The impact of factors in the csr compliance toward competitiveness of enterprises - case study of small and medium enterprises in Ho Chi Minh City

Abstract

In view of the important role small and medium-sized enterprises (SMEs) totally play as the backbone of national economies and the survival and competitiveness challenges that they face, the goal of this study was to develop specific models of corporate social responsibility (CSR) for SMEs in HCMC as a way to enhance their competitiveness and foster economic development. The primary objective was to gain insight into the deployment of CSR in SMEs, including investigating CSR factors and their potential impact on competitiveness. This study integrates previous findings and theories on CSR activities and SMEs’ competitiveness into a comprehensive hypothesized model. A comprehensive literature study revealed potential factors that could influence the Increased competitiveness of SMEs in HCMC. Four independent variables (Workforce-oriented, Society-oriented, Market-oriented and Environmental-oriented CSR activities) and three mediating variables (Employee satisfaction, Business reputation and Customer loyalty) were identified as variables influencing the Increased competitiveness (dependent variable) of SMEs. Independent variables were categorized as CSR factors while mediating and dependent variables were categorized as outcomes factors. Furthermore, hypotheses were formulated for possible relationships between the independent, mediating and dependent variables. All the variables in the study were clearly defined and operationalized. Reliable and valid items sourced from various measuring instruments used in other similar studies, were used in the operationalization of these variables. Furthermore, several items were generated from secondary sources. A structured self-administered questionnaire was made available to respondents identified using the stratified and purposive sampling techniques, and the data collected from 221 usable questionnaires was subjected to several statistical analyses. The validity and reliability of the measuring instrument was ascertained using an exploratory factor analysis and Cronbach-alpha coefficients respectively. An exploratory factor analysis using SPSS 23 for Windows was conducted to identify the unique factors available in the data before applying structural equation modelling (SEM). The data were categorized into models of independent variables (CSR factors) and the mediating variables (Outcomes factors). The items measuring Market-oriented CSR activities and Workforce-oriented CSR activities loaded as expected. The items measuring Environmental-oriented CSR activities loaded onto two separate factors which were renamed Environmental-oriented CSR activities and Regulated CSR activities. One of the items originally expected to measure the construct Society-oriented CSR activities loaded onto Environmental-oriented CSR activities, leaving three items which loaded together onto the Society-oriented CSR activities factor. Four factors constituted the outcomes sub model, namely Customer loyalty, Stakeholder trust, Business reputation, and Employee satisfaction. In this study, SEM was the main statistical procedure used to test the significance of the relationships hypothesized between the various independent and dependent variables. Owing to the sample size limitations, the hypothesized model could not be subjected to SEM as a whole. Consequently, six sub-models were identified and subjected to further analysis. Further research is encouraged on action-oriented areas such as: the success of different policies and techniques to increase the uptake of CSR amongst SMEs; the economic, social and environmental impact of CSR at sector level; and a typology of SMEs with regard to their engagement in CSR.