Unintended consequences of CSR:

protectionism and collateral damage in

global supply chains: the case of Vietnam
Antonio Tencati, Angeloantonio Russo and Victoria Quaglia

Antonio Tencati,
Angeloantonio Russo and
Victoria Quaglia are all
based at the Department of
Management, Bocconi
University, Milan, Italy.

Abstract
Purpose This paper seeks to investigate the influence of the increasingly sustainable sourcing
policies of many multinational companies on suppliers located in developing countries such as Vietnam.
The focus is the process through which corporate social responsibility (CSR) is reaching this Southeast
Asian country.
Design/methodology/approach The research was conducted in Vietnam through the support of the
United Nations Industrial Development Organizations (UNIDO) regional office. The survey was based
on a questionnaire used during direct interviews or sent out electronically when onsite visits were not
possible. The research involved 25 Vietnamese enterprises.
Findings The results reveal, on the one hand, how CSR makes business sense even in a developing
country such as Vietnam and, on the other hand, the difficulties of maintaining sustainability as products
move from northern consumers to Vietnamese suppliers. This process calls for more collaborative
models of governance among the companies along the supply chain, local authorities, international
players, and civil society at large.
Originality/value This paper highlights the unsustainable process through which corporate
responsibility is being imposed on Vietnamese suppliers and how CSR, now required for access to
international markets, might eventually turn into a new form of protectionism. To avoid this, CSR must be
supported, rather than imposed, through building innovative partnerships and through a demand-driven
educational agenda.
Keywords Governance, Corporate social responsibility, Supply chain management, Partnership,
Vietnam, Globalization
Paper type Research paper

Introduction
Globalization has spread the urgent need for corporate social responsibility (CSR) beyond
the northern enterprises to which it was previously confined (Deloitte Touche Tohmatsu
Emerging Markets, 2004; UNIDO, 2002). International trade environments have awakened
to issues such as human rights and labor exploitation in developing parts of the world, and
the need for sustainability now also concerns suppliers in the South along the global supply
chain (Welford, 2002). Along this reverse supply chain, the concept of corporate
responsibility has been introduced into countries like Vietnam through a number of codes of
conduct and international standards (e.g. SA8000, ISO 9001, and ISO 14001). CSR has thus
become mandatory in business relationships with foreign partners. Therefore, local
managers must learn more socially responsible practices.
The literature on responsible supplying relationships (Maloni and Brown, 2006) and the
stakeholder view of the firm (Donaldson and Preston, 1995; Post et al., 2002) point out new
ways to manage responsible relationships along the global supply chain. Within this
framework, sound relationships along the supply chain and between local suppliers and
their stakeholders foster new strategies for pursuing sustainability. More collaborative
models of governance based on innovative partnerships (Albareda et al., 2008; Zadek,

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CORPORATE GOVERNANCE

VOL. 8 NO. 4 2008, pp. 518-531, Q Emerald Group Publishing Limited, ISSN 1472-0701

DOI 10.1108/14720700810899248

2006) might help companies in developing countries to address new sourcing requirements,
to get support from their stakeholder networks, as well as to enhance their reputation in the
international markets.
Focusing particularly on Vietnam, this paper investigates the impact of multinational
companies more sustainable sourcing policies on local suppliers. In this context, it is
crucial:
B

to understand the process through which CSR is reaching the country;

to investigate the effects of CSR strategies on the enterprises that manage to comply with
imposed international labor standards and regulations; and

to analyze the monetary and non-monetary costs of CSR, as well as the challenges and
difficulties faced by local Vietnamese entrepreneurs in implementing CSR strategies for
the first time.

Our findings suggest that CSR does make business sense for the enterprises big and rich
enough to comply with international social standards even in developing countries such as
Vietnam. However, the process through which sustainability is reaching Vietnam is
unsustainable. The costs of a top-down commitment to CSR are beyond the reach of many
enterprises, whose inability to comply with social and environmental standards is preventing
them from doing business in international markets. Originally considered an effective
opponent of abuses and exploitation, corporate responsibility is on the brink of becoming a
new form of protectionism.

