Application Of Corporate Responsibility In Vietnam

Published Date: 02 Nov 2017

- Mrs. Nguyen Thi Hoai Thu

- Mrs. Hoang Thi Viet Nu

- Ms. Lam Thi My Phung

- Mr. Nguyễn Trung Hiếu

4/29/2013

Contents

Concept of CSR 2

The development and application of CSR in the world 4

Practice of CSR in Vietnam business 8

3.1 Current practice 8

3.2 Challenges in applying CSR in Vietnam business 13

Conclusion 15

References

CONCEPTS

The concept of corporate social responsibility (CSR) was defined in the 1950s. Since the second half of the 20th century a long debate on CSR has been taking place. Bowen (1953) wrote the seminal book Social Responsibilities of the Businessman. Since then there has been a significant development of terminology, theories, and approaches from the social responsibility of business to CSR. The European Union supports CSR activities in the Europe since 1990s. They use CSR as a tool for achieving tenable and acceptable growth (ElisabetGarriga, Dome`necMele´, p.1).

Some of the definitions from different theories introduced from the 50s:

Author(s)

Nature of

theoretical

perspective(s)

Key argument/result

1

Friedman

(1970)

Agency theory

CSR is indicative of self-serving behavior on the part of managers, and thus, reduces shareholder wealth

2

Freeman

(1984)

Stakeholder theory

Managers should tailor their policies to satisfy numerous constituents, not just shareholders. These stakeholders include workers, customers, suppliers, and community organizations

3

Donaldson and Davis

(1991)

Stewardship theory

There is a moral imperative for managers to ‘do the right thing’, without regard to how such decisions affect firm performance

4

Donaldson and

Preston

(1995)

Stakeholder theory

Stressed the moral and ethical dimensions of stakeholder theory, as well as the business case for engaging in CSR

5

Jones (1995)

Stakeholder theory

Firms involved in repeated transactions with stakeholders on the basis of trust and cooperation have an incentive to be honest and ethical, since such behavior is beneficial to the firm

6

Hart (1995)

Resource-based view of the firm

For certain companies, environmental social responsibility can constitute a resource or capability that leads to a sustained competitive advantage

7

Jennings and Zandbergen

(1995)

Institutional

Institutions play an important role in shaping the consensus within a firm regarding the establishment of an ‘ecologically sustainable’ organization

8

Baron

(2001)

Theory of the firm

The use of CSR to attract socially responsible consumers is referred to as strategic CSR, in the sense that firms provide a public good in conjunction with their marketing/business strategy

9

Feddersen and Gilligan

(2001)

Theory of the firm

Activists and NGOs can play an important role in reducing information asymmetry with respect to CSR on the part of consumers

10

McWilliams and Siegel

(2001)

Theory of the firm

Presents a supply/demand perspective on CSR, which implies that the firm’s ideal level of CSR can be determined by cost- benefit analysis

11

McWilliams et al. (2002)

Resource-based view of the firm

CSR strategies, when supported by political strategies, can be used to create sustainable competitive advantage

12

Waldman et al. (2004)

Theory of the firm/strategic leadership theory

Certain aspects of CEO leadership can affect the propensity of firms to engage in CSR. Companies run by intellectually stimulating CEOs do more strategic CSR than comparable firms.

(© Blackwell Publishing Ltd 2006, P.7)

Furthermore, managers more and more interested in the causes and consequences of CSR, especially executives at multi-national or multi-divisional companies. These corporate leaders are fully aware of the fact that business norms and standards, regulatory frameworks, and stakeholder’s demand for CSR can vary substantially across nations, regions, and lines of business. They are also aware that their divisional managers are under certain pressure from employees, suppliers, community groups, NGOs, and government to increase their involvement in CSR. With so many conflicting goals and objectives, the definition of CSR is not always clear.

Generally, CSR can be defined by a concept where by companies combines social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis, or a transparent business should base on ethical values, compliance with legal requirements, and respect for people, communities, and the environment. Thus, beyond making profits to the shareholders, companies are responsible for their impact on their employees, customers, partners, investors, suppliers and vendors, the government and the community. Increasingly, stakeholders expect that companies should be more environmentally and socially responsible in doing their business.

