Summary of phd thesis international economics corporate social responsibility of FDI enterprises in vietnam, given issues and solutions

Therefore, a study of "Corporate social responsibility of FDI enterprises in Vietnam, given issues and solutions" is necessary to analyze the CSR implementation of FDI enterprises and

FOREIGN TRADE UNIVERSITY -˜˜µ™™ -

AT FOREIGN TRADE UNIVERSITY

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The Thesis can be referred at:

- National Library of Vietnam

- Library of Foreign Trade University

1 Tran Ngoc Mai (2020), Corporate social responsibility in the

context of international free trade, Economy and Forecast

3 Tran Ngoc Mai (2019), Current states of implementing social

responsibility for the stakeholders of FDI firms in Vietnam,

Economy and Forecast Review, No.15 (697), pp 42-46

4 Tran Ngọc Mai (2018a), Stakeholders’ implementations of CSR to enhance corporate reputation: the case of 208

foreign-invested enterprises in Hanoi, External Economics

Review, No 15 (697), pp 42-46

5 Tran Nguyen Hop Chau, Tran Ngoc Mai (2018b), Social responsibility of FDI firms in business strategy - practice in Vietnam, Science Research Project at the institutional level, Banking Academy

INTRODUCTION

1 The urgency of the theme:

Originating from developed countries, corporate social responsibility (CSR) has reached developing countries and Vietnam is no exception, especially in global integration and competition The concept of CSR in Vietnam is often viewed from the perspective of the Government That is, CSR is often viewed as the requirements from the Government that businesses need to be responsible for the locality where they operate In this approach, businesses implement CSR passively, and in the perspective of complying with legal regulations

However, many studies have shown that implementing CSR proactively can bring many benefits for businesses, such as improving employee productivity, loyalty, operational efficiency, reputation, and relationships with business stakeholders so companies should approach CSR proactively The proactive implementation of CSR helps businesses satisfy the host government's requirements and helps companies achieve development and other strategic goals Therefore, this Thesis approaches the concept of CSR not only from the government’s perspective (complying with the laws), but also from the business's perspective, recognizing social responsibility as a tool that companies can use to manage relationships with stakeholders

Among various the business's strategic goals, maintaining and improving the reputation seems to be of the utmost importance Reputation is the goal and an intermediate step to help the company achieve all of its remaining goals A business with a good reputation will help build trust with customers, partners, and the Government, thereby making business operations more effective and easier to achieve goals in sales, market, and finance CSR is not a new concept but is becoming increasingly popular in enterprises globally (KPMG, 2015; Porter, 2006; Reid & Toffel, 2009) CSR's development has always been in line with expanding FDI inflows into developing countries in the 1990s (Goyal, 2005) The participation of FDI enterprises has positive effects on the host country, reflected in the addition of capital to the total national investment capital in order to achieve economic growth targets; contribute to improving the general balance of payments through a straight increase in the balance of capital; create conditions for countries to access new technologies, promote technology transfer, and at the same time improve management skills, production, and qualifications of employees (Cao Thi Hong Vinh, 2016) However, despite receiving many incentives from host country, FDI enterprises are posing many pressing environmental and social problems to the country such as environmental

pollution, violation of business ethics, lack of responsibility for the safety and security of the community These problems require economic entities, especially FDI enterprises, to solve; otherwise, economic development itself will be unsustainable and will be paid off Therefore, FDI enterprises need to

be aware of their responsibility for the sustainable development of the countries in which they invest In other words, the activities of FDI enterprises and profit purposes need to be associated with the implementation of CSR through good tax obligations, environmental protection, ethical treatment of employees, consumers and other community

Currently, Vietnam is participating in signing many new free trade agreements (FTA) Many of which deal with different aspects of CSR Therefore, CSR of FDI enterprises to the host country is a mandatory factor in the integration context FDI enterprises play a huge role for host countries, especially developing and transition economies like Vietnam However, research on CSR is mainly conducted in developed countries, and quite limited

in developing countries CSR theories, CSR concepts in the world cannot be applied mechanically to the situation of developing countries or Vietnam due

to differences in culture, governance mechanisms and economic characteristics Therefore, the impacts, relationships or results of this topic have not been fully verified and evaluated, bringing difficulties for researchers and managers Therefore, the study of CSR for FDI enterprises in developing countries is even more important than ever

