A study on the effect of csr activities on customer loyalty the case of shinhan bank’s in vietnam

ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH
---------------------

CHO KWANGMAE

A STUDY ON THE EFFECT OF CSR ACTIVITIES ON CUSTOMER
LOYALTY: THE CASE OF SHINHAN BANK’S IN VIETNAM
ẢNH HƯỞNG CỦA TRÁCH NHIỆM XÃ HỘI DOANH NGHIỆP ĐẾN
LÒNG TRUNG THÀNH CỦA KHÁCH HÀNG. NGHIÊN CỨU
ĐIỂN HÌNH TẠI NGÂN HÀNG SHINHAN BANK VIỆT NAM

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2019


ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH
---------------------

CHO KWANGMAE

A STUDY ON THE EFFECT OF CSR ACTIVITIES ON CUSTOMER
LOYALTY: THE CASE OF SHINHAN BANK’S IN VIETNAM
ẢNH HƯỞNG CỦA TRÁCH NHIỆM XÃ HỘI DOANH NGHIỆP ĐẾN
LÒNG TRUNG THÀNH CỦA KHÁCH HÀNG. NGHIÊN CỨU
ĐIỂN HÌNH TẠI NGÂN HÀNG SHINHAN BANK VIỆT NAM

Chuyên ngành: Quản trị kinh doanh
Mã số: 60 34 01 02

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS.TS NGUYỄN NGỌC THẮNG

HÀ NỘI - 2019


DECLARATION

The author confirms that the research outcome in the thesis is the result of
author’s independent work during study and research period and it is not yet
published in other’s research and article.
The other’s research result and documentation (extraction, table, figure, formula,
and other document) used in the thesis are cited properly and the permission (if
required) is given.
The author is responsible in front of the Thesis Assessment Committee, Hanoi
School of Business and Management, and the laws for above-mentioned
declaration.

Date 25/06/2019.


ACKNOWLEDGEMENT

Firstly, I would like to make the most of this opportunity to thank my
company, Shinhna Bank which has given me a lucky chance to study at HSB. In
addition, they have also reassured me all the time through their knowledge and
experiences in order to accomplish this project. Secondly, I would like to thank my
wife who always supports me and takes care of children without my help in South
Korea. Thirdly, I would like to show my sincere gratitude to Assoc. Prof. Dr.

Nguyen Ngoc Thang for his enthusiastic support throughout the process of
composing this project. Without his valuable advices, I would not be able to
accomplish the project with a clear orientation. Lastly, big thanks to all my
colleagues at work, all my friends at HSB, especially all HSB - MBA15 classmates,
who have supported me with laughter and joy, and comforted me when I was
depressed.
Owing to the fact that limited time and ability so it can not avoid some
mistakes in my research topic. I look forward to receiving comments from lecturers
and colleagues in order have more accomplished and better achieved of research
result and application in my career.

Thank you again for those who have supported me, and best wishes to all.

Date: 6th June, 2019

Cho Kwang mae


TABLES OF CONTENTS

LIST OF TABLES ...................................................................................................... i
LIST OF FIGURES.................................................................................................... ii
INTRODUCTION .......................................................................................................1
CHAPTER 1: THEORETICAL BACKGROUND.....................................................8
1.1. Concepts of Corporate Social Responsibility ......................................................8
1.1.1. Concept of Corporate Social Responsibility .....................................................8
1.1.2. The scope of corporate social responsibility (CSR)........................................11
1.1.3. The Significance and Importance of Corporate Social Responsibility (CSR) .......16
1.2. Advanced research of Corporate Social Responsibility(CSR) ..........................18
1.3. Definition and Advanced research of Customer Trust.......................................20