THE DEVELOPMENT AND APPLICATION OF CSR IN THE WORLD

BP's oil spill in the Gulf of Mexico, Google's battle for free speech in China 2010, Toyota’s product recall for safety seriously affected Japanese safety reputation, India's 2G license scandal prolonged from 2008 to 2010 with the forced resignation of the Telecommunications Minister Andimuthu Raja due to the allegations of the government lost in revenue of $38 billion because of corruption and the most painful scandal from China’s milk by Sanlu Group with chemical melamine killing four babies as well as causing sickness to some 60,000 children are some typical cases explained why CSR has more huge implications.

Furthermore, in financial aspect, the big name Lehman Brothers collapsed—resulted in the biggest scandal not only in Wall Street but also all over the world, causing over 25,000 people unemployed. British Petroleum and Halliburton — taking shortcuts and ignoring protocol caused the largest accidental marine oil spill in the history of US. Numerous investigations have explored the causes and they turned out to come from the act of greedy and irresponsibility of these organizations.

In the last decade, globalization has blurred national borders, and technology has accelerated time and masked distance. The competition focusing on price and quality can not secure the company’s growth anymore. In fact, today more and more companies are realizing that brands have become intangible assets that help organization stay and grow, even on the global scale. However, it is very important to balance out between profit and risk and in the meantime, protect their own reputation. In order to remain productive, competitive, and relevant in a rapidly changing business world, they have to become socially responsible. Also because of globalization, there is also fierce competition for skilled employees, investors, and consumer loyalty. How a company relates with its workers, its host communities, and the marketplace can greatly contribute to the sustainability of its business success. Consumers become more interested in products with CSR attributes, thus, many companies uses CSR as their marketing strategy to make use of CSR as an attraction to key segments of the market, like "generation X" shoppers (Abagail Mcwilliams, Donald Siegel, p.3) or advertising with CSR normally creates products’ trust, quality and loyalty, for examples, Heinz advertised its Starkist brand tuna with dolphin free, making the product quality reliable to the end-users. (AbagailMcwilliams, Donald Siegel, p.4)

Climate change is also one of the concerns that need to raise in this topic, probably the biggest single driver of growth in the CSR industry of late. The great green awakening is making company take a serious look at its own impact on the environment. It comes with no surprise from the survey conducted by Mc Kinsey- consultancy that 95% of CEOs responded positive to question about the higher expectation for business to take on public responsibility compared with five years ago. According to Geoffrey Heal of Columbia Business School, $1 out of every $9 under professional management in America now involves an element of "socially responsible investment". Some of the big banks, including Goldman Sachs and UBS, have started to integrate environmental, social and governance issues in some of their equity research.

In addition to the above external pressures, firms are also facing strong demand for CSR from their employees, especially when the labor market becomes fiercely competitive for talent. "People want to work at a company where they share the values and the ethos," says Mike Kelly, head of CSR at the European arm of KPMG, an accounting firm.

In fact, there was scores of CSR organizations and business associations promoting corporate social responsibility with a collective membership of thousands of companies of different scales and in diverse industries. In the United States alone, 2002, San Francisco-based Business for Social Responsibility alone has 1,400 corporate members that globally employ more than six million workers, and account for a total annual revenue of US$1.5 trillion. In Europe, the London-based International Business Leaders Forum joins 60 major global members, and has established affiliate resource centers in emerging market economies where there is a demand for corporate involvement in social causes.

Ten years ago, for instance, only about a dozen of Fortune 500 companies issued CSR or sustainability report.  Now the majority does.

