Corporate social responsibility and financial performance: The case in Vietnam

Abstract

This study aims to examine the impact of corporate social responsibility (CSR) on the financial performance of Vietnamese listed companies from 2012 to 2017. The study uses Fixed effects model and System Generalized Method of Moments to estimate models. The study contributes by analyzing the impact of social responsibility under three perspectives, namely economic, environmental and social responsibility in a developing country’s setting. The results suggest that overall CSR disclosure has a negative impact on firm performance, but the perspectives provide a more complete view: environmental responsibility shows a clear negative influence, while social responsibility demonstrates a preferable but weak impact on financial performance. The economic aspect does not show a significant effect on firm performance. The most burdensome category of CSR is the environment-related one, which calls for more careful employment of this investment and governmental support to ensure that it is more efficient.

Keywords:

• Corporate social responsibility
• financial performance
• environment
• stakeholder theory
• legitimacy theory

PUBLIC INTEREST STATEMENT

Corporate social responsibility (CSR) refers to the activities firms conduct to contribute to improving the well-being of the society. Firms are engaged in CSR to gain societal approval and resources to be able to attain better performance. However, it is obvious that CSR is a costly realm, too. In this study, we use a sample of listed firms in Vietnam from 2012 to 2017 and several research strategies to ascertain the effect of CSR on firm performance. Since CSR could be conducted in a number of fields, we use three measures of CSR in order to more comprehensively examine its impact. The results show that social responsibility has a weak positive impact on performance, while environmental responsibility demonstrates a clear negative relationship with firm performance. Meanwhile, economic responsibility does not show a significant effect. As the most burdensome category of CSR is environment-related one, this calls for more efficient investment in this field and governmental support to relieve the burden for firms.

Acknowledgements

This work is funded by Vietnam National University – Hochiminh City (VNU-HCM) under the Grant number NCM2019-34-01

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the This work is funded by Vietnam National University – Hochiminh City (VNU-HCM) under the Grant number NCM2019-34-01 [Grant number NCM2019-34-01].

Notes on contributors

Canh Thi Nguyen

Professor Canh Nguyen is the former Dean of the Faculty of Finance and Banking of University of Economics and Law, Ho Chi minh City, Vietnam. She published quite a considerable number of empirical papers in high-quality journals, including SSCI-indexed and Scopus-indexed ones. Her field of interest covers public finance, sustainable development, performance of firms and economy as a whole. PhD Liem Nguyen is a lecturer in the Faculty of Finance and Banking at the University of Economics and Law, Vietnam. He is also a research fellow at the Institute for Development and Research in Banking Technology and the Center for Economic and Financial Research, Vietnam. He has published quite a large number of papers in high-quality journals, such as Corporate Social Responsibility and Environmental Research, Asia-Pacific Journal of Business Administration, and International Journal of the Economics of Business. His fields of interest are corporate performance, corporate governance, financial development and stability, and sustainable development. Nhu Nguyen has completed her Master course in Banking and Finance, and is now working on her PhD.