CORPORATE SOCIAL RESPONSIBILITY IN VIETNAM STATE-OWNED ENTERPRISES: A COMPARATIVE ANALYSIS OF PVEP AND VTC BY MISS THI HUE NGUYEN A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS (ASIA-PACIFIC STUDIES) COLLEGE OF INTERDISCIPLINARY STUDIES THAMMASAT UNIVERSITY ACADEMIC YEAR 2016 COPYRIGHT OF THAMMASAT UNIVERSITY CORPORATE SOCIAL RESPONSIBILITY IN VIETNAM STATE-OWNED ENTERPRISES: A COMPARATIVE ANALYSIS OF PVEP AND VTC BY MISS THI HUE NGUYEN A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS (ASIA-PACIFIC STUDIES) COLLEGE OF INTERDISCIPLINARY STUDIES THAMMASAT UNIVERSITY ACADEMIC YEAR 2016 COPYRIGHT OF THAMMASAT UNIVERSITY (1) Thesis Title CORPORATE SOCIAL RESPONSIBILITY IN VIETNAM STATE-OWNED ENTERPRISES: A COMPARATIVE ANALYSIS OF PVEP AND VTC Author Miss Thi Hue Nguyen Degree Master of Arts (Asia Pacific Studies) Major Field/Faculty/University Asia-Pacific Studies College of Interdisciplinary Studies Thammasat University Thesis Advisor Assistant Professor Tavida Kamolvej, Ph. Academic Year 2016 ABSTRACT In line with the calls from United Nations for sustainable development, the regulations from governments, the development of global economic as well as to respond to growing demands from stakeholders, Corporate Social Responsibility is getting more attention throughout the world. This term going along with the investment of multinational corporations (MNCs) was just newly introduced in Vietnam and it instantly attracted concern from enterprises, government and scholars. Due to the limited research on Corporate Social Responsibility (CSR) in State-owned enterprises (SOEs), this paper investigates and makes a comparative analysis of CSR practices of two large Vietnamese SOEs: PetroVietnam Exploration Production Corporation (PVEP) and Vietnam Multimedia Corporation (or Vietnam Television Corporation – VTC).
The input data is based on descriptive information collected from existing literature, corporations’ official websites, published reports, and primary data from interviews with managers of the two companies. The analysis indicates that PVEP and VTC share similar views on the concept of CSR and in line with the definition of standard ISO 26000. It identifies the focal points of these corporations on CSR themes which are Environment, Labor and Community Involvement for PVEP and Labor, Fair Operating Practices, Consumer Issues and Community Involvement for VTC. Institutional Theory has been adopted to examine (2) the main drivers of CSR.
This study has determined that the external and internal institutional drivers effect on responsible behaviors of the two corporations at different extent. This study contributes to CSR literature with a focus on State-owned Enterprises. It would be helpful when using to predict the trend as well as suggest recommendation to push CSR activities in SOEs in a better way in future research. Keywords: CSR, sustainable development, SOEs, drivers, ISO 26000, Vietnam (3) ACKNOWLEDGEMENTS To complete this study, I would like to express heartfelt gratefulness to Asst.
Tavida for her direct instructions, insight and expertise that greatly support the research. I would like to thank Thammasat University for financial and facility supports. I would also want to express my gratitude to all professors of MAPS program who has created favorable conditions for me during the research and learning process in the university. This research was supported by Mr.
