How to Mitigate Risk

Sustainability along the global supply chain: the case of Vietnam

Antonio Tencati, Angeloantonio Russo and Victoria Quaglia

Abstract

Purpose – The purpose of this paper is to investigate the impact that more sustainable sourcing policies

by many multinational companies are having on the suppliers located in developing countries such as

Vietnam. Questions are raised about the process through which CSR is reaching the country.

Design/methodology/approach – The research was conducted in Vietnam thanks to the support of the

United Nations Industrial Development Organization’s (UNIDO) Regional Office. The survey was carried

out on the basis of a questionnaire that was used as a support during the direct interviews and was sent

electronically when the preferred method of on-site visits was not possible. A total of 25 Vietnamese

enterprises were involved in the research.

Findings – The results achieved highlight, on the one hand, how CSR does make business sense even

in a developing country such as Vietnam and, on the other, the difficulties related to the way

requirements of sustainability are moving from Northern consumers to suppliers in Vietnam.

Practical implications – This process calls for new forms of collaboration involving firms along the

supply chain, local authorities, international players, and civil society.

Originality/value – The paper points out the unsustainability of the process through which corporate

responsibility is being imposed on Vietnamese suppliers and how CSR, having become a mandatory

requirement for access to international markets, might transform itself into a new type of technical barrier

to trade. Therefore, CSR needs to be fostered rather than imposed, through the creation of innovative

partnerships and locally-rooted solutions.

Keywords Corporate image, Social responsibility, Developing countries, Supply chain management, Vietnam

Paper type Research paper

1. Introduction

Globalization has made the urgency of corporate social responsibility (CSR) a challenge no

longer belonging exclusively to Northern enterprises (Beschorner and Müller, 2007; Deloitte

Touche Tohmatsu Emerging Markets, 2004; UNIDO, 2002). International trade environments

have been made aware of issues such as human rights and labor exploitation in developing

countries and requirements of sustainability are moving from northern consumers to

suppliers in the south along the global supply chain (Bird and Smucker, 2007).

Passing from one actor to the other along a ‘‘reverse’’ supply chain, the requirement of social

responsibility is entering the boundaries of countries like Vietnam through a number of codes

of conduct imposed by foreign clients and through international standards (e.g. SA8000,

ISO 9001, and ISO 14001). De facto, CSR is reaching southern enterprises as a mandatory

requirement for the continuation of business relationships with foreign partners. Within this

context, sound relationships along the supply chain and between local suppliers and their

stakeholders seem to be needed to foster new solutions in how firms actually achieve

sustainability targets. Therefore, innovative forms of collaboration (Albareda et al., 2008;

Tencati and Zsolnai, 2009; Zadek, 2006) might be the way to help companies in developing

DOI 10.1108/17471111011024577 VOL. 6 NO. 1 2010, pp. 91-107, Q Emerald Group Publishing Limited, ISSN 1747-1117 j SOCIAL RESPONSIBILITY JOURNAL j PAGE 91

Antonio Tencati is based at

the Department of

Management, Università

Bocconi, Milan, Italy.

Angeloantonio Russo is

based at the Department of

Management, Parthenope

University, Naples, Italy.

Victoria Quaglia is based at

AP Møller-Mærsk A/S,

Copenhagen, Denmark.

countries to address new sourcing requirements, to get support from the stakeholder

networks of which they are members, as well as to strengthen their reputation in the

international markets.

With particular reference to Vietnam, this paper aims at investigating the impact that more

sustainable sourcing policies by many multinational companies are having on the local

suppliers. In this context, it is crucial to understand the process through which CSR is

reaching the country, to investigate the effects triggered by CSR strategies on the

competitiveness of the enterprises that are managing to comply with imposed international

labor standards and regulations, to analyze the monetary and non-monetary costs of CSR,

as well as the challenges and difficulties faced by local Vietnamese entrepreneurs when

having to implement CSR strategies for the first time.

