UCL

Integration and Communication of CSR

Principles by IKEA.

An Analysis of the Influence of and on

External Stakeholders.

Maon Franois
Swaen Valrie

Universit catholique de Louvain Belgium

GIN 13th International Conference Cardiff 2006

Structure of the Presentation

A. Context and Objectives

B. Conceptual Background

C. Methodology

D. Main findings

E. Managerial Lessons
Context

Stakeholders perceptions and attitudes towards companies

CSR policies are complex and difficult to define in a general
perspective (e.g. Sen & Bhattacharya, 2001)

Research focus on certain types of stakeholders: consumers

(e.g. Brown & Dacin, 1999), investors (e.g. Sparkes, 2002),
employees and job applicants (e.g. Turban & Greening, 1997)

Impact on other stakeholders (NGOs, unions, public

authorities, ) are rarely analyzed and contrasted

Research often considers only one type of stakeholder at

a time

Prevent any analysis of the potential differential impact

of CSR commitments and communication on different
types of external and ubiquitous stakeholders
Objectives of the study

1. Analysing how external and ubiquitous stakeholders can

influence the development of CSR commitments

2. Assessing the differential impact of CSR commitments and

CSR communications on various stakeholders groups

How?

Through an in-depth case study: The case of IKEA

By using an integrative framework providing an integrated

stakeholder orientation for a step by step implementation of
CSR (Maignan et al., 2005)
Conceptual Background (1/3)

Corporate Social Responsibility (CSR)

the extent to which businesses assume the economic, legal,
ethical and discretionary responsibilities imposed on them by their
various stakeholders (Maignan, Ferrell & Hult, 1999)

Stakeholders
interface and relay between society expectations and the corporation (Whetten, Rands & Godfrey, 2002)

Companies develop appropriate strategies to meet, manage and/or change stakeholders expectations
Conceptual Background (2/3)
Stakeholders reactions to CSR activities

Enhanced reputation (e.g., Fombrun & Shanley, 1990)

Creation of corporate goodwill on key stakeholders (e.g., Murray & Vogel, 1997)
Positive consumers attitudes towards the company and its products (e.g., Brown & Dacin, 1997)

BUT
CSR initiatives can under certain conditions decrease consumers buying intentions (Sen & Bhattacharya, 2001).
Asymmetrical influence of ethical information on attitudes (e.g., Carrigan & Attalla, 2001)

Companies hesitate to communicate about their CSR practices

Conceptual Bakground (3/3)
CSR Implementation Integrative Framework (Maignan et al., 2005)
STEP 1 :
Discovering STEP 7 :
organizational Promoting
norms and CSR
values

STEP 4 : STEP 5 :
STEP 2 : STEP 6 :
Assessing the Auditing
Identifying Implementing
meaning of current
stakeholders CSR initiatives
CSR practices

STEP 3 : STEP 8 :
Identifying Gaining
stakeholder stakeholder
issues feedback

Short term feedback loop

Long term feedback loop

Methodology
Case study research method (Dufour, 1983; Yin, 1984) and complementary data collection techniques:

Exhaustive inventory of IKEAs CSR communication

Media analysis & store visits in three countries

Extensive desk research

20 in-depth interviews in 2005 with representatives of IKEAs external stakeholders

Survey carried out on on a sample of 150 IKEA customers in Belgium (quota sampling)
Main Findings

1. IKEAs CSR Commitments

2. IKEAs CSR Communication

3. Stakeholders Reactions to IKEAs CSR Policies

and Communication

4. IKEA case through the CSR implementation

integrative framework
1. IKEAs CSR Commitments

Ambition: to make products which have minimum

impact on the environment and to manufacture
them in a socially responsible way

CSR commitments and policies materialized in

1998 by the creation of a voluntary code of
conduct: The IKEA Way
1. IKEAs CSR Commitments
Scandals and criticisms faced by IKEA

81-92 Product safety and environmental issues in Europe

92-97 Child labour in Pakistan, India, Vietnam and Philippines

98 Lamentable work conditions in IKEA supply chain

98-99 Pressures from environmental groups related to wood procurement issues in Russia and Indonesia

1999- Criticisms on the code of conduct implementation in suppliers factories (wages levels, freedom of association, work hours)
1. IKEAs CSR Commitments
Reactive behaviours