1.4. Concepts of Resistance to Negative Information and Advanced research ........23
1.5. The Concept of Customer Loyalty and Advanced research ..............................26
CHAPTER 2: ANALYSIS OF SHINHAN BANK`S CSR AND ITS EFFECT ON
CUSTOMER LOYALTY IN KOREA .....................................................................29
2.1. Research Methodology.......................................................................................29
2.1.1. Research Model ...............................................................................................29
2.1.2. Research Hypothesis .......................................................................................29
2.2. Survey Design ....................................................................................................35
2.2.1. Sample Design ................................................................................................35
2.2.2. The composition of the questionnaire .............................................................35
2.2.3. Operational definition and measurement of variables ....................................36
2.3. General characteristics of a sample ....................................................................40
2.4. Reliability and Feasibility Analysis ...................................................................41
2.4.1. Reliability analysis .........................................................................................41
2.4.2. Confirmatory Factory Analysis .......................................................................43
2.4.3. Evaluating a measurement model ...................................................................44
2.5. Correlation analysis ............................................................................................47


2.6. The verification of the theory of research ..........................................................48
2.6.1. Path analysis result ..........................................................................................48
2.6.2. The verification of the theory of research .......................................................48
2.7. Discussion and Implication of Research ............................................................50
CHAPTER 3: THE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES OF
SHINHAN BANK ....................................................................................................52
3.1. Economic Corporate Social Responsibility of Shinhan Bank ...........................52
3.1.1. Product that puts customer revenue first .........................................................52
3.1.2. Customized solution based on big data & Transform digital channels and
services ......................................................................................................................52
3.1.3. Customer-centric management .......................................................................53

3.1.4. Financial Consumer Information Protection ...................................................55
3.2. Legal Corporate Social Responsibility of Shinhan Bank ..................................56
3.3. Ethical Corporate Social Responsibility of Shinhan Bank ................................56
3.3.1. Implementation of strict ethics compliance principles ...................................56
3.3.2. Internal Control and Insider Reporting System ..............................................57
3.3.3. Anti-mononey lundering system .....................................................................57
3.4. Charitabal Corporate Social Responsibility of Shinhan Bank ...........................58
3.4.1. Social contribution activities/ Sponsorship .....................................................58
3.4.2. Support for small business owners / small businesses ....................................59
3.4.3. Financial support for low-income people/financial education ........................60
3.4.4. Expending eco-friendly work services ............................................................61
3.4.5. Development of eco-friendly financial products ............................................62
CONCLUSION .........................................................................................................63
REFERENCES ..........................................................................................................65
SURVERY ................................................................................................................69



LIST OF TABLES
Table 1.1: Definition of Corporate Social Responsibility ..........................................9
Table 1.2: Different Concepts of Academies for Social Responsibility ...................10
Table 1.3: Definition of Corporate social responsibility of Carroll ..........................14
Table 5.1: Data analysis procedure and analysis method .........................................35
Table 5.2: The composition of the questionnaire ......................................................36
Table 6.1: General characteristics of a sample .........................................................40
Table 6.2: Reliability Analysis of Each Research Unit ............................................42
Table 6.3: Measurement Model Analysis Results ....................................................44
Table 6.4: Correlation analysis results ......................................................................47
Table 6.5: Result of the verification of the theory of research .................................48
Table 2.1: Shinhan Financial Group's client complaint handling .............................54

Table 2.2: Customer personal information leakage status in Korea .........................55
Table 2.3: Strengthen ethics education .....................................................................57
Table 2.4: Current status of volunteer activities of Shinhan bank ............................58
Table 2.5: Low-interest small business loans ...........................................................60
Table 2.6: Support for disabled companies ...............................................................60
Table 2.7: Financial support for low-income people ................................................61
Table 2.8: Shinhan Bank Energy Usage ...................................................................62

i


LIST OF FIGURES
Figure 1.1: Carroll's Corporate Social Responsibility (CSR) Pyramid Materials:
Carroll, A. B. (1979), "A Three-dimensional Conceptual Model of Corporate
Performance", Academy of Management Review, vol. 4. ........................................13
Figure 1.2: Kang's analysis level, business entity, and corporate responsibility model......15
Figure 1.3: Firm’s Sustainable Competitiveness Pyramid, Source: Hoang Dinh Phi,
2015. ..........................................................................................................................16
Figur 4.1: Research Model ........................................................................................29
Figure 6.1: Path analysis result .................................................................................48
Figure 2.1: Percentage of deposits subscribed by mobile in Shinhan bank ..............53
Figure 2.2: Customer Satisfaction of Shinhan Bank(three research companies)......54
Figure 2.3: Shinhan Bank's Greenhouse gas emissions ............................................62

