living conditions falter, proponents of [CSR and bottom of the pyramid] strategies argue that companies can assume this role

(5) Crisis Response

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

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

(6) Market Access

The flipside of the socio-economic priorities driver is to see these unfulfilled human needs as an untapped market This notion underlies the now burgeoning literature on ‘bottom of the pyramid’ strategies, which refer to business models that focus on turning the four billion poor people in the world into consumers (Prahalad and Hammond, 2002; London and Hart, 2004; Rangan et al., 2007) As we have previously noted, this straying of business into the development arena is not without its critics or problems (Hardcourt, 2004)

(7) International Standardization

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

(8) Investment Incentives

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

1992, South Africa has introduced more than 20 SRI funds nationally which track companies’ 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 the total investment market In a significant development, in May 2004, the Johannesburg Securities Exchange also launched its own tradable SRI Index, the first of its kind in an emerging market (Sonnenberg et al., 2004) A similar index has also subsequently been introduced in Brazil

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(9) Stakeholder Activism

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

(10) Supply Chain

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

Nielsen, 2005)

Research into CSR in developing countries is still relatively underdeveloped and tends to be adhoc with a heavy reliance on convenience-based case studies or descriptive accounts The focus is often on high profile incidents or branded companies 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 for further research on CSR in developing countries at the international, regional, national and sectoral levels, as well as on theoretical constructs There is a dearth of international research which surveys the nature and extent of CSR in developing countries, as compared with developed countries Next to this need for more data in general, there is need for more comparative work which analyses CSR between regions (e.g Africa, Latin America, Asia) and between countries within regions On

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

1.3.4 CSR Pyramid for developing countries

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

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Economic Responsibilities

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

of companies in developing countries (Visser, 2008, 490) Therefore, CSR practices must emphasize on the capability to get new investment and income, manufacture safe 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-economic situation and the crisis response that demand for CSR actions aiming at philanthropic purpose is a regular norm This is seen as a direct path to improve firm’s image and reputation within community Generally, developing countries are

in the early stage of maturity in CSR, they even consider CSR and philanthropy equally (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 be the poorly developed legal infrastructure and many lacks of independence, resources, and administrative efficiency It does not necessarily mean that companies 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 of irresponsible 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 a voluntary action encouraged by the government According to Transparency International’s Annual Corruption Perception Index and Global Corruption Barometer, developing countries usually have the poor rank Many survey respondents approve that corruption still affects business to a large extent Thus,

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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’s Pyramid model to explain the situation of CSR implementation by Vietnamese enterprise

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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 is expected at 6.8% in 2019 (The Asian Development Bank, 2019) GDP per capita growth 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 per capita growth rates at 3.5% (The Asian Development Bank, 2018) With such economic development, Vietnam is transforming from low income to a lower-middle income country (The World Bank, 2019) ATKearney (2019) also rank Vietnam at 6th position in term of global retail development index and Vietnamese government has done remarkable activities in term of liberalizing investment laws

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

Table 2.1: Overview of Vietnam's economy

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 at US$149 million in 2019 and US$407 million in 2023 (The Statista, 2019) The revenue 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 essential spending and food and drink consumption accounts for more than 20% of total household consumption in Vietnam (Business Monitor International, 2018)

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Vietnamese consumer behavior towards food products have been changing Due to the growing of household income which is translated to US$2,385 in 2017 compared to US$2,115 in 2016 (Megan et al., 2018), Vietnamese people are more preference towards higher-value products and they aim to purchase food products with safe origination even if they must be purchased at higher prices (The British Business Group Vietnam, 2019) Local consumer preference towards imported food products 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 imported items in trade balance of the country is belonged to aquatic products, milk and dairy products, vegetable and fruits, and wheat and most of these items have import growth rate more than 10% compared to 2017

Table 2.2: Main imported items of Vietnam

Source: General Statistics Office of Vietnam (2019)

According to Rama (2018), Vietnamese consumers are spending about US$80-120 per month for local food stuffs and the primary food consumption products are sticky rice, milk tea, and coffee The food consumption market also witnesses the raise of foreign food cultures from Japan and Korea and fast food provided by KFC and McDonald (The British Business Group Vietnam, 2019) The local news reports that there are more than 1,000 Japanese food serving chain and nearly 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, McDonald

et al., 2018) However, the market consists of some big food processing manufacturers, including Vietnam Diary Products JSC (Vinamilk), Masan Consumer Corporation (MCC), Acecook Vietnam JSC (ACE), Kido Group (KG), etc in which Vinamilk is among the top favorable brands in dairy and dairy substitutes products while Masan is leading brand in food products (The Kantar World Panel, 2019) These companies in Vietnamese food industry is utilizing one

of or mixed between different distributions channels (Megan et al., 2018) The basic distribution model is started when food processing companies are not only producing foods but also acting like direct local importers The distribution channel

is also expanded with the participation of the distributors and the wholesalers and traditional sales channels (i.e food stores, hypermarket, and supermarket) The competition landmark is also increasing with the reduction of tariffs as the result of free trade agreements between Vietnamese government and other countries, including Korea, Japan, Australia, Chile, China, and India Moreover, the growing

of the Internet-based application allows Vietnamese consumers to purchase foods products from foreign countries and these products are shipped to Vietnam by shipment companies (Megan et al., 2018)

