AN INVESTIGATION INTO THE CORPORATE SOCIAL RESPONSIBILITY PRACTICES AT VIETABANK Word count: 11,695 words. Student name: Nguyen Nhat Phu Intake: Vietnam Cohort 16 Student ID: NNP2OCD Supervisor: Mathew Shafaghi. Date of submission: 1 May 2023. Abstract Purpose - The aim of this dissertation is to provide insights into the state of CSR at VietABank: how it is conducted and its benefit in enhancing the brand.
Through which, we may be able to extrapolate the state of CSR of the wider banking industry in Vietnam. In addition, the link between consumer perception of CSR and the brand equity will also be reviewed. Research methodology - This dissertation uses mixed-methods research approach, which comprises of the usage of both qualitative and quantitative methods in a study. The data collections and analyzation process will involve It involves interviewing VietABank‟s personnel on the CSR initiatives and strategy of the firm.
Then the author will conduct a survey on both customers and non-customers of VietABank to measure whether CSR improves brand equity in the context of Vietnam or not. Findings – From interviewing the personnels and management of VietA bank, it is clear that the bank does engage in socially responsible activities. However, it does not have a clear CSR strategy with concrete goals. Most of the repsonsibilties were done informally and intuitively, fitting with previous researches on SMEs‟ CSR involvement.
Despite its lack of a formal CSR strategy, as the link between consumer perception of CSR and brand equity suggested, consumers does seem to be aware of and take the bank‟s efforts in high regard. Practical Implications – A practical look into the CSR practices of a Vietnamese bank. The dissertation was also able to confirm the link between consumer perception of CSR and brand equity in the context of Vietnam. Originality/value – This dissertation provides a detailed look into the CSR practices of a mid-sized Vietnamese bank, providing a baseline for the wider CSR environment of Vietnam.
Acknowledgement Firstly, I would like to thanks my supervisor, Mathew Shafaghi, for providing me with support and guidance during the process of completing this dissertation. I would also like to thanks my family and friends for their continuous support over the years. Finally, I would like to thanks VietABank for providing me with the opportunity to research this topic. 4 Chapter One: Introduction.
7 Rationale for the dissertation. 9 The state of CSR in the banking industry in Vietnam. 12 Chapter Two: Literature Review. 13 Corporate Social Responsibility:.
13 Resources-based view of CSR:. 15 Consumer perception of CSR. 19 Brand equity dimensions:. 20 Brand equity measures:.
21 CSR and brand equity. 23 Chapter Three: Research methodology. 32 Reliability and validity. 33 Data collection techniques.
34 Chapter Four: Findings. 36 VietABank‟s CSR initiatives and strategy:. 40 Consumer perception of CSR on brand equity:. 41 Structural model assessment.
42 Chapter Five: Conclusions and Recommendations. 55 Chapter One: Introduction Introduction Over the past decades, there has been a shift in perspective on the role of corporations in society. While the economic and financial duties of firms toward their stakeholders are still relevant, firms are now ascribed non-economic responsibilities that were previously outside of their purview (Moon, 2014). They are expected to contribute toward solving some of society‟s most urgent challenges such as global warming and labor rights.
In some countries, CSR has extended from a voluntary activity into a legal mandate, with efforts by governmental bodies to establish guidelines on CSR and sustainable business practices (European Parliament, 2021; Steurer, 2010). From multinational famous corporations such as Nike to smaller local enterprises, every firm engages in socially responsible activities in some form. Facing increasing pressure to adopt corporate social responsibility (CSR) activities, managers and researchers are paying increasing attention to CSR and its impact on the organizational level. Aside from supporting society, firms engage in CSR for their own benefit.
Numerous studies have found that CSR has direct and indirect impacts on firm performance through obtaining consumer awareness and building up a favorable brand image and reputation (Orlitzky et al., 2003; Kotler and Lee, 2005; Du et al. Consumers are increasingly conscious of the ethic of businesses and their impact on society (Mohr et al., 2005; Singh et al. They now take CSR into account when evaluating which products to buy (Foreign Agricultural Service, 2020; Tian et al. According to a 2016 CSR survey sponsored by Aflac, a leader in voluntary insurance sales at the worksite, socially irresponsible firms can lose up to 39% of their customer base as consumers avoid them on principle (Aflac, 2016).
Consumers are likely to take negative actions toward these firms, from posting negative social media to boycotting. It is clear that consumer perception of CSR initiatives has a notable effect on firm performance. By engaging in CSR initiatives, a firm can develop a favorable brand image, which protects them from negative attention and may aid in differentiating the firm‟s goods or services (Hsu, 2012). Firms can benefit both themselves and society by engaging in CSR initiatives, proving “doing good” can lead to “doing better”.
As a result of its importance both to society and the continued performance of businesses, CSR become a key dimension of business strategy. Through improving consumers‟ attitude toward the firm, CSR also help firms in improving their intangible assets such as brand equity (Melo and Ignacio, 2011). Banking is an incredibly competitive industry (Bravo et al. Due to the highly intangible nature of the financial services they provide, banks tend to have a hard time differentiating their products for consumers (McDonald and Rundle-Thiele, 2008).