From north to south: CSR along the global supply chain

Over the last few years, CSR has become an indispensable component of business
activities for many companies in the world. Innovation, corporate governance, industrial
relations, and the supply chain are some of the most strategic issues that CSR currently
encompasses (Russo and Tencati, 2008). In particular, several stakeholder claims are
modifying the structure of the global supply chain, from developed to developing countries.
According to the relevant literature, firms might do well to anticipate future CSR issues along
their supply chains and to integrate CSR standards into their daily operations (Maloni and
Brown, 2006; Porter, 1998; Porter and Kramer, 2006). Therefore, from the stakeholder
perspective (Clarkson, 1995; Donaldson and Preston, 1995; Post et al., 2002), firms
relationships with their suppliers and customers might be perceived as shepherding
emerging CSR strategies along the supply chain (Perrini et al., 2007). Basing their actions on
the evolutionary concepts of logistics social responsibility (LSR) (Carter and Jennings,
2002b) and purchasing social responsibility (PSR) (Carter and Jennings, 2002a), firms are
becoming more and more attuned to this need to extend CSR behaviors along the supply
chain. Supply management should take the form of a partnership approach among firms,
their suppliers, and their customers, embracing the issues of human rights, general working
conditions, and the environment (Perrini, 2006).
The necessity of social responsibility has penetrated countries like Vietnam, and the
traditional supplier relationships are assuming the form of a reverse supply chain. Three
crucial components characterize this process, which begins with consumers, proceeds
through multinational corporations (MNCs), and ends up among manufacturers.
From consumers to MNCs: step one
The transmission of CSR from developed to developing countries begins with the demands
of ethical consumerism. Recent studies suggest that consumers are becoming increasingly
preoccupied with business products and processes and the issues that these entail, such as
environmental protection and child labor (Auger et al., 2003; Pivato et al., 2004). Osterhus
(1997) and Bhate and Lawler (1997) analyze socially responsible behavior of consumers in
terms of economic, structural, and normative components. In particular, after studying the
influence of seven key constructs personal cost, personal benefit, personal norms, social
norms, attribution of responsibility, awareness of consequences, and trust Osterhus
(1997) found that normative influences do not automatically translate into behavior, that

VOL. 8 NO. 4 2008 CORPORATE GOVERNANCE PAGE 519

people are strongly influenced by personal costs and rewards, and that personal norms,
though significant, interact with responsibility and trust. However, the importance of ethical
consumerism has increased dramatically in recent years (Castaldo and Perrini, 2004).
Ethical consumers, of necessity, transmit their concern with social and environmental
sustainability to businesses (Zsolnai et al., 2004), in particular to MNCs, that is, in many
cases, producers of valuable brands. These companies, which can operate in countries
disciplined by a weak system of law enforcement, are often characterized by
labour-intensive production, high-impact output, and strong links to communities. MNCs
are the first players sensitive to CSR along the supply chain. They are also the companies
that make the best use of globalization, exporting their production abroad, where human
resources cost less.
MNCs contract with suppliers located in remote parts of the world and in emerging
markets to manufacture their products. But globalization has shrunk the world, far more of
which is now media-accessible. As a result, the activities of northern firms are far more easily
monitored by consumers and international associations, nongovernmental organizations
(NGOs), policy makers, financial markets, and civil society as a whole.
From MNCs to their manufacturers: step two
Obliged by the increasing demands of a robust supply chain, companies must transmit their
need for sustainability to their manufacturers. This constitutes the second step of CSR along
the global supply chain.
To retain their northern clientele, MNCs must provide them with evidence that their
manufacturers observe the highest standards of material and ethical responsibility
(OHiggins, 2002; Weiser and Zadek, 2000). Their manufactures must in turn prove to MNCs
their compliance with these standards MNCs comprise the majority of their clientele, if not
all of it. MNCS employ two basic tools to export CSR practices: first, their own codes of
conduct and the related monitoring schemes; and second, international certification. In the
marketplace, there are now more than 1,000 codes of conduct and standards (The World
Bank Group, 2003), among which the most common focuses are wages and working hours,
freedom of association and collective bargaining, discrimination, and occupational health
and safety (The World Bank Group, 2004). The difficulties of effective interaction with so
many different codes of conduct and their discrepancies with legal frameworks greatly
complicate the implementation of sustainability. The manufacturers involved have to pay for
annual audits and any remedial action and infrastructure upgrade required for the
certification process. The related costs are in most cases unbearable, if not for major
enterprises, and therefore such certifications risk becoming technical barriers to trade for
the companies that cannot afford them.
From manufactures to raw material suppliers: step three
To be considered socially responsible and therefore able to trade with northern clients, a
manufacturer must guarantee that all production materials were purchased from responsible
suppliers, but, because raw material suppliers are considered to be the most
irresponsible actors along the supply chain, step three is considered the most
delicate stage. The relationship between supplier and producer is of fundamental
importance, as the fact of producing a safe product with low impacts on the surrounding
environment and society depends on the high quality of raw materials. In this way, then, CSR
also reaches the most remote raw-material suppliers, who are obliged to rethink and
redesign their businesses to retain their place in the ever-evolving international market.
Focusing on Vietnam, this paper investigates the impact of multinational companies more
sustainable sourcing policies on the local suppliers and also on the global supply chain. Our
research questions are built on previous research on CSR at the international level (Boda,
2002; Sethi, 2003), which we adjusted specifically to address the issues faced by
Vietnamese firms. We investigated CSR strategies by Vietnamese enterprises and their
relationships with other organizations, whether on or outside of the global supply chain, to

