NATIONAL TAICHUNG UNIVERSITY OF EDUCATION
Master Program of Business Administration
Master Thesis
Corporate Social Responsibility in
Vietnam Travel Agencies
Student: Tran Viet Trieu (BTR098193)
Advisor: Dr. Chiu Chou-Kang
(丘周剛 博士)
Corporate Social Responsibility in Vietnam Travel
Agencies
研 究 生：陳越朝 Student: Tran Viet Trieu 指導教授：丘周剛 博士 Advisor: Dr. Chiu Chou-Kang
國立臺中教育大學 事業經營碩士學位學程
碩士論文
Master Thesis
Submitted to Graduate Master Program of Business Administration
National Taichung University of Education
In Partial Fulfillment of the Requirements
For the Degree of
Master of Business Administration
December 2012
Taichung, Taiwan, Republic of China
Corporate Social Responsibility in Vietnam Travel
Agencies
Advisor: Professor Chiu Chou-Kang Master Program of Business Administration
National Taichung University of Education Student: Tran Viet Trieu
Master Program of Business Administration National Taichung University of Education
ABSTRACT
This study is a researching and finding the attitude towards corporate social responsibility of travel agencies in Vietnam. The World Bank Group definite Corporate Social Responsibility as: “Corporate social responsibility (CSR) is the commitment of businesses to contribute to sustainable economic development by working with employees, their families, the local community and society at large to improve their lives in ways that are good for business and for development”. The tourism industry is one of the world’s major industries, one that offers significant opportunities for employment creation, local economic development and integration in to the international market. Therefore, approach into tourism sector we will get lot of overview in areas which social need concern. Socio-economic efficiency of the tourism activities has contributed to eliminating hunger and alleviating poverty, improving living standards and enriching the society. Vietnam has potential to develop tourism and at the first step it is becoming tourism industry with spearhead economy sector. The development is similar to how using social’s resource to get motivation effectively. The natural resources, ecological system, environment and cross cultural… all that coordinate with corporate social responsibility by its way, special when many travel agencies operating in this area which having too much relationship with the social and its bodies. This study research the attitude towards CSR of Vietnam Travel Agencies, there are 150 agencies participate into the survey and 108 participants available collected. Using statistic software SPSS to analysis T-test, One-way Anova, correlation, regression... many interesting things discovered. The attitude towards Vietnam Travel Agencies is positive and some factor in Travel Agencies effect to that attitude. Therefore, the study suggests researching and applying CSR into the business strategy where enterprise can creates goodwill and a positive image of the business as well as the brand. Getting the trust and a good reputation are some of the company’s best valuable assets. Therefore the corporation can nurture these important assets by being socially responsible. The corporate social responsibility brings benefits in moral obligation, environment, social, reputation, ...
Keywords: Corporate Social Responsibility (CSR); Sustainable Tourism Development
越南旅行業的企業社會責任
指導教授：丘周剛博士 國立臺中教育大學 事業經營碩士學位學程 研 究 生：陳越朝 國立臺中教育大學 事業經營碩士學位學程摘 要
世界銀行集團將企業社會責任(CSR)定義為『企業透過與員工、其家屬、當地 社區與社會之合作，藉以改善其生活方式，且有利於企業長久的經濟發展的一項承 諾』。觀光旅遊產業是現在一大重要產業，為當地的經濟發展提供就業機會，更促 進其邁向國際化。本研究目的是為了瞭解越南旅遊業對於企業社會責任之概況。在 旅遊業中，我們可以貼近現在社會中各領域所需要被關注的概況。旅遊活動所帶來 經濟效益對社會而言可以減少人民貧瘠、提高人民生活水準、造福整個社會。 越南是一個有潛力發展旅遊業的一個國家，第一步便是將旅遊業發展成為一 經濟部門。如何利用當地的社會資源將旅遊業的發展達到一個激勵的效果是一重要 議題。而旅行業將會影響當地的自然資源、生態環境系統、甚至其跨文化的差異… 等，都將與其企業社會責任有關係。一個良好的企業社會責任可以建立一個有好且 積極的企業品牌與形象。 本研究探討越南旅行社對企業社會責任的認知，總共進行 150 間旅行業者調 查，有效資料為 108 間。使用 SPSS 統計軟體進行 T 檢定、多變量分析、相關、迴 歸等資料分析方法，研究發現越南旅行社對企業社會責任的認知將與組織產生正面 的影響。因此，本研究結果認為應將企業社會責任納入商業策略中，已建立企業友 好及正面的企業形象，而其所產生的優良的商譽與各界的信任對於公司來說絕對唯 一寶貴的資產。因此，企業可以藉由 CSR 來培育這項公司重要的資產。CSR 在道 德上的責任、環境、社會商譽…等皆會帶來超過其效益的無形價值。 關鍵字: 企業社會責任 (CSR) 、 永續發展 、觀光 、觀光展業 、越南旅行業(VTA).Acknowledgement
I would like kindly thank with appreciation to my advisor, Professor Chiu Chou-Kang (丘周剛教授) – Dean of Academic Affairs, Director of Graduate Institute of Business Administration in Taichung National University of Education, who always closely guides and advises me by providing valuable and insightful comments on this thesis.
I would also like to express my gratitude to all of the professors in the Master Program of Business Administration Prof. Lin Shin-Yi (林欣怡教授), Prof. Yang Yi-Xing (楊宜興教授), Prof. Chen Uy-Juan (陳玉娟教授), Prof. Li Jia-Zong (李家宗教) and others professors in National Taichung University of Education who provided valuable guidance throughout the course with encouragement and professionalism.
The data provide by the Vietnam Travel Agencies’ manager participates into this study is also acknowledge with gratitude.
Finally, I would like to extend my heartfelt gratitude to my family and all friends in both Taiwan and Vietnam who always support and help me during the time I live far from home. They are always with me whenever I need them and they become a part of important that will go along all my life.
