Authors Phan Van Thanh 1 Szilrd Podruzsik 2

Authors: Phan Van Thanh 1 Szilárd Podruzsik 2 Enterprises in Vietnam - The Implementation of CSR International Conference for the 75 th Anniversary of DTI Pécs, Hungary - 19 -20 April 2018 1 Kaposvár University, Doctoral School of Management and Organizational Science, Kaposvár, Hungary (thanhpv. hut@gmail. com) 2 Corvinus University of Budapest, Department of Agricultural Economics and Rural Development, Budapest, Hungary

Contents Abstract 1. Introduction 2. Enterprises in Vietnam 3. Corporate Social Responsibility 4. The Implementation of CSR in Vietnam 5. Conclusion References © Phan Văn THANH, 2018 2

Introduction CSR is considered as a decisive factor for sustainable growth and increased profitability • Companies that engage in CSR initiatives build consumer trust and convey a positive company image. • CSR initiatives, so far, have tended to focus mainly on large and multinational companies. In Vietnam, the implementation of CSR in enterprises are facing many difficulties and limitations • Because its legal system is incomplete and monopoly, corruption and group interests strongly influence society. • SMEs account for up to 97% of all registered firm. They are limited by the financial resources, personnel, size of the business, and usually the business owner is also the director. They focus more on profit maximization than on social responsibility. There are few theoretical and empirical contributions to CSR in Vietnam The main purpose of this research: “to investigate the practices of CSR in Vietnam, especially in Vietnamese SMEs based on available literature and published data” © Phan Văn THANH, 2018 3

Enterprises in Vietnamese enterprise • SMEs are playing a vital role in the national economy, especially in the Vietnamese economy • In 2012, Vietnamese SMEs account for 97, 4% of the total number of registered companies. SMEs account for 77, 3% of the country's total labor force and contribute 26% of Vietnam's GDP • “SMEs are business establishments registered in accordance with the law. It is divided into three levels: micro, small and medium scale. ” Table 1. SME criteria by Vietnamese Government's Decree No. 56/2009/ND-CP Company category Business sector I. Agriculture, forestry and fisheries II. Industry and construction III. Trade and services © Phan Văn THANH, 2018 Micro Small Medium-sized Number of employees (L) Total assets (A) - Bil. VND Number of employees (L) L ≤ 10 A ≤ 20 10 < L ≤ 200 20 < A ≤ 100 200 < L ≤ 300 L ≤ 10 A ≤ 10 10 < L ≤ 50 10 < A ≤ 50 50 < L ≤ 100 4

Enterprises in Vietnam Figure 1. Number of newly registered enterprises in Vietnam from 2011 -2016 500, 000 450, 000 400, 000 350, 000 300, 000 250, 000 200, 000 150, 000 100, 000 50, 000 2011 2012 2013 The total number of active enterprises 2014 2015 2016 Number of newly registered enterprises [Source: Summary from http: //www. gso. gov. vn] © Phan Văn THANH, 2018 5

Corporate Social Responsibility CSR also known as: n Corporate Citizenship n Corporate Responsibility n Responsible Business n Corporate Social Responsiveness n Corporate Social Performance © Phan Văn THANH, 2018 6

Corporate Social Responsibility n European Commission (2001) defined CSR as: “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”. n The World Business Council for Sustainable Development (WBCSD, 2000) defines CSR as “the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large”. © Phan Văn THANH, 2018 Economical Responsibility PROFIT Environmental Responsibility PLANET PEOPLE Social Responsibility 7

Corporate Social Responsibility n Carroll (1979), CSR is “The social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organization at a given point in time”. n In Vietnam, a developing country, CSR is understood as the enterprise commitments to contribute to the sustainable economic development, through improving living quality of laborers, of their own families, of the community and of the whole society, in the way which is beneficial to both the enterprises and the general development of the society (Nguyen Ngoc Mai, 2013) © Phan Văn THANH, 2018 The Pyramid of Corporate Social Responsibility (Archie Carroll, 1991) 8

