a study on corporating social responsibility (csr) in a multinational companies operating in vietnam a case study on unilever vietnam

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A STUDY ON CORPORATING SOCIAL RESPONSIBILITY (CSR) IN A
MULTINATIONAL COMPANIES OPERATING IN VIETNAM
A CASE STUDY ON UNILEVER VIETNAM

BY
NGUYEN THI VAN TRANG








Graduation Project Submitted to the Department of Business Studies, HELP
University College, in Partial Fulfillment of the Requirements for the Degree of
Bachelor of Business (Accounting) Hons



October 2011

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Declaration of Originality and Word Count


DECLARATION

I declare that this graduation project is based on my original work except for quotations
and citation which have been duly acknowledged. I also declare that it has not been

previously or concurrently submitted for any other courses/degrees at HELP University
College or other institutions.
Word Count: 11,638 words.











NGUYEN THI VAN TRANG
Date 17/10/2011

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Acknowledgements
Many people have helped me to finish this project. I wish to take this opportunity to
thank all the people who have helped, tough and guided me all the time.
 Firstly, I want to express my deep gratitude to my supervisor, Dr Le Van Lien from
International School at Vietnam National University, Hanoi. He helped me to gather
and analyze information, guide and correct me when I'm wrong. I can learn so much
from him such as his knowledge, inspiration and attitude of working.
 Secondly, I also would like to express my thanks to Ms. Sumathi, Help University
College, who initiated the project and give me so much instruction and support.
 Lastly, I want to thank to all managers and employees at Unilever Vietnam, who are
very friendly and cooperative.

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Abstract

A STUDY ON CORPORATING SOCIAL RESPONSIBILITY (CSR) IN A
MULTINATIONAL COMPANIES OPERATING IN VIETNAM
A CSE STUDY ON UNILEVER VIETNAM
BY
NGUYEN THI VAN TRANG
October 2011
Supervisor: Dr. Le Van Lien
Although there are many different interpretations, but more than a decade, the number of
companies around the world recognizes the economic benefits of CSR policies are on the
rise. CSR commitments beyond the desire to increase profits, and company was fully
aware of their responsibility to employees, customers, communities and the environment.
The main purpose of this project is to find out the level of awareness and the
implementation of CSR of a multinational company operating in Vietnam - Unilever
Vietnam. Both primary data and secondary data will be used to collect information in this
project. After collecting the information, researcher will analyze the information and

from that can give conclusion and recommend some suggestions.







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TABLE CONTENTS
Page
Declaration of Originality and Word Count ii
Acknowledgement
Error! Bookmark not defined.
Abstract iv
Table of contents vi
List of Figures and Tables vii
List of Abbreviations viii

CHAPTER 1 : INTRODUCTION Error! Bookmark not defined.2
1.1 Research Background 13
1.1.1 CSR in the world 13
1.1.2 CSR in Vietnam 14
1.1.3 CSR in multination company in Vietnam 15
1.2 Problem Statement 16
1.3 Objectives and scope of the research 18
1.3.1 Objectives of the research 18
1.3.2 Scope of the research 19
1.4 Research Methods 19

CHAPTER 2 : LITERATURE REVIEW 20
2.1 Definition of CSR 21
2.2 Caroll’s 1979 - 1991 concept 23

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2.3 Other concepts related to CSR 25
2.3.1 Triple bottom line 25
2.3.2 Stakeholder theory 26
2.3.3 Business ethics and CSR 27
2.3.4 Sustainable development 28
2.3.5 Social responsible investment 29
2.3.6 CSR reporting 30

CHAPTER 3: RESEARCH METHODOLOGY 31
3.1 Research Objectives 32
3.2 Research methodology 32
3.3 Theoretical framework 32
3.3.1 Managers 33
3.3.2 Employees 33
3.4 Data sources 34
3.4.1 Primary data 34
3.4.2 Secondary data 35
3.5 Research method 35
3.6 Research tool 36
3.6.1 Questionnaires 36
3.6.2 Phone interview 36
3.6.3 Annual report 37
3.7 Sampling 37
3.7.1 Sample population 37

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3.7.2 Sample frame 37
3.7.3 Sample size 37
3.8 Limitations 38
3.9 Hypothesis 38
3.9.1 Manager’s attitude toward CSR 38
3.9.2 Employee’s attitude toward CSR 39

CHAPTER 4 : ANALYSIS 40
4.1 Questionnaires collection and respond 41
4.2 Description of result 41
4.2.1 Age 42
4.2.2 Gender 42
4.3 Managers 43
4.3.1 Level of awareness 43
4.3.2 Implementation 46
4.4 Employees 53
4.4.1 Level of awareness 53
4.4.2 Implementation 56
4.5 Overall evaluation 59