All thankful with my honor! Sincerely,
Tran Viet Trieu
Tables of Contents
ABSTRACT ... III Acknowledgement ... V Tables of Contents ... VI List of Tables and Figures ... VII
CHAPTER ONE -‐ INTRODUCTION ... 1
1.1 Research Background ... 1
1.2 Research Rationale ... 4
1.3 Research Objectives ... 5
1.4 Research Procedure ... 7
1.5 Research Structure ... 8
CHAPTER TWO -‐ LITERATURE REVIEW ... 9
2.1 Corporate Social Responsibility ... 9
2.1.1 Corporate social responsibility definitions ... 9
2.1.2 CSR in relationship with organizational stakeholders ... 15
2.1.3 Argument for and against CSR ... 18
2.2 Development Sustainability and Tourism Sustainability ... 20
2.3 Corporate Social Responsibility and Tourism sustainable development ... 24
2.4 Tourism Industry and Travel Agencies ... 26
2.5 Vietnam Travel Agencies with Corporate Social Responsibility and Sustainable Tourism Development ... 30
CHAPTER THREE -‐ RESEARCH DESIGN AND METHODOLOGY ... 34
3.1 The Research Approach ... 34
3.2 The Research Design ... 34
3.3 Research Hypotheses ... 36
3.4 Questionnaire Design and Sampling Plan ... 39
3.5 Data collection ... 41
CHAPTER FOUR -‐ RESEARCH ANALYSIS AND DISCUSSSION ... 42
4.1 The sample characteristics ... 42
4.2 The attitudes towards Corporate Social Responsibility ... 44
4.3 Attitudes towards Sustainable tourism ... 51
4.4 The Correlations between Social Responsibility Corporate and Sustainable Tourism Development with Sample ... 54
4.5 Discussion ... 57
CHAPTER FIVE -‐ CONCLUSION ... 59
5.1 Conclusion ... 59
5.2 Implications ... 60
5.3 Future Research and Limitations ... 61
REFERENCE ... 62
List of Tables and Figures
Table 2-1: List of CSR’s definitions (1) ... 9
Table 2-2: List of CSR’s definitions (2) ... 10
Table 2-3: Checklist of Stakeholder-based CSR themes ... 17
Table 2-4: Description of sustainable development spectrum in Hunter’s view ... 21
Table 4-1: SPSS analysis of Agent Size ... 43
Table 4-2: SPSS Statistics Sample of The Survey ... 44
Table 4-3: Level of respondents to CSR’s statements ... 45
Table 4-4: Agency Size’s attitude to CSR’s statements ... 47
Table 4-5: LSD results of difference attitude by Agency Size ... 48
Table 4-6: Rate of commitment in CSR’s activities ... 50
Table 4-7: The difference commitment in CSR’s activities ... 50
Table 4-8: Level of respondent to STD’s statements ... 52
Table 4-9: Agency type’s attitude to sustainable tourism development’s statements ... 53
Table 4-10: The correlations between CSR’s statements and STD’s statements ... 54
Table 4-11: Summary factor of multivariate regression analysis ... 55
Table 4-12: The coefficients of multi regression analysis. ... 56
Figure 1-1: The flow chart of the study ... 7
Figure 2-1: The Pyramid of CSR ... 12
Figure 2-2: The Three-Domain Model of CSR ... 14
Figure 2-3: A Firm’s stakeholder ... 16
Figure 3-1: The model of Research ... 36
Figure 4-1: The distribution location of Vietnam Travel Agencies ... 42
Figure 4-2: Distribution of Vietnam Travel Agencies size ... 43
CHAPTER ONE - INTRODUCTION
1.1 Research Background
Nowadays, “Social Responsibility” is not only a new concept for Corporate but also widely consideration by Nations, Industries, Politicians, Lawgivers, Scholars, There are so many definitions about Corporate Social Responsibility (CSR), from the beginning discussion by Bowen (1953) until now. And the most commonly definitions of the World Bank Group is known as: “Corporate social responsibility is the commitment of businesses to contribute to sustainable economic development by working with employees, their families, the local community and society at large to improve their lives in ways that are good for business and for development”. This concept mentions that corporate whether small or larger, need to do responsibility to society, but what aspects they are responsible for and how should the responsibility be clearly. With many arguments of CSR’s definition and no one consented definition for corporations to follow which leads to different levels of engagement of policy with different corporations.
In the fierce competitive condition, corporate do good responsible to social will be a corporate get competitive advantage because owning the background of good customers, business environment, intangible value, the truth created and corporation cultural value accumulated. Therefore, corporate social responsibility becomes one of basic business philosophy in recently. This philosophy contributes to sustainable development of corporate where the social and community recognize. As Murthy’s perspective “Philosophy of Business refers to an understanding of the moral and ethical basic of business as an area of knowledge”, (Murthy, 1905). However, corporate social responsibility not only is ethical matters, corporate can do performance with highly rank through do their social responsibility activities.
Devising the right social responsible program in business which can open up a myriad of new relationships and opportunities that leading to corporation’s goals in financial, organization, relationship, product or customer… therefore able to consider to put CSR in the strategies development, that request for the answer of question that scholars have been mentioned “the question of whether firms can use CSR to achieve a
sustainable competitive advantage is another important question” (CSRVietnamForum, 2009). Obviously, corporate social responsibility creates goodwill and a positive image of the business as well as the brand. Getting the trust and a good reputation are some of the company’s best valuable assets. Therefore the corporation can nurture these important assets by being socially responsible. No deny that the corporate social responsibility brings benefits in moral obligation, environment, social, and reputation...
In Vietnam, Social responsibility is not new but still unfamiliar to enterprise. There are media showing some corporate social irresponsibility’s cases have been happened but that able to emphasized the important of corporate social responsibility but not enough to get the knowing of CSR’s concept in the world. The boom of economic development after “Doi moi - (renovation)” stage, in the mid-1980s (Wikipedia, 2012), since then with the participate of many economic components, diversification of industries, business model, (Vuong & Napier, 2010). Economic social management needs to have a look, knowledge by government as well as many authorities management about CSR. As researchers concluded: “Enterprise is an organization engaged in the trade of goods, services, or both to consumers” (Sheffrin, 2003). Therefore when it take part into activities it required have full of rights and obligations. In 2005, Vietnam government approved award “CSR Award” organized by Vietnam Chamber of Commerce and Industry (VCCI); Ministry of Labor, War Invalids, and Social Welfare; Ministry of Industry and Trade; Vietnam Leather and Footwear Association; Vietnam Textile Association. (Vietnamforumcsr, 2005). This award means through CSR lead to sustainable development, its purpose to encourage and honor corporations which doing good social responsibility activities in integrate status. CSR become one of requirement to corporate in Vietnam, if they not compliance CSR they will not approach to international market. However, doing CSR activities in Vietnam still cope with hardly like the lack of knowledge in CSR, some corporate understand CSR is only charity manner but not understand that it needs doing from inside the firm. Another effect to doing CSR in Vietnam is lacking of finance source and technical doing CSR standards, especially in medium and small enterprises.
