UCL

Integration and Communication of CSR

Principles by IKEA.

An Analysis of the Influence of and on

External Stakeholders.

Maon François
Swaen Valérie

Université 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 IKEA’s CSR communication

– Media analysis & store visits in three countries

• Extensive desk research

• 20 in-depth interviews in 2005 with representatives of

IKEA’s external stakeholders

• Survey carried out on on a sample of 150 IKEA

customers in Belgium (quota sampling)
Main Findings

1. IKEA’s CSR Commitments

2. IKEA’s CSR Communication

3. Stakeholders’ Reactions to IKEA’s CSR

Policies and Communication

4. IKEA case through the CSR implementation

integrative framework
1. IKEA’s 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. IKEA’s 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. IKEA’s 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. IKEA’s 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. IKEA’s CSR Communication

• Central belief: « Little publicity is good publicity »

BUT
• Doesn’t 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 IKEA’s CSR policies
• Don’t significantly ask for more CSR information
• Slightly positive perception about IKEA’s CSR commitments
(mean = 4,3 on a scale from 1 to 7)
• No significant influence on their buying intentions

 Relatively ethical “chastity” of IKEA doesn’t constitute a

determinant factor in IKEA’s 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 IKEA’s 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 IKEA’s CSR commitments and policies

About organizations that have only accessed to independent

and external sources of information on IKEA’s 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

• IKEA’s Origin, values and culture, as well as IKEA’s 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 IKEA’s 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 globe’s 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
customer’s face when he discovers
the new self-assembling system…
 Type of Perception about Perception about Induced attitude
stakeholders IKEA’s CSR IKEA’s 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 IKEA’s CSR IKEA’s CSR towards IKEA
commitments communication
Public POSITIVE PERCEPTION POSITIVE PERCEPTION SUPPORTIVE
authorities PROACTIVE COMPANY TRANSPARENCY
from Belgium HIGH CREDIBILITY STILL DEMANDING

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
and monitoring TO DO IN THE FIELD COMMUNICATION SCEPTICAL
with respect to
CSR REDUCED RANGE OF
STRATEGIC TOPICS