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discover how they measure up to the rigors of the sustainability challenge. We posed the
following research questions:
B

Is CSR reaching Vietnam and how?

What are the effects of CSR strategies on the competitiveness of the enterprises that
manage to comply with imposed international labor standards and regulations?

What are the costs, monetary and non-monetary, as well as challenges and difficulties
faced by Vietnamese entrepreneurs implementing CSR strategies for the first time?

Methodology
The research was carried out in Vietnam in 2004 thanks to the support of the United Nations
Industrial Development Organizations (UNIDO) regional office (Bekefi, 2006), based in Ha
Noi, and with the involvement of sector associations, such as the Leather and Footwear
Organisation (LEFASO), the Vietnam Textile and Apparel Association (VITAS), the Vietnam
Promotion Agency (VIETRADE), and the Vietnam Chamber of Commerce.
The survey was conducted on the basis of a questionnaire. In more detail, this questionnaire
was used as a support during the direct interviews, which mainly involved the chief
operating officers (COO) or their representatives, and/or was sent electronically when onsite
visits were not possible. The questionnaire, consisting of 52 items, was first composed in
English and then translated into Vietnamese. Direct interviews and questionnaires were the
best route considering our context. For example, most of the management did not feel
comfortable giving out information about minimum wages, night shifts, or their economics at
other levels. So, in order to understand the real working conditions, we obtained answers
indirectly, by visiting their workplaces, reading the work schedules displayed on the walls, or
simply using their toilets. Moreover, language presented a further barrier, especially at
state-owned enterprises, where even top managers did not speak English. We
communicated more easily with private and joint-ventures companies, where interpreters
were unnecessary. Finally, we did not once use the term CSR in our questionnaire,
because even though this concept has reached (or, at least, is starting to reach) Vietnams
enterprises through international certifications and codes of conduct, the acronym CSR is
still largely unfamiliar to them. Summarizing the consequences related to the different ways
of collecting data and information, especially in the state-owned enterprises the interviews
were hard to conduct, the questions often misunderstood and the answers extremely
evasive. A real managerial approach seemed lacking: almost impossible to face problems
related to productivity or employee turnover, and the content of the oral message was
inevitably distorted.
Our research encompassed 59 Vietnamese enterprises, 42.37 percent of which (25
companies) agreed to collaborate either through direct interviews or by answering the
questionnaire electronically.
We chose our subjects on the basis of three criteria. First, we considered genres and ended
up concentrating on footwear (32 percent of the firms in the sample), garments (32 percent),
and seafood (36 percent). Actually after crude oil, these industries are the main sources of
Vietnams exports (Ministry of Labour Invalid and Social Affairs, 2004), are characterized
by intense international business relations and now the firms operating in such sectors are
the first ones to cope with the sustainability-oriented trends and strictures streaming in from
foreign markets. To study the enterprises we targeted, we used the databases of,
respectively, LEFASO (for the footwear companies), VITAS (for the garment companies), and
the Ministry of Fishery (for the seafood companies). The databases provided general
profiles, including date of establishment, number of employees, type of ownership, export
markets, and most important clients. Second, we selected our subjects on the basis of their
export markets international clients (with preference for the EU and US and large
multinational companies). Figure 1 displays the export markets of our respondents.
Finally, we chose our subjects based on the number of their employees, confining ourselves
to medium-sized to large companies, as illustrated in Figure 2. Our reason was that the

VOL. 8 NO. 4 2008 CORPORATE GOVERNANCE PAGE 521

Figure 1 Export markets of respondents

Figure 2 Respondents by size (number of employees)

influence of CSR on the daily business routine increases consistently the more the employee
force grows.