This study through research and finding the attitude towards corporate social responsibility of travel agencies in Vietnam, which almost are medium and small sizes
firm that will highlight the understanding of CSR. The tourism industry is one of the world’s major industries, one that offers significant opportunities for employment creation, local economic development and integration in to the international market. (Dilys, Harold, & Caroline, 2002). Therefore, approaching into tourism sector we will get lot of overview in areas which social need concern. Socio-economic efficiency of the tourism activities has contributed to eliminating hunger and alleviating poverty, improving living standards and enriching the society. The development of tourism has helped change the face of urban and rural areas. People’s living standards have been much improved, especially in tourist centers, (Amaeshi, Osuji, & Nnodim, 1905). Vietnam has potential to develop tourism and at the first step it is becoming tourism industry with spearhead economy sector. The development is similar to how using social’s resource to get motivation effectively. The natural resources, ecological system, environment and cross cultural … all that coordinate with corporate social responsibility by its way, special when many travel agencies operating in this area which having too much relationship with the social and its bodies.
Niels Jacobson, CEO of Lars Kolnid stated that: “our goal is to do business in a manner that positively contributes to society in every country where we do business. We support the principle that industry has a responsibility to society and that we have collective responsibility to the environment” (Dunphy, Griffiths, & Ben, 2003).
Therefore, the sustainable corporate base on the attract members who are strongly committed to the real values. CSR will approach expand and create opportunities through acknowledgment of management team and then also actively encourages all members of organization to be involved in communities activities in which they contribute their own right. And who knows that, the source for business would be created.
1.2 Research Rationale
Corporate social responsibility is an attractive subject by the approaching to many areas whether related to many aspects of life social. The combination between corporate social responsibility with tourism sector in general speaking and with agencies who works in tourism individually speaking is the best way to get knowledge and widespread to stakeholder who will join, act of controlling a part of social. “Change in top management (CEO or team) might be examined to determine whether leadership style and characteristics are more important than corporate control/ culture for predicting CSR activity. Understanding the role of leadership could be extended to understanding the decision making process and how decisions about CSR activity are affected by demands from multiple stakeholders”, CSRVietnamForum (2009). Therefore, the first motivate in this study is finding attitude of Vietnam Travel Agencies toward Corporate Social Responsibility, which the top management’s attitude will be representative.
In Vietnam, the company which operation in tourism sector mainly in small and medium sized, and as United Nations’ statistic, in 2002, Small and Medium-sized Enterprises (SMEs) form 90% of the worldwide population of firms, and employ more than 50% of all labors in the private sector, (United Nations, 2002). And how and what motivates SMEs participate in CSR, although larger firms tend to have a bigger social impact rather than small firms but Madden et at, 2006 provided evidence that many smaller firms tend to be involved in CSR activities in some way. (Madden, Scaife, & Crissman, 2006). So that, aiming to discover differences of perception Corporate Social Responsibility among different size tourism companies is the second motivate of this study.
In 2011, Vietnam tourism industry contributes 12.4% Vietnam’s gross domestic product (GDP) and growth speed as 3.4%, and is expected to 7.3% annual in 10 years coming, (Ha, 2010). In fact that travel and tourism is an important contribution to the Vietnam economy and it impacts, touches nearly all sectors of the national economy and attracts a lot of labor force nationwide. Therefore, doing this study at the social responsible manner will contribute acknowledgement of CSR to individual activities in Vietnam Travel Agencies who mainly operating the tourism industry.
And as mention above, CSR becomes popular now and corporation researching and applying it on the different methods. The fact that relation are fundamental for the existence of a firm and therefore should be looked at in more detail as they could open up new opportunities which opening the network include the communities with the firms, workers and customers. “find business and resources opportunities that they would otherwise not now about” in respect to all the players involved directly or indirectly, (Vergalli & Poddi, 2009). Understanding and bolding role of CSR will help get strategies development business.
In brief, background on corporate social responsibility and tourism industry, this study motivate on:
- Firstly, finding attitude of Vietnam Travel Agencies toward Corporate
Social Responsibility.
- Secondly, discovering differences of perception Corporate Social
Responsibility among different size tourism companies.
- Thirdly, contributing acknowledgement of CSR to individual activities in
Vietnam Travel Agency in particularly.
- Finally, studying strategies development business through bolding role of
CSR.
1.3 Research Objectives
In the market economy, the competitive continuous delicate and complex each day, the life environment change every day by changing of social, culture, economic… There are some matters seem developing of scientist, technology can applying to solve but in the fact, the more science and technology developed the more progress, civilized become on process? (Arne, Carl B, & Thorvaldur, 1992). Many where in the world, everyday on the news of nations we can see the prosperity parallel with poverty, a lot of people no food, no wear… The destroyed of environment, atmosphere, forest fires, disaster, flood and drought, etc.… might that is the irresponsible of individual and organization which accidentally or deliberately created, (Lange & Washburn, 2012).
When approaching the corporate social responsibility concept, with the objective is the agencies that working in tourism sector where the most activities touch into social. Therefore the first objective through researching the attitude toward CSR by travel agencies in Vietnam, the study hope pushing the acknowledgment about important of the social responsibility to tourism agencies.
And tourism product is diversity, including value cultural from tangible to intangible, destinations, leisure industry… therefore business activities need to do the sustainable by conservation value cultural and protect environment, create the valuable things actively affected to social. Sustainable tourism is very important for the development of developing countries, especially for the least developed ones, (Tatjana, 2008). That is also an objective of study – measurement engage in Sustainable Tourism related activities of Vietnam Travel Agencies.