Hoang Anh Thao VTC Corporations and Mr. Nguyen Van Cu PVEP Corporation who were ready to assist me in the process of collecting data to serve this research topic. Miss Thi Hue Nguyen (4) TABLE OF CONTENTS Pages ABSTRACT (1) ACKNOWLEDGEMENTS (3) LIST OF TABLE (7) LIST OF FIGURE (8) LIST OF ABBREVIATIONS (9) CHAPTER 1 INTRODUCTION 1 1.1 CSR in Vietnam 1 1.2 State-owned Enterprises in Vietnam 6 1.3 Objective of study 11 1.4 Research questions 11 CHAPTER 2 THEORETICAL FRAMEWORK 12 2.3 Drivers of CSR 18 2.2 Non- economic approach 19 2.3 Institutional theory 20 CHAPTER 3 RESEARCH DESIGN 25 3.3 Scope of research 26 3.5 Data analysis 29 CHAPTER 4 RESEARCH FINDINGS 31 4.1 Company Profile and CSR in Practices 31 4.1 History and Company files 31 4.2 Company’s view of CSR 34 4.3 CSR in Practices 38 4.3 Fair Operating Practices 44 4.5 Corporate Governance and Human Rights 46 4.4 Civil Society Groups 52 4.3 Structure, Financial Resources, Knowledge-based 55 Resources and Human Resources CHAPTER 5 ANALYSIS 57 5.2 CSR Practices 60 CHAPTER 6 CONCLUSION 64 REFERENCES 67 APPENDIX 75 (7) LIST OF TABLE Table Page 2.1 7 core subjects of CSR 17 (8) LIST OF FIGURE Figure Page 2.1 An Internal – External Institutional Drivers Framework for 23 Analyzing CSR motivations (9) LIST OF ABBREVIATIONS Abbreviations Terms CSOs Civil Society Organizations CSR Corporate Social Responsibility EMS Environmental Management System FDI Foreign Direct Investment GDP Gross Domestic Product HR Human Resources ILO International Labor Organization ISO International Standard Organization MNCs Multinational Corporations MoU Memorandum of Understanding OECD Organization for Economic Cooperation and Development PVEP PetroVietnam Exploration Production Corporation SMEs Small-medium Enterprises SOEs State-owned Enterprises SR Social Responsibility UNEP United Nations Environment Programme UNIDO United Nations Industrial Development Organization US The United States of America VCCI-SD4B Sustainable Development for Business Office of Vietnam Chamber of Commerce and Industry VND Vietnamese dong (Vietnam’s currency VTC Vietnam Multimedia Corporation or Vietnam Television Corporation WBCSD World Business Council for Sustainable Development WGSR Working Group on Social Responsibility WTO World Trade Organization 1 CHAPTER 1 INTRODUCTION 1.1 CSR in Vietnam Public goods, externalities and common property problems all cause the imperfection of market. That where the governments step in, to fix the market failure or in other words, to warrant welfare (Crosby, 2011).
However, the world is getting more problematic, human being has faced huge changes that we have never thought of before: the climate change, pollution in global scale, shortage of resources, human trafficking, child labor, etc. The world has been constantly calling for sustainable development which needs the aggregate efforts from each government, each society, each organization and each individual. Corporations, as a part of society have been responding to this call by a strategy known as Corporate Social Responsibility - CSR (UN Global Compact). In line with the calls from United Nations, the regulations from governments, the development of global economic as well as to respond to growing demands from stakeholders, Corporate Social Responsibility is getting more attention throughout the world (William & Aguilera, 2008; Florian Hinz, 2009).
This term going along with the investment of multinational corporations (MNCs) was just newly introduced in Vietnam (Charlotta, 2007), and it instantly attracted concern from enterprises and government. In 2005, the Chamber of Commerce and Industry of Vietnam, the Ministry of Labor, Invalids and Social Affairs, the Ministry of Trade and Industry together with the Footwear and Textile Associations established the Award “Corporate Social responsibility towards sustainable development” in order to honor enterprises which well-implement CSR in the context of integration (Baomoi, 2012). After 30 years of Doi Moi – Renovation (from 1986), Vietnam has stepped out of the socio-economic crisis and less development status, becomes a developing country with average income, are proactively pushing industrialization, modernization and international integration. Economic growth has maintained stable between 6 and 8%/year.
As the consequence, since 2010, Vietnam was officially 2 graduated from the Least Developed Country status and reclassified as a “middle- income” country (Nguyen, 2016). Nevertheless, this economic growth is unsustainable, because it still relies on capital, depends heavily on cheap labor resource and on FDI. Foreign investors and transnational corporations under the pressure of civil society from consumer countries, want to apply their ethical standards to Vietnamese companies (Hamn, 2012). By 2016, Vietnam has signed 10 regional and bilateral Free Trade Agreements; just completed negotiations of two FTA negotiations (FTA with the European Union and TPP); is proactively negotiating three other FTAs (ASEAN-Hong Kong; EFTA; RCEP).
