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IKEA and Sustainability: Sustainable Development Through the Lens of

Individual, Organisational and Network Perspective

Article · May 2019

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 IKEA and Sustainability: Application of the Sustainable
Development Through the Lens of Individual, Organisational and
Network Perspective

Masud Gaziyev

Graduate Student, MA in Leadership and Organization

Malmö University, Department of Urban Studies

May 10, 2019

 Table of Contents

1. Introduction 2
2. Theory and Analysis 3
2.1 Individual Perspective of Sustainable Development 3
2.2 Organisational Perspective of Sustainable Development 4
2.3 Network Perspective of Sustainable Development 5
3. Conclusion 6
List of References 7

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 ABSTRACT
This paper analyses multinational corporation IKEA and its sustainability strategy as described in its
official sustainability strategy document. Several theoretical frameworks each describing various levels
of analysis, namely individual, organisational, and network perspectives are introduced and applied to
IKEA. Moreover, the justifications for why certain theories have bene chosen as well as insights they
provide to understand IKEA and its sustainability strategy are discussed and analysed critically.
Key words: Sustainability, IKEA, Strategy, Organisation.

1. Introduction
At a time characterized by the urgent need to address the challenge of climate change, waste problem,
as well as the concerns of social equity, private corporations are increasingly seen as major mediums
through which change towards achieving sustainable development goals can be achieved. Sustainable
development has been defined initially as “development that meets the needs of the present without
compromising the ability of future generations to meet their own needs” (UN, 1987). Moreover, the
2030 Agenda for Sustainable Development which was adopted by all member states of the United
Nations in 2015 provides a framework through which “to achieve a better and more sustainable future
for all” (UN, 2019). The agenda consists of 17 Sustainable Development goals which addresses several
global challenges, such as climate change, hunger, poverty, pollution, peace, justice, and inequality.
The organization that has been selected for this paper is IKEA, multinational company that specializes
in home furnishing, kitchen products, furniture and appliances (Loeb, 2012). The company was founded
in 1943, and since then had gone through many changes in terms of its business concept, corporate
structure, and organizational culture. The company has described “sustainable growth” as one of its
core business aims, as well as stating that sustainable solutions is one of the areas in which the company
invests the majority of its profit (IKEA, 2019). Moreover, the company pledged that it plans that “100%
of the wood materials will be FSC (Forestry Stewardship Council) certified or from recycled sources”
and that the company had already reached 80% as of 2019.
Therefore, it can be argued that given the apparent sustainability commitments and ambitions that IKEA
has designated, it is important to study the implications of it in the context of theory. The research
problem that is constituted in this paper is to examine to what extend a certain private corporation, in
this case IKEA which is widely accepted as a leader in certain industry is able to take a leading role in
achieving sustainability. The paper aims to examine sustainable development as applied to IKEA and
analyse the organization’s possible role in future in contributing to the sustainability through the lens
of individual, organizational and network perspectives. Moreover, this paper mainly deals with the
decisions and organisational structure that is designated at the strategic level. Therefore, the contents
of “IKEA Sustainability strategy – People & Planet Positive” that was launched in 2012 will be
regarded as the main document for referring to the sustainability commitments and ambitions that the
organization has designated.
Firstly, the selected theories for each unit of analysis will be introduced, alongside with the
consideration of how these theories are relevant for the organization and the insights they provide to
understand the organization. Then, the collected theories and frameworks will be analysed and relevant
similarities with IKEA sustainability strategy will be identified. Finally, the concluding remarks will
be made to decide what extend the employment of certain theories helped in responding to the defined
research problem.

