SCHOOL OF BUSINESS

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Student name: PHAN THI MINH PHUONG number: M1011812019
UNIT AND TUTORIAL DETAILS

Unit name: Integrated Business Experience 2 Unit number:

Tutorial group: Tutorial day and time:
Lecturer or Tutor name: Michael Saram
ASSIGNMENT DETAILS

Title: Assignment 4 – Corporate Social Responsibility

Length: 2,565 words Due date: 28/09/2018 Date submitted: 27/09/2018
Home campus (where you are enrolled): ISB
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 CORPORATE SOCIAL
RESPONSIBILITY
REPORT
IBE2 - INTEGRATED BUSINESS EXPERIENCE 2

Lecturer: Michael Saram

Student: Phan Thi Minh Phuong – M1011812019

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 Executive summary

Corporate social responsibility – CSR is expressed as the long-term commitments

between the business and the community that these associate with concerns about the
society and environment in daily business activities. CSR brings great profit in economic
development, competitiveness of business or advancing citizen’s life standard and
quality. Recognizing the important of implementing CSR in the case of globalization and
international integration, perception of stakeholders, especially shareholders has
changed day by day towards CSR strategies. In Vietnam, CSR concept was brought by
multinational firms and it is widely practiced by big enterprises and the firm with export
market only because they need to satisfy the world market’s requirements. It means that
implementation of CSR in Vietnam is still difficult due to the deliberate
misunderstanding, lack of legal constraints, and issues linked to finance and technology
resource. Therefore, presently, Vietnam needs to take long term actions in order to
supporting the business in realizing their responsibilities to the society via the education,
regulations and the initiative from organization and industry associations to provide a
correct picture about CSR for each organization.

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Table of Contents

I. INTRODUCTION ......................................................................................................................... 5

II. BRIEF DESCRIPTION OF CSR ................................................................................................. 5

III. THE EFFECTS OF CSR ON INTERNATIONAL BUSINESS ............................................... 6

IV. THE SHAREHOLDER’S AND STAKEHOLDER PERSPECTIVE OF CSR ........................ 7

V. BARRIERS IN IMPLEMENTING CSR PROGRAM IN VIETNAM ..................................... 9

VI. CONCLUSION .......................................................................................................................... 10

REFERENCE ....................................................................................................................................... 12

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 I. Introduction

Recently, there is a change in public perception over the business’s role in society. It
clearly claimed that business contributes to the economic growth, employment and
wealth creation. However, a modern society requires ever greater demands to business
in achieving sustainable and responsible development in economic, society and
environment. To adapt changes from society, the organization needs to develop new
models of corporate management, which must consider implications of society and
environment to business processes and interest of all shareholders and stakeholders
(Gallardo et al., 2015). In Vietnam, CSR strategy is a quite new picture while small and
medium firm have not been seen related chances and benefits of the CSR. Thus, this paper
will examine the link between CSR and business ethics by identifying the relation of
business and society and describing some current difficulties and recommendation in
implementing CSR program in Vietnam.

II. Brief description of CSR

CSR has been defined in different ways during a past century and these definitions
include performing ethical standards to increase the social welfare (Dahlsrud, 2008). CSR
is as a duty of the organization take on protecting and enhancing the society. According
to Porter and Kramer (2006), CSR has a wide meaning than a concept of philanthropy.
They argued that CSR is a strategy and sustainably economic and social engagements via
long-term plans, which are compliance with the corporate strategy, mission and
strengths. In other words, CSR strategy needs to be merged with the value, code of ethics
and community desires in the company’s vision. Besides, they asserted that business
activities are directly related to the society around then and the compete ability of each
company is heavily based on the circumstance of locations where they run the business.
For example, the workforce’s education level greatly affects to potential competitiveness.
Hence, the more a social improvement the more it results to economic benefits.

On the other hands, CSR refers to a corporate obligation, which impacts to sustainable
economic development for each employee and their families, the local community and
the society in general to improve their life quality (WBCSD, 2006). Also, Business for
Social Responsibility (BSR) stated that the term of CSR could be interchangeable with

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phrases of business ethics or corporate accountability and sustainability. And these
phrases are understood as achieving commercial successes by honoring ethics values,
respect people, community and the environment. And, Green Book of European
commission (2001) explained CSR as an interaction with internal and external
stakeholder, such as customer, employees, supplier, government, competitor, local
communities and society at large and building relationships between key stakeholders.

III. The effects of CSR on international business

In fact, CSR can be much more than a constraint, a philanthropic practice or a cost
because it is a chance, renewal and competitive advantages in the business (Porter &
Kramer, 2006). This is a reason to explain the increase of CSR implementation into
business structure nowadays.