For this reason, intangible assets can prove to be a decisive competitive advantage for banks. Brand equity is defined as “the differential effect of brand image on consumer response to the marketing of the brand” (Keller, 1993). It is one of the most important intangible assets of a firm. While financial and physical assets can be emulated by competitors, brand equity can prove to be a much more sustainable and semi- inimitable source of competitive advantage (Aaker, 1991).
Over the years, there have been numerous studies on the link between CSR and brand equity (Hsu, 2012; Hur et al., 2014; Hoeffler and Keller, 2002; Fatma et al., 2015; Wang et al., 2015; Torres, et al., 2012; Lai et al, 2010). A majority of the studies agree that there exists a positive relationship between consumer perception of CSR initiatives and consumer-based brand equity. Consumer perception of CSR both directly and indirectly affects the brand equity of firms. By committing to CSR initiatives in their business strategy, managers and marketers will be able to improve on the consumer-based brand equity of their firm and produce a sustainable competitive advantage.
However, consumers tend to have an inaccurate perception of the CSR of a firm regardless of the firm‟s actual CSR communication (Peloza et al. Positive (or negative) sentiment toward the firm will positively (or negatively) impact the link between CSR and brand equity. So, it is important to test between consumer‟s perception of CSR and actual CSR engagement. Rationale for the dissertation The state of CSR in the banking industry in Vietnam While CSR has spread globally, a majority of the theories and models are developed from research conducted in developed countries (Lindgreen and Swaen, 2010).
How CSR is perceived and conducted in emerging economies is still relatively less understood. Developing countries have multiple distinctive contextual factors that differ from developed economies (Jamali and Karam, 2016). CSR and the way people perceive it are highly context-sensitive and can be deeply affected by the contextual factors of the country (Perry, 2012; Wang et al. Applying CSR research from developed economies to emerging economies wholesale can prove ill-advised due to these countries‟ distinctive socio-political institutional contexts.
As such, more studies need to be done in developing countries to make clear whether the relationship between CSR and brand equity is ubiquitous. Vietnam has a distinct socio-cultural, politico-economical, and environmental context that influences the way CSR is perceived differently than in the West (Nguyen et al. While contributions to local communities are nothing new to the Vietnamese public, the concept of CSR is still relatively new and less understood. In addition, while local firms engage in philanthropies, charities, and other social responsibilities, they still struggle in developing a concrete CSR strategy following international standards (Tran and Jeppesen, 2016).
Most firms‟ CSR strategy is still relatively informal and intuitive. This is also applicable to the banking industry in Vietnam. This dissertation intends to fill in the relative dearth of studies in Vietnam by seeking to confirm the relationship between CSR and brand equity in the context of a developing country by investigating the CSR strategy of VietABank. About VietABank Vietnam Asia Commercial Joint Stock Bank (VietABank) is a Vietnamese commercial bank.
It operates in both retail and corporate banking. In corporate banking, it has a focus on investing in finance, oil, energy, consumer manufacturing industries and other focused sector as directed by the Vietnamese government. Their investment in the oil and energy industries have considerable effect on the environment. Over 20 years of growth, the bank has achieved numerous successes and was awarded several awards such as Best bank for sustainable development and ASEAN brand awards (VietABank, 2023).
However, despite its successes, the bank has not managed to penetrate into the international market like some of Vietnam‟s more well-known banks like Vietcombank or VPBank. In comparison to the wider banking industry in Vietnam, VietABank is situated in the middle rankings, at least in regard to banks listed in the VNR500. Over the years, it has engaged in sustainable business initiatives and philanthropical efforts in local communities, gaining several related awards. Research aims The aim of this dissertation is to provide insights into the state of CSR at VietABank: how it is conducted and its benefit in enhancing the brand.
Through which, we may be able to extrapolate the state of CSR of the wider banking industry in Vietnam. In addition, the link between consumer perception of CSR and the brand equity will also be reviewed. Research questions With the above-mentioned research aims, the research questions of this dissertation are: What kind of CSR responsibilities and strategy does VietABank have? What is the effect of consumer perception of VietABank‟s present CSR initiatives on its brand equity? How can VietABank improve on its CSR strategy and engagement? Research objectives There are three objectives in this study. First, to determine the CSR components at VietABank in addition its CSR strategy.
From interviewing VietA‟s personnel and managers, the author intends to what CSR responsibilities the bank engage in and find out more about its CSR strategy. The second objective is to determine the influence of consumer perception of VietA Bank‟s CSR initiatives on its brand equity. The author intends to find out whether the current CSR initiatives at the bank have any impact on its brand equity and how strong the link between the two is. Additionally, it also determines how VietABank‟s customers react to its CSR efforts and whether it benefits the bank‟s performance at all.
Finally, based on the results from the previous objectives, the author will make recommendations on how to improve the CSR strategy of the bank with the goal of enhancing the link between consumer perception of CSR and brand equity. Research methodology This dissertation uses mixed-methods research approach, which comprises of the usage of both qualitative and quantitative methods in a study. The data collections and analyzation process will involve It involves interviewing VietABank‟s personnel on the CSR initiatives and strategy of the firm. Then the author will conduct a survey on both customers and non-customers of VietABank to measure whether CSR improves brand equity in the context of Vietnam or not.
Research contribution This dissertation investigated the state of VietABank‟s CSR engagement and determine whether it possesses a CSR strategy or not.