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 2. Theory and Analysis
2.1 Individual perspective of sustainable development
A model for sustainability leadership was proposed by Ferdig (2007) who utilized the traditional
leadership theories with the complexity science. Three critical areas that require attention from leaders
and policymakers, namely long-term viability of natural systems, present unacceptable social
conditions, and if managed properly, potential of economics to create and maintain wealth and
prosperity for all residents of the planet were identified. Moreover, certain “phenomena cannot be
reduced to ‘understandable and manageable parts’ separate from the interactive networks of which they
are a part” (p. 28). Considering these insights from complexity science, leaders cannot decide to act
outside of the holistic interconnections that exist between natural systems and people which
characterize the world today.
The model to consider social, environmental, and economic well-being in business strategies and
practices were first introduced by the concept called “Triple Bottom Line” (Elkington, 1997).
According to Ferdig (2007), given the necessity to consider the holistic interconnections to exercise
effective leadership for sustainable future, the need to balance the contradicting demands for economic,
environmental, and social sustainability presents a real leadership opportunity (p. 30). Then, it was
argued that these complex conditions as well as complexity science require societies to rethink the
nature of leadership. That is, since the world today faces three main challenges for creating sustainable
future which were described in previous paragraph, in rather unstable world characterized by the need
to balance contradictory sustainability challenges, “sustainability leaders create opportunities for
people to come together and generate their own answers – to explore, learn, and devise a realistic course
of action to address sustainability challenges” instead of providing all the answers (p. 31). Moreover,
sustainability leaders should be driven by more than pure self-interest, understand that “everything is
connected to everything else”, should possess “a spirit of inquiry and learning” and cooperate with
other agents (p. 33).
Achieving sustainability is defined as a complex problem, since it “requires systems-level redesign of
our entire socio-ecological regime, focused on the goal of sustainable quality of life rather than
unlimited material growth” (Beddoe et al, 2009, p. 2488). Moreover, organisations operate in
interconnected economic, environmental, and social systems as agents (Metcalf & Benn, 2012). In
their article, Leadership for Sustainability: An Evolution of Leadership Ability, Benn and Metcalf
(2012), argue that this interconnectedness makes achieving sustainability a complex problem. Complex
problems are then defined as having “a large number of interacting elements and there is an absence of
proven theoretical approaches for the solution” (Metcalf & Benn, 2012, p.371). The complexity of
sustainability combined with the difficulty of developing unified framework of leadership that
addresses this problem requires “leaders of extraordinary abilities, who has an ability to read and predict
through complexity, can think through complex problems, engage groups in dynamic adaptive
organisational change and can manage emotion appropriately” (Metcalf & Benn, 2012, p. 381).
With regards to the application to IKEA, proposed models, mainly complexity problem and
sustainability leadership posit relevant points if IKEA is assumed as an individual organization within
the global market. The problem of complexity requires individual organisations and leaders to
cooperate with other agents in the market to build a strategy for sustainable future for all. In that context,
IKEA sustainability strategy which was adopted in 2012 designates “Co-Creating a Better World”
namely through “open engagement with others through sharing knowledge and ideas” as one of the
core parts of its sustainability vision (2018, p. 18). The strategy designates three focus areas for the
organization; (1) healthy & sustainable living, (2) circular & climate positive, and (3) fair & equal.

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 These focus areas are described to be adapted based on “three major challenges; climate change,
unsustainable consumption, and inequality” (p. 5).
It can be argued that identifying three major focus areas based on three global challenges resembles the
framework of sustainability leadership that was proposed by Ferdig (2007). Nevertheless, it is important
to mention that these goals and focus areas have a chance of contradicting itself when put into
application. If one designates to describe sustainability “a complex problem” that is not necessarily
solved and addressed through one set of unified leadership practices, the organizations will need to be
careful when translating organizational vision and strategy into common business practices.