The research 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

proving to be unsustainable. The costs triggered by a top-down imposed engagement to

CSR are really prohibitive for many enterprises and the consequent incapability of meeting

social and environmental standards is starting to mean for these firms impossibility of doing

business in international markets. What was originally thought to be a way to fight abuses

and exploitation risks transforming itself into a new form of protectionism (Tencati et al.,

2008).

2. From developed to developing countries: CSR along the global supply chain

Over the last years, CSR has become a fundamental requirement for doing business for

most of the companies in the world. Claims from several stakeholders are therefore

contributing to modify the structure of the global supply chain, starting from developed to

developing countries. The requirement of social responsibility is entering the boundaries of

countries like Vietnam, and the traditional supplier relationships are assuming the form of a

‘‘reverse’’ supply chain. In more detail, three critical passages are characterizing this

process, which starts from consumers, goes through multinational companies (MNCs), and

arrives to manufacturers. Figure 1 presents the reverse supply chain.

2.1 From consumers to MNCs: first passage

The transmission of CSR from developed to developing countries begins with the

requirements deriving from ethical consumerism. Recent studies on ethical consumerism

suggest that consumers increasingly care about the characteristics of business products

and processes, encompassing the importance of non-traditional and social components

such as environmental protection, elimination of child labor and so on (Auger et al., 2003;

Pivato et al., 2008). Thus, ethical features have a substantial impact on the purchase

intentions of consumers (Castaldo et al., 2009).

Therefore, the requirements of social and environmental sustainability are firstly transmitted

by ethical consumers to businesses (Zsolnai et al., 2004), in particular to MNCs, that is, in

many cases, producers of valuable brands, companies whose production is effectuated in

countries with weak law enforcement, firms characterized by labor intensive production,

businesses with a high impact on the communities where their operations are located. These

MNCs are the first players sensitive to CSR along the supply chain. They are also capable of

Figure 1 The reverse supply chain

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exploiting the advantages deriving from globalization bringing their production activity

abroad, where there is a major availability of human resources at a lower cost.

So, such companies contract with suppliers located in ‘‘remote’’ parts of the world and in

emerging markets to manufacture their products. Globalization has also enabled these parts

of the world to be less remote and isolated, that is, to be at reach of the media. So, activities

fostered by Northern firms are more easily monitored by consumers and international

associations, non-governmental organizations (NGOs), policy makers, financial markets,

and civil society.

2.2 From MNCs to their manufacturers: second passage

Having to respond to increasing requirements of a sound supply chain, companies see

themselves obliged to pass onto their manufacturers the necessity of sustainability. This

constitutes the second passage of CSR along the global supply chain.

MNCs must prove to northern societies the soundness of their manufacturers’ working

places, otherwise their reputation could be ruined and sales will tend to decrease

(O’Higgins, 2002; Weiser and Zadek, 2000). Manufactures must prove to MNCs their

capability of complying with the required social standards, otherwise they will lose their

contracts, as MNCs are their main, and in most of the cases only, clients. The tools used by

MNCs to export CSR practices are basically two: first, their own codes of conduct and

independent monitoring schemes; second, international certifications. In the marketplace,

there are at least more than 1,000 codes of conduct and standards (The World Bank Group,

2003). The most common elements of them are wages and working hours, freedom of

association and collective bargaining, discrimination, and occupational health and safety

(The World Bank Group, 2004). The difficulties in handling so many different codes of

conduct and the discrepancies with the national legal framework constitute a major obstacle

in the implementation of sustainability. The manufacturers involved have to pay annual audits

and any required remedial action and infrastructure upgrade 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.

2.3 From manufacturers to raw material suppliers: third passage

In order to be considered entirely socially responsible and therefore able to trade with

northern clients, a manufacturer must guarantee that materials used for the production

derive from responsible suppliers. Raw material suppliers are considered to be the most

‘‘irresponsible’’ actors along the supply chain and a lot of pressure is put on this delicate

phase. The relation between supplier and producer is fundamental in that producing a safe

product with low impacts on the surrounding environment and society greatly depends on

the raw materials used in the manufacturing processes. In this way, CSR reaches also raw

material suppliers that have to re-think and re-design their business to be not cut out from a

demanding market.

