CSR and Difficulties in Implementation in Vietnam Recently, the topic about Corporate Social Responsibility (CSR) is becoming more popular, CSR has been concerning by not only profit corporations but also the society. Many researches and studies have been occurred around the globe about this topic. CSR role has increasingly become important factor in business strategies and in consumer’s perception. In cased of Vietnam business, manager is becoming more and more concerning with CSR practices (Hieu, 2011), although implementing is still limited. This paper focus on providing overview about CSR, identifying the effect CSR that could bring to international business, evaluating the barriers of implementing CSR programs in Vietnam and giving recommendation to improve the CSR programs among Vietnamese enterprises.

1. Running head: CSR AND DIFFICULTIES IN IMPLEMENTATION IN VIETNAM 1
CSR and Difficulties in Implementation in Vietnam
Tran Hoang Thang
Integrated Business Experience 2
March, 20, 2016
Prof. Douglas Foster

2. CSR AND DIFFICULTIES IN IMPLEMENTATION IN VIETNAM 2
CSR and Difficulties in Implementation in Vietnam
Recently, the topic about Corporate Social Responsibility (CSR) is becoming more
popular, CSR has been concerning by not only profit corporations but also the society. Many
researches and studies have been occurred around the globe about this topic. CSR role has
increasingly become important factor in business strategies and in consumer’s perception. In
cased of Vietnam business, manager is becoming more and more concerning with CSR practices
(Hieu, 2011), although implementing is still limited.
This paper focus on providing overview about CSR, identifying the effect CSR that could
bring to international business, evaluating the barriers of implementing CSR programs in
Vietnam and giving recommendation to improve the CSR programs among Vietnamese
enterprises.
Brief description of CSR
The concept of CSR has a long and extensive history; the concept of CSR that began in
the early 19th century. However, CSR’s concept was formed prior in early 1950s, the term
"Social Responsibility" was first defined by Howard R. Bowen in 1953 in his book "Social
responsibilities of the Businessman". The Corporate Social Responsibilities concept was later
developed and contributed by different professional researchers. The later year corporate social
performance was discussed more specifically on three levels: social obligation, social
responsibility and social responsiveness. The first level was about responding to the market and
legal restrictions, the nest level was implying that corporate behavior was lifted up to the level of
reaching social values and the final one level social responsive, was meant focusing on the
proactive adaption to the social needs.

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Friedman (1970) also indicated another different concept of CSR which causing the
argument around the world. He believes that CSR activities in a business is the only
responsibility to maximize the profits as long as it obeys the basic rules which are both embodied
in law and ethical custom. He pointed out that the profit maximizing purpose is important and if
the company executives the burden of social costs outside of the business that would causes the
operations to become less efficient, because they are spending company money for no profit.
Then 20 year later, a new concept of CSR which was built based on all the previous and accepted
by majority of conscientious. Carroll (1991) introduced CSR in a pyramid shape which classified
CSR into four segments with decreasing in importance on upper level. The first level was the
basic but compulsory is profitable responsibility; the second level is called legal responsibility
which understood as social requirement, the next level is ethical responsibility or social
expectation, and the last level is social desire.
In brief, CSR can be known as a chain of actions which making the companies become
better for the society. The law does not obligate companies to do charities or contribute, raising
funds, CSR activities include these actions because CSR bring both positive effects on the
companies and society. However, the companies should balance the combine of profits and CSR
action in their business to achieve sustainable growth. CSR also can be known as a strategy to
raise the companies’ social statue through solving social problem with a right amount of
resources while creating benefits.
The effect of CSR on international business
Company performance can be defined as the level of achieving business objectives and
can be measured as profitability, sales growth or the achievement of strategic goals. Emezi &
Nwaneri (2015) finds that there is positive relationship between the investment on CSR and

4. CSR AND DIFFICULTIES IN IMPLEMENTATION IN VIETNAM 4
company profitability on the long-term. CSR affects international business not only internally
but also externally.
About Internal, justify investment and a deep awareness on CSR could lead companies to
increase company productivity, company image, job satisfaction and commitment by reducing
production mistakes, and employee turnover rate (Quaglia. and Russo. 2009). Moreover, CSR
can help the corporations to improvement in employee motivation and retention (Kim and Park,
2011). In modern business, talent employees are considered as significant factor in creating
competitive advantage because in modern business all the traditional resources can be duplicated
by competitors. The cooperation of employees in CSR practices will help enhance the relation
between employees with employer. Furthermore, the increase in employees’ commitment can
also make an impact on customer satisfaction.
Eternal benefit could gain from long term effort is increasing in sales figures, customer
satisfactions and the improving brand image (Tsui-Hsu Tsai. Jing Lin & Li. 2014). Moreover,
customer will believe more in the brands equity and companies’ reputation if the corporations
give more effort to CSR activities (Hur. Kim & Woo. 2014). Hsu (2012) has presented that
effective CSR practices can give the organization opportunity to enhance brand reputation and
differentiate their products. A company has social responsible can gain an increase on their
customer purchasing behavior.
As mentioned above, according to all the benefit companies can have by a good CSR
implementation, corporate social responsibility makes greater effects on an international business
than any local business. If CSR is against from a negative activities or is not implemented, it
could cause a great damage to multination corporations not only on the local business but also
the company’s international operation.