Firstly, positive CSR activities certainly bring a lot of benefits for the company due to
enhancing their brand image and reputation in the market. In fact, many people simply
think that the business only has pressures themselves profits and put less attention on
maintaining company reputation on the capitalist society. However, this is a challenge
for management to build a good image of the company without specific actions like CSR
in the capitalist society and they always tries to obtain how to keep a great company
image in the market every day. Accordingly, it could be said that committing CSR is the
best choice to enhancing company reputation and has a positive effect on customers,
employees and investor’s choice as well. In other word, CSR is to connect to the
company’s benefit directly.

Next, CSR performance certainly will offer benefits in production and business
through achieving high productivity and good quality, and corporate environmental
responsibility is a way to cut cost and improve productivity too. In 2017,
FrieslandCampina Vietnam organized training sections, exchanged experience in dairy
farming between Dutch and Vietnamese farmers. The purpose of this activities is to help
Vietnamese farmers access advanced farming techniques in order to maximize yield and
increase milk quality (Nguyen, 2017). As a result, FrieslandCampina probably have a
good source of material supply for producing product with high quality. On the other
hands, corporate considerations of workplace, which straightly links to employee welfare
or working environment, is another practice contributed to raise productivity and quality

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of goods and services. Hence, it is clear that CSR will offer interest for the business by
accomplishing high productivity and work quality.

Consequently, CSR could differentiate a business from its rivals by bringing value
towards customers and employees (McWilliams & Siegel, 2001) and help in gaining
advantages in market competitions. In the case that a firm has successfully implemented
CSR actions, competitors might be forced to participate in CSR as well. If they do not
apply CSR, they possibly might face to lose customers loyalty.

IV. The shareholder’s and stakeholder perspective of CSR

Implementing, running and communicating the concept of CSR in the business

certainly affect to the number of internal and external stakeholders because they are a key
and inseparable determinant. According to all description of CSR, it could be claimed
that the company’s management should carefully consider stakeholders’ expectations
while planning CSR and the overall company’s strategy at the same time.

• Shareholder’s perspective

Now, a number of companies adopting CSR initiatives has been grown and at the
same time, CSR has created debates, especially between shareholders with two dissenting
opinions. One is that CSR benefits outweigh its cost (Waddock and Graves, 1997) and
others believe that CSR is irrelevant and affect to maximize the business profit (Schaefer,
2008). Shareholder’s perspective is connected to four categories, including economic,
legal, ethics and philanthropic perspective (Carroll, 1997).

Most of shareholders concern is that CSR could be harmful for their wealth. In fact,
they really do not want corporation spend money to create benefit for non-shareholders
while there is no regulations or contracts requested or forced them follow. Particularly, if
management decides using funds for enhancing working environments quality, it will
decline corporate earnings in which it is created in the accounting period. That mean
shareholders are less wealthy at the end of accounting period due to that expenditure. In
the worst situation, that expenditure could result in missing its earning target and the
decline of share price in the market (Macey, 2014)

Under the view of legal perspective, shareholders expect that the company should be
achieved in compliance with laws and regulations. In the other words, they require all

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aspects of the business, such as construction standard, labor safety or employment and
paying tax, must be strictly accompanied and implemented in the corporation. Besides,
doing business honorably and developing it healthfully are terms to prove the
management acknowledge in running the business when CSR is not a thing that the
company has to or should do, but it gradually become obvious in deciding the long-term
survival of one business (Cacioppe et al., 2008).

In regards to ethical, it could be understood that doing what is right, both the
organization and individual must always attempt to do the right things. All corporate
practices, which are done to achieve the business purpose, are expressed to be based on
ethical theory without any fraudulent practices or harming to any stakeholders and
society. Furthermore, each individual in the organization needs to aware from their
thinking about professional conscience and working with hard and virtue in order to
deliver many advantages for the corporation and society.

Finally, the term of philanthropic perspective is to present contributions from the firm
into the community and for improving the life quality (Carrol, 1991). These actions are
not limited in spending time, money and human resource to the community, like housing
for poor people or collaborate with customer to collect donation. In fact, shareholder
encourage the CSR participation if they have enough capacity since it is worthwhile
activities to build a good relationship with the community and citizen for increasing the
company’s image (Porter & Kramer, 2006; Windsor, 2006).

• Stakeholder perspective

In fact, stakeholder perspective about CSR not only focus on resource-based (e.g.
employee) and market-based stakeholder (e.g. customer), but also social and political
stakeholder (e.g. government, community).