 More than 8,000 businesses around the world have signed the UN Global Compact pledging to show good global citizenship in the areas of human rights, labor standards and environmental protection. The next generation of business leaders is even more likely to prioritize CSR. According to data released this month by Net Impact, the nonprofit that aims to help businesses promote sustainability, 65% of MBAs surveyed say they want to make a social or environmental difference through their jobs.(Zynia L. Rionda, p.8)

In developing countries such as India, Indonesia, Brazil, Egypt, and the Philippines, business associations dedicated to CSR activities have also been established. Though these companies and organization have support for CSR but there are many variations on this. If we do a benchmark between the standard of management oriented discourse on CSR, the CSR application of developed companies is at certain limited level

In a survey carried out in India in 2003, it was found that not even 20% of the large corporations surveyed had a policy or a formal program on CSR and of these majorities were charitable nature, involving small amount of money donation. At the same time, there is a gap between how companies understand the boundaries of their responsibility and how these boundaries are perceived by their own employees and the public. For instance, a survey about CSR awareness conducted in India found that leaders put emphasis on offering low prices, fair treatment between employees and applicants, while more than 60% of the general public held these companies responsible for bridging the gap between the rich and the poor, reducing human rights abuses, solving social problems and increasing economic stability. (Marina Prieto-Carrón, Peter Lund-Thomsen, Anita Chan, Ana Muroand Chandra Bhushan (2006), p.7)

Why does CSR become more and more popular and have wide spread impact on many countries all over the world?

Companies should embrace CSR in their business to benefit themselves and benefit the society because of the below reasons:

Firstly, CSR brings innovation to the firms and innovation helps companies exist and develop in this rapidly changing world. Why do most companies continuously invent new products with unique features? For an example, Apple with Iphone and Ipad series, Unilever with hair conditioner less water, these innovations help the firms get long-term development.

Secondly, CSR helps enterprises in terms of branding and product differentiation. For example, the "Cola Wars" is one of the longest running rivalries in business. Coke and Pepsi are constantly looking to grab as much market share as they can from each other. Yet they are both adopting similar, although slightly different, approaches to CSR. Both Pepsi and Coke are pursuing strategies of zero net water usage. Both companies offer water bottles made from sustainable packaging as well. Another example for product differentiation is a ‘hybrid’ version of a Honda Accord, which generates less pollution than a standard Honda Accord. Thus, it is clear to most consumers that the hybrid car is better than the standard model. Some consumers are willing to pay premium price for this hybrid car, given that the social characteristic of less pollution is ‘valuable’ to them. This type of differentiation can strengthen or maintain the reputation of the firm which adds value in addition to allowing the firm to meet a particular market demand (Fombrun and Shanley, 1990).

Thirdly, long-term thinking ensures the sustainability of company future. "The only reason we’re doing sustainability is to drive the growth of Unilever," said by McDonald- the Unilever Global VP for HR, Marketing, Communications and Sustainability.

The next reason for application of CSR is for Customer Relationships. One of the foundational elements of CSR is that it gives companies the reason beyond basic ethics to consider the benefits of active involvement in communities. In his article "The 7 Principles of Business Integrity," business strategist Robert Moment argues that 21st-century companies must prove themselves to customers to build long-term, trusting relationships. They must also get themselves involved in the community to give back. This community connection endears your company to the local markets in which you operate. For the past few years, Walmart has established itself as a leader in environmental efforts. Walmart is a leader in environmentalism. In 2008, Walmart ran an ad campaign designed to raise awareness about the environment and the product choices consumers could make. Using CSR can help you engage with your customers in new ways. Since the message is about something "good," it can often be an easier way to communicate with your customers. This is an underused tool for business-to-business company communication.

Whether firms use CSR to achieve sustainable competitive advantage is another important question. A paper by Reinhardt (1998) finds that a firm engaging in a CSR-based strategy can only generate an abnormal return if it can prevent competitors from imitating its strategy. In competitive markets this is unlikely, since CSR is highly transparent, with little causal ambiguity. Other theoretical studies (Dutta et al., 1995; Hoppe and Lehmann-Grube, 2001) show that any early mover advantages that might be gained by offering higher quality products (recall that CSR is modeled as a ‘quality improvement’ in McWilliams and Siegel, 2001) are eroded when competitive strategies are observable.

