study on corporate social responsibility of Vietnamese Corporations (Nghiên cứu về trách nhiệm xã hội của Tổng Công ty Việt Nam)

VIETNAM NATIONAL UNIVERSITY, HANOI
SCHOOL OF BUSINESS











Le Thi Quynh Anh






A STUDY ON CORPORATE SOCIAL RESPOSIBILITY
OF VIETNAMESE CORPORATIONS






Master of business administration thesis

Hanoi - 2008
2008 * Master of business administration thesis *
Le Thi Quynh Anh
i

VIETNAM NATIONAL UNIVERSITY, HANOI
SCHOOL OF BUSINESS






LE THI QUYNH ANH





A STUDY ON
CORPORATE SOCIAL RESPOSIBILITY OF
VIETNAMESE CORPORATIONS

Major : Business Administration
Code : 60 34 05



Master of business administration thesis




Supervisor: Dr .VU XUAN QUANG







Hanoi – 2008
vi

TABLE OF CONTENT

ACKNOWLEDGEMENT i
ABSTRACT ii
TÓM TẮT iv

TABLE OF CONTENT vi
LIST OF ABBREVIATIONS viii
LIST OF TABLES ix
LIST OF FIGURES AND GRAPHS x
CHAPTER 1 INTRODUCTION 1
1.1 Statement of the study 1
1.2 Objectives and Aims 2
1.3 Research questions 2
1.4 Scope of Work 2
1.5 Data Sources and Processing 3
1.6 Method 3
1.7 Significance and implications 3
1.8 Limitations 3
1.9 Expected Results 4
1.10 Disseminations 4
1.11 Follow-up 4
1.12 Short Introduction 5
CHAPTER 2 THEORETICAL FOUNDATION 6
2.1 The meaning of Corporate Social Responsibility 6
2.2
History of Corporate Social Responsibility 9
2.3 Fundamental Principles of Corporate Social Responsibility 10
2.4 The significance of Corporate Social Responsibility 12
2.5 Modern Forms of Corporate Social Responsibility 14
2.6 Benefits of CSR 17
2.7 Overview of Corporate Social Responsibility in the World 18
CHAPTER 3 RESEARCH AND DISCUSSIONS 23
vii

3.1 Review of Corporate Social Responsibility studies 23

3.2 The Case study of FPT 27
3.2.1 The case of FPT 27
3.2.2 CSR in FPT 29
3.3 The case study of Vinamilk 34
3.3.1 The case of VNM 34
3.3.2 Social activities in VNM 37
3.4 The case study of Asia Commercial Bank (ACB) 40
3.4.1 The case of ACB 40
3.4.2 CSR in ACB 42
3.5 The case study of ITA Group 46
3.5.1 The case of ITA Group 46
3.5.2 CSR in ITA Group 49
3.6 Discussions 52
3.6.1 Overview of CSR implementation in Vietnamese Corporations 52
3.6.2 Comparisons among case studies 53
3.6.2.1 Similarities 54
3.6.2.2 Differences 57
CHAPTER 4 CONCLUSIONS AND RECOMMENDATIONS 60
4.1 Conclusions 60
4.2 Recommendations 61
4.2.1 For the Studied Corporations 61
4.2.2 For the Vietnamese Government and Social –oriented organizations 62
APPENDIX 1 65
APPENDIX 2 66
READING REFERENCES 67

viii


LIST OF ABBREVIATIONS

ACB
Asia Commercial Bank
AFTA
ASEAN Free Trade Area
APEC
Asia-Pacific Economic Cooperation
CBT
Computer-Based Training
CEO
Chief Executive Officer
CoCs
Code of Conducts
CSR
Corporate Social Responsibility
EU
European Union
FDI
Foreign Direct Investment
FPT
FPT Corporation
IFC
International Finance Corporation
ITA
Tan Tao Group
MOLISA
Ministry of Labor, Invalids and Social Affair
SAP
Social Action Program
SMEs

Small and Medium Enterprises
VNM
Vinamilk Corporation
UNIDO
United Nations Industrial Development Organization
WTO
World Trade Organization
ix