Obviously, tourism has become a very important and dynamic sector both in the world economy and particularly in the developing countries. It allows jobs to be created for various levels of workers, both skilled and unskilled, and for those often marginalized in the labor market such as women. Therefore, the combination it with CSR will show the benefit certain and it is also the third objective of study want to give out.
So that, tourism is already an important sector in certain developing countries and the opportunities presented by this phenomenon must therefore be seized. Every economic sector also need develop own strategies business. And applying CSR in the business also will be performance strategies development business that corporation should be consideration.
The study’s objectives in brief below:
1. Find out the understanding and attitude of Vietnam Travel Agencies toward
Corporate Social Responsibility.
2. Measurement engage in Sustainable Tourism related activities of Vietnam
Travel Agencies.
3. Showing benefit from applying Corporate Social Responsibility.
To make clearly the study’s objectives, the research will follow with the hypotheses examined at the Chapter 3.
1.4 Research Procedure
The models in the sequence of the research procedure refer to each step in subsequent chapters. In the view of procedure the study will be clearly purposes, motivations.
Figure 1-1: The flow chart of the study
Conclusions and sugges\ons
Discussion of the interrela\on between research constructs Data analysis
Collec\on of ques\onnaire data
Ques\onnaire determina\on and conduct the ques\onnaire survey Ques\onnaire designs and revision
Construc\on of conceptual framework Relevant literature review
1.5 Research Structure
This study contains five chapters, and the summary for each is as below:
(1) Chapter one outlines the research background, motivations, objectives, procedure, and the structure of this study.
(2) Chapter two introduces the previous literature related to the corporate social responsibility, sustainable development, tourism industry, and Vietnam travel agencies. Key variables and their respective relationships are identified. The hypothesized relationships are proposed to integrate the results of previous studies. (3) Chapter three presents the construct measurements and research design of this study. A research framework that suggests the general relationships among the key research constructs, including input and output constructs based on structure of research. Meanwhile, the research design the sampling plan, data collection procedures, and data analysis techniques, has also been discussed.
(4) Chapter four is research analysis and discussion. Using the statistic software – SPSS to analysis T-Test, One-way Anova, and regression to analysis the effected factor. And discussion the attitude of Vietnam Travel Agencies to CSR. (5) Chapter five includes conclusions and suggestions.
CHAPTER TWO - LITERATURE REVIEW
2.1 Corporate Social Responsibility
2.1.1 Corporate social responsibility definitions
Corporate social responsibility (CSR) has been taking place since the second half of the 20th century. This field has grown rapidly and today contains a great proliferation of theories, approaches and terminologies. Society and business, social issues management, public policy and business, stakeholder management, corporate accountability are just some of the terms used to describe the phenomena related to corporate responsibility in society (Garriga & Melé, 2004). There are some definitions of corporate social responsibility:
Table 2-1: List of CSR’s definitions (1) Source Definition
Bowen (1953) (The social responsibility of businessmen) “refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society.” Friedman (1970) “The social responsibility of the firm is to increase its profits.” Davis (1973) CSR refers to “the firm’s consideration of, and response to,
issues beyond the narrow economic, technical, and legal requirements of the firms.”
Carroll (1979) “The social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time.”
Jones (1980) “Corporate social responsibility is the notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law and union contract.”
Epstein (1987) “Corporate social responsibility relates primarily to achieving outcomes from organization decisions concerning specific issues or problems which (by some normative standard) have beneficial rather than adverse effects on pertinent corporate stakeholders. The normative correctness of the products of corporate action
has been the main focus of corporate social responsibility.” Wood (1991) “The basic idea of corporate social responsibility is that business
and society are interwoven rather than distinct entities; therefore, society has certain expectations for appropriate business behavior and outcomes.”
Brown and Dacin (1997)
CSR is defined as a company’s status and activities with respect to its perceived societal or, at least, stakeholder obligations.” Matten and
Moon (2004)
CSR is a cluster concept, which overlaps with such concepts as business ethics, corporate philanthropy, corporate citizenship, sustainability and environmental responsibility. It is a dynamic and contestable concept that is embedded in each social, political, economic and institutional context.”
Sources: (Crane & Matten, 2007)
And under overview of Micheal Hopkins - a CEO and Chairman of MHC International Ltd. (London & Geneva), a research and service company that specializes in social development issues for the public and private sector, his book gave more CSR definitions as below:
Table 2-2: List of CSR’s definitions (2) Definition
The United Kingdom – UK (2004)
“CSR is not simply about whatever funds and expertise companies choose to invest in communities to help resolve social problems, it is about the integrity with which a company governs itself, fulfill its mission, lives by its values, engages with its stakeholders, measures its impacts and reports on its activities.”
World Business
Council for Sustainable Development –
WBCSD (2006)
‘continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families, as will as of the local community and society at large.” Europe – EU (2002) “CSR is a concept whereby companies integrate social
and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis (emphasis added).”
International Labour Organization – ILO
“the voluntary initiatives enterprises undertake over and above their legal obligations”.
(2003)
William Werther and David Chandler (2005)
“the broad concept that business are more than just for profit seeking entities and, therefore, also have an obligation to benefit society.”
Micheal Hopkins (2007)
“CSR is concerned with treating the stakeholders of the firm ethically or in a responsible manner. Ethically or responsible means treating stakeholders in a manner deemed acceptable in civilized societies.”
Source: (Hopkins, 2007)
Observation of management CSR becomes a important factor that lead entrepreneurship appearance their organization and other way CSR become one of most potential strategy development (Mackey, Mackey B, & Barney, 2007). However, there were many arguments as well as critical around this topic.
Siegel and Vitaliano discussed that theories of CSR by Baron (2001), McWilliams and Siegel (2001), Bagnoli and Watts (2003) asserts that firms engage in “profit-maximizing” CSR, means that companies are assumed to be socially responsible because they anticipate a benefit from these actions such benefit include reputation enhancement, the ability to charge a premium price for its output, or the use of CSR to recruit and retain high quality workers. These benefits are presumed to offset the higher costs associated with CSR, since resource must be allocated to allow the firm to achieve CSR status. And they argued that these theoretical emphasize how this activity is likely to be matrixed into a firm’s differentiation strategies with the important information asymmetry, therefore they determine whether observed patterns of investment in CSR are consistent with strategic use of CSR and they also did a test to provide how the firms selling experience and credence goods are more likely social responsibilities than firms selling search goods (Siegel & Vitaliano, 2006).
