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THE EFFECT OF CORPORATE SOCIAL RESPONSIBILITY ON
COMPANY’S FINANCIAL PERFORMANCE
“A case study of NamTrieu Company"

BY
NGUYEN HAI MINH Graduation Project Submitted to the Department of Business Studies, HELP
University College, in Partial Fulfillment of the Requirements for the Degree of
Bachelor of Business (Accounting) Hons
Otc 2010
Declaration of Originality and Word Count
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DECLARATION

I declare that this graduation project is based on my original work except for

accompanied by Corporate Social Responsibility that business must address
concerns. The successful implementation of social responsibility particularly as
businesses becomes more meaningful in the current period of integration when
Vietnam became an official member of the World Trade Organization. 4

Table of contents
Chapter 1: INTRODUCTION
1.1 Research Background
………………………………………… … ……… 1
1.1.2 CSR in the world…………………………………………………………….1
1.1.3 CSR in Vietnam……………………………… ……….…………………5
1.2 Reason for Future
Research………………………………………………10
1.2.1 Objectives of Research………………………………………….……… 10
1.2.2 Structure of
Research…………………………………………………….10
CHAPTER 2: LITERATURE REVIEW
2.1. The overview of CSR
………………………………………………… 12
2.2 CSR motivates Financial
Performance……………………………………19
CHAPTER 3: RESEARCH METHODOLOGY
3.1 Overview………………………………………………………………………25

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3.2 Sphere of Research…………………………………………………….………25
3.3 Data


Exhibit 1: 10 Principles of UN Global Compact …………………………………….4
Exhibit 2: Carroll‟s pyramid……………………………………………………… 17
Table 1: Question 1 – Result analysis……………………………………………….31
Exhibit 3: Question 2 – Result analysis………….……………………… ……… 32
Table 3: Question 3 – Result analysis………………………………… ………… 33
Table 3: Question 4 – Result analysis……………………………… …………… 34
Exhibit 4: Question 2 – Result analysis………………………… ……………… 37
Table 4: Question 6 – Result analysis…………………………… ……………… 38
Table 5: Question 7 – Result analysis……………………………… …………… 39
Table 6: Question – Result analysis……………………………………………… 32

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List of Abbreviations

 CSR
 Corporate Social Responsibility
 RI
 Responsible Investment
 IR

present across the corner of the planet, has embarked on a series of community
activities. Evian, the famous French mineral water, distributes products in the water
bottle-friendly environment. To Search engine Google Company, in Googleplex
headquarters, the employees are treated like a very precious asset. General Electric
use $ 2 billion annually to research new technologies to protect the environment.

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Deputy Head of Public Relations of Best Buy, Prahl Paul has stated that "We just
feel we will succeed in the marketplace if we take social responsibility." In many
corporate, CSR report often accompany with the annual report. In developed
countries, the cost of social responsibility for the research and development accounts
for more than the cost to a charity, although the cost of philanthropy is not small.
In addition to ensuring the quality of life for employees, environmental protection,
and development of products that create benefits for consumers and the environment.
Many companies also built charity funds and contribute to the development of
society and community. Royall Dutch Shell established charity funds, including the
construction of educational centers Early Learning Centre in South Africa to educate
children and teach skills for adults.

World Bank and Merck pharmaceutical company has launched an initiative to raise
the fund of U.S. $ 50 million including the donation of Mectizan products to help 28
African countries eliminate disease. The billionaire, along with the company's funds
also contributed a lot to do charity work like Bill Gates or Warren Buffet.

Consumers today are not only interested in product quality but also appreciate the
way the company created the products whether the product is environmental friendly
and safety. In many countries, there are many community trends are trying to protect
consumers such as boycott fringe foods aimed at companies producing fast food,
fizzy drinks, Fairtrade trends (ensuring fair material price of product, safety working
conditions in factories from the 3rd countries), avoiding to use of fur products,
1
Manh Kim (2008), "Corporate citizen" on “Tuoi Tre” 10/12/2008

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to make CSR become an international practice have become a reality. In 1999, a
global compact was proposed by the UN Secretary Kofi Annan at the World
Economic Forum. On July 2000, United Nations Global Compact (UNGC) was
officially launched. This rule set consists of 10 rules such as to ensure respect for
human rights, child abuse prevention, and environmental protection. Although it is
not a binding document, it is recognized as a formal framework to discuss on the
forums of the United Nations. SCR is also recognized very early on by the European
Commission officially. In addition, CSR has been also put on the agenda official
APEC summit in November 2008 in Lima, Peru.
Table 1: 10 Principles of UN Global Compact