In the context of sustainable development, businesses all over the world are interested in CSR implementation As a group of enterprises with certain advantages, FDI enterprises always focus on implementing CSR and consider

it one critical factor affecting the firm's sustainable development Therefore, a

study of "Corporate social responsibility of FDI enterprises in Vietnam,

given issues and solutions" is necessary to analyze the CSR implementation

of FDI enterprises and propose some solutions to improve this group's CSR performance in the coming time

2 Objectives of the research, Questions and Tasks of the study:

Objectives of the study:

The research objective of the Thesis is to study the CSR implementation

of FDI enterprises in Vietnam, point out some issues and propose solutions to improve and promote the CSR implementation of FDI enterprises in the coming time to 2030

Study questions:

1 What is the concept of CSR in the Vietnamese context?

2 In which contents are FDI enterprises in Vietnam performing CSR?

3 Who are the main, most important and particular stakeholders of FDI enterprises?

4 How is the current situation of CSR implementation of FDI enterprises in Vietnam in the period 2010 - 2020? What are the remaining problems? What is the cause of those problems?

5 What solutions can be taken to improve CSR performance of FDI enterprises in Vietnam?

Study tasks:

To carry out experimental studies to achieve the research objectives and answer the research questions, 4 specific tasks have been identified as follows: (i) Systematize and supplement the theory of corporate social responsibility (identifying the content, stakeholders and the need for research

(iv) Propose solutions to improve the CSR performance of FDI enterprises in Vietnam

3 Objects and scope of the study:

Regarding content: The Thesis studies on the CSR implementation from both the business and the Government perspective The Government approach views CSR as the compliance of the laws The business approach claims that businesses need to pursue the active and strategic CSR implementation to achieve specific goals, rather than a passive approach, in terms of complying with legal provisions as before Thoroughly researching both approaches helps the research results get the most comprehensive assessment of the company's CSR implementation

Besides, because the scope of CSR of FDI enterprises is quite large, the PhD student only focuses on the current situation, the results of the CSR implementation for various stakeholders and its impact on reputation from

2010 to 2020 On that basis, the PhD student also assesses the positives and limitations of the implementation results and identify the underlying causes of the limitations, then propose appropriate and practical solutions to promote CSR activities in the coming time, especially in the current context (from 2020) as the amount and magnitude of FDI inflows pouring into Vietnam are

of the CSR performance on the reputation of the business

4.2 Study method

* Method of collecting data: To collect secondary data, the PhD student

uses this method to search and synthesize from sources such as books,

newspapers, magazines, scientific conference proceedings, general reports of the Ministry of Planning and Investment, Vietnam Chamber of Commerce and Industry (VCCI), Central Institute for Economic Research (CIEM), university research topics, websites of industry agencies and businesses as well as of domestic and foreign articles The data collected by this method is used to study the rationale and evaluate the current situation of CSR performance of

FDI enterprises in Vietnam

- Method of survey: PhD student uses this method to collect primary

data, serving in-depth assessment in the research field

+ Study Sample: To do the research, the PhD student conductes a survey with the sample number of 500, the subjects surveyed are business owners, CEO, the head of the strategic department of FDI enterprises The number of samples collected are 233, reaching the rate of 46.6% Due to the limited time

as well as the budget for the implementation of the Thesis, the PhD student uses a convenient - non-probability sampling method

+ Objects of the survey: business owners, CEO, heads of strategic divisions of FDI enterprises in the territory of Vietnam These people are knowledgeable about the functions, tasks and activities of the business, so their answers will be most representative

+ The survey was conducted in April 2018 As a result of the cleansing survey, 208 survey samples are obtained to conduct DEA analysis using DEAP 2.1 software, exploratory factor analysis (EFA) and regression using SPSS 22 software

post-* Method of data analysis

The Thesis uses a combination of study methods such as:

- Qualitative method: The PhD student uses statistical, descriptive, analytical and synthetic methods to analyze the secondary data The assessment of the current situation of CSR implementation is also based on various reports, domestic and foreign research papers and projects in recent years

- Quantitative Method:

+) The PhD student uses data analysis software tool including DEAP 2.1 and SPSS 22 to synthesize and analyze the primary data with criteria such

as number of average, frequency, percentage to describe the current situation

of implementing CSR and evaluate the performance in association with 4 important stakeholders including the Government, employees, customers and the community of FDI enterprises in Vietnam

+) The PhD student uses DEA method to analyze the efficiency of the CSR implementation responsibility of FDI enterprises in Vietnam