CHAPTER 5: CONCLUSION AND RECOMMENDATION 61
5.1 Conclusion 62
5.2 Recommendation 63
5.3 Limitation of Sutdy 64

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5.4 Suggestion for Furture Research 64
REFERENCES ( Harvard referencing system) 65
APPENDICES 70

Appendix A: Questionnaire Sample 70

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LIST OF ABBREVIATIONS

CSR
Corporate Social Responsibility
VND
Viet Nam Dong
TBL
Triple Bottom Line
MNCs
Multinational Companies
NGOs
Non Government Organizations
WCED
World Commission and Environment and
Development
SRI
Socially Responsible Investment
UVF
Unilever Vietnam Foundation

CIEM
Central Economic Management
UVN
Unilever Vietnam












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CHAP 1: INTRODUCTION
1.1 Research background
1.1.1 CSR in the world
1.1.2 CSR in Vietnam
1.1.3 CSR in multinational company in Vietnam
1.2 Problem statement
1.3 Objectives and scope of the research
1.3.1 Objectives of the research
1.3.2 Scope of the research
1.4 Research methods

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1.1 Research background
1.1.1 CSR in the world
Globalization and the rapid advancement of technology offer opportunities for economic
development and society. Simultaneously, it also brings serious challenges as the
financial crisis, insecurity, poverty, exclusion and status inequalities among societies.
That significant obstacle to the further integration and to participate fully in the global
economy still exists in some developed countries. If the benefits of economic
development, society can not be guaranteed, there still more and more countries and areas
are marginality from the global economy. CSR in many countries has grown to the
specific level of corporate responsibility in the code of conduct and internationally
quality standards. The provisions of this standard have been adopted as the required
conditions in business. CSR is the corporate commitment to business ethics and
contribute to sustainable economic development, enhance quality of life for employees
and their families, communities and the society in common (WBCSD). Social
responsibility of business (Corporate Social Responsibility – CSR) is no stranger to the
developed country. In the United States, there is “One Percent Club” where the members
committed to use at least 1% of their profits into social work. In France, a series of
cultural funds of enterprises such as RATP (subway company), France Télécom (France

Telecom)…are sponsor for French contemporary art. CSR is considered an important
factor as other traditional factors such as cost or quality in business. CSR is integrated
into business strategy and become prerequisite for business survival and development.
CSR became the main factor to consider the decision of responsible investment. Besides
having good reputation, businesses also get other benefits such as labor relations are

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improving, industrial accident and the rate of job quitting decrease, labor productivity
increase and workers become increasingly have a strong attachment to the business. In
countries with developing CSR activities, the majority of businesses do not consider CSR
as charity; enterprise is just like a citizen – with rights and obligations in the society,
therefore if the social is good, the business can be developed well.

1.1.2 CSR in Vietnam
Vietnam is growing rapidly; the majority of businesses in small and medium – scale
adoption and implementation of CSR has not been focused and interested. According
many Vietnamese enterprises’ explanation, it is probable because the starting point of
Vietnam’s economy is at a low level so the profitability criteria should always be in the
top priority. Therefore, enterprises are rarely considered it as an important issue. Only
after a series about Vedan polluted the Thi Vai River and the protein in powder is not
qualified…everyone begins to think about CSR seriously. Vietnamese government has
tried increased the awareness of businesses and stakeholders on CSR recently. The
international development organizations in Vietnam have tried theirs’ utmost in
promoting and implementing CSR. The programs and projects related to CSR focused on
some important issues depending on the project’s objectives, resources and experience
available. In other words, businesses should choose how to do CSR that suit their abilities
the best. The development of a business always comes with CSR. It is integrated into the
business strategy and become the conditions for enterprises to develop, improve and
maintain competitive advantage. Prof. Dr. Miriam Meckel, the world’s leading experts in
the field of Corporate Communication and CSR in his lecture on effective strategies to

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improve business communications has shown that, CSR is still new in Vietnam, but
particularly important for the sustainable development of Vietnamese enterprises. CSR
does not depend on the extent to which it is located but in the perception of each
business. However, there are some obstacles in the implementation of CSR in Vietnam
such as the concept of CSR is still new to a lot of business in the business community in
Vietnam, while the related parties do not have long-term plan and strategies to implement
CSR programs; management capacity and expertise in implementing CSR is limited…
To succeed in the application of CSR in Vietnam, business owners should implement
CSR for their labor first as the observance of laws and policies on wages, social insurance
and then building a relationship based on trust and sympathy between the employee and
enterprise. To promote the implementation of social responsibility of business, it is best
to have an association or organization to monitor and advise businesses. Besides, the
Government should create policies to support enterprises in implementing CSR.