1. Businesses should support and respect of human rights has been published
internationally
2. Make sure not complicit with the abuse of human rights
3. Businesses must support the freedom of association and the recognition and rights
of collective labor agreements
4. Eliminate all forms of forced labor and forced labor
5. Eliminate the use of child labor
6. Eliminate discrimination in employment and occupation
7. Businesses must support the plan for the prevention of environmental challenges
8. Implementation of initiatives to further improve the environmental responsibility

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Although the goal is such policies must come to corporate to generate initiatives for
companies in Vietnam.
CSR was introduced into Vietnam through the activities of multinational companies
investing in Vietnam. These companies often have Code of Conduct which can be
applied in many different markets. CSR of almost foreign companies has
implemented efficiency in Vietnam. To name some examples such as “I love
Vietnam” of Honda Vietnam, the educational programs for personal hygiene for
children in central provinces of Unilever, the computer training programs TOPIC64
of Microsoft, Qualcomm and HP, the program of surgery for congenital heart defects
Samsung, the program recovery of eyesight to the poor children of the Western
Union.
For domestic companies, almost exporting companies have access to the CSR.
Orders from US, Japan, EU require businesses of footwear must be applied to
application of good working condition labor (SA8000 standards) or sanitary and food
safety for seafood businesses. Besides, many domestic private companies have
implemented CSR fairly well, for example Mai Linh Corporation, Tan Tao Group,
Duy Loi, ACB, Sacombank, Kinh Do Bakery
2
.
Aware of the CSR, there were some notable seminars and conference discussing
topics such as the 6
th
Asian CSR forum discuss about the social responsibility of
enterprises (Diễn Đàn Châu Á trách nhiệm xã hội của doanh nghiệp) on October 13
th

2007 at HoChiMinh City, the conference “Improving the competitiveness of Vietnam
through the social responsibility of enterprises “was held on 8
th

14000, GRI but these standards not an agreement between the government and the
provisions of international conventions, therefore, is binding only between the export
or set by the companies themselves. We already have companies producing clean
vegetable production, aquaculture clean, clean coal production. But these actions

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carry more mandatory or spontaneous than a voluntary employment associated with
business operations and business image.

Our country has made good business people associated with the image of businesses
that Duong Thi Bach Diep, Chairman Diep Bach Duong Co., Ltd., have supported
the fund, "the poor" of the Vietnam Fatherland Front Committee 18 billion VND
Nguyen Thi Dieu Hien, director of aquatic products processing Co. Peace in
addition we also support the activities of natural disasters, flooding of businesses and
entrepreneurs.

In addition, Vietnam also had an official forum to discuss about CSR at: http: / /
www.vietnamforumcsr.net/ which is designed by Action Aid International Vietnam.
Growth and ecological environment has always been two opposing problems of
developing economies. After the process of rapid economic growth, the environment
of many countries has been destroyed. Vietnam Government has expressed particular
concern about this issue in the "Orientation for Sustainable Development in
Vietnam" to the country's sustainable development on the basis of economic
development, social development, environmental protection (Article 1, Decision No.
153 / QD / CP-TTg, 17th August, 2004). By commitment to the Millennium goals to
show that Vietnam doesn‟t ignore people's quality of life for the target growth in the
short term. But that requires the system of law rules must be strictly controlled and
highly accurate. In terms of state management, Vietnam has the labor law in 1994,
and amended two times in 2002 (the regulations on labor agreements, overtime,
social security, unemployment benefits) and 2006 (the contents of labor disputes and

officials who want to extend their working time. Actually, there was no association
in the presence of consumers in cases of food contamination, environmental in the
past.

1.2 Reason for Future Research
While there are many studies on CSR in Europe, the Americas, just only a small
number of research articles on CSR in Vietnam. This paper can contribute small
detail to clarify the impact of CSR on the financial operations of the company
through specific examples.

1.2.1 Objectives of Research
 To summary of the CSR concept and its definition,
 To understand the importance of CSR,
 To gain insight into SCR applications in business operations of NamTrieu
Company,
 To examine the relationship between CSR and financial performance.