Results and discussion

CSR does make business sense
In developed countries, the positive correlation between profit and CSR is still not a
household fact (Margolis and Walsh, 2003; Orlitzky et al., 2003; Rubbens and Wessels,
2004). In Vietnam the equation is nonexistent.
Several attempts have been made to correlate sound policies with sound economic
performance, but the debate is still open and opinions still vary (Friedman, 1970; McWilliams
and Siegel, 2000; Waddock and Graves, 1997). Our data indicate that the enterprises we
studied are starting to benefit from policies that have improved through compliance with
codes of conduct and international certifications. In particular, benefits include
improvements in productivity, quality, competitiveness, and retention of skilled human
resources (see Figures 3 and 4). As Mr Tran Duc Binh, Chief of Quality Management of the
Garment Company Dap Cau, put it, The company now works like a system.
CSR has become, first of all, an instructor in sound business practices for the companies
committed to it for example, it recommends better working conditions and less unwanted

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Figure 3 Benefits of CSR in the Vietnamese footwear sector

Figure 4 Benefits of CSR in the Vietnamese garment and seafood sector

imposition on surrounding societies and environments. CSR and its regulations are also
evident in standardized procedures and organized behaviors. Production is being mapped
out from a longer-term perspective, on the basis of past experience. Daily reports on the
number of items produced or the number of employees working per line are required by
clients and submitted to them. The quality of management increases and quality supports
quantity as a measure of efficiency and effectiveness. CSR has therefore radically altered
the business model in companies that never before considered economic principles as a
bottom line. Once the entire business system becomes standardized and organized, the
following benefits are possible:
B

Fewer mistakes. According to international standards, steps along the production chain
must be regulated in order to deliver a final product compliant with technical and quality
standards. Standardized procedures help the employee to complete his work most
efficiently. Moreover, mistakes can actually be foreseen and prevented.

Fewer accidents. Standardized procedures and compulsory training courses on the use
of machines are de facto reducing the number of accidents on the workplace. The
benefits to employees health are obvious, and consequently. The costs of frequent
absenteeism are reduced, increasing productivity and the image of the firm.

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Decreased employee turnover. Through our face-to-face interviews, we learned that

employees are more inclined to stay in a company concerned with safety-based rules and
training. As managers affirmed, safety codes, which increase awareness of what is
dangerous, and fire-prevention training directly benefit the single worker, as they also
enhance company profits because of lower employee turnover ratios. The costs of
training unskilled workers decrease and the time saved as a result further benefits the
company.

Higher productivity. Increased managerial skills lead to higher productivity.

An integrated management system, increased operative capacities, higher productivity, and

higher level of commitment, all result in a higher-quality final product: more sustainable
policies are also conducive to high quality and these facts were confirmed, respectively,
by 75 percent and 100 percent of the respondents in the garment and seafood sector.
Quality is what Vietnamese companies need to improve in order to function more
competitively in the world market, especially with a successful rival like its neighbor China.
Commitment to more sustainable policies is not only an entree into international markets as it
attracts an increasing number of foreign clients; it also contributes to the birth of a whole new
market where sound companies can prosper. CSR will design a strategic position and
competitive arena in which certified Vietnamese companies will become more attractive to
foreign investors and clients. In such a competitive new venue, the image that an enterprise
communicates is obviously fundamental, and a recognized commitment to sound policies
enhances it.
Unsustainability of CSR
Evidence provided by Vietnamese companies able to become more socially responsible
suggests that although globalization is bringing CSR to Vietnam, it is not conveying it
sustainably. Theoretically, the passage of CSR from one actor to another along the global
supply chain seems obvious and logical, without obvious impediments. But reality belies
this.
For a product to be entirely sustainable and welcomed by consumers, the integrity of its
supply chain must be guaranteed. But supply chains pass through several different
countries, different legal frameworks, mentalities, and cultures, and the concept of social
responsibility varies among them. The differences become even greater when continents
are crossed and social, economic, and political frameworks vary even more markedly. CSR
is all about merging development with society and enterprises with people, sustainably, and
the frameworks mentioned above are important in venturing to export CSR abroad. We
ignore such elements at our peril the process of CSR itself could become unsustainable.
What we found through our research is that compliance with international standards creates:
B

Monetary costs of certification, annual audits, and technical updates.