+) The PhD student uses the method of checking the reliability of scale (Cronbach's alpha factor), Exploratory Factor Analysis (EFA) method, and then performs multi-linear regression to see if there is a linear relationship between a single dependent variable (Reputation) and different independent variables (influencing factors) to estimate and test the CSR implementation for

4 different stakeholders (each stake holder is an independent variable) affecting the corporate reputation of FDI enterprises in Vietnam

5 Structure of the theme:

Apart from lists of tables, acronyms, conclusions, appendices, references, the Thesis is structured in five chapters as follows:

- Chapter 1 Overview of study situation related to the Thesis

- Chapter 2 Theoretical foundation about corporate social responsibility

Studies on CSR over time have had significant changes, shifting from the macro level (considering the relationship of CSR with the economic development of a country and society) to micro level (considering the relationship of the CSR with business aspects such as stakeholders or the firm's financial and non-financial goals) Studies have shifted from seeing CSR as a research object within the enterprise's external environment (CSR and its stakeholders) to seeing CSR as a research object within the corporate internal environment (CSR is a resource of the business, the relationship between CSR and the enterprise's goals) Studies have also shifted from seeing CSR as an obligation to actively pursuing the CSR strategy to achieve corporate goals

There are many foreign studies on CSR for a variety of stakeholders such as CSR for Government (Skare & Golja, 2014), CSR for employees (Turban and Greening 1997; Tsoutsoura, 2004 , Bauman and Mashruwala, 2007; Kang, 2009; Wieseke, et al., 2009; Carroll & Shabana, 2010; DeTienne, Agle, Phillips, & Ingerson, 2012; Solomon and Hanson, 1985; Lee et al., 2012), CSR for customers (Sen and Bhattacharya, 2011; Shapiro, 1983; Luo & Bhattacharya, 2006; Saei et al., 2015; Fatma and Rahman, 2016; Karaosmanoglu et al., 2016, Carroll & Shabana, 2010) and CSR for community (Okeudo, 2012) These studies mainly focus on domestic firms,

there are very few studies focusing on FDI enterprises and mainly based on available secondary data from CSR reports of corporations with little use of primary data

One of the outstanding benefits that CSR brings to businesses is that CSR has the ability to enhance the corporate reputation However, most research on CSR and corporate reputation focuses on the customer base, ignoring other important business stakeholders Research focuses on CSR's impact on customers (perceptions, loyalty of customers) and only a few studies

on CSR's impact on corporate reputation

In this research, the PhD student studies CSR for a group of four important business stakeholders including Government, employees, customers and the community The selection of this stakeholder group is a new feature of the study Next, the PhD student conducts research into the impact of CSR implementation on the enterprise's reputation, which is also a small research direction that has not yet been developed in globle CSR studies

1.2 Domestic study situation

There are quite a few studies on CSR in Vietnam depicted in books, textbooks, dissertations, articles, etc (by authors such as Pham Van Duc (2010), Hoang Thu Thuy (2016), Nguyen Thi Kim Chi (2016), Chau Thi Le Duyen and Nguyen Minh Canh (2013), Dung Phuong Hoang (2017), Hoang Thi Thanh Huong (2015), Le Thi Huong (2017), Mai Lan Phuong et al (2016), Nguyen Dinh Long and Doan Quang Thieu (2009), Nguyen Thi Kim Anh & Nguyen Thi Minh Hoa (2018), Nguyen Thi Minh Chau (2013), Nguyen Thu Linh et al (2008), Tran Dinh Phung et al (2019), Tran Thi Minh Hoa and Nguyen Thi Hong Ngoc (2014), Nguyen Thi Phuong Thao et al (2019), Tran Thi Nhinh (2020), Hoang Hai Yen (2016), Tran Nguyen Hop

CSR and the relationship with stakeholders and make recommendations to promote and create benefits for businesses However, these studies often focus

on one particular audience Experimental studies in Vietnam use two main research methods: qualitative and quantitative The research using qualitative methods is deployed in the form of case studies, expert interviews, in-depth case studies of a company, an industry or a locality These studies mainly assess CSR implementation in areas such as tax obligations, labor, environmental and social issues Despite the positive contributions to local socio-economic development, the CSR implementation in Vietnam is still very

narrow scope, limited sample or only research for a certain industry; Research content is not comprehensive, there is no clear definition for target factors and impact factors The explanation of the relationship in the model has not had

the basis of citation, has not had an appropriate and strict explanation of the laws / relationships of research variables The domestic studies' main study subjects have focused on the SME group, with very few studies focusing on the FDI group due to the difficulties in collecting research data in this target