Corporate Social Responsibility CSR is more than charity and philanthropy It is NOT simply about organizations giving to society n CSR is about creating business value AND social value. About aligning and balancing shareholder, societal and environmental interests. n Effective CSR balances the interests of shareholders, society and the planet (3 P’s or 3 E’s), making stronger and more sustainable. Corporate Social Responsibility: adds VALUE (Every CSR Project should have a value-case analysis) n Value to the organization + value to society and/or value to environment © Phan Văn THANH, 2018 Sharehol ders Society 9

The Implementation of CSR in Vietnam 2010 2005 The CSR Awards began to be given to the most committed businesses by the CSR has first Vietnam Business introduced in Vietnam through the operation Linking Initiative of the multinational (VBLI) 2000 s The EU-funded project “Helping Vietnamese SMEs Adapt & Adopt CSR for Improved Linkages with Global Supply Chains in Sustainable” - UNIDO companies investing in Vietnam © Phan Văn THANH, 2018 10

The Implementation of CSR in Vietnam Good programs n n n Honda-Vietnam: "I love Vietnam” program started in 2004 Vision rehabilitation program for poor children of Western Union - 2004 Coca-Cola Vietnam: the Clean Water for Communities project - 2006 Unilever-Vietnam: Protection Vietnamese Smile program from 1998; Sanitation program for children in mountainous provinces - 2007 Computer Training Program (Topic 64) sponsored by Microsoft, Qualcomm, Hewlett Packard and USAID from 2006 The program supports congenital malformations and support for victims of Can Tho bridge collapse of Vina. Capital, Samsung - 2007 © Phan Văn THANH, 2018 Bad activities n n n China's melamine tainted milk Direct discharge of untreated sewage into Vedan's Thi Vai River in Vietnam - 2008 Sauce with 3 -MCPD toxic, ureacontaining fish sauce, or growth stimulators pass on cattle through animal feed are not fully resolved; Industrial alcohol made fatal to consumers, and poor quality counterfeit fertilizers and fraudulent gas stations. The 2016 Vietnam marine life disaster was a water pollution crisis affecting provinces in central Vietnam - The Formosa steel plant is suspected to be the source of the toxic chemical waste. 11

The Implementation of CSR in Vietnam The barriers and challenges for implementing CSR in Vietnam Insufficient awareness of the concept of social responsibility Productivity being affected by multiple Codes of Conduct (Co. C) Lack of financial resources and techniques for the implementation of social responsibility standards (especially for SMEs) Confusion due to differences between Co. C and the Labor Code Regulations Domestic influences on the implementation of Co. C © Phan Văn THANH, 2018 12

The Implementation of CSR in Vietnam Table 2. CSR awareness score distribution of Vietnamese SMEs Textiles and garment Total Leather and footwear Electronics Range of Awareness Score (*) Baseline End-line (n=400) (n=192) Lowest to 10 0. 3 0 11 to 20 0. 6 0 21 to 30 3. 7 2. 9 4. 1 2. 5 31 to 40 14. 8 17. 8 16. 8 41 to 50 53. 3 60. 1 51 to highest 28. 4 20. 5 (n=199) (n=185) (n=160) (n=50) (n=41) 0 0 0 3. 1 2. 4 2 2. 4 18. 5 14 17 8 14. 6 50. 7 56 53. 8 64. 5 60 58. 6 28 22. 5 27. 6 16. 4 30 24. 3 0 0 0. 6 medium awareness of CSR 0. 5 0 0. 6 [Source: UNIDO, 2013] Note: (*) Higher scores have higher awareness; “Baseline” and “End-line” refer to the year when the survey was conducted on the similar sample of 400 SMEs, in 2009 and 2013, respectively. © Phan Văn THANH, 2018 13

Conclusion CSR has a lot of advantages; CSR is a concept that cannot be ignored on the path of integration of enterprises in the world in general and Vietnam in particular. In Vietnam, the legal system is incomplete and monopoly, corruption and group interests strongly influence society. However, CSR has received major attention from large enterprises, foreign invested enterprises. For most Vietnamese SMEs, they focus more on maximizing profits than on social responsibility. CSR awareness and CSR activities are still limited. A study needed to identify factors that motivate Vietnamese SMEs to fulfill their social responsibilities as well as to determine the impact of CSR on the business performance. © Phan Văn THANH, 2018 14

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