LIST OF TABLES

Table 2.1
Foundation principles of CSR and their modern expressions
14
Table 3.1
Challenges at different levels to CSR application in Vietnam
24
Table 3.2
Highlight from social activities of FPT Corporation
32
Table 3.3
Comparisons among case studies
53
Table 3.4
Similarities and Differences
54

x

LIST OF FIGURES AND GRAPHS

Figure 2.1
All about CSR
22
Figure 3.1
CSR tools and instruments in Vietnam
25
Figure 3.2
Organization chart of FPT
28
Figure 3.3
Corporate structure of Vinamilk
35
Figure 3.4
Revenue vs. CSR cost of FPT
56
Figure 3.5
ACB’s Funds for social activities
58
1

CHAPTER 1 INTRODUCTION
1.1 Statement of the study
Corporate Social Responsibility (CSR) has become an inescapable
demand made by society for businesses all over the world. Whether the
business is large or small, makes goods or provides services, operates at home
or abroad, always tries to be socially responsible. Many companies have
already done much to improve the social and environmental consequences of
their activities and are being encouraged by the society, government and
related organization to become more socially responsible. As a result, these

companies gain more and more benefits from CSR such as being more
productivity, more loyalty of employees and fame without spending much
money on advertising.

In Vietnam, CSR is still reported mostly being applied by textile and
shoe production companies as a way to enter international market like USA or
European Union. These activities are supported with many training courses
held by organizations like World Bank, UNIDO and Ministry of Labor and
Social Welfare. In fact, CSR has been applied more widely in business
community under multiple kinds from sponsorship or philanthropy activities
to environment protection or social works. For a better knowledge, this study
will look into the theory of CSR, compare it with undergoing CSR activities
and then give a full picture of CSR application in Vietnam. However, CSR is
still a very new concept to many Vietnamese enterprises; a few large
corporations have enough willingness and financial conditions to implement
it. As a result, four leading corporations representing for 4 industries like
Information Technology - FPT Corporation, Food and Beverage -Vinamilk,
Banking - Asia Commercial Bank and Real estate - ITA Group will be taken
2

as examples to identify how Vietnamese corporations have applied CSR along
with their business and what benefits they have achieved through CSR.
1.2 Objectives and Aims
In order to get a full knowledge of CSR application in Vietnam, the study will
aim to achieve the following objectives:
1. Understanding the definition of CRS and its elements in term of theory.
2. Figuring out what modern activities related to CSR all over the world.
3. Analyzing CRS activities of certain Vietnamese corporations and their
achievements.
4. Giving conclusions and recommendation for promoting CSR activities

in Vietnamese business community.
1.3 Research questions
To fulfill the objectives of the study, the following research questions need to
be answered:
• What is CSR and what are its forms?
• How does CSR develop and achieve all over the world and in
Vietnam?
• How have Vietnamese corporations applied CSR in their
businesses?
• What do these corporations aware about CSR and what do they gain
from CSR implementation?
1.4 Scope of Work
Four case studies will be taken in the research to describe and to discuss on
CSR implementation in Vietnamese Corporations. They include:
• Information Technology – represented by FPT Corporation (FPT)
• Food and Beverage – represented by Vinamilk (VNM)
3

• Banking – represented by Asia Commercial Bank (ACB)
• Real Estate – represented by Tan Tao Group (ITA Group)
1.5 Data Sources and Processing
• Documents/Reports of UNDP/World Bank/ UNIDO on CSR from
2002 to 2008
• Reports of Vietnamese government on CSR in 2003, 2005 and 2007
• Documents of FPT, VNM, ACB and ITA Group from 2002 to 2005
1.6 Method
This study is an empirical research which applied 2 methods:
• Review of related literature/documentation.
• Interviewing relevant person.
Review of Related Literature/Documentation: This will examine the

multidisciplinary theories of and empirical studies on corporate social
responsibility in the literature. Beside, it will help to compare between theory
and practical activities.
Interview: Questions will be developed and structured interviews are
conducted.
1.7 Significance and implications
This study will contribute to the body of knowledge and understanding on
CSR in Vietnam. It will also help Vietnamese enterprises enrich their
knowledge on CSR for better application in cooperation with business
activities.
1.8 Limitations
While the study examines 4 different industries, represented by 4 leading
corporations, there are limitations on data sources for analyzing and giving
4

out discussions and conclusions. Besides, the inconsistent reporting system of
different corporations on CSR is also another limitation for the study.
1.9 Expected Results
The study will give a better understanding on the CSR definition and its
elements as well as the modern CSR activities in the World and in Vietnam.
Vietnamese corporations’ CSR awareness, implementation and achievements
is also figured out through successful case studies. Moreover, some
suggestions for promoting CSR in Vietnamese enterprises and the
management of the Vietnamese government and social-oriented organizations
are recommended at the end of the study.
1.10 Disseminations
The result of study will be useful for many target groups.
Many Vietnamese enterprises might be interested in the recommendations and
the conclusions of the study, from which they can get useful information on
how to react in CSR-related issues and how to benefit from them.