Employee motivation may be the most advantage that executives expect to apply in CSR program. There is evidence that effective implementation CSR can have significant impact on motivating, developing and retaining staff.  A good corporate reputation helps firms attract and retain the best people. A sound working environment is likely to make employees more passionate and engaged with a social mandate, leading more productivity, innovation and finally more benefits to businesses, but also to better-educated, healthier families and eventually more prosperous communities.(Zynia L. Rionda, P.4) For companies in the U.S., an organization's stature in the community is the second most important driver of employee engagement, and a company's reputation for social responsibility is also among the top 10. According to a survey conducted by Deloitte last year, 70% of young employees, those ages ranging from 18 to 26, say a company's commitment to the community has an influence on their decision to work there.

Take the Coca-Cola Company, which recently started a program to empower young women entrepreneurs. The 5x20 program aims to bring five million women in the developing world into its business by 2020 as local bottlers and distributors of Coca-Cola products. Research suggests that such an investment in women can have a multiplier effect that leads to the increase in not only revenues but also the workforce for businesses. 

Nevertheless, in practice, some companies are still very cautious to develop CSR program because they are afraid that increasing expenses for environmental programs, more employee training and labor relation improvement as well as efficient waste management programs in the short term. Furthermore, the challenge of maximizing shareholder value hurdles companies in applying CSR. Thus, the owners should balance the financial performance with unexpected risks and trustfully sustainable growth.

Current practice

Since application of "Doi Moi" policy in 1986, Vietnam has been significantly developing with a rapid economic growth approximately average from 5% - 6% Nowadays, due to business competition and international environment, Vietnam corporate are focusing on sustainability development including environment concerns, working conditions improvement as well as health and safety for customer, especially after untreated wastewater scandals, worker strikes in Ho Chi Minh City as well as unsafe quality of product or service and so forth. The research of Vietnamese consumers’ behavior towards social accountability (citied in Huong B 2010) indicated that "from the Vietnamese consumer perspective, the dimensions attributed to CSR are economic responsibilities (59%), philanthropic responsibilities (59%), environmental responsibilities (54%), and societal responsibilities (32%)". Moreover, since 2005, Vietnam Chamber of Commerce and Industry (VCCI) has been organizing CSR Award in order to raise awareness about the roles and benefits of CSR for the business sustainable development, communities as well as society. Likewise, after three years of organizing CSR Award, VCCI found that there were not only textiles and footwear industry participated in their program but also other areas concerned in recent years (VCCI, 2013).

On the other hand, when Vietnam business carries out CSR issues, they also may face with difficulties in application. The research of Hieu P (2011) demonstrated that there are four challenges that business may overcome when they carry out CSR process including a barrier between law enforcement and business cooperation, financial and method concerns of business, limited staff’s knowledge of CSR as well as lack of CSR information.

Current practices in Vietnam

Environment and community

In the new millennium, corporations request to have responsibility for the community as well as the environmental issues where they established. The business mission is no longer make profit but also care environmental concerns and community involvement. A research from The World Business Council for Sustainable Development (1999), (cited in Dahlsrud, 2006, p. 7) explains the definition of CSR as ‘the commitment of business to contribute to sustainable economic development, (…) the local community and society at large to improve their quality of life’. However, we will examine how the company in Vietnam was responding the CSR issues, especially in environment concerns.

Vedan Viet Nam is considered as the typical case of CSR in Vietnam of infamous impact on the environment. Vedan was established in 1991 and located in Long Thanh Dong Nai. From 1995, Vedan had to pay VND1.8 billion as a compensation for local people due to discharge untreated waste water into Thi Vai River. Furthermore, on Sep 2008, inspectors from several departments found that this company again discharged amount of wastewater untreated into the Thi Vai River, approximately 5,000 cubic meters per day (Thai Thien, 2009). This activity resulted in the pollution of this area (change in water colour, bad smell) and consequently the death of fish, shrimp and so forth. According to Chief Inspector of the Ministry of Natural Resources and Environment, sanctions are imposed sanctions are imposed on environmental violation with a total fine of VND267.5 million as well as the enforcement to pay fees for environmental protection more than VND127 billion (PV-VNN, 2010). Furthermore, on July 2009, local environmental inspectors discovered a broken wastewater discharge system of San Miguel Pure Foods Vietnam and some 230,000 cubic meters of wastewater were dumped into ThiTinh River. Unfortunately, it has deteriorated as well as inefficient operation in earlier 2008 but the decision from Management still met with silence over the situation. As the result, the authorised department found that from wastewater at the reservoir exceeded nearly 300 times of standard level including "Nitrogen, phosphorus, coli form bacteria and so forth" (Van Nam, 2009 & V.N , T.N, 2009).