2.2 Organisational perspective of sustainable development

Organisational culture is “the set of shared, taken-for-granted implicit assumptions that a group holds
and that determines how it perceives, thinks about and reacts to its various environments” (Schein,
1996, p. 236). Organisational culture and its specific characteristics can have an important impact on
organisaiton’s stance towards sustainability and can be a source of sustainable competitive advantage
(Barney, 1986). It is also regarded as key ingredient of organisational effectiveness (Wilkins & Ouchi,
1983). Therefore, it is important to study organisational culture in the context of sustainability and
examine the culture that is more supportive of sustainable change.
Quinn and Rohrbaugh (1983) developed Competing Values Framework to determine different cultures
that might exist within organisations. The model comprises two dimensions; the focus (internal focus
versus external focus) and structure (stability and control versus flexibility and direction). As a result
of different deviations within those dimensions, the four different types of organisational culture have
been identified:
(1) Clan culture: where organisational focus is internally oriented and it is characterized by flexible
structure. These cultures are usually associated with stronger employee commitment, affiliation,
and support (Cameron & Quinn, 1999).
(2) Adhocracy culture: where organisational focus is externally oriented and it is reinforced by
flexible organisational structure. Adhocracy cultures are assumed to value growth, creativity, risk-
taking, stimulation, and market exploitation (Quinn & Kimberly, 1984).
(3) Market culture: where organisational focus is externally oriented and it is supported by the
structure that emphasizes stability and control. Market cultures are assumed to value competence,
achievement, planning, strong centralization with a strong emphasis on profit maximization
(Cameron et.al, 2006).
(4) Hierarchy culture: where organisational focus is internally oriented, and it is characterized by the
structure that emphasizes stability and control. Organizations that embrace hierarchy culture are
assumed to value control, stability, formalization, efficiency and predictability.
Hartnell, Yi Ou, and Kinicki (2011) undertook a study to test the suppositions characterized with the
four different organisational cultures. Through employing meta-analytic method involving the use of
surveys, it was identified that “clan cultures usually highly associate with employee attitudes, that is,
they have significantly positive relationship with employee attitudes than do adhocracy and market
cultures” (Hartnell et al., 2011, p.686). Moreover, it was associated that the “market cultures are more
positively related than other cultures in terms of financial effectiveness, and adhocracy cultures are
more associated with innovation than clan cultures” (Hartnell et al., 2011, p.687). Nevertheless, the
market culture was the strongest culture in terms of association with innovation and development.
Overall, authors claim that the survey results and analysis indicate modest support for the validity of
the Competing Values Framework.
With regards to the IKEA, Competing Values Framework provides valuable insights. It can be argued
that due to its strong emphasis on being multinational company that has been continuously expanding

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 into different markets, IKEA has historically been, and continue to be externally oriented in terms of
its focus. That is, the main focus is to expand into different markets and exploit the business
opportunities. Already throughout 2000s, IKEA succeeded in expanding into three big markets, namely
to Japan, Russia, and Portugal (IKEA, 2019).
Nevertheless, IKEA Sustainability strategy which was adopted in 2012, provides another insight into
the possible culture that exist within the corporation in terms of how it handles the challenge of
sustainability. The strategy explicitly mentions through one of its three sustainability focuses, namely
through the focus on “Fair & Equal” that the company aims to grow “the IKEA business in an even
more inclusive way and providing decent and meaningful work” for all employees (IKEA, 2018, p. 16).
Moreover, one interesting tendency of this part of the document is that the company emphasizes
ensuring the work conditions in markets they are recently expanding into, mostly in developing
countries more than treating their employees in fair and equal way in general sense. That is, the
tendency to expand into other markets are even more prevalent in aspects such as employee
engagement. Therefore, it can be argued that IKEA is more externally oriented rather internally oriented
in its work structure.
Taking the insights from the individual perspective where it was argued that sustainability is the
complex problem, it can be again argued that the complex nature of the problem of sustainability will
require organisations to become more flexible in their organisational structure. The document on
sustainability strategy provides little input on whether the organization is flexible in its structure or
more organised. However, due to strong external focus, the IKEA organisational culture in terms of its
approach to the problem sustainability suits better to be designated either adhocracy or market culture.
Nevertheless, it can be argued that due to market instability at a time characterized by climate change
issues and complexity problem of sustainability, multinational companies as well as IKEA will need to
experiment on different organisational structures and cultures, as well as trying different leadership
techniques to ensure that the sustainability strategy of the company is implemented thoroughly.