2.4 CSR as a driver of innovative forms of collaboration

Given the above-mentioned peculiarities of the modern ‘‘reverse’’ global supply chain, a

top-down approach aimed at imposing CSR requirements is not the only way to manage the

supply chain. A new relational perspective of governance (Albareda et al., 2006; Albareda

et al., 2009) is taking the floor among researchers and practitioners as the strategic option

that might lead to more responsible practices in the society and to a more sustainable

development (Aras and Crowther, 2009; Tencati and Zsolnai, 2009). In particular,

cross-sectorial partnerships (e.g. joint ventures, local sustainable development projects,

multi-stakeholder initiatives, and alliances) among governmental organizations, civil-society

organizations (CSOs), and firms are increasingly considered as the way to achieve more

sustainable patterns of development and overcome the limits related to top-down

approaches in promoting sustainability (Ählström and Sjöström, 2005; Argenti, 2004;

Gerencser et al., 2006; Hamann and Acutt, 2003; Hartman et al., 1999; Loza, 2004;

VOL. 6 NO. 1 2010 jSOCIAL RESPONSIBILITY JOURNALj PAGE 93

Macdonald and Chrisp, 2005; Moody-Stuart, 2004; Rigling Gallagher and Gallagher, 2007;

Rondinelli and London, 2003). In this collaborative perspective partnership can be defined

as ‘‘people and organizations 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) sharing both risks and benefits.

These collaborative efforts could have a major impact on developing countries in mobilizing

and aggregating resources towards sustainability purposes especially because the

industrial base is made of small- and medium-sized enterprises (SMEs) and much of the

business is informal (Russo and Tencati, 2009). In fact, if we look at the varying context of

developing countries, in which specific tasks are required to companies, governments, and

several other organizations, there is an enormous potential, even within current corporate

structures and market systems, to think about fundamentally new, more collaborative types

of governance mechanisms and partnerships that can serve to increase responsibility and

sustainability, set progressive new policy agendas, and activate both public and private

resources to tackle key sustainable development challenges (AccountAbility et al., 2005;

Nike Foundation, 2008; Pélouas, 2004; Stakeholder Research Associates Canada et al.,

2005; Scherer and Palazzo, 2007; Zadek, 2006).

With particular reference to Vietnam, this paper aims at investigating the impact that more

sustainable sourcing policies by multinational companies are having on the local suppliers,

also influencing the relationships characterizing the global supply chain. Our research

questions are built on previous research on CSR in the international context (Beschorner and

Müller, 2007; Boda, 2002; Crowther and Caliyurt, 2006; Haltsonen et al., 2007; Sethi, 2003)

and tested through a specific research design focused on Vietnamese firms. CSR strategies

by Vietnamese enterprises and their relationships with other organizations, not only

belonging to the global supply chain, to address the sustainability challenge have been

investigated, with the aim of answering the following research questions:

B Is CSR reaching Vietnam and how?

B What are the effects triggered by CSR strategies on the competitiveness of the

enterprises that are managing to comply with imposed international labor standards and

regulations?

B What are the costs, monetary and non-monetary, as well as the challenges and difficulties

faced by Vietnamese entrepreneurs when having to implement CSR strategies for the first

time?