On the other hand, individually, Vietnamese are on the habit of using plastic bags instead of eco-bags due to convenient, although some of them know that impact on environment. Research from Ho Chi Minh City Waste Recycle Fund showed that there is 50 ton plastic per day used. Moreover, according to The Ministry of Natural Resources and Environment stated that average Vietnamese family throws out 365 bags per year which showed higher compared to Australian 250 bags and Scottish 153 bags. Likewise, a study by Ho Chi Minh City Solid Waste Management Office indicated that there were 35 to 40 tons of plastic bags in rubbish dumped every day and the rest of them went to rivers, canals and dikes. In contrast, Metro Cash Carry Vietnam has been encouraging their employee and customer to use Eco-bags rather than plastic bags since 2007 because of the biodegradable waste. Following this company, giant players in Vietnam retail industry such as Maximark, Citimart and Big C also launched the campaign to reduce the consumption of plastic bags as a message to convey the concept of "environment –friendly enterprise", especially Co-op Mart’s banner message program "save plastics bags means save the environment" (Vietnam’s plastic bag habit dying hard, 2009) to educate and increase the awareness of the customers.

Another example from tourism would be typical case of CSR for hospitality industry. According to Grant Thornton’s Hotel Survey in 2012 related to Hospitality and Tourism industry in Vietnam, the report indicated that Vietnam attracts more than six million foreign visitors which achieve an annual growth of 19.1% growth year on year. This research also found that an average occupancy rate in the biggest cities in Vietnam such as Ho Chi Minh (67.1%), Hanoi (61.7%) and Da Nang- Hoi An (69.4 %) (Grant Thornton Vietnam, 2012). Similarly, report from the seminar on environmental protection at tourist accommodations on June 2012 showed that tourist accommodations system in Viet Nam has been increased significantly from 69,000 rooms in 2001 up to 265,000 in 2011 (Tourist accommodations not report current environmental situation, 2012). Good figures from the last 10 years showed a good potential of this industry for Vietnam. Moreover, this report emphasized that there were only 50% of tourist accommodations concerning about environmental issues influenced on their staff and tourists. According to the Strategy on Viet Nam’s tourism development until 2020 and vision 2030, the Government stated that there is an implementation on green tourism as well as development of green tourism products (Strategy on Viet Nam’s tourism development until 2020, vision to 2030, 2011). For instance, Rex Hotel, a five star Hotel in Ho Chi Minh city, carried out energy saving solutions with ‘replacing incandescent bulbs by compact bulbs; installing throttles in taps to save water; replacing refrigerators using non-CFC (non-chlorofluorocarbon) and installed extra sieve in the sink to reduce solid waste slipping into the waste water system’ (Rex Hotel- Your Vietnam Home, 2012). Moreover, they also trained their staff on environmental issues in order to help them achieve the company goal on environment. The event of Earth Hour since 2007 by World Wildlife Fund for saving electricity for climate changes would show a positive result of the action of CSR for this industry. The statistics from the Electricity of Vietnam showed that country saved of 546,000 kWh (equivalent to VND712 million) by switching of the light from 20:30 to 21:30 on the Earth Hour day 2012 (Earth Hour helps Vietnam save 546,000 kWh, 2012). The participant of 15,000 individuals and units including hospitality properties such as Norfolk Hotel, Caravelle Hotel, Rex Hotel and so forth around Central Business District. In Ho Chi Minh City, tourism industry can be noticed as the pioneer in applying CSR.