group

Studies that focus on the relationship between CSR and corporate reputation mainly focus on customers (Tran Thi Minh Hoa and Nguyen Thi Hong Ngoc (2014), Nguyen Thi Phuong Thao et al (2019)) that ignores laws/relationships A grassroots research project titled "Social responsibility of FDI enterprises in business strategy - practice in Vietnam and some proposals"

by Tran Nguyen Hop Chau (2018) in which the PhD student is also a Researcher is the only research study on CSR, focusing on FDI enterprises up

to now The topic finds a positive relationship between CSR implementation for 3 strategic goals of enterprises, including reputation, innovation and the ability to make a difference However, the topic's research model is a univariate regression model, so the reliability of the research results is not high 21 observed variables measure the CSR concept built in the article without exploring the constituent factors in depth The Thesis of the researcher researches the same object as the CSR of the group of FDI enterprises Still, the CSR approach of related parties affects the enterprise's reputation, using the multivariate regression model gives many different results more in-depth analysis Simultaneously, the Thesis also uses two approaches from the Government and enterprises to get the most comprehensive assessment of the

CSR implementation of enterprises

With the above research gaps in terms of research content and method,

it can be concluded that there are no studies on CSR of FDI enterprises in Vietnam approaching CSR from the theory of stakeholders focusing on 4 subjects include Government, employees, customers and the community and research on CSR relationship with these stakeholders to the reputation of enterprises

1.3 Study gap of the theme

In the above studies, the PhD student identifies some reseach gaps such as:

(i) Regarding study content:

- Studies on CSR mainly focus on one specific stakeholder, or a small group (group 2 or group 3) of stakeholders The Thesis studies CSR for a group of 4 prominent stakeholders, namely the Government, employees, customers and the community

- Studies on CSR mainly focuses on analyzing one or several aspects of CSR, the Thesis fully studies the 4 aspects of CSR according to the Caroll (1991)’s Pyramid Model including economics, legal, ethics and philanthropy

- Studies on CSR mainly focuses on exploiting from the Government approach, investigating and evaluating the implementation of CSR in the legal aspect, the Thesis exploits from both Government approach(legal scope and government requirements) and corporate approach (CSR is a corporate resource that helps improve the reputation)

- Studies on CSR and corporate reputation mainly focus on relationships with customer (CSR for customers, CSR perception of customer), the Thesis studies the relationship between CSR and corporate reputation from CSR implementation for all 4 stakeholders including Government, employees, customers and community

- Studies on CSR mainly focuses on domestic enterprises The Thesis studies the case of FDI enterprises, which are highly demanded in CSR implementation, but have not been exploited much due to the limitation research data

(ii) Regarding study method:

Studies on CSR in the world often use qualitative, quantitative methods

or a combination of the two Studies on CSR in Vietnam mainly use qualitative methods, researches used quantitative methods are very little and researches used a combination of both qualitative and quantitative methods are very limited The Thesis boldly absorbs and selectively uses both qualitative and quantitative research methods to analyze the CSR implementation of FDI enterprises in Vietnam and assess the impact of CSR implementation on the corporate reputation and propose appropriate solutions to improve CSR implementation of FDI enterprises in Vietnam in the coming time

CHAPTER 2 THEORETICAL FOUNDATION ABOUT CORPORATE SOCIAL RESPONSIBILITY OF FDI ENTERPRISES 2.1 Theoretical foundation about corporate social responsibility

2.1.1 The concept of CSR

Although, there are many theoretical and empirical studies surrounding CSR, but there is not a consistent concept of CSR Wood (2010) argues that CSR is difficult to be defined Each stakeholder has a different view of CSR Each industry, organization, and Government see CSR from its own perspectives and have their own definitions of CSR

The CSR approach adopted in the Thesis is understood as the business needs to be responsible for the impacts generated by its operations on society, the natural environment and stakeholders These responsibilities need to be on voluntary basis and come from enterprises themselves, be aware and actively

implemented as an essential activity of enterprises Implementing CSR proactively, methodically and strategically will help businesses maximize the positive impacts from business activities to the society and at the same time create value for businesses

2.1.3.2 Stakeholder theory

Theory of Stakeholders by Freeman (1984) states that shareholders are not the only object for which the enterprise should be responsible for, the enterprise should also consider the interests of all other subjects that may be affected or affected by achieving business goals These subjects can include: shareholders or owners of businesses, employees, suppliers, customers, communities and others such as regulators, associations or non-profit organizations, profit or international organizations (Moon et al., 2005)