1.1.3 CSR in multinational company in Vietnam
Vietnam is a developing country with strong growth in economy so Vietnam has been
attracting many companies to invest in Vietnam in which there are many famous
multinational companies (MNCs) in many different areas such as Samsung, Sony, Dutch
Lady, Unilever, and Toyota… Although CSR in Vietnam has not developed strongly as
in other countries but the government of Vietnam began to care about CSR and
encourages enterprises to do their social responsibility. CSR was launched in Vietnam
through a major multinational companies investing in Vietnam. These companies often
develop codes of conduct and business cultural norms which are universal to be applied

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in many different market areas. Therefore, the contents of CSR that multinational
companies applied in Vietnam are effective and efficient. Some typical examples are:
project “I love Vietnam” of Honda – Vietnam company, educational programs for

personal hygiene of children in the mountainous province of Unilever, computer training
program Topic64 of Microsoft, Qualcomm and HP… But not all companies investing in
Vietnam are aware of their social responsibility. Only after melamine-tainted milk from
China and Vedan discharging waste water into the Thi Vai River, people realized that a
violation of business ethics, environmental harm severely of these companies and also
realized the importance of CSR. After joining WTO, the competition with cheap goods
and the quality is not enough in Vietnam, in addition, the other factors to make good
business is CSR. This has great impact to reputation and brand products of the enterprises
especially MNCs who do not have advantages like domestic companies.

1.2 Problem statement
For enterprises in Vietnam, CSR is still new and has many difficulties to implement, first
of all understands the concept of CSR, then how to put it into production and daily
business. To do that, companies sometimes need to make changes in policies and salaries
including the improvement of factory or workplace. The commitment of the leadership is
the biggest hurdle for small and medium companies operating in Vietnam. In Vietnam,
the implementation of CSR is not active, so some enterprises think that they are required
to implement CSR, but not fully understand the nature of it. The most successful in the
implementation of CSR is the business commitment to CSR initiative, turning it into a
company’s culture.

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Beside the company trying to do CSR, there are some companies still not fully aware of
their responsibilities to society. In particular, some companies have serious violations of
ethics in business, ignoring the environmental damage they can cause and do not care
about the health of consumers – those who directly purchase and use their product. A
typical example is the scandal that Vedan discharging untreated waste to the Thi Vai
River. Vedan Vietnam active in many fields, which generate waste likely to cause
environment pollution, such as production of MSG, starch, sugar, caustic soda (NaOH),
acid… The total volume of water discharged into the Thi Vai River over 4,000m

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/day.
Moreover, Vedan has sold the waste two time to Taiwan (through the ship) with the total
volume was 130,000 tons in the day 27/09 and 10/13/2008 (Vietnam Agriculture
newspaper). After being uncovered, consumers refused to buy all the products produced
by Vedan.
A recent hot issue that is paid special attention from public is that the instant noodles
contain trans-fat. Recently, the Service Center for analysis laboratory of the Department
of Science and Technology has found that many products instant noodles sold in the
market contain trans-fat up to 38%. Trans-fat is formed during food processing at high
temperature through oil hydrogenation methods – help products to be fresh, preserved
longer and more eye-catching. Therefore, it is also understandable when manufacturers
always prefer to use oils containing trans-fat in their products. This type of fat
metabolism can cause the coronary artery becomes blocked, causing angina, stroke.
(Phunuonline) In Vietnam, there is still no rule in managing products related to trans-fat,
but some instant noodle manufacturers pioneered the specified information that does not

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contain trans-fat on their packing products. This is seen as a step in the awareness of
businesses to protect consumer health.
Vietnam is integrating into the global economy; investors and foreign companies are
setting up operations or seek partners in Vietnam, so the problem of Vietnam’s business
competitiveness in all aspects of the global markets is becoming increasingly important
for businesses. Practice shows that awareness of CSR of the people and management is
poor and legislation is not strong enough (as the fine is low). This has lead to business
easily dodge the law, denied liability and business ethics or environmental pollution in
severity in a long time without being sanctioned.