Employee stakeholder: For employee, the paramount duty is to provide competitive

wages and welfare. Commonly showed employees expect the organization to establish
fund of social welfare and bring additional welfare packages for employees. Added, some
actions related to CSR strategy for employees include offering training and career
development, employee care programs (like celebrating a family day) or creating a
healthy and safety working environment (such as focusing on work-life balance).

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 Government stakeholder: The concept of CSR towards the government is to build
public – private relationship. For instant, they encourage the firm setting industry
standard before laws and regulations are issued. or participating in designing and
running CSR programs at the local area. Added, legal compliance and paying tax seems
to be a form of government responsibility (Yin et al., 2013).

Community stakeholder: According to Chai et al.’s survey (2015), public perception

of CSR is focusing on some main aspects, included active participation in donation and
public welfare activities, offering favorable wellbeing and working environment for all
employees or limiting pollution and saving resource as much as possible.

Customer stakeholder: Recently, through the education and impact of the media,
customer could be aware and have a clear understanding of CSR’s role. They have started
to consider negative effects to the environment as an important element when buying a
product (Dilling, 2011). These kinds of product also need to satisfy the customer’s needs
with a truth and fair advertisements and statements. Another study described that
customer perspective also highlights prompt service and unethical practice such as black
marketing or hoarding (Shergill, 2012).

Consequently, CSR presents a relationship between the corporation and the wider
community. It is recognized as a part of the business that profit of each related party is
parallel exit. As a result, the business might give reasonable direction to day-to-day
operation.

V. Barriers in implementing CSR program in Vietnam

After the Doi Moi and open-door policies, along with the country’s comprehensive
development, the increasing economic growth makes Vietnam to be faced with urgent
issues related to society and environment. Added, the background about CSR is still
quietly new for corporate governance activities, so the implementation of CSR plan is
limited until now.

The first is the business awareness about CSR in their operation. Actually, a number
of businesses have incompletely understood and deliberated misinterpreted the CSR. The
definition of CSR is simply thought as business ethics, charitable contribution from them
to the community. In addition, there is no official law enough to prevent the offense, so
some of businesses continue to deliberately breach. In Vietnam, when a business violated,

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they often tried to eclipse public and fix and polish the image by performing philanthropy
activities. For example, in 2009, it was found that Vedan Vietnam dumped untreated
wastewater into Thi Vai River every month and they tried to cover their brand image by
community activities like joining hands with Dong Nai People’s Committee to bring a
health life for the community (Luu, 2011; vendan.com.vn, 2018). These kinds of
campaigns like to achieve the company’s goal in building public relations without having
close relationship with the business because it probably focuses on scatter under
marketing campaign and do not have a long-term commitment from the business with
programs.

Secondly, the weakness of legal framework is not tight enough to prevent violated
economic activities. Although Vietnam established legal provisions to create favorable
conditions to expand the business operation and reputation, there are holes in
punishments and rewards. It resulted in negative business behavior because businesses
like a profit maker and so they certainty compare between profit and capital in the
operation. Make an example of exploiting legal loopholes to keep away from ethics
responsibilities from high-tech businesses as Uber or Grab in Vietnam recently. In order
to control this problem, all economic activities should be legally strict, so businesses could
recognize that local responsibilities are not personal preference and a one-way
expectation, but also should to be complied with legal as well.

Another barrier, which business firms need to face in Vietnam, is finance and
technology resources. In Vietnam, manufacturing industry often have been used
technology behind other countries in the region about 2 to 3 generations. It leads to the
waste of energy due to outdated technology and this backwardness has unfavorable
effects to the competitiveness in business and the economy compared with other
countries and ecological environment. About the financial aspect, the Government had
policies in supporting tax and credit interest rates; launching some credit packages to
support local enterprises in production and marketing, such as 30 trillion VND for basic
construction investment. However, issues related to administrative procedures as a
barrier for enterprises access capital or interest support (Mai, 2017)

VI. Conclusion

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 CSR is a current concentration of most of business generally and Vietnam particularly.
Consequently, implementing CSR is very important when Vietnam is integrated in the
international community because it helps to ensure linked benefits for the business and
society, especially promoting the competitiveness of business and the country. Thus, the
concept of CSR should be involved in the curriculum from primary schools to help in
advancing correct awareness about the nature and benefits of CSR. It also should
organize lessons about ethical behavior or environmental protection for student
throughout the years in schools to make sure that future citizen will have a better
perception of CSR. Besides, it is necessary to complete the regulations for punishment
levels for violating businesses. At the same time, organization and industry associations
need to consult, guide and update changes in CSR concept and international codes of
conduct for long-term business situation timely.

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