The frame of reference on the other hand could be interesting for NGOs and
Vietnamese government because of the more general information about CSR
and different view of enterprises on CSR. The findings in the theory will help
them to set up a more suitable and appropriate scheme for their CSR training
and evaluating programs.
1.11 Follow-up
Further study will be taken on improvement of CSR understanding and
implementation among Vietnamese enterprises based on the experience and
achievements of large corporations. Other way of study will be analyzing the
impact of understanding level to CSR implementation in Vietnamese
enterprises in some provinces particularly and all over Vietnam generally.
5

1.12 Short Introduction
The research is divided into 3 parts which are including:
Chapter 2: Theoretical Foundation: will give a relevant theoretical
background to the study.
Chapter 3: Research and Discussions: In this chapter, CSR
application in Vietnam will be reviewed. Four leading corporations
representing for four industries will be analyzed on their awareness,
real activities, cost and benefits. They are including FPT Corporation,
Vinamilk, Asia Commercial Bank and Tan Tao (ITA) Group. At the
end of this part, discussions will be given out after comparisons.
Chapter 4: Conclusions and Recommendations: Conclusions and
recommendations will be noticed for better implementation of CSR in
Vietnamese enterprises.
6

CHAPTER 2 THEORETICAL FOUNDATION
2.1 The meaning of Corporate Social Responsibility

Corporate Social Responsibility (CSR) means that a corporation should
be held accountable for any of its actions that affect people, their
communities, and their environment. It implies that negative business impacts
on people and society should be acknowledged and corrected if at all possible.
It may require a company to forgo some profits if its social impacts are
seriously harmful to some of its stakeholders or if its funds can be used to
promote a positive social good. Although the concept of CSR has been
developing since the early 1970s, there is no single, commonly accepted
definition of CSR. Below some examples of CSR definitions are showed:

"CSR is defined as operating a business in a manner that meets or exceeds
the ethical, legal, commercial and public expectations that society has of
business. CSR is seen by leadership companies as more than a collection of
discrete practices or occasional gestures, or initiatives motivated by
marketing, public relations or other business benefits. Rather, it is viewed
as a comprehensive set of policies, practices and programs that are
integrated throughout business operations, and decision-making processes
that are supported and rewarded by top management."
Source: Business for Social Responsibility (
)

"CSR is the continuing commitment by business to behave ethically and
contribute to economic development while improving the quality of life of
the workforce and their families as well as of the local community and
society at large”
First definition of CSR in WBCSD CSR dialogue in The Netherlands.
7


"CSR is a public movement, which has gained more momentum as citizens

demand corporations to be accountable for their impacts. Consumers,
investors and employees alike are recognizing the power held by
corporations and efforts are being made on several levels to create global
change with the hope that earth will become a better place."
Source: CSR Wire

“CSR is the concept that an enterprise is accountable for its impact on all
relevant stakeholders. It is the continuing commitment by business to
behave fairly and responsibly and contribute to economic development
while improving the quality of life of the work force and their families as
well as of the local community and society at large.”
Source: European Union

“CSR is a term describing a company's obligation to be accountable to all of
its stakeholders in all its operations and activities. Socially responsible
companies consider the full scope of their impact on communities and the
environment when making decisions, balancing the needs of stakeholders
with their need to make a profit.”
Source: Ethics in Action

“CSR is concerned with treating the stakeholders of the firm ethically or in
a socially responsible manner. Stakeholders exist both within a firm and
outside. Consequently, behaving socially responsibly will increase the
human development of stakeholders both within and outside the
corporation.”
8

Source: Michael Hopkins: A Planetary Bargain: CSR Comes of Age
(Macmillan, UK, 1998)