3. Methodology

The research was conducted in Vietnam in 2004 with the support of the United Nations

Industrial Development Organization (UNIDO)’s Regional Office (Bekefi, 2006) based in Ha

Noi, Vietnam, and through direct interviews to sector associations, such as the Leather and

Footwear Organization (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 that was used as a support during the

direct interviews mainly to the chief operating officers (COO) or their representatives, and

was sent electronically when the preferred method of onsite visits was not possible. The

questionnaire was originally formulated in English, translated into Vietnamese in a second

moment and consisted of 52 questions (see the appendix). The research saw the

involvement of 59 Vietnamese enterprises, 42.37 percent of which (25 companies) agreed to

collaborate either through direct interviews (for a total of ten, seven of which operating in the

footwear sector and the remaining three in the garment sector) or by answering the

questionnaire that was sent electronically (fifteen companies returned the questionnaire

completed, of which one was a footwear enterprise, five were garment and nine seafood

enterprises). Regarding the other 34 companies, they were excluded from the final sample in

that either it was impossible to conclude a direct interview or the questionnaire was

incomplete.

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Enterprises were selected on the basis of three criteria, the first of which was the sector of

their business activity. In particular, the research focused on enterprises operating in three

sectors: footwear (32 percent of the firms in the sample), garment (32 percent) and seafood

(36 percent). Being, after crude oil, the main sources of Vietnam’s exports (Ministry of

Labour – Invalid and Social Affairs, 2004), the enterprises operating in such sectors are

characterized by intense international business relations and are the first ones to have to

cope with the new sustainability-oriented trends and requirements deriving from foreign

markets. The direct contacts of the enterprises operating in the three sectors were obtained

from 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 a general profile of the firms in terms of date of establishment and

dimensions (number of employees), type of ownership, export markets and most relevant

clients. Secondly, among the ones operating within the three sectors, the enterprises were

selected on the basis of their export markets. Having analyzed the profile provided by the

databases, the enterprises contacted were the ones that were characterized by international

clients (with preference for the EU and US markets). The research analyzed Vietnamese

suppliers of foreign markets and big multinational companies, therefore exposed to their

social and environmental requirements. The following chart (see Figure 2) indicates the

export markets of respondents.

Finally, the choice of enterprises was led by their dimensions (in terms of number of

employees) and the ones selected are of medium to large size, as can be observed in

Figure 3. The rationale of such a choice has been the following: Higher the number of

employees, wider the effects of CSR on the day-by-day management of the firm.

4. Results and discussion

4.1 Benefits of CSR implementation

In developed countries the acceptance of a positive correlation between profit and CSR is

somehow growing, but it is still not totally or sufficiently proven (Margolis and Walsh, 2003;

Orlitzky et al., 2003; Rubbens and Wessels, 2004). In Vietnam such acceptance does not

exist at all.

Several have been the attempts of defining a correlation between sound policies and a

better economic performance, but the debate is still very open and characterized by

different opinions (Barnett, 2007; Friedman, 1970; McWilliams and Siegel, 2000; Waddock

and Graves, 1997). On the basis of our data, what can be affirmed is that the enterprises

Figure 2 Export markets of respondents

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involved are starting to benefit from the recent implementation of more sustainable policies

through the compliance with codes of conduct and international certifications (see Figure 4).

In fact, what can be highlighted is the impact of CSR on variables such as productivity,

quality of the final output, competitiveness, and retaining of skilled human resources (see

Figures 5 and 6).

In more detail, our findings suggest that depending on the sector different benefits are

emerging from CSR. Looking at the garment sector, an improvement in quality (75 percent)

and competitiveness (62.5 percent) are the main benefits that such companies are

experiencing. Same considerations can be argued referring to the seafood sector

(respectively, 100 percent and 77 percent), whereas companies are also managing the

chance to expand their activity into new markets (77 percent). Broader results are related to

the footwear sector, whereas companies reveal benefits associated with several functions

throughout the managerial process. The greatest relevance is recognized to productivity

improvements, such as the standardization of procedures (50 percent) and a better quality

management (50 percent). Benefits are also associated with the human resource

management, through the retention of skilled employees (25 percent) and a decreasing

number of accidents (25 percent). Moreover, companies experience advantages in the

Figure 3 Respondents by size (number of employees)

Figure 4 Main certifications in footwear, garment and seafood sectors

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management of specific relationships along the supply chain, such as the opportunity of

reaching new clients and improving client’s trust (both 25 percent).

