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
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

FULL NAME

: Le Thi Kim Phung

Student ID’s number

: 1606060030

Supervisor

: Dr. Ly Hoang Phu

Hanoi – 2019


i
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


ii
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


iii

...............................................................................................................................23
CHAPTER 2: CSR APPLICATION IN VIETNAMESE FOOD INDUSTRY ..26
2.1. Overview of Vietnamese food industry ..........................................................26
2.2. Vietnam research context ..............................................................................29
2.2.1. CSR in Vietnam .......................................................................................29
2.2.2. Key stakeholders in CSR in Vietnam ......................................................35
2.3. CSR in Vietnamese food industry .................................................................37
CHAPTER 3: CASE STUDIES ...........................................................................40
3.1. Vietnam Dairy Products JSC ........................................................................40
3.1.1. Overview of Vietnam Dairy Product JSC ...............................................40
3.1.2. Human nutrition and safety ....................................................................40
3.1.3. Environment and energy .........................................................................42
3.1.4. Local economic development ..................................................................43
3.1.5. Employees ................................................................................................44
3.1.6. Support and community development ....................................................45
3.2. C.P. Vietnam Corporation .............................................................................46
3.2.1. Overview of CP Vietnam .........................................................................46
4.2.2. Heart ........................................................................................................47
3.2.3. Health .......................................................................................................49
3.2.2. Home ........................................................................................................50
3.3. Heineken Vietnam .........................................................................................51
3.3.1. Overview of Heineken Vietnam ..............................................................51
3.3.2. Prosperity of people .................................................................................51
3.3.2. Prosperity of planet..................................................................................53
3.4. Vedan Vietnam ...............................................................................................54
3.4.1. Overview of Vedan Vietnam ....................................................................54
3.4.2. Social responsibility activity ....................................................................54
3.4.3. Environmental protection .......................................................................54
3.4.4. Employee activity .....................................................................................55
CHAPTER 4: POLICY IMPLICATION .............................................................56

iv
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
REFERENCES


v
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.


vi
LIST OF ABBREVIATIONS

Abbreviation

Full name

ASEAN

Association of South East Asian Nations

CIEM

Central Institute for Economic Management

CDCR

Consumer-Driven Corporate Responsibility

CSR

Corporate Social Responsibility

FDI

Foreign Direct Investment

GDP

Gross domestic product

GMP

Good Manufacturing Practices

ISO

International Organization for Standardization

HACCP

Hazard Analysis and Critical Control Points

SME

Small-and-Medium-Size Enterprise

VCCI

Vietnam Chamber of Commerce and Industry

VGCL

Vietnam General Confederation of Labour

UN

United Nations

UNIDO

United Nations Industrial Development Organization

WB

World Bank

WTO

World Trade Organization


vii
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


viii
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.


1
INTRODUCTION
1. Research Rationale
Corporate social responsibility (CSR) has attracted the unprecedented
attention of governments, non-government agencies, civil society and businesses in
developing countries. The interest was heightened when recent significant economic
growth has been accompanied by unsustainable and irresponsible business practices
and their consequent environmental and social problems in these countries. For
more than a decade, the number of companies all over the world recognizes the
economic benefits of CSR practices. CSR commitments go beyond the desire of
profit growth and show that the company is fully aware of its responsibility to
employees, customers, communities and the environment. A variety of companies
have used CSR as a new business strategy when they realize that it can help
improve the financial situation, employees' motivation and boost customer loyalty
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


2
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


3
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


4

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

5
(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,


6
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.
4. Research questions
The objectives of the research are derived from the research questions as
follows:
-What are the types and forms of CSR activities and strategic postures that

Vietnamese companies adopt?
-What needs to be done in order to facilitate the application of CSR in
Vietnamese food industry?
- How do the big Vietnamese food corporations perceive CSR?


7
- What are the current CSR practices and strategies adopted by Vietnamese
food companies?
5. Scope of research
Regarding the content of the dissertation, it focuses on the real situation of
CSR in the Vietnamese Food Industry and policy recommendation. The scope of
this thesis is as follows:
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.
7. Thesis outline
Depart from the introduction, reference document and the conclusion. This
thesis contains four chapter:
Chapter 1: “Theoretical Background of Cooperate Social Responsibility”
provides the most essential knowledge of CSR including theories, concept


8
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.


9
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)

Philanthropic era
(1800s – 1950s)

Responsiveness
era (1974-1978)

Awareness era
(1953-1967)
Figure 1.1: Era of CSR

(Source: Patrick Murphy, 1978)


10
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 QuairelLanoizelee (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

11
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).


12
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.


13
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)