Different programs of actions aiming at dodging risks, latent detractors criticisms and their potential harmful impacts

Importance of external stakeholders in the development and enforcement of socially responsible buying practices agreements and codes of conduct

Code of conduct based on a 1996 IFBWW-IKEA agreement

Collaborations in environmental and social matters

1. IKEAs CSR Commitments
Proactive behaviours

Anticipate environmental demands as a part of its corporate culture and management philosophy

Officially, IKEA does not simply consider CSR policies as reactions to criticisms and scandals

Sustainable development & CSR = market opportunities

IKEA presents itself as a CSR-concerned company

speed of reaction
humble attitude
increasingly proactive behaviour
2. IKEAs CSR Communication
Central belief: Little publicity is good publicity
BUT
Doesnt want to appear as a distributor achieving low price at any price
THEN
Traditional communication tools
CSR-specific communication tools

IKEA tries to keep a low profile and prefers to progress cautiously by privileging actions instead of communication in CSR matters

Passive behaviour in terms of CSR communication

Lets potentially interested parties find CSR information about IKEA by themselves
3. Stakeholders Reactions

About customers
Feeling of not being informed on IKEAs CSR policies

Dont significantly ask for more CSR information

Slightly positive perception about IKEAs CSR commitments (mean = 4,3 on a scale from 1 to 7)
No significant influence on their buying intentions

Relatively ethical chastity of IKEA doesnt constitute a determinant factor in IKEAs consumer behaviour

40,6 % of customers affirm they would boycott IKEA if they learn about important negligence related to CSR matters they attach importance to
3. Stakeholders Reactions

About other stakeholders than customers

Stakeholders assessment of IKEAs CSR commitments

General perception = relatively favourable

HOWEVER: Interesting differences have been highlighted according to the type of stakeholders considered
3. Stakeholders Reactions

About partner organizations, trade unions and public administrations which have regular and /or formalized contacts with IKEA
better perception of IKEAs CSR commitments and policies

About organizations that have only accessed to independent and external sources of information on IKEAs CSR policies
often sceptical and critical attitude, sometimes aggressive

Lack of structured dialogue with stakeholders is emphasized

Transparency - demanded by a large majority of stakeholders plays a positive role in the development of positive attitudes towards the firm
4. IKEA Case through the CSR
implementation integrative framework
Step 1: Discovering organizational value and norms

IKEAs Origin, values and culture, as well as IKEAs business vision to create a better everyday life for the many people:

considered as fostering the development of CSR policies

Fit with prerequisite of openness towards stakeholders issues

Strong basis for implementing an integrated CSR program

4. IKEA Case through the CSR
implementation integrative framework
Step 2/3: Identifying stakeholders and stakeholders issues

Customers, employees and suppliers historically considered as key stakeholders in IKEAs environment

Crisis IKEA faced:

importance of other key stakeholders such as NGOs, unions federation, or the media
new social and environmental issues considered

Step 1, 2 and 3 allows IKEA to efficiently assess a CSR meaning that takes into account key stakeholders expectations
4. IKEA Case through the CSR
implementation integrative framework

Step 4: assessing the meaning of CSR

IKEA CSR vision highlights two essential points:

The motivation supporting the CSR commitments

The stakeholders issues considered as priorities

Better everyday life at home for customers
Products free from hazardous substance
Responsible forestry policies
Fundamental rules to be respected by suppliers:
No child labour
Acceptable work conditions
Responsible attitude towards the environment
4. IKEA Case through the CSR
implementation integrative framework

Step 5: auditing current practices

Regular market studies on customers, suppliers and employees

Batch of general key performance indicators

Internal audit structure

External auditors (KPMG, Price Waterhouse Coopers, etc.) referring

directly and only to IKEA executives

No involvement of external stakeholders in the monitoring process

Social audits allow IKEA only to a certain extent to progress in
implementation of CSR initiatives related to most valued issues
4. IKEA Case through the CSR
implementation integrative framework

Step 6: implementing CSR initiatives

Initiatives with limited adaptations of the existing process

Focus on child well-being and protection of globes forests

New process created with the development of the code of

conduct
Transportation issues, energy policies, ameliorated auditing
process, new functions
4. IKEA Case through the CSR
implementation integrative framework