Seeing CSR on the right way, we must back to the pyramid of CSR by Carroll, (Carroll, 1991). Carroll approached CSR in four kind of social responsibility were economic, legal, ethical and philanthropic and depicted as a pyramid that famous during 20 years pass.
Figure 2-1: The Pyramid of CSR
The pyramid of corporate social responsibility (Carroll, 1991)
In which, four social responsibilities:
Economic responsibilities
In the history, business organizations were created as economic entities designed to provide goods and services to societal members. And the primary incentive for entrepreneurship is profit. The business organization was the basic economic unit in society. Goods and services was produced depends on consumers needed and wanted and profit must on the acceptable. However, beside the motivation of maximum profit, the firm would be considered by moot in their responsibility. Economic responsibility is important by the performance of manner suitable with maximizing earnings per share, committed to being profitable, maintaining a strong competitive position, the operation efficiency as well as the successful firm is defined as one that is consistently profitable.
PHILANTHROPIC Be a good corporate ci<zen.
Contribute resource to the community; improve quality
of life ETHICAL Be ethical.
Obliga<on to do what is right, just, and fair. aAoid harm
LEGAL Obey the law.
Law is society's codificaton or right and wrong. Play by the rules of the game.
ECONOMIC Be profitable.
Legal responsibilities
Social has not only sanctioned business to operate according to the profit motive, at the same time business is expected to comply with the laws and regulations promulgated by federal, state, and local governments as the ground rules under which business must operate. As a partial fulfillment of the “social contract” between business and society, firms are expected to pursue their economic missions within the framework of the law. Legal responsibilities reflect a view of “codified ethics” in the sense that they embody basic notions of fair operations as established by our law-markers. They are depicted as the next layer on the pyramid to portray their historical development, but they are appropriately seen as coexisting with economic responsibilities as fundamental precepts of the free enterprise system.
Ethical responsibilities
The economic and legal responsibilities embody ethical norms about fairness and justice, ethical responsibilities embrace those activities and practices that are expected or prohibited by societal members even though they are not codified into law. Ethical responsibilities include those standards, norms, or expectations that reflect a concern for what consumers, employees, shareholders, and the community regards as fairs, just, or in keeping with the respect or protection of stakeholders” moral rights.
Philanthropic responsibilities
Philanthropy encompasses those corporate actions that are in response to society’s expectation that businesses be good corporate citizens. This includes actively engaging in acts or programs to promote human welfare or goodwill.
The distinguishing feature between philanthropic and ethical responsibilities is that the former are not expected in an ethical or moral sense. Communities desire firms to contribute their money, facilities, and employee time to humanitarian programs or purposes, but they do not regard the firms as unethical if they do not provide the desired level. Therefore, philanthropy is more discretionary or voluntary on the part of businesses even though there is always the societal expectation that businesses provide it.
The distinction between philanthropic and ethical responsibilities is that some firms feel they are being socially responsible if they are just good citizens in the community.
This distinction brings home the vital point that CSR includes philanthropic contributions but is not limited to them.
Although there are a lot of critique around Carroll’s pyramid model, but it is still the most significant contribution to CSR’s theory. The three-domain model of CSR is comprised in three responsibilities of economic, legal, and ethical and the philanthropic category is taken into regard within the ethical and economic domains. This model was highlights the overlapping nature of the domains and clearly implies that none of the three CSR domains are more important than others. (Schwartz & Carroll, 2003)
Figure 2-2: The Three-Domain Model of CSR
Source:(Schwartz & Carroll, 2003)
According to Government (2009), the description of the purely economic domain for CSR represents “a radical notion of economic responsibility that even well-known critics of most social responsibilities for corporations such as Milton Friedman would not accept”. Therefore, this model still has limitations and no more research has been done using this mode, the variables under consideration have yet to be defined into measurable factors, and a valid data-gathering instrument has yet to be created, (Government, 2009).
Purely Ethical Purely Legal Purely Economic Economic/ Ethical Economic/ Legal/ Ethical Economic/ Legal Legal / Ethical
2.1.2 CSR in relationship with organizational stakeholders
Also according to Carroll (1991), the corporate social responsibility goes combined with the organization’s stakeholders. Carroll said that the word “social” in CSR has always been short of specific direction as to which the corporation is responsible, and the concept of stakeholder personalizes social and societal responsibilities by defining “specific groups or persons business should consider in CSR orientation”. Therefore, stakeholder theory considered as “a necessary process in the operationalization of corporate social responsibility, as a complimentary rather than conflicting body of literature”. C. M. Branco and L. L. Rodrigues (2007) Said that stakeholder theory is based on the notion that “beyond shareholders there are several agents with an interest in the actions and decisions of companies”. According to Blowfield and Murray (2008), the stake holder theory has become the prevailing framework for seeing companies as “integrated in, rather than separated from society”.
Rashid and Ibrahim (2002) Categorize stakeholders as customers, employees, investors and shareholders, suppliers, governments, communities, having a claim on some aspect of company products, operations, markets, industry and outcomes. They point out that the relationship between the organizations and the stakeholders is a “two-way dialogue” between firms of internal and external environment. Vitell and Hidalgo (2006), Propose to divide stakeholders into groups of “organizational stakeholders, which are internal to the firm, and economic and societal stakeholders, which are external to the firm”. According to them the firm’s economic stakeholders represent the interface between the organizational and societal stakeholders, and without the economic interface, “an organization loses its mechanism for accountability, and therefore its legitimacy over the long term”. Look at their circles in the figure below:
Figure 2-3: A Firm’s stakeholder
Source: Vitell and Hidalgo (2006)
Three layers of a firm’s stakeholders all sit within the larger context of a globalizing business environment, driven by revolutionary technology.
A. M Quazi and D. O'Brien (2000) Stated that “stakeholder theory explains that there is not just a relationship between an agent, who has legal responsibility to a principal” but also relationships with third parties to whom the corporation owes moral obligations not codified by the law. These duties exist because “stakeholders make investments in enterprises: employments invest their time and intellectual capital, customers invest their trust and repeated businesses, communities provide infrastructure and education for future employees as well as tax support, and etc.”