ii


INTRODUCTION

1. Background Information and Rationale

After several crises around the world, capital markets and consumer markets
have lost confidence in efficiency. As a result, managers face the challenge of
improving corporate image or reliability (Marin & Ruiz, 2007), to solve the
problem of such a decline in reliability, companies are focusing on and
strengthening corporate social responsibility (CSR).
Corporate social responsibility is to demonstrate business management
activities, exchange with stakeholders, and corporate activities related to society and
the environment that arise from pursuing sustainable businesses (Carroll, 1999).
Nevertheless, in the '90s, the corporate social responsibility began to be used
pragmatically as a business term (Carroll, 1999). Over the past decade, in most
industries, companies have invested and made efforts to develop corporate social
responsibility with the aim of improving the intangible characteristics of the brand
image (McDonald & Rundle - Thiele, 2008). For example, 90 percent of Fortune
500 companies already carry out their social responsibilities and more than 80
percent of them post their activities on their websites. This trend is expanding to
most developed countries or to many developing countries (KPMG, 2011).
The company's ability to improve the company's image, reputation and trust
depends on the degree to which the company's social responsibility is consistent
with its stakeholders' expectations for the sector (form) of corporate social
responsibility performed by the company (Dawkins & Lewis, 2003; McDonald's &
Hung Lai, 2011). In this regard, scholars said that resources should be distributed
not only to society but also to stakeholders such as customers, employees, investors,
suppliers, strategic partners, and governments (Poolthong & Mandachita, 2009).
This is because when stakeholders' expectations of corporate social responsibility
coincide, firms can generally increase their friendly attitudes from stakeholders
(Vassilikopoul, Siomucos, & Mylonakis, 2005). Conversely, failure to get
stakeholders to understand the means of corporate social responsibility results in
1

inefficient corporate social responsibility implementation (Augger, Deviney, &
Louviere, 2007).
As a result, retail banks pay a high percentage of the costs associated with
corporate social responsibility to improve their reputations and improve stakeholder,
particularly their customer relationships (McDonald & Rundle-Thiele, 2008).
Banks and financial companies implement corporate responsibilities through
microcredit, environmental funds, and credit transfer programs (Prior &
Argandoffia, 2009). For example, in India, the social responsibility of the banking
industry is focused on education, balanced growth, health, environmental marketing,
and customer satisfaction (Narwal, 2007). Over the past 25 years, the Spanish
savings bank has spent 20 to 30 percent of its revenue annually on social
contribution activities, and the combined social responsibility index of companies in
32 major banks in Europe, the United States and the Pacific countries has improved
significantly since 2000 (Scholtens, 2009).
Corporate social responsibility and sustainable development of the business
environment cannot be left society. The two are interdependent. Social
responsibility as the driving force of social development leads companies to become
responsible global and local neighbors in a rapidly changing world. The most
widespread corporate issue facing change is corporate social responsibility (Engle,
2007).
The World Sustainable Development Committee (WBCSD, 1999) called the
social responsibility of companies as the ethical activities of companies continuing
to improve the quality of life for workers and their families and contribute to local
or national economic development.
The EC Green Paper (EC, 2001) incorporates social and environmental
concerns by allowing companies to voluntarily operate business or interact with
stakeholders in the Promoting a European Framework for CSR, the Act was defined
as sustainable management. Concepts related to social responsibility relate to
sustainable development. According to ISO 26000, sustainable development refers
to a company's desire for the environment on Earth so that it does not pose a risk to