In summary, there are some key trends in Vietnamese food industry (Megan et al., 2018; Nguyen, 2018; Dang et al., 2018) The first trend refers to the demand of packaged food products due to Vietnamese people are preference towards busier lifestyles It is also captured the trend of growing consumption towards ready meals and it is evidenced from high number of fast food chains in Vietnam Moreover, the demand is surged in big cities like Hanoi and Ho Chi Minh City (HCMC) Average transaction per meal per consumer in these two cities are estimated at US$2-4 The

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second trend captures the sales of packaged foods to be grown rapidly due to stronger distribution network which is fuelled by the presence of convenience stores, hypermarket, and supermarket The third trend is recognized as the shift of consumer behavior towards safety food products and they are willing to purchase extra cash in return of quality imported food products Moreover, Vietnamese consumers strongly require more detail and traceable information related to food processing and food ingredients The fourth trend is highlighted as the slow demand

of noddle products and the growing demand for organic products It is denoted that Vietnamese government supports the development of organic products but the customer awareness and customer consumption towards this food category is still limited The fifth trend emphasizes the growth in frozen processed meat, chilled processed meat, and seafood due to the influence of Western cultures Finally, Vietnamese people are in high demand for sweet biscuit, snacks, and fruit snacks and these food products are treated as personal gifts The last trend in Vietnamese food industry is captured by Dang et al (2018) and this trend acknowledges the development of the Internet in Vietnam and it directs the consumer behavior towards online food order According to CIMIGO (2011), Vietnam is among the countries with high Internet’s penetration rate and it affects positively to the development of electronic commerce Moreover, the number of customers who purchase products via online merchants is increased by more than 20% during 2017 and the incremental rate is expected at 13% by 2020 (Vietnam News, 2017; Vietnam News, 2018) In this context, more and more Vietnamese customers are able to purchase processed foods which are provided by online food providers (Forbes, 2013)

2.2 Vietnam research context

2.2.1 CSR in Vietnam

CSR is determined as important activities that are integrated deeply into the business structure of the companies operating in Vietnam It is evidenced through the governmental guidance and laws which are implemented in the last 20 years, including the law of environmental protection implemented firstly in 1991 and

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refined in 2005, the law of labors in 1994 and 2005, the law on social insurance in

2006, the law on trade unions in 1990, etc (Ha, 2018) Vietnamese government also follows the conventions regulated by the International Labor Organization to regulate ethical labor practices, to protect the labors from poor working conditions,

to resolve labor conflicts, and to provide the minimum wage level (The International Labor Organization, 2017) In addition, Vietnamese government also provides legal provision for business sector, reflecting through several laws such as the law on foreign investment, the enterprise law, the law on procurement, and the law on securities (Ha, 2018) With the government’s efforts, it is concluded that the regulators in Vietnam have been done remarkable jobs in term of formulating legal framework for business activities in the way of labor and environmental protection (Tran, 2011; Ortmann, 2017; Ha, 2018)

Although there are several laws to be issued by different governmental bodies, CSR has just been introduced in Vietnam recently, according to Hamm (2012) It is explained by the integration of Vietnam to global economy, starting after the country officially joined World Trade Organization in mid-2017 Following the WTO accessibility, Vietnamese companies are forced to implement CSR practices

in order to ensure social and environmental compliance and the effort is proven through the enforcement of maintaining working conditions for the labors and avoiding environmental deteriorated by business activities (Hamm, 2012; Ha, 2018) Moreover, the presence of foreign investment sectors and the development of the Internet increase the awareness of local companies towards carbon footprints and the contribution to reduce the harmfulness from climate change (Tran, 2011) The growing of the Internet in Vietnam with more than 50% of the Internet penetration (The Internet Word Stats, 2019) enables the information transparency in which the issues related to environment and labor are being highlighted in public media such as online newspaper and the Facebook (Nguyen and Pham, 2011) All these statements above bring a strong sense of CSR implementation for Vietnamese companies in order to avoid negative attitude from the customers although the gap is still existing and varied A survey which is conducted by