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The shareholders’ and stakeholders’ perspective of CSR
The shareholder’s perspective of Corporate Social Responsibilities
Naturally, corporations always concerned about their shareholders who invested money
in the companies. According to Carroll pyramid of CSR, the first fundamental level is financial
benefit for the shareholder. Moreover, basing on the shareholder perspective, shareholders
concern most about how to make profit become maximization, they view CSR as a cost for the
business which affects direct to their benefit so they don’t want to put money in CSR to some
extent. However, as society evolves, the demands for companies having a good image and a
good CSR practices is obvious, if the company want to extent their business and survive in the
modern industry they have to involve in CSR. With the right CSR implementing and the right
method to have the profit maximize the return to the corporation will be excessive and worth to
follow. Therefore, with the changing of the industry shareholder is also changing their way of
thinking, be more positively about CSR (Glac, 2014) and adapt with the new trend.
The stakeholder's perspective of Corporate Social Responsibilities
The stakeholder’s perspective of Corporate Social Responsibilities vary based on the
types of the stakeholders is. Stakeholder is including four primary groups: employees,
governments, customers and society (Ditlev-Simonsen, C., & Wenstop, F., 2013). It’s depend on
different group will have different perceptions about CSR activities. For instance:
The employee’s concepts about CSR is that the corporation which take care of their
employments, offer them competitive incomes, give them opportunity of careers developments,
best practice training and provide a heathy working (Yin et al., 2013)
The government and the society are cable share some common concepts to CSR like: the
company’s operation bring values to the society such as hiring local people, giving the local

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supplier business opportunities, or doing social contributions and funding to solve social issue
like helping homeless and poor people, giving children opportunities to go to school (Longo, M.,
Mura, M„ & Bonoli, A, 2005). In addition, for the environmental issues are also a part of
government and the society interest, the companies have to invest in finding a way to lessen the
environment affects from the companies’ operating activities.
The customers need from the corporations is being offered the quality goods and services
with trustworthy information and affordable prices. Furthermore, the corporation must not cause
confusing to customers about its product through advertisement.
In summary, in modern business beside targeting profit and the shareholder’s
satisfactions, there also happened to depend on the fulfillment of the stakeholders.
Barriers to implementing effective CSR program for an international corporation in
Vietnam.
Despise having knowledges, experiences in doing CSR in other countries and has been
the first corporation done CRS program in Vietnam as they enter the Vietnam market,
international companies still having barriers which prevent them from success the CSR
implantation.
The first barrier to implementing CSR is the law enforcement.
Vietnam government have introduced several law which relate to CSR practices
regarding labor protection and environment protection, for example: Law on Consumer
protection in 2011, Law of Environment Protection in 2005. However, the punishment for
violating the law is considered as insignificant which made implementing CSR become

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ineffective. In addition, CSR report is not compulsory and not bound by the law which may
made the information and achievement in CSR practices of the companies become suspicious.
The next barrier is the lack of knowledge of labor.
In a developing country like Vietnam, employees may not know their right and what they
deserve and what benefit they could require from their managers. That lead to the total
dependence of employee on their employer, and force employee to believe that they have lost of
the negotiate power about their benefits.
The main barrier to implementing CSR in Vietnam is consumer awareness and the
sensitive price of Vietnam market.
Consumers lack of knowledge and awareness about CSR is a main barrier which create a
great disturb for corporations making a decision about investment in CSR. The lack of awareness
of consumers is the reason why company’s’ employer may be aware of the significant of CSR
but they often do not concern much about it (Hieu, 2011) and may be give up their effort on it.
The main factor that make consumers being like this because their buying decision are usually
base on price (Bui, 2010) and Vietnamese people are price sensitive consumers (Pham, 2011).
Recommendations for effective implementation of CSR strategies for Vietnamese
companies
In summary, this paper shows the readers an overview about CSR and CSR effects on the
international business and a specific case of CSR barriers in a developing country. In Vietnam,
not only multinational companies but also local companies are facing difficulties in making an
effective CSR program, because of the difficulties from legal, the lack of knowledge of both

8. CSR AND DIFFICULTIES IN IMPLEMENTATION IN VIETNAM 8
employees and customers about CSR. Basing on the barriers analyzed, there could be come up
with some recommendations for executing CSR plan effectively in Vietnam.
Firstly, the multinational companies have to executing training program to help their
employees to understand the important of CSR and learn about their benefit and what they can
gain in a company devour and invest to CSR. Moreover, international enterprises should do
campaign to educate their customers about CSR, raise their awareness about CSR. Doing all that
will make customers change their buying behavior and be more aware of the product they
purchase, not only about price anymore.
Secondly, the local authorities and especially the government should concern more about
CSR and CSR requirement, by proposing stricter law which high penalty to punish the company
who violate the society benefit, the labor right or damage the environment. Moreover, should
offer reward or supporting to the corporation who perform a good CSR plan, make a great
contribute to solve society issues.

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