These results are also confirmed by the analysis of the direct interviews. As declared by the

Chief of Quality Management of a garment company, ‘‘the company now works like a

system’’ and, with regard to the adoption of specific international standards, he recognized

that ‘‘having the SA8000 certification, the company has noticed an increased facility in

recruiting acknowledged and hard-working employees. This will positively affect the

productivity in a medium-long term. Only in the last six months, 200 new people started

working for our company.’’

In light of the above results, CSR is being first of all a business lesson for the companies that

had the strength to commit to it. When we think of CSR and its effects on companies, what

immediately comes to mind are concepts such as better working conditions and less

negative impact on society. CSR is actually more than that for the enterprises contacted.

CSR and its regulations that take shape in standards and codes are bringing standardized

procedures and organized behaviors. Production is starting to be planned with a

longer-term perspective, on the basis of past orders. Daily reports on the quantity of items

produced or the number of employees working per line are required by and submitted to the

clients. The quality of management increases and the understanding of business issues

such as efficiency and effectiveness is starting to enter realities where ‘‘quantity’’ was

considered the only real indicator of success. This points out how deeply CSR can change

the business model in companies never run before according to economic principles

because of a number of reasons such as a regime that owned most of the companies and a

cultural disapproval for whoever shows off profit and richness. Especially according to the

direct interviews with managers from the footwear and garment sector, once the whole

Figure 5 Benefits of CSR in the footwear sector

Figure 6 Benefits of CSR in the garment and seafood sector

VOL. 6 NO. 1 2010 jSOCIAL RESPONSIBILITY JOURNALj PAGE 97

business system gets standardized and organized, the following benefits may result as

consequences of a more integrated system:

B Decreasing number of mistakes. According to international standards, the different

stages of the production chain must be regulated in order to deliver a final product

compliant with technical and quality standards. Standardized procedures help the

employee in the implementation of her/his work and the chance of committing mistakes

decreases. Moreover, mistakes can actually be foreseen and prevented.

B Decreasing number of accidents. Standardized procedures and compulsory training

courses on the use of machines are de facto reducing the number of accidents on the

workplace. The benefit for the employees’ safety is obvious, but the benefit is not enjoyed

solely by the single worker. In fact, the costs of frequent absenteeism are extremely high

in terms of productivity and image of the firm.

B Lowering employee turnover. A lower turnover is a result of safety-related rules and

training. As the interviewed managers affirmed, compulsory working behavior imposed

by codes in order to assure the occupational safety; increased awareness of what is

dangerous; fire-emergency prevention training courses are all elements that benefit

directly the single worker, but also they are actually enhancing the overall performance of

the firm, which sees decreasing employee turnover ratios. Thus, costs caused by the

necessity of re-training unskilled workers decrease and benefits triggered by timesaving

increase.

B Higher productivity. Increased managerial skills, and a better operative capacity and

effectiveness lead to higher productivity.

Moreover, CSR does not only enable an enterprise to operate according to principles of

efficiency and effectiveness, increasing its overall productivity, but it also gives the power of

attracting and retaining skilled employees.

The Deputy Managing Director of a footwear company pointed out that ‘‘a sound working

environment is considered as the only way to attract skilled and committed workers.’’ In more

detail, because of the need of increasing production, the firm decided to build a new factory

in which potentially ten thousand employees could operate. In order to find workers willing to

leave their homes to be employed in the company a specific area devoted to facilities for the

employees (e.g. dormitories, nurseries for medical assistance, a training school, and so on)

was constructed.

Finally, an integrated management system, increased operative capacities, higher

productivity, and higher level of commitment, all result into a higher quality of the final

product: More sustainable policies lead to high quality, as confirmed respectively by 75

percent and 100 percent of the respondents in the garment and seafood sector. Quality is

what Vietnamese companies need to face the stiff competition of, in particular, the neighbor

China.