Those are only few examples that Vietnam has to face on positive and negative perception that might have impact on the environment on both scales of industry, organization operating in the economy.

Stakeholder

Any corporation is does not strive to survive alone, it is highly recommended to find and establish the relationship with stakeholders in order to help it run well as well have an opportunity to expand their business. Weiss (2006) cited a study by Freedman who defines stakeholders as any individual or group that is able to affect or be affected by an organization. Moreover, stakeholders also are divided into two groups related to the corporate performance including primary and secondary level. According to Weiss (2006) the primary stakeholders consist of the owners, customers, employees and suppliers. Furthermore, the secondary stakeholders are people who are interested in corporate activities including consumers, media, government and so forth. However, in this report, we only examined employee and consumer issues as a stakeholder applied in CSR Vietnam and how was company in Vietnam reacting.

Employee

Research from Business Impact (2000), (cited in Moir, 2001) indicated that employees want to be treated fairly and equally in corporations and also want to work under better conditions as well as get a better offer on benefit packages. For example, Norfolk Group, a Vietnamese Australian joint-venture, all staff working at their properties with conditions in accordance with Occupational Health and Safety (OH&S), Equal Employment Opportunities (EEQ) and Superannuation issues. That means employees will work in a safe and diverse environment with fairly treatment. Furthermore, employees have opportunity to join company trade union who will uphold employee rights at the workplace. At the same time, following the previous years, the Management carried out staff performance appraisal at the end of the year 2012 in order to find out person who has a good performance for rewarding six to seven months of bonus (Mai V, personal communication, 2012). On the other hand, another negative example should be examined that approximately 1,400 workers were on a strike at Komega Sports Company- a glove sport manufactory- in Ho Chi Minh City upon an announcement of the Management about ban on drink and urination. According to workers, the company only has sixteen cards used rest room and drinking water and time allows for these activities from 9:00 am to 10:30 pm during the day. Within a short time and limited card, each worker only had one minute to get all done (Duc D., 2004). Moreover, in the beginning of year 2013, nearly 2,000 workers went on strike at Taicera Ceramic Company in Dong Nai province due to working conditions and employee benefits issues. Workers said that they had to work twelve hour per day and twenty days per month under noisy and dust working environment. Likewise, the company did not provide their employees labour protections as well as Operation Health and Safety issues. Furthermore, the company did not follow current salary policy in accordance with Vietnam Labour Law and company commitment (Thuy Linh, Do Hung, 2013).

Likewise, another responsibility of corporations is that employees have an opportunity for growth and well-being while working at workplace. Hendry & Sorell (1999) indicated that corporate can provide employee with benefits including training, education and personal development as well as promotion opportunities. For example, FPT Corporation, a leading IT company in Vietnam, offers their newcomers to attend workshops including work guidelines, company regulations as well as business culture before commencing work. Moreover, FPT staff is also well trained with professional skills in order to meet each job requirements. In the mean time, the management level has opportunities to sign on Mini MBA program which is able to find management talents as well as supports the company’s personnel appointment in the future (FPT Corporation, 2013).

Consumer

Furthermore, consumers are important stakeholders of the business, corporate might take responsibility to consumers who are financially related to the business property. According to Jensen (2002) consumers also concerned about quality of products and they are willing to pay for them. For instance, Ministry of Heath of Vietnam concerned about dairy products with melamine distributed nationwide after preliminary tests in imported raw materials from China in 2008. At that time, Vinamilk, one of the largest milk companies in Vietnam, took action promptly upon their sending out all products tested at the Centre of Analytical Services and Experiment in Ho Chi Minh City. No melamine was found in their products because raw materials are imported from Australia, Holland and New Zealand (Hong Van, Thu Hien, 2008). This conveyed the message of due diligence in manufacturing products to offer customer. Overall, the on time action from Vinamilk is considered to be most effective move to assure the concern of the consumers which were set at highest alarming level.

