Ethical Climate in Businesses and Its Relationship with CSR: A Case Study of SMEs in Vietnam Aftermath COVID-19

This study aimed to investigate the relationship between ethical climate (EC) and Corporate Social Responsibility (CSR) in Vietnamese small and medium-sized enterprises (SMEs) following the COVID-19 pandemic. EC represents shared perceptions of acceptable conduct, while CSR denotes businesses’ societal obligations. Although substantial research exists exploring these dynamics in large corporations, investigations focused specifically on Vietnamese SMEs remain limited. Given SMEs’ economic contributions, examining this context is critical. The study used a survey methodology to collect primary data from 100 participants from SMEs in Vietnam. This data was analyzed quantitatively using structural equation modeling (SEM) techniques through SmartPLS 4 software to assess the correlations and causal relationships between EC and CSR. The result of R-square is 0.848, Cronbach's alpha with CSR is 0.831, and EC is 0.792. Then, the path coefficient between these variables is 0.000 at P-value and 0,001 at P-value in in-direct effect through other variables. These findings revealed a statistically significant positive correlation between EC and CSR engagement in Vietnamese SMEs. SMEs exhibiting greater EC tended to have higher CSR commitment and vice versa. CSR also indirectly influenced EC through moral identity and justice perceptions. Although constraints posed challenges, the practice in EC and CSR remained beneficial for reputation, employee satisfaction, and customer loyalty. This study is important in unraveling the EC-CSR dynamics within Vietnamese SMEs.