Step 7: Promoting CSR

No structured dialogue
Lack of transparency and clarity
Credibility perceived as high but voluntary blurred discourse
CSR communication = too shy

Little is made to encourage to encourage ideas exchange and

interactions with stakeholders

IKEA gauged as too unilateral

Stakeholders skepticism
4. IKEA Case through the CSR
implementation integrative framework

Step 8: Getting stakeholders feedback

No real multi-stakeholders structured dialogue

+
Confidential audit results and lack of transparency

Reduced efficiency of stakeholders feedback

+
Limited credibility of the CSR practices
+
Skeptical attitude towards the company
4. IKEA Case through the CSR
implementation integrative framework
STEP 1 :
Discovering STEP 7 :
organizational Promoting
norms and CSR
values

STEP 4 : STEP 5 :
STEP 2 : STEP 6 :
Assessing the Auditing
Identifying Implementing
meaning of current
stakeholders CSR initiatives
CSR practices

STEP 3 : STEP 8 :
Identifying Gaining
stakeholder stakeholder
issues feedback

Short term feedback loop

Long term feedback loop

Managerial Lessons
1. Be conscious of the company's changing environment: persistently scan the external environment, identify key stakeholders, and consider CSR as a latent growth vector

2. Be aware of the role of external stakeholders in the success of CSR integration process: tackle the raised issues early enough and engage in multi-stakeholder dialogue

3. Communicate with the right tools to the appropriate stakeholders: expectations and perceptions vary from a stakeholders group to another
Managerial Lessons
4. Give transparency the importance it deserves: it strongly participates to the building of stakeholders attitudes towards the company

5. Adopt a humble attitude: involve stakeholders in the monitoring process and communicate clearly on your intermediary achievements

6. Do not rest on present achievements: CSR is a continuous process

 Thank you for your attention

Cardiff 2006 GIN 13th International Conference

 IKEA engineers
imagining the strange look on the
customers face when he discovers
the new self-assembling system
 Type of Perception about Perception about Induced attitude
stakeholders IKEAs CSR IKEAs CSR towards IKEA
commitments communication
NGOs that POSITIVE PERCEPTION POSITIVE SUPPORTIVE
have formalized PROACTIVE COMPANY PERCEPTION EXAMPLARY
partnerships or HIGH CREDIBILITY COMPANY
collaboration TOO SLOW IMPLEMENTATION
with IKEA TOO SPORADIC CRITICAL
COMMUNICATION

Other NGOs RELATIVE POSITIVE SUPPORTIVE

that have only PERCEPTION LACK OF
punctual TRANSPARENCY CRITICAL
partnerships TOO SLOW IMPLEMENTATION
with IKEA TOO SPORADIC SCEPTICAL
NOT ENOUGH COMMUNICATION
STAKEHOLDERS
INVOLVEMENT

PERCEIVED SINCERITY
Organizations LACK OF DEMANDING
having publicly TOO SLOW IMPLEMENTATION TRANSPARENCY
blamed IKEA SCEPTICAL
on CSR issues DANGEROUS LINE LACK OF
INDEPENDENT PROTESTING
MONITORING
REACTIVE COMPANY
 Type of Perception about Perception about Induced attitude
stakeholders IKEAs CSR IKEAs CSR towards IKEA
commitments communication
Public POSITIVE PERCEPTION POSITIVE PERCEPTION SUPPORTIVE
authorities PROACTIVE COMPANY TRANSPARENCY
STILL DEMANDING
from Belgium HIGH CREDIBILITY

RELATIVE POSITIVE HIGH CREDIBILITY SUPPORTIVE

Unions from PERCEPTION
Belgium LACK OF STILL CRITICAL
TOO SLOW TRANSPARENCY
IMPLEMENTATION
TOO SPORADIC
NOT ENOUGH COMMUNICATION
STAKEHOLDERS
INVOLVEMENT

Specialised RELATIVE POSITIVE LACK OF RESPECTFUL

organisms in PERCEPTION TRANSPARENCY
promotion, SUPPORTIVE
consultancy THERE IS QUITE BETTER TOO SPORADIC
TO DO IN THE FIELD COMMUNICATION
and monitoring SCEPTICAL
with respect to
CSR REDUCED RANGE OF
STRATEGIC TOPICS