Vitell and Hidalgo (2006) Were continue argue that CSR is an integral element of a firms strategy: “the way the firm goes about delivering its products or services to markets, but is also a way of maintaining the legality of its actions in the larger society by bringing stakeholder concerns into the foreground”. They add that the success of a company’s CSR is shown by how well it has been able to navigate stakeholder concerns while implementing its business model.
About benefits of the stakeholder approach, Bramwell (2005) mentions that: firstly, it allows each stakeholders to “immediately recognize their role and weight within the
Social stakeholders economic stakeholders Organiza\on stakeholders Globalization Technology Communities Government and Regulators
Nonprofits and NGOs Environment Customers Creditors Distributors Suppliers Employees Managers Stockholders Unions
company strategies and operations, making it possible for them to compare their own values with those of the company”. And secondly, adopting a stakeholder-based reporting standard permits companies to constantly monitor “the changing and multidimensional environmental system in which they operate”. Perrini concludes by saying that this way stakeholder satisfaction can be measured and activities which it still need to be undertaken to fully integrate the socially responsible action can be identified. He proposes a “checklist” of stakeholder-based themes, as shown in table under:
Table 2-3: Checklist of Stakeholder-based CSR themes
Stakeholder-based categories
CSR Themes
Human Resources Shareholders Customers Suppliers Staff composition Turnover Equality of treatment Training Working hours Schemes of wages Absence formwork Employees’ benefits Industrial relations In-house communications Health & safety Personnel’s satisfaction Workers rights Disciplinary measures & litigation Capital stock formation Shareholders’/ partners’ pay Rating performance Corporate governance Benefits & services Investor relations General characteristics Market development Customer satisfaction Customer loyalty Product/ Services information & labeling Ethical & environmental product and services Promotional policies Privacy Supplier management policies Contractual conditions
Financial Partners Public
Authorities Community Environment Relations with banks Relations with insurance companies Relations with financial institutions Taxes and duties Relations with local authorities Codes of conducts and compliance with laws Contributions, Corporate giving Direct contributions in the different intervention Fields of stakeholder engagement Relations with Energy consumption Materials Emissions Environmental strategy and relations with the community
benefits or easy term financing the media Virtual community Corruption prevention Source: (Bramwell, 2005)
There are some problems with stakeholder theory lie in the difficulty of considering “mute” stakeholders, like the natural environment and “absent” stakeholders, such as future generations or potential victims. To consider the natural environment as a stakeholder arises from the definitions of stakeholders met difficult that usually treat them as human groups or individuals. Some researchers also give the natural environment stakeholder status, and according to M. C. Branco and L. L. Rodrigues (2007) the interests of the environment as well as future generations should be considered and presented in decision-making structures, “whether of companies or of society as a whole”.
2.1.3 Argument for and against CSR
Blowfield and Murray (2008) wrote that “eighty percent of executives said, that corporate responsibility is essential to their business”. They said that those executives disagreed about what the term “corporate responsibility” means, but the majority believe that business should serve as a steward in society, and that it has a duty to investors, employees, consumers, communities, and the environment. Executives from small, medium, and large enterprises all equally shared these views. Although profit are necessary for any business to survive, Vitell and Hidalgo (2006) point out that it is also important to note that “for-profit” organizations are only able to obtain these profits because of the society in which they operate. They constitute this as the moral argument for CSR, since it broadly represents the tie between a company and the standard expected by the general public. From a rational perspective, Vitell and Hidalgo (2006) argument is that CSR represents “a means of anticipating and reflecting societal concerns to minimize operational and financial limitations on business”. Summing the moral and rational arguments for CSR leads to an economic argument; incorporating CSR into operations can offer a potential point of differentiation and competitive market advantage.
Business benefits that derive from CSR activities have been analyzed in theoretical as well as some empirical research. Weber (2008) points out five main areas of CSR
business benefits identified: Firstly, she mention “positive effects on company image and reputation” according to her, image represents the mental picture people have of a company and can change quickly, while reputation evolves over time and is influenced by company performance and communication over several years. Secondly, she brings up “positives effects on employee motivation, retention and recruitment”, and explains this by saying that CSR can directly influence employees since they could be more motivated in a better working environment or be inspired from participating in CSR activities such as volunteering programs. On the other hand, CSR activities can directly or indirectly affect the attractiveness of a company for potential employees. The next benefit she sees in CSR practices is “cost savings” as she says, they have been extensively discussed in sustainability research and some authors argue that implementation of a sustainability strategy can produce efficiency effects. The last two benefits she mentions are “higher sales and market share” due to CSR as well as “risk reduction”. Weber explains that the former is an indirect result of an improved band image or a direct consequence of a “CSR-driven product or market development”, and the latter can be observed in the case when CSR is used as a means to “reduce or manage CSR-related risks such as the avoidance of negative press or customer and NGO boycotts”.
According to Falck and Heblich (2007), the practice of CSR is “an investment in the company’s future; as such, it must be planned specifically, supervised carefully, and evaluated regularly”. They argue that CSR can be a way of actively contributing to society and, in doing so, enhancing the company’s reputation. Falck and Heblich (2007). And mention that a good reputation increases the value of the brand, which, in turn, increases the company’s goodwill.
Porter and Kramer (2006), propose their own summary of arguments commonly used to advocate CSR: “moral obligation, sustainability, license to operate, and reputation”. They go further and say that moral appear, explained the duty companies have to be good citizens and “do right thing”, is widely supported and considered as the most prominent goal by leading non-profit CSR business associations in the US. Secondly, Porter and Kramer (2006), emphasize us, they stress the fact that every company needs tacit at explicit permission from sustainability or community stewardship, and thirdly, they stress the fact that “every company needs tacit or explicit permission
from governments, communities and numerous other stakeholders to do business”. Which in can be facilitated through CSR initiatives. Finally, they state that even though reputation is used by many companies to defend CSR initiatives on the basis that they though reputation is used by many companies to defend CSR initiatives on the basis that they will “improve a company’s image strengthen its brand, enliven morale, and even raise the value of stock,” none of them really orders adequate direction for the difficult choices corporate leader must make, (Porter & Kramer, 2006).