1.3 Objectives and scope of the research
1.3.1 Objectives of the research

There are some main objectives to carry out this research:
- Firstly is providing the concepts and definition of CSR.
- Secondly is inspect the level of awareness of CSR in multinational company with
specific target is Unilever company.
- The third objective is to find out what benefits can CSR brings to the company
and stakeholders.
- The last objective is recommending a CSR framework for a multinational
company operating in Vietnam.




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1.3.2 Scope of the research
The research is carried out in order to find out how Unilever applied CSR in Vietnam.
Unilever is a multinational company established by England and Netherlands specializing
in the production of consumer goods such as cosmetics, chemicals, detergent, toothpaste,
shampoo and food… The headquarter is in London and Rotterdam but it has many
subsidiaries all over the world such as Africa, Americas, Asia Pacific (including
Vietnam), Europe and Middle East. Unilever employs about 180,000 workers and has
sales of nearly 40 billion Euros or more than 62 billion Euros in 2005 (Unilever website).
So the research conducting place at Unilever Vietnam at 156 Nguyen Luong Bang
Avenue, Tan Phu Ward, Dist 7.

1.4 Research methods
In order to do this research, the researcher will use the investigation and survey method.
Questionnaires will be distributed to the manager and employees of Unilever Vietnam
and also consumers in Hanoi city. Questionnaires are built based on previous researches
and studies. After collecting the information, researcher will use Microsoft Excel to
analyze the data and collect the result.

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CHAP 2: LITERATURE REVIEW
2.1 Definition of CSR
2.2 Carroll's 1979-1991 concepts
2.3 Other concepts related to CSR
2.3.1 Triple bottom line
2.3.2 Stakeholder theory
2.3.3 Business ethics and CSR
2.3.4 Sustainable development
2.3.5 Socially responsible investment
2.3.6 CSR reporting

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2.1 Definition of CSR
CSR is considered an important factor as other traditional factors such as cost, quality
and delivery in business. CSR is integrated into business strategy and become a
prerequisite for business survival and development. Although CSR is now common but
there are still many different views about the concept, content and scope of CSR. One
famous quote about CSR is
“the fundamental responsibility of any business in a free-enterprise system is to make a
profit while conforming to the basic rules of society, both those embodied in the law and
those embodied in ethical customs.” (Carroll, 1979).

Some people believe that “There is one and only one social responsibility of business –
to use its resources and engage in activities designed to increase its profits so long as it
stays within the rules of the game, which is to say, engage in open and free competition,
without deception or fraud.” (Friedman in Turner 2006, p. 7)
And some people understand
“In its broadest sense, corporate social responsibility represents a concern with the
needs and goals of society which goes beyond the merely economic. Insofar as the
business system as it exists today can only survive in an effectively functioning free
society, the corporate social responsibility movement represents a broad concern with
business’s role in supporting and improving the social order.” (Eells and Walton in
Carroll 1999, p. 278).

According to Aaronson “Business decision making linked to ethical values, compliance
with legal requirements, and respect for people, communities, and the environment
around the world”. And in the 1990s O'Rourke writes that
“A trend also noteworthy in the late 1990s was that of shareholder activists linking their
environmental or social issue to financial performance and/or risks faced by the

company. By claiming that environmental and social issues have a direct effect on
shareholder value, shareholder activists are moving the rhetoric of their activism out of
the realm of “ethics” or good versus bad behavior, and into that of traditional issues of
profitability, risk and shareholder value” (O'Rourke 2003, p. 230).




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The figure below shows three main factors that companies should do when carrying out
CSR:


Figure 2.1: Three main factors of CSR
From many definitions above, we can see that businesses that wish to sustainable
development must always abide the standards of environmental protection, gender
equality, labor safety, labor rights, equal wages, training and staff development,
community development. The economy has seen a decline led to many difficulties for
businesses, especially small and medium companies. In such difficult conditions why are
these companies still interested in CSR? Because consumers, investors, policy makers
and non-government organizations (NGOs) worldwide are increasingly concerned over
the impact of globalization on worker’s rights, environmental and community welfare.
Businesses that fail to comply with CSR can no longer access to international market.


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2.2 Carroll's 1979-1991 concepts
Social responsibility has now become extremely popular and there are many theories
revolve around this issue. Among them, the pyramid of A. Carroll (1999) is
comprehensive and being used the most. Carroll (1983) says that,

“corporate social responsibility involves the conduct of a business so that it is
economically profitable, law abiding, ethical and socially supportive. To be socially
responsible then means that profitability and obedience to the law are foremost
conditions when discussing the firm’s ethics and the extent to which it supports the
society in which it exists with contributions of money, time and talent” (p.608)

According to Carroll, CSR including economic responsibility, legal responsibility, ethical
responsibility and discretionary responsibility.