Based on all of the above definitions, CSR generally refers to:
1. A collection of policies and practices linked to relationship with key
stakeholders, values, compliance with legal requirements, and respect
for people, communities and the environment; and
2. The commitment of business to contribute to sustainable development,
commonly understood as sustainable development is the ability of the
current generation to meet its needs without compromising the ability
of future generations to meet theirs.
The social responsibilities of business grow directly out of two features
of the modern corporation: the essential functions it performs for a variety of
stakeholders, and the immense influence it has on the lives of the
stakeholders. However, being socially responsible does not mean that a
company must abandon its other primary missions. The challenge for
management is the blending of many responsibilities (e.g.: economic, legal,
and social) into a comprehensive corporate strategy while not losing sight of
any of its obligations. At times, the responsibilities will clash; at other times
they will work together to better the firm. Thus, having multiple and
sometimes competing responsibilities does not mean that socially responsible
firms cannot be as profitable as others less responsible; some are and some
are not. In other words, social responsibility requires companies to balance
the benefits to be gained against the costs of achieving those benefits.
9

2.2 History of Corporate Social Responsibility
Even though CSR is becoming more and more important these days,
the idea of companies having a social responsibility goes back much further.
The history of CSR is almost as long as that of companies. Concerns
about the excesses of the East India Company were commonly expressed in
the seventeenth century. There has been a tradition of benevolent capitalism
in the UK for over 150 years. Quakers, such as Barclays and Cadbury, as well

as socialists, such as Engels and Morris, experimented with socially
responsible and values-based forms of business. And Victorian philanthropy
could be said to be responsible for considerable portions of the urban
landscape of older town centers today.
The idea of companies taking a broader responsibility for their actions
can be traced as far as to the 19th century (Smith 2003). In 1851 Sir Titus Salt
(1803-1876) founded the industrial community Saltaire just outside Bradford,
England. Bradford was on that time the world’s textile capital but also one of
the most polluted towns in England with an average life expectancy of 20
tears for its inhabitants. By moving his factory to Saltaire the workers’
conditions improved considerably but it wasn’t only out of philanthropically
reasons that Sir Salt moved his factory, he also realized that the workers were
more productive if the working environment and living standards improved.
By the time of Sir Salt’s death, Saltaire had 850 houses served with fresh
water as well as a park, church, hospital and a library. (Smith, 2003)
CSR appeared round the turn of the twentieth century in the United States.
Corporations at that time came under attack for being too big, too powerful
and guilty of antisocial and anti competitive practices. Critics tried to curb
10

corporate power through antitrust laws, banking regulations, and consumer-
protection laws. Faced with this kind of social protest, a few farsighted
business executives advised corporations to use their power and influence
voluntarily for broad social purposes rather than for profits alone. Some of the
wealthier business leaders – steelmaker Andrew Carnegie is a good example –
became a great philanthropist who gave much of their wealth to educational
and charitable institutions. Others, like automaker Henry Ford, developed
paternalistic programs to support the recreational and health needs of their
employees. The point to emphasize is that these business leaders believed that
business had a responsibility to society that went beyond or worked in parallel

with their efforts to make profits.
2.3 Fundamental Principles of Corporate Social Responsibility
Because of these early ideas about business’s expanded role in the
society, two broad principles emerged. These principles have shaped business
thinking about social responsibility during the twentieth century and are the
foundation stones for the modern idea of CSR.
The Charity Principle: the idea that the wealthier members of society
should be charitable toward those less fortunate is a very ancient notion.
Royal through the ages has been expected to provide for the poor. The same is
true for those with vast holdings of property, from feudal times to the present.
There were many kinds of charity like: endowing public libraries,
supporting settlement houses for the poor, giving money to educational
institutions, and contributing funds to many other community organizations.
This kind of private aid to the needy members of society was especially
important in the early decade of the century because at that time, there was no
11

