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SMEs in their Own Right: The Views of Managers and Workers in Vietnamese Textiles, Garment, and Footwear Companies

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Abstract

This article contributes to the limited literatures on small- and medium-size enterprises (SMEs) and corporate social responsibility (CSR). Using an institutional theoretical framework, we analyzed fieldwork interviews with twenty SMEs and perspectives of 165 SME managers and workers in textiles, garment, and footwear industries, the most important wage-earning sector in Vietnam. Having understood in the context of a developing “market economy with socialist orientation” (thus a “Southern perspective”), we find that socially responsible practices and expectations developed long before the arrival of CSR as a western concept and an MNC agenda. While identifying and contributing ideas concerning forms of “informal” CSR practices—influenced by social and cultural expectations—to the CSR/SME literature, we are conscious of the mixed effects of these practices and the ongoing nuanced negotiations between workers and managers in these SMEs. In our research, we found that it takes both domestic and international stakeholders to improve labor conditions in Vietnam under the banner of CSR.

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Notes

  1. No single definition of SMEs exists because governments, international organizations, and business associations represent different economic and political interests and goals that require language and structural differences in terminology. In this article, ‘SMEs’ are defined as ‘registered entities having at least five employees and no more than 299 employees,’ based on the official definition of SMEs in the textile, garment and footwear sectors in Vietnam.

  2. See Jamali et al. (forthcoming), an editorial to the special issue on SMEs and CSR in Developing Countries in Business and Society.

  3. Please note that the missing articles and grammatical errors found in the translations are because they are taken verbatim from short-hand responses of both managers and workers in the questionnaire, which were then translated verbatim to English.

  4. Instead, he points out that ‘there may be drivers based on a sense of rootedness within a particular community … or other social and cultural norms and experiences’ (Fox 2005, p. 6).

  5. Among the fallacies, Fassin (2008) lists (a) CSR is worthless without formalization, (b) SMEs do not report on CSR and hence do not have CSR, and (c) that the CSR approach of large companies can be used by SMEs (pp. 367–368).

  6. The literature on SMEs and CSR has also highlighted the context-specific nature of SMEs’ engagement in CSR, including the community embeddedness of many CSR activities (Fox 2005; Fuller and Tian 2006; Russo and Tencati 2009).

  7. Referring to this phenomenon, Whalley says that ‘many cultures exist within SMEs’ (2000, p. 120).

  8. This issue entails additional dimensions that we will not discuss in this article. In particular, that existing contributions on SMEs and CSR tend to present SMEs as a monolithic type of firm and/or as one homogeneous unit or entity. The contributions often refer to SMEs as if this very large group of firms had similar characteristics. However, SMEs differ in size, type of activity undertaken, management style, markets (Whalley 2000; Murillo and Lozano 2006) and choice of CSR practices (Scott 2000; Vives 2006). Further assessment of the differences between SMEs constitutes an important future research area.

  9. Other perspectives such as those of Peng and others (Peng 2002, 2003; Amine and Staub 2009) focus on market-oriented institutional transitions—formal and informal—and how they affect firm strategies and decision-making. However, these perspectives are not relevant to our case because we did not focus on the interplay between institutions and firm strategies, nor did we seek to engage the formal institutions by interviewing the representatives of such institutions.

  10. A stakeholder perspective would similarly include a range of views of importance to the SME (see e.g. Freeman 1984). However, the focus revolves around the firm (MNC) actions—the key stakeholder—not the suppliers or the workers.

  11. With regard to the relevance of Rawls (2001) for Vietnam and the study, please kindly review Appendix 2 for an extended discussion.

  12. Similar to Rawls, Arnold and Hartman draw on Kant as they have the following point on MNC managers and their respect for workers: “One core ethical obligation of MNC managers is to respect their employees. To fully respect a person, one must actively treat his or her humanity as an end, and not merely as a means to an end. This means that it is impermissible to treat persons like disposable tools. The Kantian basis for this claim is well established (Arnold and Hartman 2006, p. 682).