Although having arguments of CSR, but all arguments lead an objective bolding more the acknowledge of CSR and getting ideas supporting CSR. As Knox and Maklan (2004) stated “being trusted by stake holders and pursuing socially responsible policies reduces risks arising from safety issues (consumer, employee and community), potential boycotts & loss of corporate reputation” (Knox & Maklan, 2004). They also discussed intuitively appealing, “many researchers will admit the links between business performance and the implementation of CSR policy are difficult to prove”. Porter and Kramer (2006) also raise concerns over the assumption that company good deals lead to clear benefits for the company, and this is very hard to measure. (MOJ, 2009) find that where CSR performance is treated as independent variable “approximately half of the studies ground a positive relationship between the two, a quarter of researches found no relationship, a fifth were inconclusive and 5% reported a negative relationship between CSR performance and firm financial performance”. One more study that Scholtens (2008) found “the relationship between social and financial performance is rather positive wide variety of contexts and sectors” and in his study also showed “the approach can be biased due to the differences in accounting in accounting procedures and managerial manipulation”. According to (Aupperl, Carroll, & Hatfield, 1985) – bring useful information about firm performance, the suggest the use of a financial performance measure “return on assets with is less susceptible to corporate manipulation”. The relationship between the performance of CSR and financial can moderately socially responsibility firms actually proved to be the best performance.
Sustainable consumption is: “the use of goods and services that respond to basic needs and bring a better quality of life, while minimizing the use of natural resources, toxic material and emissions of waste and pollutants over the life-cycle, so as not to jeopardize the needs of future generations”, (OECD-2002, 1994 Norwegian Ministry of Environment paper).
In Brundtland Commission 1987, sustainable development known as: “Sustainable Development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Get more understand of sustainable development, look at a simple description of the sustainable development spectrum in Hunter’s view and that is adapted from Turner et al.
Table 2-4: Description of sustainable development spectrum in Hunter’s view Sustainability position Defining characteristics
Very weak Anthropocentric and utilitarian; growth orientated and resource exploitative; natural resources utilized at economically optimal rates through unfettered free markets operating to satisfy individual consumer choice; infinite substitution possible between natural and human-made capital; continued well-being assured through economic growth and technical innovation.
Weak Anthropocentric and utilitarian; resource conservationist; growth is managed and modified; concern for distribution of development costs and benefits through intra- and intergenerational equity; rejection of infinite substitution between natural and human-made capital with recognition of some aspects or the natural world as critical capital (e.g., ozone, layer, some natural ecosystems); human-made plus natural capital constant or rising through time; decoupling of negative environmental impacts from economic growth. Strong (Eco) systems perspective; resource preservationist;
recognizes primary value of maintaining the functional integrity of ecosystems over and above secondary value through resource utilization; interests of the collective given more weight than those of the individual consumer; adherence to intra- and intergenerational equity; decoupling important but alongside a belief in a steady state economy as a consequence of following the constant natural assets
rule; zero economic and human population growth.
Very strong Bioethical and eco-centric; resource preservationist to the point where utilization of natural resources is minimized; nature’s rights or intrinsic value in nature encompassing non-human living organisms and even a biotic elements under a literal interpretation for Gaianism; anti-economic growth and for reduced human population.
Source: (Hunter, 1997)
The term “sustainable development” came into the public arena in 1980 when the International Union for the Conservation of nature and Natural Resources presented the World Conservation Strategy (IUCN 1980). It aimed at achieving sustainable development through the conservation of living resources. However, its focus was rather than limited, primarily addressing ecological sustainability, as opposed to liking sustainability to winder social and economic issues.
Sustainable development is a model of societal change that, in addition to traditional developmental objectives, has the objective of maintaining ecological sustainability (Lélé, 1991). This differs from the previous IUCN approach, mentioned above, which linked the environment made it explicit that social and economic conditions, especially those operating at the international level, influence whether or not the interaction between human beings and nature is sustainable.
Environmental problems include poor air and water quality, inadequate treatment and disposal of industrial waste (including hazardous and nuclear waste), soil deterioration and contamination of land. Most countries also lacked a comprehensive waste management strategy and effective legislation.
Particularly in large firms, were often put in charge of their won environmental monitoring. Environmental fines were set at very low levels, often making it more “rational” to pay fines than to install costly pollution prevention measures. In other words, under the old communist system there was a very close relationship between the economic and political elites and the system of public administration. This embeddedness resulted in only weak responses to the growing environmental problems that industrialization was causing in the region.
The visions of sustainable development are merely couched in the language of “balance”, for example finding the right balance between the need for development and the need for environmental protection. Apart from the likelihood that one person’s balance is another’s imbalance; the language of balance can be misleading, being used to mask the reality that economic growth is generally the primary concern.
If people want the world to be a playground, then this is nothing more than natural selection, with the selection process driven by the need to meet the desires of tourists in terms of destination area characteristics. Growth is good and the key issue is how to maintain it in existing enclaves and foster it where tourism is as yet absent, or” underdeveloped”. Hence, satisfying demand through correctly tailored products is the fundamental task. So far as sustainable tourism is primarily about finding new strategies for tourism to maintain and increase measures of its economic activity like visitor numbers and expenditure.
Making tourism more sustainable requires action on a number of fronts. Regulation by government can, for example, establish minimum standards of performance with regards to the generation of certain environmental impacts.
The tourism industry has the potential to improve the world, not just sustain itself. Properly planned tourism can enhance human communities on a scale compatible with their resources and infrastructure. By emphasizing the principles of discovery, mutuality, locality, historicity, potential, and enhancement, may have a model for tourism that can help millions of individuals reach their potential in a global society.
There are so many issues and challenges associated with sustainable tourism development. Example the difficulties associated with coordination and cooperation between the many stakeholders involved in bringing about sustainable tourism; the limitations inherent in the various tourism industry efforts to drive the adoption of sustainable practices; and the resource and knowledge difficulties small-scale enterprises face in their efforts to make their operations “greener”. While the tourism industry, policy makers and other stakeholders continue to grapple with these and other matters and other stakeholders continue to grapple with these and other matters, it is nonetheless apparent that the shift towards a “green paradigm” based on sustainable tourism development is occurring apace both within the tourism industry itself and in tourist destination regions.