Non-monetary costs, related to changing mentalities and cultures; related to monitoring

(the introduction and use of formal procedures and time consumption, e.g.), and related
to training (capacity building, educational upgrading, and technical skill building).

The monetary costs of CSR appear to be common to and evenly influencing all three sectors
studied, but consideration of non-monetary costs revealed some differences among them
(see Figures 5 and 6).
CSR as a driver of more collaborative models of governance
Given these peculiarities of the modern reverse global supply chain and the possible
difficulties related to the introduction of CSR strategies into the Vietnamese business
environment, we can still turn social and environmental risks into opportunities, with a
demonstrable effect on the bottom line. A new relational perspective on governance
(Albareda et al., 2008; Zadek, 2006) is emerging among researchers and practitioners as a
strategic option that might lead to further advances. In fact, cross-sectoral partnerships (e.g.
joint ventures, local sustainable development projects, multi-stakeholder initiatives, and

PAGE 524 CORPORATE GOVERNANCE VOL. 8 NO. 4 2008

Figure 5 Monetary costs of CSR in the footwear, garment, and seafood sectors

Figure 6 Non-monetary costs for footwear, garment, and seafood sectors

alliances) among governmental organizations, civil-society organizations (CSOs), and firms

are frequently identified as means to achieve more sustainable patterns of development
(Ahlstrom and Sjostrom, 2005; Brugmann and Prahalad, 2007; Hartman et al., 1999; Loza,
2004; Moody-Stuart, 2004), with special emphasis on private-public partnerships (Argenti,
2004; Hamann and Acutt, 2004; McDonald and Chrisp, 2005; Rondinelli and London, 2003).
Of course, despite the many positive examples, the relationship between private and public
sectors is not always as productive as it could be and low-quality communication often
interferes with productive work relationships (Egels-Zande`n and Wahlqvist, 2007; Webster,
2004).
Partnership models shift from single-issue to sector-wide initiatives to incorporate CSR
practices into the core strategy of a given company. In this context of CSR interactions, the
definition of partnership becomes people and organisations from some combination of
public, business and civil constituencies who engage in voluntary, mutually beneficial,
innovative relationships to address common societal aims through combining their
resources and competencies (Nelson and Zadek, 2001, p. 14) sharing both risks and
benefits.
The engagement process can be simple or complex. In developing countries, the industrial
base comprises small- and medium-sized enterprises (SMEs) and much of the business is

VOL. 8 NO. 4 2008 CORPORATE GOVERNANCE PAGE 525

informal. In these countries, social responsibility often emerges from adverse outcomes, that
is, poor governance practices by local or national governments. It can influence NGO
activity or long-term collaborations or partnerships formed to complete a defined task or at
achieve common goals. Such partnerships seek to merge competencies with resources to
achieve their goals. Those between organizations and stakeholders may be bilateral, that is,
between a company and a specific NGO; or multilateral, which, involves a company, a local
government, and community groups or, at the international level, companies, business
associations, environmental and social NGOs, trade organizations, and intergovernmental
organizations (for detailed examples of partnerships in the world, see Table I adapted from
Partridge et al., 2005).
To summarize, in the varying contexts of developing countries, where specific tasks
encompass companies, governments, and several other players, there is enormous
potential, even within existing corporate structures and market systems, to visualize
fundamentally new, more collaborative types of governance and partnerships that can
increase sustainability, set progressive new policy agendas, and mobilize both public and
private resources to tackle key sustainable development challenges. Of course, in
assessing which type of governance best produces the most benefits and the lowest costs,
no one approach suits all circumstances. Players form partnerships when they anticipate
that the benefits will exceed their costs (Gottfried et al., 1996).