On the other hand, Rowley & Berman (2000) and Waddock& Graves (2007) (citied in Campbell J, 2007) stated that the main characteristics of CSR on customer perspective is not only provide superior product to them but also un-misleading advertising of product considered. For example, MiGau Do (Red Bear noodle), a brand of Asia Food Corporation turned out to be the bad lesson in terms of marketing for all corporate in FMCG industry about the abuse code of conduct. In 2012, the company launched advertising campaign with titled ‘Red Bear - Tie People’s Love’ which attracted millions of audience after few weeks on air. Even consumers shed tears because of this touching commercials about the child contracting with cancer. His parents were hopeless because they had not enough money for treatment. This commercial also clearly stated that every purchase will raise VND10 (equivalent to USD 0.00048) to make a difference for the child cancer patient. At the end of the day, all consumers are letting down with the split out of information that this is simply a normal commercial using the concept of cancer. As the result, the advertising gained initial success because of using customer’s psychology and it attracted a lot of buyers (30% sales increase) as well as hotline donation (Talk Vietnam, 2012 &VietnamNet Newspaper 2012)but due to the split out of information, the image of this company was badly damaged, they faced a lot of pressure on press but no figure of damage was reported.

Challenges in applying CSR in Vietnam business

Above is some of the typical case of CSR applied in Vietnam. However, these activities have not yet been fully supported by the community. Local community does not have enough interest in participating in and contributing to CSR activities. According to a survey on CSR conducted by SRI Vietnam, 90% of interviewees misunderstand the idea of CSR and related issues. 40% of interviewees consider CSR as a social obligation of businesses, which mainly consists of community works and events. Vietnamese consumers have not yet aware any perception toward CSR as well as other ethical behaviors even though they have been suffering serious consequences caused by corporations during the past few years. There are not much communication between company and the community at the grassroots.

While the level of awareness about CSR of Vietnamese is still low, it is no effort to increase awareness of CSR. The main issue is the high cost of international experts and lack of clear guideline. There is no way to well define the direction to CSR initiatives of company. In addition, the media suspicion also makes it more difficult in dealing with general public. Lack of in-depth knowledge and professional research about CSR in Vietnam has resulted in incomplete information provided, which produces inaccurate news and articles. CSR programs are often cited as PR (Public Relations) activities – another new 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 point of view, the lack of resources and commitment for CSR is one of the major challenges. There is a resistance to change among many local companies who keep their conventional thinking system. The business performance is measured by simple and more visible metrics. These companies sense and apply CSR as branding incentives for drivers by short term to make money. It is hard to find competent staff to overlook CSR activities at the companies that want to pursue a longer term, more sustainable approach to CSR. In Vietnam, 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. That is the attitude of businesses being 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.

The transformation from agricultural based economy to industrialized one has made Vietnam’s environment suffer immensely from a unique ecological assets. To provide a more environment for business to operate on, the Vietnam Commercial Law has been through a process of ongoing revision. It appears to be a fairly comprehensive regulatory framework for environmental and social protection. However, the challenge is that what in policy is not always implemented in practice and there are duplications and contradictions between rules and regulations that even complicate matters.

There is no clear responsibility for CSR within the Gov. Vietnam passed its first Environmental Protection Law in 1993. In 2006 it was amended to include provisions for the adoption of "polluter pays" measures; for instance waste discharge into water bodies and the disposal of hazardous wastes. In principle, with the new law, authorities are required to report to communities the organization name that causes the pollution, and people can demand either businesses or government agencies to provide information on polluting incidents. Each year ‘State of the Environment’ reports are supposed to be provided by authorities at various levels. Despite these changes, particularly with regard to industrial pollutants, there are concerns that matters appear to be getting worse and that this in turn is having serious consequences for farmers’ life. Amongst those companies that participate in the Manufacturing and Distribution working group of the Vietnam Business Forum, there is a strong perception that it is unlikely for a manufacturing facility to suffer any serious legal consequences if they ignore the pollution laws.