2.1.3.3 Value theory

Value theory is a coherent approach to solving social problems - promoting social value creation while at the same time providing business benefits (Porter and Kramer 2002, 2006; Habisch 2006) CSR is a business resource to create a competitive advantage and reputation from a resources based view According to Helm, Garnefeld, & Tolsdorf (2009), reputation is seen as a competitive advantage and increasingly recognized as an important business asset Besides, reputation is one of those intangible assets that is extremely difficult to copy, making it a valuable source of competitive advantage (Alsop, 2004, p 1) CSR is proved to have the ability to build coporate reputation among stakeholders

2.1.3.4 Approach foudation of the Thesis

To study the relationship between CSR and reputation, the PhD student uses a combination of three typical basic theories including CSR Pyramid

model, stakeholder theory and value theory

The relationship between CSR and reputation is built on stakeholder theory and value theory In particular, the CSR implementation brings benefits

to the business itself (value theory) as well as for the company's stakeholders (stakeholder theory) Consequently, corporate reputation is built when the mutual value created between firm and its stakeholders through its CSR

performance

CSR is the implementation of activities by enterprises to demonstrate responsibility to stakeholders These activities are completely voluntary and include economic, legal, ethical and philanthropy aspects The implementation

of CSR not only brings benefits to society but also benefits enterprises themselves Therefore, businesses should proactively implement CSR to balance benefits for society and for themselves By doing so, businesses can

achieve the sustainable development

2.2 Theoretical foundation about corporate social responsibility of fdi enterprises

2.2.1 The concept of FDI enterprise

Foreign Direct Investment (FDI) enterprise is defined as an enterprise with foreign direct investment capital and direct management participation of foreign investors This enterprise operates under the host country's laws to carry out business activities that benefit all parties

In Vietnam's legal documents, the identification of this type of enterprise is generalized in Clause 17, Article 3 of the 2014 Investment Law as

an economic organization with capital Foreign investment means an economic organization with a member or shareholder as foreign investors

It can be seen that the current Vietnamese law recognizes the activities

of foreign investors in the host economy to a broader scope (foreign-invested economic organizations) than enterprises with Foreign investment capital

2.2.2 CSR of FDI enterprises and their stakeholders

The stakeholder theory associated will be the basis for identifying the most important corporate stakeholders and identifying their interests in the FDI firms' CSR In the theory section, the PhD student has listed potential stakeholders and their expectations for the business and the responsibilities that businesses need to have with them Based on an overview of foreign researches, the PhD student determines that FDI firms’ most important stakeholders will be customer, labor, government and the community

2.2.3 The CSR contents associated with the stakeholders of FDI enterprises

2.2.3.1 CSR for the Government

(1) Responsibility to pay taxes

(2) Responsibility to comply with the law in the host country

2.2.3.2 CSR for labor

CSR for labor refers to the enterprise's responsibility in ensuring the legitimate benefits of employees both at present and in the future The content

of CSR for labor will include (1) paying an adequate salary (2) protecting

employees' interests (3) training to improve the quality of human resources and (4) building a safe and effective working environment

2.2.3.3 CSR for customer

This specific responsibility includes: creating a variety of products and services with certain standards of quality, safety for consumers, products that satisfy customer’s needs, delivery on time, providing after-sales service, product information is clear and honest Therefore, CSR for consumers is

shown in two contents, including (1) providing products and services (2)

protecting consumers

2.2.3.4 CSR for community

(1) Responsibility to protect the environment

(2) Responsibility to support the local community

2.2.4 Factors affecting the CSR performance of FDI enterprises

2.2.4.1 External factors

(i) Legal system

(ii) The inspection and supervision of functional agencies

(iii) Perceptions of stakeholders: Government, employees, customers,

community

(iv) Associations and media participation

2.2.4.2 Internal factors

(i) Enterprise perception

(ii) Consciousness of law observance

(iii) Enterprise characteristics: size of the enterprise, number of years of operation, financial capacity

2.3 Proposing a research model on the implementation of social responsibility of FDI enterprises

2.3.1 Theoretical foundation

According to Gotsi & Wilson (2001), a company's reputation is the overall assessment of a company's stakeholder This assessment is based on stakeholders' direct experience with the company for differential comparison with competitors (Mutch et al., 2009) Therefore, CSR implementation with stakeholders plays an important role in building the corporate reputation However, there are many different stakeholders Each business has stakeholders that are more important than the rest, and need more attention

2.3.2 Theoretical framework and research model