Social Security system, no Medicare for the elderly, no unemployment pay
for the jobless, and no United Way to support a broad range of community
needs. When the wealthy industrialists reached out to help others, they were
accepting some measure of responsibility for improving the conditions of life
in their communities. In doing so, their actions helped counteract the critics
who claimed that business leaders were uncaring and interested only in profits
Beginning in the 1920s, much of the charitable load was taken on by
business firms themselves rather than by the owners alone. The symbol of this
shift from individual philanthropy to corporate philanthropy was the
Community Chest Movement in the 1920s, the forerunner of today’s United
Way drivers that are widespread throughout the United States. Business
leader have vigorous support to this form of corporate charity, urging all firms
and their employees to unite their efforts to extend aid to the poor and the

needy. Business leaders established pension plans, employee stock ownership
and life insurance programs, unemployment funds, limitations on working
hours, and higher wages. They built houses, churches, schools, and libraries,
provided medical and legal services, and gave to charity. For some of today’s
business firms, CSR means participating in community affairs by making
paternalistic, charitable contribution. However, charitable giving is not the
only form that CSR takes.
The Stewardship Principle: Many of corporate executives today see
themselves as stewards, or trustees, who act in the general public’s interest.
Although their companies are privately owned and they try to make profit for
the stockholders, business leaders who follow the stewardship principle
believe they have an obligation to see that everyone – particularly those in
need- benefits from the company’s actions. According to this view, corporate
12

managers have been placed in a position of public trust. They control vast
resources whose use can affect people in fundamental ways. Because they
exercise this kind of crucial influence, they incur a responsibility to use those
resources in way that are good not just for the stockholders alone but for
society generally. In this way, they have become stewards, or trustees, for
society. As such, they are expected to act with a special degree of social
responsibility in making business decisions.
2.4 The significance of Corporate Social Responsibility
CSR as a strategy is becoming increasingly important for businesses today
because of three identifiable trends:
• Changing social expectations
Consumers and society in general expect more from the companies whose
products they buy. This sense has increased in the light of recent corporate
scandals, which reduced public trust of corporations, and reduced public
confidence in the ability of regulatory bodies and organizations to control

corporate excess.
• Increasing affluence
This is true within developed nations, but also in comparison to developing
nations. Affluent consumers can afford to pick and choose the products they
buy. A society in need of work and inward investment is less likely to enforce
strict regulations and penalize organizations that might take their business and
money elsewhere.
• Globalization
The growing influence of the media sees any ‘mistakes’ by companies
brought immediately to the attention of the public. In addition, the Internet
13

fuels communication among like-minded groups and consumers—
empowering them to spread their message, while giving them the means to
co-ordinate collective action (i.e. a product boycott).
These three trends combine with the growing importance of brands and
brand value to corporate success (particularly lifestyle brands) to produce a
shift in the relationship between corporation and consumer, in particular, and
between corporation and all stakeholder groups, in general. The result of this
mix is that consumers today are better informed and feel more empowered to
put their beliefs into action. From the corporate point of view, the market
parameters within which companies must operate are increasingly being
shaped by bottom-up, grassroots campaigns. NGOs and consumer activists
are feeding, and often driving, this changing relationship between consumer
and company.
CSR is particularly important within a globalizing world because of the
way brands are built—on perceptions, ideals and concepts that usually appeal
to higher values. CSR is a means of matching corporate operations with
stakeholder values and demands, at a time when these values and demands are
constantly evolving.

CSR, therefore, can best be described as a total approach to business.
CSR creeps into all aspects of operations. Like quality, it is something that
everyone knows when he sees it. It is something that businesses today should
be genuinely and wholeheartedly committed to. The dangers of ignoring CSR
are too dangerous when it is remembered how important brands are to overall
company value; how difficult it is to build brand strength; yet how easy it can
be to lose brand dominance. CSR is, therefore, also something that a company
should try and get right in implementation.
14

2.5 Modern Forms of Corporate Social Responsibility
The two establishing principles have evolved to form the modern idea of
CSR as below:
Table 2.1: Foundation principles of CSR and their modern expressions


Charity Principle


Stewardship Principle
Definition


Business should give
voluntary aid to
society’s needy
persons and groups


Business, acting as a

public trustee, should
consider the interests
of all who are affected
by business decisions
and policies

Modern
Expression

 Corporate philanthropy
 Voluntary
actions to
promote the
social good


 Acknowledging business
and society
interdependence
 Balancing the interest
and needs of many
diverse groups in society