  13. Tran (2011), pp. 128–129; www.vcci.com.vn/sub/vbli/default.htm. Aaccessed October 2014.

  14. For example, the Ministry of Labor, Invalids and Social Affairs (MOLISA) worked with the ILO to conduct several preliminary studies of the impacts of CSR in Vietnam.

  15. UNIDO: corporate social responsibility: implications for Small and Medium Enterprises in Developing Countries; UNIDO, Vienna, 2002; UNIDO: SME Clusters and Responsible Competitiveness in Developing Countries—AccountAbility with UNIDO, January 2006; (Hamm 2012).

  16. http://vccinews.com/news_detail.asp?news_id=27693; http://www.csr-vietnam.eu/.

  17. UNIDO 2006, pp. 45–49.

  18. Examples of crucial questions asked to managers and workers include: (A) Do you/your firm monitor the usage of water, electricity and input materials? (B) Are the occupational safety and health procedures in your firm due to government regulation, formal certified systems, codes of conduct or your own system or practices? (Similar questions were asked regarding wages and labor standards), and (C) Does your company e.g. provide loans to the employees/workers, allow sick leave and/or absence to participate in funerals, family events etc, organize musical/cultural performances, donate book/magazines to companies and dormitories? See Appendix 1 for further information on all the questions asked and Jeppesen et al. (2012) for further information on the format of the questionnaires and interview guidelines, and Sects. 2 and 4 in Jeppesen et al. (2012) for the reasons for focusing on these issues.

  19. Among the 20 SMEs, seven were small and 13 medium-size; 17 had international markets, while 3 sold domestically; and 10 were based in the metro area, while 10 were based in non-metro areas (Jeppesen et al. 2012).

  20. See Appendix 1 and Jeppesen et al. (2012) Appendix 1 for further details.

  21. We were able to interview workers in 14 SMEs, and not in six factories. The key reasons were not because the owners want to ‘hide’ their practices, but precisely because, as second-tier suppliers, they were directly affected by the work pressure of manufacturing for global supply chains with workers who wanted to work overtime to make ends meet. The three medium factories did grant us management interviews and allowed us to interview their workers subsequently. But when we followed up on their promises, all three pleaded ‘urgent delivery schedules’ (to first-tier suppliers) for not allowing us time to interview their workers. Also, we could not interview workers in three TGF factories mainly due to the heavy work pressure of on-time deliveries and the piece-rate payment system. The interviews with managers and workers were conducted face-to-face in Vietnamese by field assistants whose first language is Vietnamese. All three questionnaires were translated into Vietnamese and verified by Vietnamese native speakers to ensure relevance to Vietnamese cultural contexts. In the data analysis phase, the information from the questionnaires was a) typed into Word documents from in-depth interviews (open-ended sections of the forms) and b) coded and typed into SPSS from the quantitative sections (Likert-scale typed questions and changes over time).

  22. More discussion on local initiatives to help themselves will be discussed in the Cognitive and Normative sections below.

  23. The six factories that did not state any private buyers' regulation include four small and two medium factories.

  24. Skadegaard Thorsen and Jeppesen (2010), deal in depth with the many challenges that this phenomenon, sometimes called ‘code mania’, represent for local suppliers, including SMEs. As the same authors point out, this also leads to the exclusion of SMEs from the value chains.

  25. For more information on the standard, see: http://live-in-green.com/products/bedding/eco-tex.html.

  26. http://www.sgs.vn/en/Our-Company/About-SGS/SGS-in-Brief/SGS-in-Vietnam.aspx, accessed 12 June 2013.

  27. What we call ‘East Asian intermediaries’ in this article.

  28. http://www.intertek.com/news/2010/11-16-audit-services-alibaba/.

  29. This means: Screening (Sàng Lọc), Organizing (Sp Xp), Cleanliness/Hygiene (Sch Sẽ), Caring (Săn Sóc), Readiness (Sn Sàng).