1.2.2 Structure of Research
This study is consist of five chapters:
Chapter 1: Introduction
This chapter will introduce the situation of CSR and giving a reason and purpose
of the study.
Chapter 2: Literature Review

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This chapter will explain the theory and experimental results related to the
problem that research subjects.
Chapter 3: Research Methodology
This chapter will present the method used to solve the problem posed by the
subject in order to achieve overall objectives.

competitive advantages and long-term community development.
Attention to the consequences arising from the operation of enterprises in particular,
the economic activity in general has a long life, but the concept CSR only appeared
in the years 50s of the 20
th
century in the USA with H. R. Bowen. The spread of
model Ford - Taylor in corporate governance and the development model of the
welfare state (instead of the employer‟s charity) has obscured the issue of social
responsibility of business industry. Until the early 90s of the 20
th
century, before the
threats that people think the culprit is the operation of large enterprises and economic
activity in general such as destruction birth rights, family crystal, increases inequality
threatens the social structure, but the damage to public health have done away up the
concept of social responsibility of the business. On the other hand, the response of
the main associations, non-governmental organizations, the civil society in general,
have created a movement of social pressures caused by businesses, especially
corporations, the multinational companies to take action reflected business social

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responsibility. Theoretical, starting from identifying the business relationship
between the environment around us, the notion of responsibility was extended from
responsibility of improving profitability for shareholders, who ownership, to a place
with responsibility for the ingredients involved (stakeholders).
R. E. Freeman (1984) said: “that the components that are related to individuals may
affect or be affected by the realization of the goals of the organizations (enterprises).
According to A. B. Carroll (1989), CSR can be divided into relevant sections into
two categories: components that are mainly related such as shareholders, employees,
suppliers, customers and indirect related components, including the relationship of
the ingredients voluntarily or involuntarily to business with an escrow or implied

profits, but also for recognising the needs of such stakeholders as employees,
customers, demographic groups and even the regions they
serve.(PricewaterhouseCoopers, 2004)

CSR is the continuing commitment by business to behave ethically and contribute to
economic development while improving the quality of life of the workforce and their
families as well as of the local community and society at large. (Lord Holme, former
executive director of Rior Tinto, and Philip Watts, former chair of Royal Dutch
Shell) 22
CSR requires companies to acknowledge that they should public accountable not
only for their financial performance but also for their social and environment record.
CSR encompasses the extent to which companies should promote human rights,
democracy, community improvement and sustainable development objectives
throughout the world. (Confederation of British Industry, 2001)

[CSR is] a concept whereby companies integrate social and environmental concerns
in their business operations and in their interactions with stakeholders on a
voluntary basis. (European Commission, Directorate General for Employment and
Social Affairs)

CSR is the commitment of business to contribute to sustainable economic
development, working with employees, their families, the local community and
society at large to improve their quality of life, in ways that are both good for
business and good for [international] development. (World Bank, 2004)

In general, the concept of CSR always changes, always new, depending on space and
time when CSR takes place. The business must have responsibility to contribute to

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Carroll’s pyramid

Carroll's CSR Pyramid is widely used because it represents the most comprehensive
content and scope of CSR. The pyramid is composed of four elements: Economic,
legal, Ethical and discretionary responsibilities.
 Economic Responsibility includes maximizing profit, compete effectively for
growth is a prerequisite of the business because the business is established
with primarily purpose of profit-seeking. Moreover, the enterprise is the
economic fundamental cell of society so that business functions are always
top priority. The remaining liability should be based on economic sense of
responsibility of enterprises.
 Legal Responsibility is part of the covenant between business and society.
The State shall provide social rules and ethics in the legislation for the
enterprises to pursue economic objectives within the fair framework.

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Economic responsibility and liability are two basic parts, indispensable of
CSR.
 Ethical Responsibility is the rules, values which are accepted by social
without being encoded in legislation. The morality always exist the rights and
wrongs which are not clear. Hence they caused much debate in society and
they have never been put into law. Moral responsibility is voluntary, but it is
the heart of CSR, for example: good working condition, using clean raw
materials and food safety.
 Philanthropic Responsibility is the behavior of businesses beyond the
expectations of society, such as donations to support the poor, funding