2.3 Network perspective of sustainable development

Networks, in the context of complex business environments, are the connections where multiple
business units are in a constant relationship with one another to share information and knowledge
(Håkansson & Ford, 2002). All business units that characterize networks have their own resources,
knowledge, and understanding that take place various forms. Each business units are connected to one
another through different ways that characterize their relationship (Håkansson & Ford, 2002, p. 133).
The success of the relationships that are being formed between different business units and the potential
for cooperation are strongly affected by the existing trust within networks (Maurer, 2010). Trust is
understood as “an expectation concerning the intensions or behaviour of others” (Maurer, 2010, p. 630).
Trust usually rests on the expectation for the cooperativeness of the other agent. Nevertheless, the lack
of time is usually crucial issue when it comes to failing to build trusting relationships within networks
in the context of inter-organizational project that require to be completed in a very short time (Nordqvist
et al., 2004). In inter-organizational projects that are characterized by the strong union of different
business units under the umbrella of unified project, “trust helps to exploit the opportunities that arise
due to the collaboration with knowledgeable project partners” (Maurer, 2010, p.635).
The vision part of IKEA Sustainability strategy explicitly mentions that “Co-creating a better world” is
one of the core values that the organization is focusing on. Namely, knowledge sharing in areas of
innovation and development, as well as cooperating with other agents to address the challenges of
achieving sustainable future. By drawing attention to the three focus areas, namely, “people, planet and
business”, document mentions that IKEA “will work together in new ways and continue to support
organisations that develop sustainable value for people, the planet and our business” (p. 18). The
document neither the company mission or vision does not explicitly state how that cooperation should

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 come about or whether it should incorporate concepts such as trust. Nevertheless, the special
consideration for co-creation in sustainability strategy indicates that IKEA effectively considers
cooperation within networks as an important part of managing sustainability.

3. Conclusion
The discussion throughout the paper was centred around the examination of IKEA through its
sustainability strategy and its possible contribution to the sustainability through the lens of individual,
organisational, and network perspectives. Several theoretical concepts and frameworks were introduced
and analysed in accordance with the organization.
In terms of individual level, it was identified that sustainability is complex problem. Moreover, there is
no any unified leadership method that is best suitable to handle the challenge of sustainability.
Nevertheless, employing the insights from the concept of “sustainable leadership” model can serve as
a guide for multinational organisations such as IKEA when organizing their sustainability
commitments. Leadership should be rethought, and it should not necessarily be about establishing clear
strategies, but also encouraging platforms where every agent can communicate with other business
units within the network and propose solutions. Moreover, IKEA’s three focus areas, as outlined in its
document on sustainability strategy posits a challenge as to whether the commitments can contradict
one another when put into practice due to complex nature of the sustainability.
Organisational culture, in terms of organisation’s focus and structure is designated as an important
factor whether the organization will be more committed towards realizing its sustainability goals.
Competing Values Framework which has been tested indicate that the cultures which emphasize
flexibility and external focus are more likely to be associated with innovation and development than
the cultures that emphasize internal focus and stability. Moreover, creating innovative solutions for
solving challenges associated with sustainability has been described as one of the core approaches for
managing sustainability in IKEA’s document on sustainability strategy.
IKEA is seen more as an externally focused organization, with the focus on expanding into various
markets around the globe. That is prevalent form the official sustainability strategy of IKEA which
states the importance of building decent working conditions in markets that IKEA is expanding to.
Nevertheless, it is still not clear whether the organization emphasizes stability or flexibility. Through
introducing the concepts related to networks, it was shown that trust is an important determinant of the
success of inter-organisational collaboration and co-creation. It was also shown that IKEA
Sustainability strategy clearly emphasizes the co-creation as one of possible ways of organizing its
work to address sustainability challenges. That is, working within networks is considered one way of
managing the complexity of sustainability.

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