  30. Correspondence with Dr Huynh thi Ngoc Tuyet and Ms Nguyen Minh Chau, September 2–7, 2013. Also, in http://www.ust.vn/trade_detail.asp?trade=10585andcat=19andp=95 (Accessed September 8, 2013).

  31. The city people's committees govern DONRE administratively, and the Ministry of Natural Resources and Environment directs and supervises DONRE technically.

  32. IWRETE is Vin K  thut Tài Nguyên N c và Môi Tr ng in Vietnamese. It is an environmental consultancy institute that belongs to the Vietnamese Science and Technology Association (VUSTA or Liên Hip Hi Khoa Học and K Thut in Vietnamese).

  33. Her interview with a VGCL official shows that there were only four or five inspectors in Ho Chi Minh City to monitor nearly 40,000 enterprises that have been established there since 2000 (Kim 2012, p. 288).

  34. Most do not receive support from MNCs or suppliers to engage in formal CSR practices, as explained earlier.

  35. About one in six said ‘neutral,’ and very few were unsatisfied.

  36. The median wage is the same for both female and male TGF workers. We have used the exchange rate of 1 USD = 20,794.00 VND as of 15 March 2012. At the time of writing, the government-stipulated monthly minimum wage is 2 million VND in Ho Chi Minh City and 1.78 million VND in non-metropolitan areas (Tran 2007).

  37. But overall, many managers do not provide masks to workers to save costs.

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Acknowledgments

We would like to acknowledge the French development Agency AFD (Agence Francaise du Developpement) for financing the study from which we draw data for this article. We are also indebted to the Vietnamese team that supported us throughout this whole process, including endless hours in the collection and processing of field data as well as follow-up questions. The team included Huynh Thi Ngoc Tuyet, Nguyen Minh Chau, Tran Bao Ha, Nguyen Cuc Tram, and Nguyen Vu from the Sustainable Development Research Institute in the Southern Region, Ho Chi Minh City, and Doan Thi Kim Khanh, ESL and Citizenship Teacher from Boat People SOS Organization. Laura Jakobeit provided invaluable support through her assistance with data analysis as the then research assistant at the Centre for Business and Development Studies, Department of Intercultural Communication and Management, Copenhagen Business School. We are grateful to Joe Lubow who provided excellent copy-editing assistance throughout the editing process to the final version and to Andrew Crabtree, who provided the last round of critical and thoughtful copy-editing before the final submission. Last, but not least, we are grateful to the two reviewers, who provided valuable and insightful comments, which enabled us to bring the article to its present stage.

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Authors and Affiliations

  1. Global Studies Department, Social, Behavioral and Global Studies Division, California State University, Monterey Bay, USA

    Angie Ngoc Tran

  2. Department of Intercultural Communication and Management, Center for Business and Development Studies, Copenhagen Business School, Frederiksberg, Denmark

    Søren Jeppesen

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  1. Angie Ngoc Tran
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Correspondence to Søren Jeppesen.

Appendix

Appendix

Appendix 1: Detailed Information on Categories of Questions Asked to 20 Interviewed SMEs (Managers and Workers) in the TGF Sector in Vietnam

Based on this literature, we used a four-dimensional approach to explore formal and ‘informal’ CSR practices when interviewing representatives from SMEs. The formal CSR practices include (1) physical environment, (2) working environment, and (3) labor standards/working conditions. The informal CSR practices include (4) informal arrangements between management and employees (such as loans, various types of leave) and support to the local communities and others (e.g., in the form of donations of money or in kind, or in personal involvement).

On formal CSR practices, we inquired about the systems, code certifications, and compliance activities in three areas: labor standards, the working environment, and the physical environment. With respect to informal CSR practices, our culturally sensitive questions covered Vietnamese cultural practices embedded in their changing politico-economic contexts, since the market reform in the late 1980s and the historical legacy. For example, we inquired about ‘informal assistance to workers’ and included possible responses such as loans, different types of leave, and others. On ‘support to local communities and organizations,’ we included responses such as monetary and/or in-kind contributions to local religious centers, schools, youth clubs, sports clubs, and other community-based organizations, and goals. On ‘involvement in community work,’ we elicited open-ended responses that revealed a wide array of cultural- and country-specific activities by managers and workers in Vietnam.