2


future generations. The link between corporate social responsibility and sustainable
development is to ease recent challenges and use resources efficiently. If sustainable
development is viewed as a result of current activities, regardless of the future of the
enterprise, social responsibility is primarily aimed at minimizing risk exposures
from interactions between economic, regional and natural environmental entities
and maximizing synergies (Hediger, 2010).
In Korea, companies and public institutions have been publishing the
Sustainability Report (SR) in accordance with the global guideline of the Global
Report Initiative (GRI) since 2003.
According to the financial sector, banks have been publishing annual reports
on six areas, including academic, educational, seminar, physical education,
environment and global, since June 2006. Corporate social responsibility activities
by financial institutions are still in the early stages of internal and external
evaluation and detailed discussions. Corporate social responsibility activities are
limited to charitable, environmental, and institutional financial support, and the
results of assessment of performance are not well received as they are often only
formal.
The lack of social responsibility activities by domestic financial institutions
can be seen as a lack of awareness and practice that financial institutions develop
with society only when their social responsibility activities harmonize with the
essential characteristics of financial activities in overall management activities. It
can be said that financial institutions recognize corporate social responsibility
activities as a concept of cost by emphasizing only philanthropic and environmental
aspects, and that they focus only on the visible performance system of productivity
improvement and profit creation as a competitive indicator to maximize their
business performance.
In the case of financial institutions, the emergence of new technologies such as

globalization, deregulation, financial innovation, and FinTech, which have changed
the traditional distribution channel of financial services, makes it difficult for
financial institutions to differentiate themselves, and consumers are not aware of
3


real differentiation in products and services. On the other hand, in an increasingly
competitive global environment, corporate social responsibility is becoming the
most important strategic factor in improving business performance through
marketing differentiation strategies. Local financial institutions are in the early
stages of developing and implementing strategic corporate social responsibility
activities that will maximize corporate performance through corporate social
responsibility activities. Theoretical and practical corporate social responsibility
success models have not been presented, such as the division of specific corporate
social responsibility-related activities that reflect the inherent nature of financial
institutions and the development of measures to measure the social responsibility,
the development of stakeholder-oriented value activities, image and reputation, and
the establishment of marketing strategies to build sustainable and strong brand
assets.
In this situation, this study aims to analyse, empirically, in four sub-level
measures of corporate social responsibility activities, how they affect consumers'
confidence in their businesses, and how they affect customer loyalty and resistance
to negative information. Through this process, we are going to present suggestions
on how to strategically develop corporate social responsibility activities, thereby
enhancing bank customer loyalty and leading to business performance.
2. Aims of Research
First, we need to know the concept of CSR correctly. After looking at many CSR
activities at Shinhan Bank, we will look at how these activities affect customer trust
and loyalty. And with the results of this study, companies should also be
encouraged to do CSR activities in Vietnam in the future. Therefore, the followings

are the main aims of this thesis:
-

Accurately understand the concept of corporate social responsibility;

-

Understanding the Corporate Social Responsibility Activities of Shinhan Bank;

-

Analyze the impact of corporate social responsibility activities on customer
reliability and loyalty through surveys.

3. Objects of Research
4


In this study, theoretical and practical studies were combined to achieve the
objectives of the study. First, research questions were raised based on research on
existing social responsibilities(Carroll, 1979; Lichtenstein, Drumwright, & Braig,
2004; Powell, Balmer, Melewar, Podnar, & Golob, 2007; Claydon, 2011; Green &
Peloza, 2011; Lamond, Dwyer, Arendt, & Brettel, 2010; Porter & Kramer, 2002)
and, accordingly, research models and theories were derived.
Next, to verify the research model and research theory empirically, the survey
was conducted on the general financial consumers of Shinhan Bank who transacted
with Shinhan Bank and used it as basic data for analysis.
Analysis of the collected data was performed using SPSS 21.0 to identify
demographic characteristics of the sample, to perform a confidence analysis on the
research unit, and to verify the structural relationship. This study consisted of five

chapters, each of which is as follows.
In order to reach the above-mentioned aims, the research focuses on the
following main objects:
-

Presents the need for this study, the purpose of the study, the method of
research, and the scope of research;

-

Explained the rationale behind the company's social responsibility and
explained, for example, the corporate social responsibility activities of
Shinhan Bank.;

-

Established research models and hypotheses based on theoretical and prior
studies, and the design of the empirical investigation provided operational
definitions of variables and specific measurement questions for each variable.

