UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ TRAN THANH DANG SON THE STUDY OF CONSUMERS’ PERCEPTIONS OF CORPORATE SOCIAL RESPONSIBILITY TOWARD CONSUMERS’ TRUST, ATTITUDE AND PURCHASE INTENTION: EVIDENCE FROM VIETNAM MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2015 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ TRAN THANH DANG SON THE STUDY OF CONSUMERS’ PERCEPTIONS OF CORPORATE SOCIAL RESPONSIBILITY TOWARD CONSUMERS’ TRUST, ATTITUDE AND PURCHASE INTENTION: EVIDENCE FROM VIETNAM ID: 22130062 MASTER OF BUSINESS (Honours) SUPERVISOR: DR. NGUYEN THI MAI TRANG Ho Chi Minh City – Year 2015 TIEU LUAN MOI download : skknchat@gmail.com Acknowledgement This final thesis concluded my academic study at University of Economics Ho Chi Minh City on the International School of Business (UEH-ISB). Although it was challenging, I am grateful to have been given this opportunity to study at UEH- ISB and to conduct this final research. With this work, I have gained a good knowledge of Corporate Social Responsibility (CSR), which is a new field of study.
Nonetheless, it has received noticeable attention from the academics and scholars for its recognized roles in the economy. I hope this study will be beneficial to the companies when it comes to CSR related decisions. I offer my sincere appreciation for the invaluable learning opportunities provided by the committee during thesis process. I would like to personally express my gratitude to Dr.
Nguyen Thi Mai Trang who has actively guided and provided me with valuable insights and suggestions to my dissertation. Your thorough review of my dissertation has definitely made it perfect. I am also deeply grateful to my course mate Ms. Nguyen Thi Ha, who is resourcefulness to me.
My family, especially my wife, deserves special thanks for their valueless contribution to my education, upbringing and my life in general. Tran Thanh Dang Son TIEU LUAN MOI download : skknchat@gmail.com Abstract Corporate social responsibility (“CSR”) is currently becoming an emerging trend in many developing countries over the world. Although the concept of CSR is a very new-born and unfamiliar with many people; however, Vietnamese consumers have recently demonstrated their perceptions of CSR through their environmental concerns, their “go-green” protection, their understanding about the activities of educational assistance and building houses for the poor performing by enterprises, etc. This quantitative research is to examine the factors that encourage Vietnamese consumers’ purchase intention toward CSR enterprises’ products.
The research is to develop hypothetically suitable theoretical model that is then empirically tested through an internet survey of 224 respondents in Vietnam. The respondents are chosen from diverse backgrounds. Structural Equation Modeling technique is deployed in this study. The results show that Vietnamese consumers’ CSR perceptions and their trust of CSR have positively relationship with their attitude toward firm and their purchasing intention toward products of enterprises that are engaged with CSR activities.
The research implications and recommendations provide specific discussion about findings and future research. TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS CHAPTER 1: INTRODUCTION. SCOPE OF THE RESEARCH. SIGNIFICANCE OF THE STUDY.
STRUCTURES OF THE RESEARCH. 7 CHAPTER 2: LITERATURE REVIEW. CORPORATE SOCIAL RESPONSIBILITY (“CSR”). CONSUMERS’ PERCEPTIONS OF CSR.
CONSUMERS’ TRUST OF CSR. ATTITUDE TOWARDS FIRM. 27 CHAPTER 3: RESEARCH METHODOLOGY. DATA ANALYSIS METHODOLOGY.
36 CHAPTER 4: RESULTS OF DATA ANALYSIS. 37 TIEU LUAN MOI download : skknchat@gmail. RELIABILITY STATISTICS BY CRONBACH’S ALPHA. CONFIRMATORY FACTOR ANALYSIS (“CFA”).
STRUCTURAL EQUATION MODELING (“SEM”). EFFECTS OF DEMOGRAPHICS IN THE RESEARCH MODEL. 51 CHAPTER 5: CONCLUSIONS, IMPLICATIONS AND LIMITATIONS. 59 APPENDIX A – Questionnaires in Vietnamese.
64 APPENDIX B – Questionnaires in English. 68 APPENDIX C: In-Depth Interview. 72 TIEU LUAN MOI download : skknchat@gmail.com Overview of tables Table 2. Economic and legal components of Corporate Social Responsibility (Carroll, 1991).
Ethical and philanthropic components of Corporate Social Responsibility (Carroll, 1991). Source of data collection. Cronbach’s Alpha coefficients for each measurement scale (before eliminated item) .2 Cronbach’s Alpha coefficients for each measurement scale (after eliminated item). KMO and Bartlett's Test.
Total Variance Explained. Key goodness-of-fit indices. Unstandardized Regression Weights (SEM). Summary of hypothesis and structural equation model analysis results.
51 TIEU LUAN MOI download : skknchat@gmail.com Overview of figures Figure 2. The pyramid of Corporate Social Responsibility. Confirmatory Factor Analysis (Standardize estimates). Multi group analysis.
Constant group analysis. Multi group analysis. Constant group analysis. Multi group analysis.
Constant group analysis. 78 TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 1: INTRODUCTION 1. RESEARCH BACKGROUND Today, more companies are aware of the importance of Corporate Social Responsibility (CSR), and as such, have started to engage with responsible actions in different magnitudes. CSR puts a company in a more advantageous position compared to its competitors.
These advantages can be in the form of better customer engagement, employee engagement, brand differentiation, customer retention, cost savings, publicity and media opportunities, and sometimes, access to other investment and funding opportunities (Porter & Kramer, 2006). Different ways of committing to CSR are available from which companies can choose. Some companies may provide funding and resources for worthwhile causes, some others would produce products or provide services that are in the best interest of society such as job creation and economic development, use of safe materials and processes, integration of ethical practices into supply chain activities, etc. According to Tian, Wang and Yang (2011), companies can derive enormous benefits when they are perceived as being socially responsible by their stakeholders.