In brief, CSR strategies trigger increased productivity and quality enabling a major

competitiveness. Commitment to more sustainable policies does not only provide a license

to operate in international markets and to attract an increasing number of foreign clients; it

also gives the opportunity of creating a whole new market where sound companies can

prosper. CSR will have to be the perspective through which re-designing a strategic

positioning and re-creating a competitive arena in which certified Vietnamese companies

will be more attractive for foreign investors and clients. In this new competitive strategy, the

image that an enterprise is able to communicate is obviously fundamental, and a recognized

commitment to sound policies improves such image.

4.2 Unsustainability of CSR requirements

Evidence gained from Vietnamese companies big and rich enough to make social

responsibility an element of their business suggests that CSR is reaching Vietnam through

globalization, but the way it is reaching the country is to some extent unsustainable. From a

theoretical point of view, the passage of CSR from one actor to the other along the global

PAGE 98jSOCIAL RESPONSIBILITY JOURNALj VOL. 6 NO. 1 2010

supply chain seems obvious and logical, and no difficulties seem to occur. As emerged from

interviews, reality proves the opposite instead. An interviewed Chief of Quality Management

in the garment sector highlighted that ‘‘the criteria used to select the suppliers are imposed

by the foreign buyer.’’ Specifically, foreign companies dominate their suppliers and expect

them to have specific certifications: ‘‘There is a very strong relation between the foreign

client and the raw material supplier and this also means very competitive prices.’’

In order to assure that a product is entirely sustainable and accepted by consumers, the

integrity of its supply chain must be guaranteed. The same Chief of Quality Management

declared: ‘‘We must constantly monitor our suppliers in terms of time of delivery and quality

of the raw materials; this means additional costs for implementation.’’ In general, the

interviews and the collected questionnaires point out that in all three sectors the main criteria

adopted to select suppliers are price and quality.

The point is that the global supply chains go through several different countries, different

legal frameworks, mentalities and cultures: If these differences are not taken into account,

the supply chain management and the related introduction of CSR requirements and

policies could become unsustainable.

What resulted from the interviews and responses to the questionnaires is that the compliance

with international standards triggers:

B monetary costs, such as costs of certification, annual audits, and technical updates; and

B non-monetary costs, such as those related to reassessment (in terms of a change of

mentality and culture), monitoring (introduction and use of formal procedures, time

consumption), and training (capacity building, educational upgrading, technical skill

building).

The monetary costs triggered by CSR seem to be common and evenly impacting all the

enterprises of the three sectors, whereas non-monetary costs revealed some differences

among the three sectors (see Figures 7 and 8).

Talking about monetary costs, an interviewed manager in the garment sector revealed that

‘‘the costs of certification are prohibitive, therefore only few competitors can possibly afford

to have the certification. To what extent this is not a ‘technical barrier to trade’, given that

there is not any kind of financial assistance for these companies, could be an interesting

reflection to do.’’

Focusing on the non-monetary costs associated with CSR, results provide evidence of the

different impact that responsible behaviors might have on companies from different sectors.

Whereas the quality has a stronger influence on the value of the final product, the training

Figure 7 Monetary costs of CSR in footwear, garment and seafood sectors

VOL. 6 NO. 1 2010 jSOCIAL RESPONSIBILITY JOURNALj PAGE 99

costs represent the most important factor affecting the bottom line, as revealed in the

seafood sector (100 percent of the responding companies). Monitoring costs, on the other

hand, have the highest impact in the garment and footwear sector (respectively, 100 and 75

percent).

5. Conclusions

In this paper we investigated the impact that more sustainable sourcing policies by many

MNCs are having on the suppliers located in developing countries such as Vietnam. In more

detail, we looked for the impacts of the CSR strategies on the competitiveness of the

enterprises that are managing to comply with imposed international standards and

regulations. The results achieved point out, on the one hand, how CSR does make business

sense even in a developing country such as Vietnam. On the other hand, data and direct

interviews provide evidence of the difficulties related to the way requirements of

sustainability are moving from northern consumers to suppliers in Vietnam. In light of the

above results, implications for both practitioners and researchers emerge.