Examples

 Corporate
philanthropy
foundations
 Private initiatives to
solve social

problems
 Employee

 Enlightened self-interest
 Meeting legal
requirements
 Stakeholder approach
to corporate strategic
planning
15

volunteerism
 Social partnership
with needy groups

Based on these modern forms of CSR, some social responsibility
actions are recommended to companies:
• Economic growth and efficiency: improving productivity and
cooperating with government
• Education: Giving aid to schools and colleges; Assisting in managing
schools and colleges
• Employment and training: training disadvantaged workers; retraining
displaced workers
• Civil rights and equal opportunity: Ensuring equal job opportunities;
building inner-city plants
• Urban renewal and development: Building low-income housing;
Improving transportation systems
• Pollution abatement: Installing pollution controls; developing
recycling programs
• Conservation and recreation: Protecting plant and animal ecology;

restoring depleted lands to use
• Culture and the arts: Giving aid to art institutions
• Medical care: Helping community health planning; designing low-cost
medical care programs
• Government: improving management in government; modernizing and
reorganizing government.
16

Besides, there are many others expression of the two foundation
principles such as Corporate Philanthropy and Corporate Employee
Volunteerism.
Corporate Philanthropy is the modern expression of the charity principle.
The stewardship principle is given meaning today when corporate managers
recognize that business and society are intertwine and interdependent. This
mutuality of interests places a responsibility on business, to exercise care and
social concern in formulating policies and conducting business operations.
Corporate Employee Volunteerism is relatively new phenomenon. Many
large corporations developed charitable contribution programs but left
employee involvement in community service up to the individual. In the early
1970s, companies began to see communities service as the way to improve
their images- internally and externally – as well as to serve the communities
in which the business operates. Today, workplace employee volunteer
programs generally take two forms:
• The team model, in which a team of employees plan and implement
group volunteer activities.
• The volunteer clearinghouse model, in which a full-time coordinator or
a part-time employee provides volunteer opportunities to employees
According to a study conducted by Conference Board of US, employee
volunteer programs help companies attract and retain good employees. They
also help to develop characteristics such as creativity, trust, teamwork, and

persistence. Moreover, skills and attitudes that foster commitment, company
loyalty, and job satisfaction are built.
17

2.6 Benefits of CSR
Corporate social responsibility (CSR) isn't just about doing the right
thing. It also offers direct business benefits.
Building a reputation as a responsible business sets CSR-companies
apart. Many consumers prefer to buy from ethical businesses. Companies
often favor suppliers who demonstrate responsible policies as this helps them
to minimize the risk of any damage to their own reputations. Some customers
don't just prefer to deal with responsible companies, but insist on it. For
example, sales of "environmentally friendly" products continue to grow - and
these products often sell at a premium price.
Reducing waste and emissions doesn't just help the environment - it
saves companies’ money too. It's not difficult to cut utility bills and waste
disposal costs, bringing immediate cash benefits.
There are other benefits like:
• A good reputation makes it easier to recruit employees.
• Employees stay longer, reducing the costs and disruption of recruitment
and retraining.
• Employees are better motivated and more productive.
• CSR helps ensure you comply with regulatory requirements.
• Activities such as involvement with the local community are ideal
opportunities to generate positive press coverage.
• Good relationships with local authorities make doing business easier.
• Understanding the wider impact of business can help companies think
up profitable new products and services.
18

• CSR can make companies more competitive and reduces the risk of
sudden damage to the reputation (and sales). Investors recognize this
and are more willing to finance the business.
2.7 Overview of Corporate Social Responsibility in the World
Social responsibility, however, reflects cultural values and traditions
and takes different forms in different societies. What may be the accepted
customs in the United States, Japan, or South Korea may not be in Germany,
Brazil, Indonesia, or the Ukraine. Determining what is social acceptable
around the world often is a difficult process.
Japanese firms have proven themselves to be model citizens on many
dimensions of CSR. Their support of local community activities and other
philanthropic endeavors has led to increase goodwill in the community
activities where they operate. The firms help society in areas directly related
to the operations of the business. Thus, Japanese firms clearly help
themselves while helping others, showing a strong commitment to the
harmonious relations between the corporation and society. However, as
Japanese firms have become more integrated with the international
community, a broader view of CSR has begun to emerge.
CSR has assumed a different form in European countries. Governments
have provided many social services often received as benefits from private
employers. For example, debate by government representatives over social
responsibility issues resulted in the adoption of a social policy for the
European Union countries, called the Social Charter. Rather than lying on
private corporate initiatives, governments represented in the EU drafted a
public policy that provided initiatives and rewards for corporate social actions