[Research Contribution] Internal Corporate Social Responsibility and Sustainable Employee Performance

20 April, 2025

Keywords: Internal Corporate Social Responsibility (ICSR), Sustainable Employee Performance (SEP), Small and Medium Enterprises (SMEs), Training and Development, Work-Life Balance, Corporate Culture, Employee Engagement, Sustainable Human Resources Policy

Corporate social responsibility is not only a story toward the community – the external audience of the enterprise, but also internally – the people within the enterprise. It is to explore the research of the author group from UEH Mekong, University of Economics Ho Chi Minh City (UEH) on internal social corporate responsibility and the impact on employee performance – a mechanism toward sustainability in business operations.

Corporate Social Responsibility (CSR) is no longer just an external tool; actually, it is gradually becoming an intrinsic value of the organization. However, in Vietnam, most businesses have been focusing on CSR in the “peripheral” direction – mainly toward the community, environment, and customers. Meanwhile, an equally important aspect is Internal Corporate Social Responsibility (ICSR), which is directly related to employees, and has not been fully recognized and invested in accordingly.

Meanwhile, the market has been increasingly competitive, and human resources have become a strategic advantage. Businesses, especially small and medium enterprises (SMEs), face heightened pressure to retain employees, improve performance, and enhance organizational capacity.

This has prompted the author group from UEH Mekong, University of Economics Ho Chi Minh City, to focus on measuring the impact of internal social responsibility on sustainable employee performance (SEP) in the context of SMEs in Vietnam, with the desire to contribute to filling the current research and practice gap.

Internal Corporate Social Responsibility (ICSR)

Internal corporate social responsibility is a part of corporate social responsibility, referring to the policies and actions of the enterprise towards its employees, including training, career development, work-life balance, ensuring working conditions, mental and physical health, and creating motivation and promotion opportunities.

When it comes to corporate social responsibility, most of the current research and practices mainly focus on external stakeholders like customers, suppliers, or communities. Meanwhile, internal stakeholders, especially employees, are often overlooked in academic research and the process of implementing CSR in enterprises. In fact, employees are a key group, both influenced and strongly impacting the effectiveness of CSR implementation.

Internal social responsibility refers to the social responsibility that businesses undertake to enhance employee satisfaction and well-being, with a focus on creating a positive work environment, career development opportunities, and comprehensive support for physical and mental health.

Internal social responsibility not only reflects organizational ethics but is also considered a cultural factor that directly affects employee loyalty and engagement. Employees who are adequately trained, respected, and supported in balancing work and life tend to improve their work performance, to enhance their personal image, and to contribute positively to the sustainable development of the business.

Sustainable Employee Performance (SEP)

Sustainable Employee Performance (SEP) is an expanded concept from traditional performance, focusing on immediate performance and emphasizing factors of stability, long-term, responsibility, and adaptability in the individual’s work process.

Sustainability in performance is considered an essential factor for the continuous operation and long-term development of the enterprise. Employees with high levels of job satisfaction tend to comply with regulations, to commit to the organization, and to maintain stable performance.

In addition, sustainable performance helps enterprises optimize profits, improve investment efficiency in human resource management, and create opportunities to enhance competitiveness. When feeling the support and positive development from the enterprise, employees will increase their level of engagement and be willing to contribute more to the success of the organization. They will proactively seek solutions to improve work and increase work efficiency continuously and sustainably.

ICSR impact on Sustainable Employee Performance

The results indicates a positive relationship between three factors: workplace safety and well-being, work-life balance and resilience with sustainable employee performance (SEP).

In particular, work-life balance (WLB) is the strongest influencing factor. The majority of this group is female, aged 30-40, married, and the harmony between work and personal life is a top priority. Businesses can support this with flexible working policies, allowing employees to manage family responsibilities well, easily swap days off, or handle personal work when necessary. Concurrently, employees are still willing to work overtime when needed to complete goals or achieve career progress.

Workplace safety and well-being (WW) is the second most positively influencing factor. This factor is measured through conditions like a safe working environment, full insurance, regular health check-ups, friendly colleague relationships, and transparent compensation policies. These are fundamental policies but they have practical significance in retaining employees. However, implementation should not be restricted to written regulations; actually, it should be demonstrated by specific commitments and actions from the business toward its staff. Resilience positively impacts sustainable work performance although the level of influence is lower. This factor reflects the ability to cope with stress, to control emotions, to maintain confidence in one’s own abilities and satisfaction after completing the job. This is the combined result of both personal training and a supportive working environment, especially training and development policies (TD). Although these training and development policies were not statistically significant in the study, the indirect role of training in improving sustainable performance through the relationship with resilience can be confirmed. In the post-COVID-19 context, equipping coping and emotional management skills should become an essential part of internal training programs.

In contrast, Job Stress (JS) showed a clear negative impact on sustainable work performance. Stress stems from an uncomfortable working environment, increased work pressure, feelings of being undervalued, lack of recognition and support from management, as well as the situation of employees having to take on work outside the scope of their responsibilities. These factors negatively affect physical and mental health, thereby reducing long-term performance. Minimizing stressors is a necessary solution to maintain and to improve the sustainable work performance of employees.

Policy implications for small and medium-sized enterprises (SMEs) in Vietnam

The findings from this study suggest that managers can sustain and enhance sustainable employee performance by enhancing or improving ICSR practices. Specifically, it is necessary to focus on the factors: work-life balance, workplace safety and well-being, resilience and stress reduction at work.

To apply these results to management practices, managers need to be fully aware of the importance of implementing social responsibility, primarily internal social responsibility, proactively developing solutions to promote internal social responsibility practices in their enterprises. In addition to policy solutions, the allocation of financial resources for internal social responsibility practices needs to be given appropriate attention. In parallel, businesses can conduct interviews with employees to determine their expectations, from which managers can adjust policies to meet these expectations through internal social responsibility activities.

Most importantly, managers need to understand that taking responsibility and commitments to employees, aiming at the sustainable development of the organization and going beyond the terms of the labor contract. However, from an organizational perspective, building standards and committing to implementing them is necessary to create consensus among employees, motivating them to pursue the business’s strategies, including the sustainable development strategy. One of the integrated solutions that companies can consider is practicing the three main pillars of ESG: Environmental, Social, and Governance. In particular, the “Social” pillar emphasizes factors related to employees like working conditions, career development opportunities, welfare regimes, etc., to improve the quality of life, work performance, and employee satisfaction.

This study was conducted in the context of Vietnamese enterprises gradually shifting to a comprehensive CSR approach, not only focusing on responsibility to external stakeholders but also promoting internal responsibility to the human resources, those who directly and regularly contribute to the success of the enterprise.

The full-text research article on Internal Corporate Social Responsibility and Sustainable Employee Performance can be accessed HERE.

Authors: Nguyen Hong Nga, Dr. Lam Thi Truc Linh, Nguyen Ngoc Tho – University of Economics Ho Chi Minh City, Vinh Long Campus (UEH Mekong).

This article is part of a series spreading research and applied knowledge with the message “For a More Sustainable Mekong”, under the program “Research Contribution For All – Research for the Community” implemented by UEH. UEH cordially invites readers to read the next UEH Research Insights newsletter.

News, photos: The authors, UEH Mekong Department of Admissions and Communications, UEH Department of Communications and Partnerships