In particular, to explore how SME managers understand various formal practices such as codes of conduct, we asked 20 questions related to the cognitive level which addressed all relevant stakeholders, both internal and external to the SMEs, based on the exploratory component. We then asked 35 questions addressing both the cognitive and regulatory levels to investigate how managers understand and actually perform their company responsibilities, given the historical legacy and cultural context (informal practices). These questions elicited the country-specific contexts of modern-day socialist Vietnam. To show relations between SME managers and workers, we asked five questions. Moreover, we asked 21 questions to reveal the perspectives of other relevant stakeholders and their impacts on labor–management–state relations, such as corporate buyers, first-tier and second-tier suppliers, government and labor union officials, local communities, NGOs, and other global actors.

First, we interviewed the managers based on a qualitative, in-depth interview format for owners/managers asking the categories of questions mentioned above. Second, we interviewed 125 workers in 14 SMEs, using three types of semi-structured questionnaires for focus-group, individual and in-depth interviews. The Vietnamese team was able to do this thanks to their extensive ongoing contacts with local labor unions and government officials. Third, we conducted follow-up interviews with managers using the more quantitative or structured questionnaire that focused on changes over time (in five years) in labor standards and environmental aspects.

Appendix 2: A Note on the Application of Rawls’ Arguments to Vietnam and this Study

Rawls’ theory of justice is premised on a liberal society in which the citizens are free with basic equal rights and the political system is democratic and legitimate. His argument of “justice as fairness” is based on a “well-ordered society”; the basic structure of this society is characterized by the main political and social institutions being publicly known “to satisfy principles of justice.” In this well-ordered democratic society, Rawls argues that the citizens develop their moral powers and become fully cooperating members: understand and apply the publicly recognized principles of justice, and adjudicate their claims of political right on those political institutions (Rawls 2001, pp. 8–9, 57). However, the one-party Socialist Vietnam is not a well-ordered democratic society. Its basic structure, sanctioned by the Eighth Party Congress in 1996 as a “socialist state governed by the rule of law,” is undermined by the Communist Party government which has not respected the supposed separation of powers (the Politburo, the National Assembly, and the Judiciary). There is no moral division of labor between the branches of the government and the citizens they purport to represent, because the state arbitrarily has enforced some laws and not others, while the citizens have had to fight for their basic rights (Tran 2013, pp. 3–6). The socialist legacy of ensuring equity, or equal distribution of wealth and income, has some connection to Rawls’ second part of the second principle of justice: the greatest benefit of the least-advantaged members of society (the difference principle) (Rawls 2001, pp. 42–43). But fundamental contradictions inherent in Vietnam’s “market economy with socialist orientation” have greatly diminished, if not prevented, the fulfillment of this sense of justice and equity on behalf of its citizens in socialist Vietnam (Tran 2013, pp. 261–289).

In thinking further about Rawls’ two principles of justice (pp. 42–43): the first principle does not apply to Vietnamese citizens as each person does not have “the same indefeasible claim to a fully adequate scheme of equal basic liberties.” The Communist Party members and former government officials (Party members) have power, privileges and access not accessible to all citizens. In the context of CSR, public regulation of CSR is controlled by state and quasi-state institutions as discussed in the Meaning of Regulatory System in Vietnam section. The second principle of “offices and positions open to all under conditions of fair equality of opportunity” also does not apply to Vietnam since, in reality, political power is dominated by Communist Party members: over 90 % of seats in the National Assembly of Vietnam are held by Communist Party members (only a minority were independent members).

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Tran, A.N., Jeppesen, S. SMEs in their Own Right: The Views of Managers and Workers in Vietnamese Textiles, Garment, and Footwear Companies. J Bus Ethics 137, 589–608 (2016). https://doi.org/10.1007/s10551-015-2572-x

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