These steps of development have been bringing to Vietnam not only many opportunities but also challenges. On the one hand, the country has seen many social and environmental consequences as a result of prioritizing GDP growth. These issues demand that economic stakeholders, including enterprises, have a responsibility to contribute to solving the problems which are caused partly by them. On the other hand, on the road to economic integration, the requirements for implementation of good Corporate Social Responsibility towards Sustainable Development have become one of the non-tariff barriers challenging developing countries like Vietnam (Hamn, 2012).
From the perspective of the enterprises, Vietnamese companies started to be more aware of the importance of respecting social and environmental standards in enhancing their reputation and increasing competitiveness (Pham, 2011). According to a survey published in the Ceremony for Announcement of Top 500 Vietnamese Largest Enterprises of Vietnam Report team: in the large enterprises VNR500’s viewpoints, among the elements of CSR, long-term investment for social activities has been viewed as the most important and oriented activities to CSR’s strategy (51%). In addition, the strengthening of humanitarian social activities is also considered important and influential (39%).A survey conducted by the Vietnam Business Council for Sustainable Development (VBCSD) reveals the situation and the need to build Sustainable Reports of enterprises in Vietnam with one of the questions as: ”What are the benefits that CSR brings?”. The majority of enterprises (accounting for 76.5%) say that the implementation of CSR would enhance the reputation of the enterprises which demonstrates their commitments to the implementation of CSR.
43% of respondents recognize the benefits in improving the competitive advantage. A similar 3 percentage say that the biggest benefit is the improvement of business efficiency. However, only about 2.1% of the opinions agreed that CSR brought the transparency and help enterprises to have appropriate strategic planning. Thus, the majority of enterprises surveyed have not been fully aware of the benefits that CSR may bring (Le, 2016).
In earlier times, CSR is understood as community involvement activities or philanthropy and charity or the passive implementation of the exporting companies by complying with the requirements specified by the importing companies who launched through the Code of conduct (CoC) only. But currently, enterprises and related organizations are promoting CSR implementation in order to improve the competitiveness and towards sustainable development. Florian Beranek, Lead Expert of Social Responsibility at the United Nations Industrial Development Organisation (UNIDO), shares the same statement. He said: “The understanding of CSR as philanthropy in Vietnam has been decreasing.
Recently the awareness of CSR of enterprises as a strategic concept has been greatly improved” (Beranek, 2016). In regard to government’s reaction, Vietnam’s government issued the Decision on promulgating Strategic Orientation for Sustainable Development in Vietnam in which stated that the Decision (Vietnam Agenda 21) was to “develop the country sustainably on the basis of incorporated, fair and harmonious economic development with social development and protection of natural resources, the environment, national security defense, security and social order and safety.” Due to the increased interest, there are more and more studies conducted on CSR practices covering various perspective and objects. The government agencies have planned and carried out a series of programs and projects aiming at accelerating the process of implementing comprehensive CSR strategies such as Vietnam National Strategy on People’s Healthcare and Protection; National Strategy on Environmental Protection to 2020, with vision towards 2030; National Program on Labor Protection, Safety and Sanitation; National Target Program on Employment; National Target Program to Respond to Climate Change; National Target Program to Improve Efficiency of Water Management, Protection and Usage. The Ministry of Labour, Invalids and Social Affairs coordinates CSR in Vietnam.
Other Ministries have various 4 responsibilities for the individual components of CSR. The legal system has been renovated and rebuilt comprehensively, from the Constitution to the system of laws, acts and decrees. In terms of environmental protection and climate change, being aware of the significance of climate change issues, Vietnam’s Government has approved the Convention on Climate (1994) and later the Kyoto Protocol (2002). The period 2005-2010 is considered the most successful period in the process of developing and improving the system of Vietnam's laws on environmental protection, which is marked by Law on Environmental Protection passed by the National Assembly in 2005.
In 2008, Law on Biodiversity was approved. So far, a total of 66 acts and by-law documents have been developed and issued.