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 Grade
Introduction (clear and concise, includes a thesis statement) 5% 4%
Defined CSR 15% 11%
CSR in International Business 15% 11.5%
Presented the Shareholders/ 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)
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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
materialCompanies 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 arms 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)
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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 organizations 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.





Corporate Social Responsibility 9

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/FraudInAccountingOrganizatio
nsAndSociety/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.