MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY ------------ BÙI THỊ DIỄM NGA MANAGEMENT PERCEPTION OF THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON CORPORATE FINANCIAL PERFORMANCE AND CORPORATE REPUTATION IN VIETNAM MASTER THESIS HO CHI MINH CITY – 2013 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY ------------ BÙI THỊ DIỄM NGA MANAGEMENT PERCEPTION OF THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON CORPORATE FINANCIAL PERFORMANCE AND CORPORATE REPUTATION IN VIETNAM Subject: Master of Business Administrator Code: 06.02 MASTER THESIS SUPERVISOR: DR. NGUYỄN THỊ NGUYỆT QUẾ HO CHI MINH CITY – 2013 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com I ACKOWLEDGMENT First of all, I would like to indicate my deep gratitude to Dr. Nguyen Thi Nguyet Que, my promoter. Throughout the entire research, she offered valuable advice, helpful guidance and comments as well as encouragement during difficult times.
I sincerely appreciate you, both personally and professionally. I am also grateful to my classmates who were unfailingly kind, offered ongoing encouragement, and helped me whenever it was necessary. In addition, I‟d like to send my special thanks to all of my colleagues- Ms. Thu and my director- Ms.
Nguyen Vu Thanh Uyen at Dang Hung Chemical Company for your persistent support, encouragement. Without your help, my dissertation couldn‟t be finished in time. I will be forever indebted to my beloved family members, especially my parents and my parents-in-law. They have supported me in a consistently loving manner.
I am especially grateful to my husband, Kim Do, for his love, thoughtfulness, and endless support. Thanks for looking after our daughter- Lucie so well whenever I were busy and focus on this dissertation. Lucie, thank you so much for your precious existence in my life! While it is true that you make my life increasingly busy. Without you, my life would have no meaning at all.
Once again, I extend my profound thanks to all of you, as well as to others whose names are not mentioned here but who also contributed directly or indirectly to this thesis. Bui Thi Diem Nga Ho Chi Minh City, 26 September, 2013 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com II COMMITMENT I certify that the ideas, analyses, and conclusions reported in this thesis “Management Perception Of The Impact Of Corporate Social Responsibility On Corporate Financial Performance And Corporate Reputation In Vietnam” are entirely my own effort. The data was collected in reality and it has clear origins. I also certify that the work is original and has not been previously submitted for any other award.
LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com III TABLE OF CONTENT ACKOWLEDGMENT .II LIST OF FIGURES. VI LIST OF TABLES .2 Research Issues, Objectives & Questions .4 Significance of study .5 Structure of study .6 CHAPTER 2: LITERATURE REVIEW: .2 Concept of Corporate Social Responsibilities .1 Definition of Corporate Social responsibility .3 Review of previous studies on CSR and organization performance .1 Related CSR and financial performance .2 Related to CSR and corporate reputation .4 Development of theoretical model and research hypothesis .1 CSR and Financial performance .22 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.2 CSR and corporate reputation.28 CHAPTER 3: RESEARCH METHOD .1 Scale of independent variables .2 Scale of dependent variables .3 Translation of the Questionnaire. The pilot study .6 Methods of data analysis .40 CHAPTER 4: DATA ANALYSIS .2 Descriptions of sample. Reliability and validity of the measurement scale.
Exploratory factor analysis (EFA) .44 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.4 Testing the research model and the hypotheses .1 Testing correlations of constructs .3 Test the violations of assumptions in linear regression .58 CHAPTER 5: CONCLUSION AND IMPLICATION .2 Discussion of findings. The impact of CSR activities in term of employee responsibilities on financial performance and corporate reputation .2 The impact of CSR activities in term on community responsibilities on financial performance and corporate reputation. The impact of CSR activities in term of customer responsibilities on financial performance and corporate reputation.4 The impact of CSR activities in term of environment responsibilities on financial performance and corporate reputation .3 Practical implications and contribution of study .4 Limitation and future research .67 LIST OF REFERENCE .83 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com VI LIST OF FIGURES Figure Description Page Figure 2.1 Research Model 28 Figure 2.2 Research process 30 Figure 4.4 The revised research model 57 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com VII LIST OF TABLES Table Description Page Table 2.1 Definitions of CSR – academic research 8 Table 2.2 Definitions of CSR based on representatives organizations 9 Table 2.3 Abstract of CSR researches 17 Table 3.1 Items of variables in the study 33 Table 4.1 Sample characteristics 42 Table 4.2 Reliability of scales 43 Table 4.3 KMO and Barlett's Test of independent variables 45 Table 4.4 Rotated Component Matrix(a) 45 Table 4.5 Item-Total Statistics 46 Table 4.6 KMO and Bartlett's Test 47 Table 4.7 Rotated Component Matrixa 47 Table 4.8 Correlations of MLR (1) 49 Table 4.9 Correlations of MLR (2) 50 a Table 4.10 Variables Entered/Removed 51 Table 4.11 Model Summary 51 Table 4.14 Model Summaryb 54 a Table 4.1 Research Purposes, Hypotheses and Results 61 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 1 ABSTRACT Nowadays, the Vietnamese business community has been facing with important issues for its sustainable development, especially societal and environmental including energy saving, waste management, workplace safety standards, take care of its employee and so on. Recent numerous cases of health safety problems especially tainted milk distribution, toxic ingredients found out in food, consumer goods,…, have been raising a greater concern on Corporate Social Sesponsibility (here in after refered to as CSR) in Vietnam.