-

We conducted an empirical survey and analysis to verify the hypothesis of
this time.

-

The results of the study were summarized, the limitations of the research,
and the direction of future research.

-

Factors of Vietnam business environments that impact the operation of FDI
firms from South Korea.

4. Scope of Research
5


- Focus on the main aims and main objects.
- Country: Target Shinhan Bank customers in Vietnam
- Time: The survey was conducted from December 1 to 31.
- Survey customers: 500 customers
5. Research Methodology
First, the theory of corporate social responsibility collected data from research
books and books researched by existing scholars.
In addition, the social responsibility activities of Shinhan Bank's various
businesses were checked through its booklet, homepage and website.
Besides that, public information was also gathered to make the analysis more
convincing. Based on public information on Corporate Social Responsibility
through Internet, via newspapers, magazines.
The data were collected through a survey of 500 Shinhan Bank customers directly.
For primary data or soft data, the in-depth interview method was applied in
this research and played an important role in helping the author get more factual and
reliable required information.
6. Thesis Structure
Besides the Introduction Chapter, the thesis as 6 main chapters:
Chapter 1: Theoretical background
Chapter 2: Customer trust, resistance to negative information, customer
loyalty

Chapter 3: Methodology
1. A Case Study on the CSR Activities of Shinhan Bank
2. Research design
3. Survey design
Chapter 4: Result and Disscussion
1. Verification analysis
Conclussion

6


7


CHAPTER 1: THEORETICAL BACKGROUND
1.1. Concepts of Corporate Social Responsibility
1.1.1. Concept of Corporate Social Responsibility
Corporate CSR activities have long been a subject of discussion in
academia.(Mcguire,1963). However, the names associated with the social needs and
responsibilities of the company are diverse in the use of CSR ( Corporate Social
Responsibility), Corporate Responsibility (CR), and Social Responsibility (SR) and
there are various arguments and discussions on CSR(Foreign cramp, 2015). In
general, corporate social responsibility is defined as 'responsible activities to satisfy
stakeholders through business activities and to positively influence the communities
and society in which the business belongs' (Kim Hyun-soo, 2006). These definitions
of corporate social responsibility are defined separately by international institutions
and scholars, as mentioned above.
The following is a review of definitions made by major international agencies
on social responsibility through Table 1 and a review of definitions by scholars.
Thus, while the definitions of social responsibility in various international

institutions are expressed differently, it is common to see that laws and systems
define a wider range of social responsibilities than the social responsibilities
required by businesses.
The existing scholars at home and abroad also set various definitions of
corporate social responsibilities, which Bowen (1953) defined in "The Social
Responsibility of the Businessman" as "the responsibility of entrepreneurs to pursue
and make the desired policies in terms of goals or values in our society, and to make
such decisions". Ells and Walton (1961) argued that an entity's social responsibility
should be taken from the perspective of the problem arising from its activities and
the ethical principle that governs the relationship between the entity and society.

8


Table 1.1: Definition of Corporate Social Responsibility
International
agency name
UNCTAD

Definition of corporate social responsibility
How companies respond and influence the needs
and goals of society

Term

CSR

to benefit people and society as a whole through
ISO

their contribution to economic, social, and

SR

environmental issues
Concepts by which companies voluntarily
EU

integrate social and environmental concerns into
corporate activities and interactions with

CSR

stakeholders
OECD

ILO

the actions companies take to mature and develop
symbiotic relationships with society
The impact of the company on stakeholders
voluntarily beyond its legal obligations

CR

CSR

Voluntary and positive activities of companies in
IOE

various social, economic, and environmental

CSR

distributions beyond legal compliance
the will of companies to contribute to sustainable
WBSCD

development and improve the quality of life of
their work by working with employees, families,

CSR

communities and society as a whole
ICC

the willingness of companies to do business in a
responsible manner

CR

Data: Ko Dong-soo (2006), "Company's Social Responsibility (CSR): Trends
in International Issues and Our Countermeasures," KIET Institute.