The gathered findings highlight that monetary and non-monetary costs of complying with

international standards may turn out to be unsustainable and prohibitive for many

enterprises, and especially for small- and medium-sized suppliers. CSR is a long-term

investment, expensive if considering the civil foundation and the reality within which the

Vietnamese have always operated. The inability to meet social and environmental standards,

though, could mean the impossibility of doing business in international markets. The

increasing opening of the market and the recent access to the World Trade Organization

(WTO) are making CSR an extremely important asset that cannot simply be imposed by

foreign partners. Rather, local players should be technically and financially supported in

their approach to more sustainable policies (Bird and Smucker, 2007), especially now that

the implementation of such policies has become crucial to build business relationships with

foreign clients. In this context, a relational perspective is gaining its momentum: Like in other

countries, partnerships and more collaborative models of governance could foster the

development of responsible approaches also by Vietnamese firms. However, this calls for a

deeper and broader involvement of public authorities and managers in charge of supporting

the development of more sustainable business models in the country.

Figure 8 Non-monetary costs of CSR in footwear, garment and seafood sectors

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From the public authorities’ perspective, first of all a sustainable development of CSR should

start with local capacity building. ‘‘Vietnam doesn’t need the fish, but the net,’’ affirmed the

Director of the Trade Promotion and Business Support Development Department, under the

Vietnamese Ministry of Trade: Effective partnerships and collaborations especially with

foreign companies and institutions could foster this issue.

Therefore, a major collaboration between public and private efforts, local and international

authorities, managers and workers is strongly needed. If Vietnam could become a more

enabling environment for sustainability, the several initiatives carried on in this country would

be more likely to be successful with total awareness on what has been done before and what is

planned to be done, rather than in isolation. What can be witnessed is an over-crowded aid

environment, where a number of international organizations, NGOs, and bilateral donors are

‘‘competing’’ rather than collaborating on same issues. If all these efforts started to be

coordinated together with the Vietnamese counterparts, results would be achieved more

effectively and much quicker and Vietnam would concretely benefit from the presence of

international institutions. Through a deepen collaboration among the international institutions

and a public authorities’ stronger involvement, CSR would be effectively strengthened along

global 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

highly recommendable and would enhance an effective implementation of CSR in Vietnam.

At a managerial level, among all the most problematic challenge to address seems to be the

mentality and the culture at the basis of the organizations (Crowther and Davila Gomez,

2006). Many indications gained from the footwear, garment and seafood sectors reveal that

the major cost associated with new and imposed social policies derive from necessary

changes in the management system, which means changes of the whole business mentality.

The reticence of most manufacturers and suppliers to undertake CSR compliance is caused

by the insufficient understanding of the business and social utility related to the major efforts

needed to meet international requirements. Therefore, awareness of CSR benefits must be

created at a managerial and operative level; until developing countries such as Vietnam will

consider international standards as an imposition from foreign clients, the effectiveness of

CSR will be very low, and business, employees and thus society will not be able to improve.

To date, the only reason why Vietnamese enterprises – similarly to what happens in other

developing countries – are beginning to approach social issues is because otherwise they

could no longer supply foreign countries and would be excluded from international trade

markets. As declared by a representative of an international organization operating in Vietnam:

Until 1997, Indonesia was the biggest supplier. From then on, the foreign buyers moved here to

Vietnam, leaving all the Indonesian workers alone with no skills. These big MNCs do not provide

their suppliers with any kind of capacity and when they decide to move on to another country, they

leave the previous one with no hope.