Among all the stakeholders, one important group that appears to be particularly susceptible to a company’s Corporate Social Responsibility (CSR) initiatives is its consumers (Bhattacharya & Sen, 2004). The question today is no longer whether companies should incorporate CSR into their activities, but rather how they should do this. Research indicates that consumers seem to care about CSR and therefore it is in the best interest of the company to do so as well (Boulstridge & Carrigan, 2000). Nevertheless, studies indicate that nowadays most consumers expect companies to go beyond delivering economic outcomes and contribute to society’s welfare, and sustainability by being socially responsible and will support them if they do so (Sen & Bhattacharya, 2001).
A growing body of academic research attests that CSR has positive influence on consumers’ evaluations and purchase intentions of company’s product 1 | Page TIEU LUAN MOI download : skknchat@gmail. More companies are willing to increase their CSR investment and integrate it into the long-term strategic plan to maintain or even enhance long-term market performance (Mahoney & Thorne, 2005). The concept of Corporate Social Responsibility was first introduced widely in Vietnam in recent years through various activities of international Non- Governmental Organizations (NGOs) and multinational companies. According to a CSR Survey conducted by SRI Vietnam (as cited in Pham, 2010), there are 90% of interviewees misunderstand the idea of CSR and related issues.
This survey reported that Vietnamese consumers’ perception toward CSR as well as other ethical behaviors remains virtually unknown. 40% of interviewees consider CSR as a social obligation of businesses, which mainly consists of community works and events. While the level of awareness about CSR of Vietnamese is still low, the suspicion of the media continues to add up to the difficulty in dealing with general public. Lack of in-depth knowledge and professional research about CSR in Vietnam has led to incomplete information provided, which then turns into inaccurate news and articles that can influence consumers and governmental departments.
CSR programs are often cited as PR (Public Relations) activities, another communication concept in Vietnam, that is frequently misinterpreted as negative as well. As a result, the main challenge is to raise the level of awareness of CSR among consumers, increase their appreciation of CSR and associate it in their choice of products to buy and to relate CSR with social concerns. On the business side, lack of resources and commitment for CSR is the major cause for the current situation. Many local companies resist to change and still maintain their conventional thinking system, in which business performance is measured by simple and more visible metrics.
They are more driven by short term incentives to make money, therefore using CSR as a branding tool is in fact more 2 | Page TIEU LUAN MOI download : skknchat@gmail.com sensible to them. Even for companies that want to pursue a longer term, more sustainable approach to CSR, finding competent staff to overlook CSR activities is also challenging. In a country like Vietnam where CSR is a new concept even to people working in business, the number of people with professional training in CSR is very limited while the subject of CSR is not yet taught or even mentioned in most universities’ bachelor programs. On top of that, the attitude of businesses remains as an internal barrier to practice CSR at the moment.
Many businesses in Vietnam believe that “CSR is only for big, multinational corporations”, or even “CSR is a luxury of the developed world, which is not relevant in a developing country”. Therefore, it is important to change their attitude from “CSR as a cost” to “CSR as an investment” in order to see more active CSR initiatives among local business community in the near future. According to Bui (2010), in emerging countries like Vietnam, a large population is still influenced by price and quality of products when making their buying decisions. However, following some serious environmental damages caused, serious food safety and health problems that Vietnamese consumers have been facing during the past few years.
As accentuated by Vietnam Journalist Association (2008), the most gigantic pollution scandal in Vietnam in year 2008 was the case of a company named Vedan Vietnam that dangerously polluted the local river for more than 14 years without being noticed and caught. Similarly, in the same year, another company called Miwon was also caught of adversely contaminating another local river. In additions, there were various cases of health safety problems in recent years such as tainted milk distribution, toxic ingredients in consumer goods and pesticide remained in vegetables, etc. These scandals have been raising a greater concern on corporate social responsibility among Vietnamese consumers, and have pushed them to reconsider the importance of environment and health factor in their purchase intention.
Vietnamese consumers currently begin to take actions against food safety problems while taking for granted societal and 3 | Page TIEU LUAN MOI download : skknchat@gmail.com environmental dimensions of CSR. Bui (2010) said that an ethical segment of consumers has been also emerging gradually in the Vietnamese market. Nowadays, the public shows increasing interest in social responsibility of business and also reacts strongly against those that fail to do so, both foreign and local companies start paying more attention to CSR in Vietnam. Nevertheless, CSR is still a very new concept and pioneers in this area are facing numerous challenges in executing CSR programs in Vietnam.
RESEARCH OBJECTIVE The overall objectives of this study are to gain the understanding of the manner that consumers come up with the purchase intention for products of enterprises that are engaged with CSR activities. Specifically, this study examines whether consumers’ perceptions of CSR that could cause positive impact to consumers’ trust, attitudes toward firm, and then affect to purchase intention. On that purpose, this study addresses following relationships: 1. The relationship between the consumers’ perceptions of CSR and trust of CSR practices.
The relationship between the consumers’ trust of CSR practices and attitude towards firm. The relationship between the consumers’ perceptions of CSR and attitude towards firm. The relationship between the consumers’ perceptions of CSR and purchase intention. The relationship between the consumers’ attitude towards firm and purchase intention.
The effect of the consumer’s demographics on the relationship between consumers’ perceptions of CSR and purchase intention. 4 | Page TIEU LUAN MOI download : skknchat@gmail.