9


McGuire (1963) requires companies to be responsible for society as a whole as
well as for its economic and legal obligations, the emphasis was especially placed
on corporate social services as a form of corporate responsibility for society.

Sethi (1979) defined an enterprise's social responsibility as addressing social
and environmental problems and complying with the ethical principles, and
ultimately it is an entity's actions that can go beyond its legal and economic
obligations and harmonize with its social norms, values, and social expectations.
The views on corporate social responsibility by Sethi (1979) were structured
in

Carroll

(1971)'s

"Three-dimensional

conceptual

model

of

corporate

performance," which systematically organized academic discussions that lasted for
about 20 years after a full-scale discussion of social responsibility by Bowen
(1953). According to this, corporate social responsibility is a constructive concept,
including all economic, legal and ethical expectations that society has about the
business at a given point in time. In other words, the model explains that a company
has four responsibilities. Economic profit creation, legal compliance, ethical
responsibility, and philanthropic responsibility.
Table 1.2: Different Concepts of Academies for Social Responsibility
Scholar

Bowen, H. R
(1953)

Definition
a duty to make decisions and pursue principles in accordance with
actions that are considered desirable for the purposes and values of
society

Ells and Walton the conduct of ethical principles by projecting a firm to desirable things
(1961)
McGuire
(1963)
Sethi
(1975)

in order to coordinate its relationship with the society
To fulfill not only economic and legal obligations for society, but also
overall responsibility for society in addition to these obligations.
corporate behavior that transcends legal and economic obligations and
harmonizes with social norms, values, and expectations

10


Carroll, A.B.
(1979)
McFarland
(1982)

Wood, D.
(1991)

Lee sangmin
(2000)
McWilliams
and
Siegel(2001)
Mohr et al.
(2001)
Maiganan and
Ferrell
(2004)

Heo Gap Soo
(2006)

Ban Hye Jung
(2009)

the timely implementation of economic, legal, ethical and charitable
responsibilities for society
To recognize interdependencies between individuals, organizations, and
social institutions and to translate such perceptions into action within
the moral, ethical and economic values
the exercise of the decision-making rights of each individual who is a
business that pursues profit but does what it does in the moral and legal
respects.
A normative system of corporate behavior that must meet the needs or
expectations of the stakeholders and society as a whole by addressing

social and economic problems arising from business activities
the level required by law and the company's actions to make society
better beyond its grasp
Companies are legal entities that have rights and obligations and are
'citizens' of the area in which they operate
the degree to which the economic, ethical and discretionary
responsibilities conferred by the company's stakeholders are fulfilled
A duty by moral and instrumental rationale to meet and exceed the
norms of stakeholders
Responsibility for creating and making corporate decisions, both in the
interests of individual companies and in the interests of society as a
whole
Concepts that cover diverse activities such as environment, human
rights, labor, service, and donation as well as compliance with various
laws

Data: Choi Eun-young (2012), "Company's Relationship Between Social Performance and Financial
Outcomes"

1.1.2. The scope of corporate social responsibility (CSR)

11


The conceptual discussion of CSRs has evolved into a discussion of priorities
by level of social responsibility. Steiner (1971) divided the contents of social
responsibility into internal and external responsibilities. Internal responsibilities are
related to the use of employees and resources, such as employment, training,
working conditions, and efficient use of resources. External responsibilities include
assistance to the social and cultural underprivileged, protection of citizens' basic

rights, and contributions to the recognition and respect of human existence. Mondy
(1990) divided CSR content into the provision of employment opportunities, safe
working conditions, pollution management, efficient use, maintenance of resources,
and operation of social activities programs.
Until now, however, the definition of Carroll (1979) is most commonly used
to discuss the level of corporate social responsibility (CSR). Corporate social
responsibility pyramids were largely defined as four categories: Economic
Responsibility, Legal Responsibility, Ethical Responsibility, and Philanthropic
Responsibility.
Charitable
Responsibility

