Running head: Corporation Social Responsibility 1

Corporate Social Responsibility

Nguyen Le Hong Hanh

International Business

March 20, 2014

Douglas M. Foster

Grading Rubric for Written Assignments Points GradeIntroduction (clear and concise, includes a thesis statement) 5% 4%Defined CSR 15%  11%CSR in International Business 15%  11.5%Presented the Shareholder’s/ Stakeholder perspective on CSR 15%  10%Difficulties and advantages of CSR in Vietnam 15% 11.5%Strong Academic Support (at least 3 peer-reviewed articles within 5 years)

15%  10%

Conclusion (restated thesis) 5% 4.5%APA (format, headings, citations, and references) and high writing quality (free from grammatical mistakes)

15%  9%

TOTAL 100% 71.5%

Corporate Social Responsibility 2

Introduction

The objective of this essay is to give a general look of corporate social responsibility

(CSR). The first part is a brief description of CSR by defining CSR, pointing out some external

facets that lead to the emergence of CSR in improved countries and improving countries, and

some impacts of CSR to business. The second part is about some positive and negative effects of

CSR on international business by the consideration of some important facets of an international

business: law regulations, international customers and business partners. The unfavorable effect

be mentioned is the cost of time, money and effort for CSR implementation. The third part

mentions some perspectives of shareholders and stakeholders based on their view of their own

benefits and obligations brought from CSR. The differences in those view results in arising

compatibility and incompatibility in perspectives among these parties. The final part is the

difficulties and advantages to implementing an effective CSR program for international

organization operating in Vietnam.

1. The Description of Corporate Social Responsibility

Corporate social responsibility (CSR) is the set of obligations an organization undertakes

to protect and enhance the society in which it functions. (Griffin & Pustay, 2013)1

American and Europe initiated CSR since 1960s under some social pressures that lead to

the change in policies. Since the raising of high living standard and awareness of customers,

people do not only pay attention to product price and quality, but the company responsibility to

the environment, stakeholders, and the community. There were a boom of many movements of

protection toward the interests of environment and consumers since 1960s. For instances, the

fringe foods Movement against the fast food companies, Fairtrade Movement to assure the

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buying right for material and working condition in the 3th world countries, Movement to

ostracize the feather products, Movement to ostracize the companies exploited child labor( Nike,

Gap), and shopping with a conscience Movement…

Another reason that put pressure on the necessity of CSR is the increase of unethical

behavior in business. Financial scandals from high-profile and well-documented companies like

Tyco, Enron, WorldCom, and Arthur Andersen have caught attention of people everywhere

(Griffin & Pustay, 2013)3 . Dealing with these pressures, almost big companies proactively

integrated CSR into their company business activities. Thousands of campaigns had put into

practice. Some of them were campaigns of saving energy, using recycled material, using solar

power, improving running water, be clear and explicit in audit…

The demand for CSR in improved countries put a trend toward improving countries

through the high competition in the global market place. In a long period, low cost product is a

competitive advantage of companies in improving countries. However, nowadays, international

customers requires their manufacturers to take social responsibility more. Producers must obey

the social and environmental regulations, pay care about labor working condition, use green

material…Companies have to cope with these problems to satisfy their customers. Gradually,

conducting CSR has become a part of business activities and been a motive for building

company competitive advantage.

The benefit from undertaking CSR was positively recorded. CSR helps develop the brand

image among the domestic customers and society, result in pushing up the sale, smoothening

investment paper work, increasing satisfaction and commitment of employees, gaining the

working effectiveness and the efficiency…

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2. The effects of Corporate Social Responsibility on International Business

International business consists of business transactions between parties from more than

one countries. CSR can pose both positive and negative effects on international business. There

are many advantages for international business to undertake CSR:

Taking social responsibility means execute law regulations, which gain capital and public

administrative support from government, avoid legal proceedings, and contribute to create a

stable business environment development. A typical example for legal abuse that happen usually

today is parent companies directly transfer material, technology to subsidiary companies within

transfer price, which is not based on arm’s length price( not obey market demand and supply

rules). This action can distort national or international commodity flow and financial market,

thus pose a reactive effect on their business. (L. Eden & L. M. . Smith (Eds.), 2011)4

CSR is a powerful tool to catch up with the new trend in marketing- social marketing, of

which aim is to benefit individuals and communities for the greater social good. CSR is also a

good way to build good brand image in domestic community, which helps attract talent and push

sale in the domestic market.

To business partners, suppliers, CSR helps build trust. A hot topic for international

companies is license violation and intellectual property breakdown that normally happen when

improved countries transfer their technology to improving countries. Therefore, government of

the transferors usually impels the transferees to sign the commitment of intellectual property

protection.

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CSR helps create business opportunities. Implementing CSR requires the action of

network including governments, customers, partners, social media…; result in building more

business relationship.

The negative effect of CSR on international business is obvious to see. CSR costs lot of

money, time and effort. Because of the diversification in law regulations, ethical standards of

behavior, culture… among countries, CSR poses more challenge to business management.

Besides, many CSR activities such as good environmental treatment and employee treatment

require a huge investment, while measuring the result of CSR needs much time, the risk of taking

CSR is high.

.