The Secretary-General of the United Nations Kofi Annan has noted that sustainable development is “the new conventional wisdom”. That encourages business to move away from a sole focus on profit to a concern for what has become known as the “triple bottom line”; that is, financial, social and environmental performance. (UNNewsCentre, 2002).
Logically, if there is accepted that alternative interpretations of sustainable development are inevitable and that sustainable tourism should be about trying to contribute to the wider goads of sustainable development, then it must surely be recognized that sustainable tourism cannot be seen as a rigid code. Rather, sustainable tourism should be seen as a flexible or adaptive paradigm, whereby different tourism development pathways may be appropriate according to local conditions (Hunter, 1997).
2.3 Corporate Social Responsibility and Tourism sustainable development
In the tourism area, the concept corporate social responsibility has increased in recent years. The first concept was mentioned in 1987 in a report published by World Commission on Environment and Development. In 1999, the World Tourism Organization approved the Global Code of Ethics for Tourism that was an important contribution in this area by consolidating and reinforcing previous recommendations and declarations on sustainable tourism. The Code aims to protect the world’s natural resources and cultural heritage against disruptive tourist activities and to ensure a fair and equitable sharing of benefits that arise out of tourism with the residents of tourism destinations (Constanţa, 2007).
In the research of Cornel and Mihaela (2010), they said many benefits arising based on principles of social responsibility and sustainable development such as:
- The increase in operational performance through:
P The focus on new market segments, new target groups of customers; P Increased use of resources in the area where is the unit located;
P Implementation of innovative solutions in the management of the touristic unit;
P The optimization of the operation and material flow process;
P The improvement of energy efficiency and the reduction of consumption; P The improvement of waste and chemical management;
- The improvement of the public image and increased awareness through: P The improvement in the communication process with stakeholders
(authorities, neighbors, partners); P The increase in customer satisfaction P The promotion through mass-media
- The increase in staff training and employees’ satisfaction: P The increase in personnel competence
P The increase in satisfaction through greater access to training and the improvement of internal communication;
- The reduction of the environmental impact through: P The reduction of pollution;
P The reduction of energy, water and material consumption from primary resources;
P The reduction of the amount of waste generated;
CSR discussions often occur at a rather general level and have a tendency to focus on the positive contributions that are made by corporations. Obviously, corporate social responsibility can make a significant contribution toward sustainability, special in tourism sustainable development. Sustainable development is common trend, tourism is not outside this process but also contribute important to do that target. Almost nations have developed tourism as well as developing countries are now and already do concentrate many efforts to develop that model tourist and get a lot of successes. Tourism is an economy that has relation wide and high socially, it is factor and consequence to confirmation the sustainable development. To do implementation the target’s
development tourism, need to have high corporate responsibility and the good coordination from many factors, special tourism industry with government from central to local, community, associations, tourist. The commitment to develop sustainable tourism needed the separate the responsibility with the duty belongs to. Need to build a national strategy of sustainable tourism development, in which background to create initiative, content of tourism responsibility in building program policy… beside that, mobilize the resources is important too, special in human resource. Therefore, how to using and implementing good resources according to the orientation above, will having good background to promote the tourism industry develop in sustainable, quality and responsibility.
2.4 Tourism Industry and Travel Agencies
Tourism is a thriving global industry with the power to shape developing countries in both positive and negative ways. It is a vital part of the global economy. In 2008, tourism industry generated roughly $1 trillion in global receipts. Tourism is a key foreign exchange earner for 83% of developing countries and the leading export earner for one-third of the world’s poorest countries. (Martha & Raymond, 2009)
Tourism is the second-most important source of foreign exchange after oil. Tourism Industry helps transform societies, often for the better. It has advantage over other industries as: directly benefits the communities that provide the goods, enables communities that are poor in material wealth but rich in culture, history, and heritage lead to generate comparative advantage, and creates networks of different operations, from hotels and restaurants to adventure sports provider and food supplier. It has also supplying chains of goods and services, supporting a versatile labor market with variety jobs for tour guides, translators, cooks, cleaners, drivers, hotel managers, and other service sector workers. (Martha & Raymond, 2009).
Tourism can only achieve the goals if it respects the environment and places host communities at the center of the development process. Responsibility lies with the governments of developing nations to ensure that tourism grow in a sustainable manner. To attempts to build a sustainable tourism sector has to consider regulations, plan
development and sensitive attitudes toward host communities, where will take lot of tangible benefits. (UNEP & WTO, 2005). Tourism has several advantages over other industries:
- It is consumed at the point of production so that it directly benefits the communities that provide the goods.
- It enables communities that are poor in material wealth but rich in culture, history, and heritage to use their unique characteristics as an income-generating comparative advantage.
- It creates networks of different operations, from hotels and restaurants to adventure sports providers and food suppliers. This enables tourist centers to form complex and varied supply chains of goods and services, supporting a versatile labor market with a variety of jobs for tour guides, translators, cooks, cleaners, drivers, hotel managers, and other service sector workers. Many tourism jobs are flexible or seasonal and can be taken on in parallel with existing occupations, such as farming.
- It tends to encourage the development of multiple-use infrastructure that benefits the host community, including roads, health care facilities, and sports centers, in addition to the hotels and high-end restaurants that cater to foreign visitors.
Travel agencies play a critical role in the tourism industry, making important links between tourists and destinations. Normally, travel agencies known as selling airlines tickets, hotel booking... and general speaking it running main travel services supplier, travel expert and counselor. (Xavier, Benjamin, & Leeds, 2005)
The success of a destination depends on the positive support of travel agent who may sell a destination or refuse to provide recommendations for specific destinations. It is not difficult to recognize (Xavier et al., 2005), and the important of travel agents in the decision-making of customer choice for destinations and contributing in destination development, (Lawton & Page, 1997). Obviously, travel agencies will influence to sustainable tourism development, (Carey, Gountas, & Gilbert, 1997).
Tourism – a set of activities aimed at attracting visitors to geographical area, receiving these visitors and satisfying their demands – is a particularly complex industry. It comprises residential activities (hotels, apartments, camp sites, second homes);
