The impact of market orientation and corporate social responsibility on firm performance: Evidence form Vietnam

Abstract

This paper examines the impact of market orientation and corporate social responsibility (CSR) on firm performance and how firm performance is affected by these factors in a transition economy, like Vietnam. A model incorporating the key determinants was tested with a sample of 256 owners, senior managers and CEOs in Vietnamese enterprises in the Mekong Delta. Four concepts of CSR are used in this study including economic, legal, ethical and philanthropic. Market orientation (MO) comprises three behavioral components: customer orientation, competitor orientation, and inter-functional coordination. Structural equation modeling (SEM) was used to analyze the data collected. The results showed that both CSR activities and MO have positive impact on firm performance. Through the analysis, legal factor (PL) almost has no significant. Only PL1 variable (with λ = .664) has significant and nearly compatible with ethical component. The study also suggests Vietnamese senior managers, CEOs, as well as owners should upgrade their perceptions about the importance of CSR, therefore they could improve their competitiveness into the market-orientation economy. A major limitation of this study is the examination of two concepts that impact on Vietnamese firms’ performance. Several other concepts may be investigated in specific industries and how these impacts on other concepts may be studied.