Figure 2.2: Pyramid concept of CSR
(i) The economic responsibility: expressed through performance and growth, is a
prerequisite because the business was established from the primary purpose of profits.
Moreover, the enterprise is the economic fundamental cell of society. Therefore, business
functions must always be placed on top. The aim of economic responsibility is to provide
goods and services for consumers and to gain profit out of it. (Crane, Matten, Spence,

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2008, p. 62) The responsibility must rest on a sense of economic responsibility of
business.
(ii) Legal responsibility: responsibilities for compliance are part of the “contract”
between business and society. Government has responsibility “coding” the social norms
and ethics in fairly and meets the standards and values of that society expected from
them. Responsibilities for economic and legal are two basic parts that can not be lacked
of CSR.
(iii) Ethical responsibility: is the rule, the value that is socially acceptable but not “coded”
into the legislation. For a company ethical components of CSR embrace acting morally
and ethically and going further than compliance with laws and regulations. (Carroll,
1991). Generally, the law can only go after to reflect changes in the rules of social
conduct which are flexible and complicated. Moreover, in social ethics, there has always
existed between right – wrong that is not clear and when the debate in the society still

pending, we can not be specified in the law. Therefore, compliance can only be
considered as meeting the requirements, minimum standards that society sets. Enterprises
also need to implement the commitments outside the law. Moral responsibility is
voluntary, but is at the heart of the CSR.
(iv) Discretionary responsibility: is the behavior of businesses beyond the expectations of
society, such as donations to support the weak, funding scholarships, contributions to
community projects… The difference responsibilities between charity and business ethics
is the businesses entirely voluntary. However, the difference is that it is not seen as
unethical behavior if businesses do not contribute their money to humanitarian programs.
(Carroll, 1991)

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Firstly, we can see the model is on comprehensive and high feasibility. Secondly placing
the economic responsibility as the foundation not only satisfy the needs of the theory in
corporate governance, but also resolve doubts about the truthfulness of the CSR programs
of business. Thirdly, boundaries between layers in the pyramid are always influencing
each other. Compliance with the law certainly leads to economic costs for businesses.
The rules of morality outside the law has always extended (by level of social
development), putting pressure on the legal system, forcing lawmakers to always keep
abreast of social practices. And finally, the relationship between charity and social
responsibility are clarified.

2.3 Other concepts related to CSR
2.3.1 Triple bottom line
We have been familiar with the 4P (Product, Price, Place and Promotion) in marketing –
mix or 6P (adding Political environment and Public opinion) by Philip Kohtler or many
other P in the organization and operation of the business… Purpose of this call (P) not
generalize a complete text, but also helps us easily recognize and remember them.
Among them, the letter P is used widely because they involve many different meaning
that related to business operations. There is one theory that has another Ps related to CSR.

That is People – Planet – Profit or “Triple bottom line” (TBL). TBL was first
recommended in 1994 by John Elkington – the founder of a British consultancy named
SustainAbility. People or we can say human capital indicated the treatment of the
enterprises with their employees. In this part of TBL, it just not only mean paid a fairy
day’s work for the employees; but also how the enterprises treat the workers (with other

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benefits such as insurance, vacation,…) and how the enterprises help to develop the
surrounding community such as donation, scholarships or sponsorships… This action for
society in many countries can be written off tax by government as a part of the business
operating expenses. The second P is planet or also can be called natural capital. Every
business operates based on the fundamental from the nature therefore; they will try to
decrease their ecological impact. And the last P is profit. Profit of course is the most
important purpose that all enterprises pursue but this P must be made on the balance with
other two Ps. In each concept, we will have different understanding of philosophy of 3Ps.
But if we are aware of the structure and operation of social relations in general and
business relations in particular, the philosophy of TBL does not stop at listing three Ps
but also asked each enterprise to arrange three letters P under the order of priority based
on different business concepts.

2.3.2 Stakeholder theory
When it comes to the concept of sustainable development or CSR, certainly a concept
that can not be excluded is “stakeholder”. This concept was first mentioned in 1963 in
internal memos of the Stanford Research Institute, which later was developed by R.
Edward Freeman in the 80’s, and among researchers about CSR, R. Cowe and M.
Hopkins emphasized the importance of stakeholder in the CSR activities. Friedman
(2006) mentioned: “That group of writers comes to coalesce around particular social
constructions of reality, leading to writers referring to stakeholders without being
aware of relevant theoretical issues that have been raised in other literature”. In
simple, any individual or group who has influenced or affected by the actions of an