Beside that, Vietnamese export- oriented companies have been also encountering problems of good citizenship when their foreign investors and buyers require them to take business practices based on respect for people, communities and the environment. Corporate social responsibility (here in after referred to as CSR) has been considered as non-tariff barriers and challenging to the developing countries including Vietnam. Being aware of the important of CSR and the impact of it on the organization performance are necessary to help organization overcome these invisible barriers as well as to have a suitable investment on CSC activities. There are many researches examining the impact of CSR activities on the organization performance in the world.
They are investigated not only in developed countries but also in developing countries. The result of these researches show the positive, negative or neutral impact, however, most of these researches find the positive impact of CSR activities on organization performance. Other two known researches which are investigated in emerging economic also show the positive relationship between CSR and organization performance, in other word, CSR can bring determined advantages for organization. In Vietnam, CSR is still new concept not only toward customer but also toward Vietnamese enterprise.
Based on the attitudes of CSR experts, because the lack of in-depth knowledge and professional research about CSR in Vietnam has led to LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 2 incomplete provided information, which then turns into inaccurate news and articles that can influence consumers, governments and enterprises as well. Therefore it‟s essential to raise the level of awareness of CSR and their roles in Vietnam. That is the reason to implement this study. This study aims to examine the perception of managers of the impact of CSR on organization performance in terms of financial performance and corporate reputation.
This relationship between corporate social responsibility activity and organizational performance attracts the interest of significant stakeholder groups (customer, employee, community and environment). Research was conducted in Southern Vietnam which main concentrate at Hochiminh city, Binh Duong province, Dong Nai province and somewhere else near to HCMC. The results of the study find that CSR activities in environment have positive impact on financial performance of organization. In addition implementation of CSR toward environment and customer has positive effect on corporate reputation as well.
LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 3 CHAPTER 1: INTRODUCTION 1.1 Research background The ongoing globalization has made people, capital and goods move quickly around the world and easier access information and communication. A large part of international enterprises move their investment in to developing countries to save production cost and take advantage from local market. This transformation brings not only many new opportunities and advantages but also new challenge to the developing countries including Vietnam. For the challenge, after joining to the World Trade Organization Vietnam must to invest more in environment policies, legal framework and especially CSR activities because of strict requirements from partner and international organization.
Furthermore, societal and environmental issues rise during the last few years in Vietnam are considered worldwide as corporate social responsibility that businesses should commit to their stakeholders such as the community, employees, and customers for the sake of positive long term benefits. In 2007, Vietnam Chamber of Commerce and Industry (VCCI) had a report to evaluating status CSR in Vietnam. This report shows that CSR still a new concept in Vietnam, it fist introduced to Vietnam in form of Code of Conduct or Social standard requirements (VCCI, 2007). In Vietnam, CSR is applied firstly in footwear and apparel industries (VCCI, 2007) after that it is extended to the other sectors.
In a report of VCCI regarding to the CSR in Vietnam in year 2011, CSR is still the hot issue which is considered in terms of environmental issues (water/ air pollution…), social responsibilities (human right, poverty rate…) and ethical issue (fight against corruption). There are some barriers to implementation CSR in Vietnam. According to VCCI (2011), barriers can be listed such as lack of awareness of the relative actor and hierarchy preference, lack of support from government, limit in resource, lack of CSR model for Vietnam…Furthermore some Vietnamese companies assume that CSR should be only for big companies or for international company only. Therefore LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 4 it is importance to change their mindset from “CSR as a cost” to “CSR as an investment”.
To do this thing, it needs more studies to investigate the impact of CSR in Vietnamese enterprises. There are many researches in the world show the positive impact of CSR on organization performance in term of financial performance and corporate reputation (Taneja et al. 351), it is not only true to the developed countries but also for the developing countries. We do this research aims to examine this relationship in Vietnam based on the managerial perception in Vietnam.
The result from this research will bring a clear insight about CSR in Vietnam then we will have more facilitate to make decision in implementation CSR in Vietnam.2 Research Issues, Objectives & Questions Knowing thoroughly CSR and their benefit in Vietnam are still big questions which are concerned by many enterprises, governmental organizations and consumer as well. This study aims to answer the following questions: 1. Is there a positive association between CSR activities and financial performance? 2. Is there a positive association between CSR activities and corporate reputation? 3.
To which extent category of CSR activities impacts on financial performance and corporate reputation? This study examines the impact of each category of CSR activities on organization performance in terms of financial performance and corporate reputation. Categorization of CSR activities in this study is based on the approach of CSR to different stakeholder groups. There are four categories of CSR activities which include CSR toward employee, customer, community and environment. The objectives of this study are: LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 5 - To examine the impact of CSR activities including community responsibilities, employee responsibilities, customer responsibilities and environment responsibilities on financial performance.
- To examine the impact of CSR activities including community responsibilities, employee responsibilities, customer responsibilities and environment responsibilities on corporate reputation.