3. Stakeholders vs. Shareholders perspectives

Shareholders are people who legally own a share of stock in a company. Stakeholders are

people who affect or can be affected by an organization’s action. Government, employees,

customers, community, managers, shareholders can be exemplified as stakeholders. Each of

these parties has different perspective of CSR, based on their benefits and obligations taken from

CSR.

Government: Government obligation is to allocate the society resources fairly through

CSR activities. By CSR implementation, corporation repay what they has benefited from society

and environment. However, each company may do not know how much responsibility has to be

taken. Government must guide these companies in a frame of law regulations to assure justice.

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Employees: they seeks for the benefits of rates of pay, job security, compensation,

respect, truthful communication. Performing CSR can fulfilled these expectations.

Community: while taking benefits from external resources, companies can cause negative

impacts on the environment and society. Therefore, they have to be responsible for their actions

to the community through CSR.

Shareholders have two conversed perspectives of the aim of CSR. The first group

considers the only objective of the corporation is to earn profit and gain shareholder value. Thus,

CSR execution is a money consuming activity. The second group believes that CSR helps build a

stable development for company. In the long term, undertaking CSR can even bring more profit.

Managers: managers expect benefits like any other employees. However, they have

different obligation. Their duty is to accomplish the expectations of other parties toward

corporation. CSR is the last obstruction that keep organization not be too far away from ethical

and legal standard due to profit.

Customers: some of the customer considerations about CSR are the product quality,

customer care, ethical implementation.

Because of the differences in rights and duties of each parties, compatibility and

incompatibility among them arise. An example is the conflict between shareholders and

managers that has happened throughout the ages. Managers, the ones that have the direct

operating authority toward the company, sometimes only seek for their own-interest, which

oppose to the shareholder expectation. (Surroca and Tribo, 2008) (5)

.

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4. Implement the effective CSR for an international corporation operating in Viet

Nam

Globalization put a pressure over the necessity of CSR implementation in Vietnam,

especially when the country joined WTO. In this global stance, CSR is a powerful tool to build

up the company competitive advantage. Within unique features in economics, society, politics,

implementing an effective CSR program for in international organization operating in Vietnam

has its own specific advantages and difficulties.

There is a lower awareness and standard for undertaking CSR in Vietnam compared to

some other countries, which make some advantages. Firstly, to the most of domestic customers,

price and product quality are favorably considered over ethical attributes due to low income and

low living standard. Secondly, the law system does not contain a strict regulation of CSR,

because of the late emergence of CSR concept, and the assurance of foreign investment

attractiveness in the stage of industrialization and modernization. Thirdly, employees do not put

a high standard of CSR over the corporation, result in the less complex CSR policies. Due to the

advantage of low-skill labor in Vietnam, companies just have to fulfill basic expectation, of

which the highest consideration is salary payment.

There are still many difficulties among the advantages. CSR implementation involves

effort of a joining network including many parties (government, employees, managers,

partners…). The lack of awareness, knowledge, and experience in CSR among those parties

could lead to some obstacles. Firstly is the support of Government in laws and paperwork. For

example, if a company was impair by an unethical behavior, it is impossible to ask for

government protection if the case has not been recorded before, thus cannot be contained in law

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regulation. Secondly, low CSR awareness and CSR management skill result in difficulty to find

business partners in Vietnam. A typical example is franchising, of which the hardest part is to

accommodate the local peculiarity without hurting the general brand image. Every wrong

decision making that made in Vietnam can affect the overall brand. Thirdly, employees must be

able to understand the role of CSR. For instance, marketer must understand the needs and

expectation of international customers in order to serve them better. (DNSG, 2012)

Conclusion

CSR has become a crucial part in international business in both developed and

developing countries. CSR requires careful benefits-cost analysis and decision-making. Besides

many advantages to international business such as gaining the support from government and

community, building brand image, building trust from business partners, CSR really consumes

time, money and effort. CSR is a process requires participation from all shareholder and

stakeholder parties. Difference in perspective can lead to the accommodation or also the conflict

among those groups. Going global has put the pressure on the necessity of CSR in Vietnam. The

late of emergence of CSR in the country leads to many advantages and difficulty for

international corporation operating in.

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References

1. Griffin, R., & Pustay, M. (2013). International business. (7th ed.).

2. McKinsey (2007), Assessing the impact of societal issues: A McKinsey Global Survey,

Retrieved from www.mckinseyquarterly.com

3. Griffin, R., & Pustay, M. (2013). International business. (7th ed.).

4. The ethics of transfer pricing. In (2011). L. Eden & L. M. Smith (Eds.), Retrieved from

http://www.business.ualberta.ca/en/Departments/AOIS/Conferences/FraudInAccounting

OrganizationsAndSociety/~/media/business/Conferences/

FraudInAccountingOrganizationsAndSociety/Documents/EDEN-SMITH-ETHICS-OF-

TP-AOS-UK-FINAL.PDF

5. (Schaefer, B. (2008, August), Shareholders and social responsibility. Journal of Business

Ethics

6. DNSG. (2012, 11 23). Starbucks sets one foot in vietnamese market. Retrieved from

http://english.vietnamnet.vn/fms/business/53179/starbucks-sets-one-foot-in-vietnamese-

market.html

Format: Failed to follow APA.

Content: Content largely consists of unsupported, underdeveloped assumptions. Little initiative

in good research and writing shown.

Language: English and writing skills inadequate. Major efforts is advised to improve.

Reference: Met the bare minimum requirement of research.