What has to be considered is that CSR is ‘‘exported’’ to countries where the civil foundation,

which consists of norms, customs and laws that govern corporate practices, is shallow and

fragile (Martin, 2002). Consider, for example, how firms manage their relations with such an

important stakeholder as employees, whereas once the management has realized the

importance of corporate responsibility, the concept must first be shared with them. This may

sound contradictory: educate workers on their own rights. However, in Vietnam the limit of

eight working hours a day wanted/imposed by Vietnamese Labour Code (Art. 68.1) actually

goes against workers’ interest, as they need to work as many hours as possible during a day

and a month in order to earn enough and come back home soon. In this case the civil

foundation and the economic framework do not create the conditions enabling employees to

work eight hours a day: therefore, the implementation of CSR must take this feature into

account. Nevertheless, although the minimum wages to be paid a month were of VND

210,000 ($12) for employees working at domestic business (Decree N. 77/2000/ND-CP

dated December 15th, 2000 of the Government on Re-adjusting the Minimum Wage) and of

VND 417,000 to 626,000 ($24 to $36) for the ones working in foreign-invested enterprises

(Decision n. 708/1999/QD/TTg dated June 15th, 1999 of the Prime Minister on Minimum

VOL. 6 NO. 1 2010 jSOCIAL RESPONSIBILITY JOURNALj PAGE 101

Wages of Vietnamese Labour Working at Foreign-invested Companies), managers and

employees should understand that following the rules is not a waste of time.

As clearly resulted from the collected data, increasing training costs have been triggered by

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 but

not every firm can afford them. There was a common feeling among the entrepreneurs of

powerlessness, underpinned by the perception of being asked to shoulder all the costs of

compliance, whereas the buyers would receive the benefits.

In brief, CSR and its advantages must be concretely proven to local players through specific

initiatives. Such awareness must be tailored to the addressed country and must be sustainable,

that is, financially and structurally supported and based on local capacity building.

So, clear indications for future research as well as for public authorities’ interventions emerge

from this study. In more detail, a robust business case should be defined in order to spread

more sustainable practices among the entrepreneurs; moreover, an on-field CSR

educational agenda seems necessary and should address all the companies, including

the smallest ones. However, a methodology for demonstrating the business case in a

comprehensive and rigorous way is still a challenge, considering that the question does not

simply call for a one-size-fits-all solution (Spence, 2007).

Finally, it is not possible to generalize the Vietnam experience to all developing countries. In any

case, this research shows that CSR could make business sense in countries such as Vietnam,

but the efforts towards sustainable goals need to be fostered, rather than imposed, through the

definition of innovative forms of collaboration involving companies, local authorities,

international players and civil society at large and through the construction of locally-rooted

solutions. Many experiences in other developing countries confirm the progressive role that

this collaborative approach could play (Brugmann and Prahalad, 2007; Perrini and Russo,

2008; Porter and Kramer, 2006; World Economic Forum, 2008; Zadek, 2006).

Otherwise, what was originally thought to be a way to reduce and limit abuses and

exploitation risks transforming itself into a technical barrier to trade and a new form of

protectionism.

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Appendix

Figure A1 The questionnaire

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Figure A1

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About the authors

Antonio Tencati is Assistant Professor of Management and CSR at Università Bocconi. He is a Senior Researcher at SPACE Bocconi and a member of the CSR Unit, Department of Management, Università Bocconi. He is also a member of the Business Ethics Faculty Group of the CEMS-MIM (Community of European Management Schools – Master in International Management) Programme. His research interests include business management, management of sustainability and corporate social responsibility, environmental management, innovation and operations management. Antonio Tencati is the corresponding author and can be contacted at: [email protected]

Angeloantonio Russo is Assistant Professor of Management at Parthenope University. He is also Senior Researcher at the SPACE Research Centre, Università Bocconi, where he got his PhD in Business Administration and Management. His research interests are mergers and acquisitions, strategic alliances, environmental management, renewable energies, sustainability, and corporate responsibility.

Victoria Quaglia took a degree in Business Administration at Università Bocconi in 2004. Between 2005 and 2007 she was in Vietnam at Oxfam first, then at Ernst & Young. Victoria Quaglia currently works for Group Finance, M&A of AP Møller-Mærsk in Copenhagen, Denmark.

Figure A1

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