Ethical Responsibility

Legal Responsibility

Economic Responsibility

12


Figure 1.1: Carroll's Corporate Social Responsibility (CSR) Pyramid
Materials: Carroll, A. B. (1979), "A Three-dimensional Conceptual Model of
Corporate Performance", Academy of Management Review, vol. 4.

13


Table 1.3: Definition of Corporate social responsibility of Carroll
Types of

Definition

responsibilities
Economic
Responsibility

Legal
Responsibility
Ethical
Responsibility

Purpose with which the corporate itself exists.
The responsibility to produce goods and services, sell them at an
appropriate price, and to make a profit to compensate investors
Compliance with relevant laws and regulations.
Compliance with the laws of the environment, consumers, and
workers
means that as a member of a civil society, one must carry out the
actions or activities expected of the enterprise

Charitable

Responsibility left to the discretion or choice of the company.

Responsibility

Cultural activities, donation activities, volunteer activities, etc.

Materials: Carroll, A. B. (1979), "A Three-dimensional Conceptual Model of

Corporate Performance", Academy of Management Review , vol. 4.
The Kang (1995) extended the model of Carroll (1979), arguing that Carroll's
hierarchical rule indicates the sequence and weight of social responsibility, and that
if management's attention is all focused on economic responsibility, it would violate
the ethical and legal boundaries for the protection of economic losses or the increase
in profits. Thus, he changed the hierarchical order in Carroll's model, arguing that
ethical responsibility is fundamental to all humans, followed by legal responsibility,
and finally economic responsibility."

14


Analysis
level

institutional

The social reality of a
company

Corporate
responsibility

Charita
ble

a single economic
organization

Respon

sibility
Economic
Responsib
ility

systematic

An organization that
forms the network of
society

Legal
Responsibility

individual
Ethical Responsibility

individual

1 human (the ethical
proxy)

Figure 1.2: Kang's analysis level, business entity, and corporate responsibility
model
DATA: KANG, Y. C. (1995) "BEFORE-PROFIT CORPORATE SOCIAL
RESPONSIBILITY AND STAKEHOLDER MANAGEMENT SYSTEM",
DOCTORAL DISCERATION, UNIVERSITY OF PITTSBURGH;

15

1.1.3. The Significance and Importance of Corporate Social Responsibility (CSR)
As quoted by Hoang Dinh Phi [2], firm’s competitiveness is a degree to which a
firm can, under normal market conditions, develop its capabilities to produce goods
or services that can be marketed with profit and growth while fulfilling its
obligation toward its corporate social responsibility(CSR) and environmental
protection. Firm’s sustainable competitiveness is understood as the firm’s
competitiveness to be maintained for firm’s profit and growth for a long and desired
period of time despite the market challenges.
PROFIT
CSR
ENVIRON. PROTECT.

MARKET SHARE
(Domestic, Exp., Brand)

PRODUCTI/SERVICE & VALUE FOR USERS
(Productivity, quality, price)

INVEST & DEVELOP FUNDAMENTAL CAPABILITIES
(Corp. governance, security, technology, finance, human, marketing, train,
culture...)

Figure 1.3: Firm’s Sustainable Competitiveness Pyramid, Source: Hoang Dinh
Phi, 2015.
After several crises around the world, capital markets and consumer markets
have lost confidence in efficiency. As a result, managers face the challenge of
improving corporate image or reliability (Marin & Ruiz, 2007), to solve the
problem of such a decline in reliability, companies are focusing on and
strengthening corporate social responsibility (CSR).

The discharge of corporate social responsibility is now a duty from past
corporate choices. The International Organization for Standardization (ISO) hosted
an international conference in June 2005 to index corporate social responsibility
16