In relation to labor issues, various new laws and decrees were enacted, including the "tripartite partnership" between MOLISA (Ministry of Labor, Invalids and Social Affairs, representing the government), VGCL (representing employees) and VCCI (Vietnam Chamber of Commerce & Industry, representing employers) to mediate labor disputes. Decision 1129 was passed in August by the Prime Minister, on "enhancing leadership, providing direction for the development of harmonious labor relations, improved investment environment, and social order". In addition to raising minimum wages, the government issued Decree 11 in January 2008 which states that if a strike is deemed ‘unlawful’ by the courts, those workers involved are required to pay compensation to their employers. This later decree has been a cause of concern for many groups working on issues in a country where it is nearly impossible to have a ‘legal strike’ and labor activists face imprisonment.

Furthermore, like elsewhere, the need for improved managerial capacity, human resource practices and upgraded production facilities all pose challenges for embedding sustainable business practices. According to 2006 ILO research in Vietnam, the challenges and lack of skills is more apparent in smaller enterprises and others that do not have exclusive relationships with multinational buyers. Factories with exclusive relationships receive more support for upgrading production and improving labor standards. Research by the Vietnam Business Links Initiative in 2007 noted that to change business practices, "mentality and culture at the base of organizations" is the greatest challenge. Changes in management systems require changes in how managers think but that "most of the enterprises think that it is a very challenging task and costly with very modest evidence of success and gains". This is compounded by the low profit margins for garment and textile factories whereby employers look for any means possible to keep costs down.

Buyer orders are likely to be a major incentive for domestic manufacturers to operate more sustainably. Thus it appears that those companies – whether local or foreign-owned, private or state-owned – producing for image-conscious (foreign) brands tend to be more concerned with (or see a clearer business case for) acting responsibly. In particular, since 1997, many producers for large American and European customers have started to adopt SA 8000.

On the demand side, faced to these CSR issues, Vietnamese consumers seem to response passively and weakly to protect themselves. At the reverse, consumers living in developed countries are more and more conscientious on their health and life in their purchasing behavior (Corporate Social responsibility Monitor 2001: Global Public Opinion on the changing role of companies, APCO Worldwide, 2004) and engage in putting aggressively pressure on companies to take greater social responsibility. The recent transition from planned to the market economy in the country explains mainly the reasons why Vietnamese consumers, victims of CSR scandals, do not know how to react actively to these issues and also how to use consumer power to make a social change.

Although the CSR concept is not new in Vietnam, its role and its impact on the business success and well-being of consumers have not yet attracted a great number of Vietnamese economists to get involved in such a research work. Besides, in the academic and non-academic literature on CSR, studies conducted by international authors do not treat the Vietnamese case (Shaw, Shin, 2000, Belk, Devinney, Eckhardt, 2005, Brinkmann; Peattie, Sigh, Sanchez, Bosque, 2008). More importantly, the Vietnamese consumers' perception toward CSR as well as their ethical consumption behavior remains virtually unknown even though they have been suffering serious consequences caused by growing CSR issues during the past few years.

CONCLUSION

Through the review, we can see that CSR concept is not new to the whole world the limitation in application. However, the concept matching and linking of CSR into daily activities bring many benefits to the business. For small and medium enterprises in Vietnam, the application of the concept of CSR can bring significant benefits to the market, signing a contract or expand with customers, including organizations international customers. The productivity of enterprises is also enhanced by improving the working conditions of the employees.

For Vietnam, after joining the WTO, the competition about pricing and quality is not enough, in addition to those factors, there are factors that companies implement CSR or not. This has a huge impact on reputation and brand products of these enterprises. Today Vietnam business community are becoming aware of the many benefits derived from the investment performance of socially responsible companies. This was previously considered to be the single responsibility of the State and the Social Organization

Vietnam is integrating into the global economy; investors and foreign companies are setting up operations or seeking partners in Vietnam, so the issue Vietnam enterprises have faced in all aspects of the global market is becoming increasingly important. The need to have programs and activities to raise awareness and understanding of CSR enterprises especially small and medium enterprises is crucial so that they have a comprehensive approach to CSR in the future.

To successfully apply CSR in developing countries and the developed countries have gone through a lot of difficulties. However, it is time to take action if the organization wants to reap the fruits of society and the environment.