Conclusions
Our findings show that the monetary and non-monetary costs of complying with international
standards may prove to be unsustainable and prohibitive for many enterprises, and
especially for small- and medium-sized suppliers. CSR is a long-term investment, expensive
within the Vietnamese context as it exists today. The inability to meet social and
environmental standards inhibits possible business interactions at the international level.
As managers assess where to invest, they might wish to take into account the results
reported above. This study suggests that managers have to consider the impact that
responsible investments can have on the overall performance of the firm. Although literature
investigating the linkage between corporate social performance (CSP) and corporate
financial performance (CFP) (Waddock and Graves, 1997) provided evidence that there is
no detrimental impact from or penalty for allocating some resources towards CSP (Graves
and Waddock, 1994), in developing countries this is not always the case. In fact, it seems
that such investments might be beneficial if they are supported by the engagement of key
stakeholders.
The increasing opening of the Vietnamese market and the recent access to the World Trade
Organization (WTO) benefit from CSR as a vital asset, but one that that cannot simply be
imposed on local firms by foreign partners. Rather, local entities should be technically and
financially supported as they advance to more sustainable policies, especially now that
these have become indispensable to business relationships with foreign clients. Here a
relational perspective is gaining momentum: as in other countries, partnerships and more
collaborative models of governance could foster the development of responsible
approaches in places like Vietnam if public authorities and managers are attentive to
these opportunities.
For public authorities wanting to achieve sustainable development of CSR, a first step should
be major collaboration between public and private efforts, local and international authorities,
and managers and workers. Were Vietnam to become a more enabling environment for
sustainability, individual activities would more likely succeed with a total awareness of what
has been done before and what is planned next by the world community. In Vietnam the aid
environment is overcrowded and a number of international organizations, NGOs, and
bilateral donors sometimes compete rather than collaborate. Were all these efforts
coordinated with their Vietnamese counterparts, results would be more effective, emerge
more quickly, and Vietnam would benefit directly from the presence of international
institutions. Through improved collaboration among the international institutions and a
stronger public-sector involvement, CSR could be effectively strengthened along global

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Table I Some examples of partnerships

Type of partnership

Parameters

Examples

Bilateral

Between one company and one

key stakeholder

Multilateral

Between one company (or

several companies) and several
stakeholders

International
organization-associated
stakeholder forums

Among one leading international

stakeholder, several companies
and (in many cases) other
stakeholders

Global multi-stakeholder

Partnerships in which no one

company or stakeholder has a
predominant role and for which a
new, multi-stakeholder institution
may be created (Scherer and
Palazzo, 2007)

Dow Chemical, for example, formed a productive partnership

with the Natural Resources Defence Council, an American
NGO, in reducing Dows toxic pollutants in Michigan
Lafarge worked with CARE, an international development
NGO, to develop its health policy in Africa and is currently
working with another NGO, Habitat for Humanity, to provide
below-market-cost housing in 25 countries. It also currently
works in partnership with WWF
In February 2006, Wal-Mart committed to source all of its
wild-caught fresh and frozen fish for the North American
market from fisheries that meet the Marine Stewardship
Councils (MSC) independent environmental standard.
Thanks to the partnership with MSC, the first ten fish products
are now available in the stores across the US
Locally based corporate-stakeholder partnerships in which
the company engages a number of local stakeholders to
identify and help meet priority community needs (Gerencser
et al., 2006)
An important case history regards mining companies in Latin
America: in that area they are changing their traditional
behavior and are starting to involve in depth communities,
NGOs and public authorities in order to define a shared vision
of the development and overcome the previous conflicts,
which characterized the relationships between international
enterprises and local players (Pelouas, 2004)
UNEPs ongoing initiatives with companies in the finance and
insurance, tourism, information and telecommunications
technology, automotive manufacturing and construction
sectors. These initiatives involve non-business stakeholders
in project activities and meetings, thus leaning towards the
multi-stakeholder model
World Health Organisations partnership with pharmaceutical
companies to provide affordable medication for the
prevention and treatment of AIDS, malaria and other
diseases in developing countries
The World Business Council for Sustainable Development
has set up several sector projects involving research and
stakeholder consultations to see how an industry can align its
practices and policies with the requirements of sustainability
The European Commission has declared in the last
communication on CSR, issued in 2006, the aim of
Implementing the Partnership for Growth and Jobs Making
Europe a Pole of Excellence on CSR. Therefore, the
European Commission has launched the European Alliance
for CSR, which is fostering nineteen Laboratories. These are
action-oriented projects which aim to address CSR
challenges. The final goal of the CSR Laboratories is to bring
together business practitioners, stakeholders and
representatives of the European Union to share experience
and explore joint operational projects (CSR Europe, 2007)
UN Global Compact and Global Reporting Initiative, fostering
corporate responsibility and accountability
Marine Stewardship initiative, and Mining, Minerals and
Sustainable Development Project (MMSD), preserving
natural resources at the international level
Fair Labour Association, involving local NGOs in the
independent monitoring of human rights and labor practices
in factories producing for apparel and footwear companies

Source: Adapted from Partridge et al. (2005)

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supply chains. In other words, a major engagement by the local and national bodies and a
higher level of collaboration and coordination among the international agencies are both
needed to achieve an effective implementation of CSR in Vietnam.
Nevertheless, local capacity building is even more important. Vietnam doesnt need the
fish, but the net, affirmed Mr Linh, Director of the Trade Promotion & Business Support
Development Department, under the Vietnamese Ministry of Trade: effective partnerships
and collaborations especially with foreign companies and institutions would support this
effort.
At the managerial level, the greatest challenge seems to be the mentality and the culture at
the base of organizations. Evidence from the footwear, garment, and seafood sectors
reveals that the major cost of implementing new and imposed social policies involves the
changes necessary in the management system, which entails comprehensive changes in
the business mentality. The reticence of most manufacturers and suppliers to undertake CSR
compliance is attributable to their insufficient understanding of the benefits of increased
efforts to comply with international requirements. Therefore, greater awareness is needed at
the managerial and operative levels. Until developing countries such as Vietnam perceive
that international standards are imposed by foreign clients, effectiveness of CSR
implementation will suffer and businesses, employees, and therefore society as a whole
will be held back.
To date, the only reason that Vietnamese enterprises and those in other developing countries
are beginning to involve themselves in social issues is to continue to supply foreign
countries and remain viable within international trade markets. CSR is being exported to
countries where the civil foundation, that is, the norms, customs, and laws that govern
corporate practices, is shallow and fragile (Martin, 2002).
As an example, consider that corporate responsibility must be shared with employees. It
may seem redundant to educate workers about their own rights. In a country such as
Vietnam, the limit of eight working hours a day imposed by the Vietnamese Labour Code
(Art. 68.1) actually goes against workers interest, because they need to work as many hours
as possible to earn enough. In this case, the real civil foundation and the economic
framework do not enable employees to work eight hours a day and the implementation of
CSR must take this into account. Nevertheless, although the minimum wages per month are
VND 210.000 ($13) for employees working at domestic business (Decree N. 77/2000/ND-CP
dated December 15, 2000 of the Government on Re-adjusting the Minimum Wage) and VND
417.000 to 626.000 ($26 to $39) for those working in foreign-invested enterprises (Decision
n. 708/1999/QD/TTg dated June 15, 1999 of the Prime Minister on Minimum Wages of
Vietnamese Labour Working at Foreign-invested Companies), it is fundamental for
managers and employees to understand the importance of following the rules.
Increasing training costs are required by the new CSR policies, especially when the sectors
considered are labor-intensive. In all the cases analyzed, such dissemination costs have
been entirely borne by the company and of course not all companies can afford them.
Entrepreneurs felt powerless, asked to shoulder all the costs of compliance, in that here the
buyers would be the only ones to benefit.
In sum, the advantages of CSR must be concretely proven to local suppliers and local
authorities through specific initiatives tailored to the specific country and must be
sustainable, that is, financially and structurally supported and based on local capacity
building.
Therefore, indications for future research as well as for more effective CSR policies have
become evident in this study. The case for business should be defined in order to spread
more sustainable practices among the entrepreneurs; furthermore, an on-site CSR
educational agenda seems necessary and should address all the companies, including the
smallest ones (Tencati et al., 2004). A methodology for demonstrating the business case in a
comprehensive and methodologically rigorous manner must be developed, with the
awareness that the question calls for more than a one-size-fits-all solution (Perrini et al.,
2006; Spence, 2007). In order to investigate and explain more fully the interconnections

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among the different elements along the supply chain, and the advantages of the relevant
CSR initiatives and whether and how they differ in Vietnam compared with other developing
and developed countries, we suggest a broader study, based on cluster and factor analyses
(Russo and Tencati, 2008).
Finally, our research shows that CSR could make business sense in countries such as
Vietnam, but efforts toward sustainable goals must be fostered, rather than imposed,
through defining innovative partnerships involving companies, local authorities, international
players, and civil society at large and through a demand-driven educational agenda.
Otherwise, what was originally thought to be a way to fight abuses and maltreatments risks
transformation into a new form of protectionism (Welford, 2002). Many experiences in other
developing countries confirm the crucial role of this collaborative approach (Porter and
Kramer, 2006; Zadek, 2006).

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Corresponding author
Antonio Tencati can be contacted at: antonio.tencati@unibocconi.it

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