Research Memorandum 70 • July 2007
Corporate Social Responsibility at IKEA: commitment and communication
FRANÇOIS MAON Université Catholique de Louvain Louvain-la-Neuve, Belgium VALÉRIE SWAEN Université Catholique de Louvain Louvain-la-Neuve, Belgium ADAM LINDGREEN Centre for Marketing, Communications and International Strategy Business School, University of Hull Cottingham Road, Hull, HU6 7RX, the UK Email: [email protected]
© 2007 F Maon, V Swaen, A Lindgreen All intellectual property rights, including copyright in this publication, except for those attributed to named sources, are owned by the author(s) of this research memorandum. No part of this publication may be copied or transmitted in any form without the prior written consent from the author(s) whose contact address is given on the title page of the research memorandum.
Abstract Understanding an organization's commitment to corporate social responsibility (CSR) policies and its communication of this commitment to its stakeholders often is difficult, as is understanding stakeholders' complex perceptions and attitudes toward the organization. Existing literature lacks managerial guidelines in this important area; previous studies focus essentially on organizations' commitment and communication to customers, employees, prospective employees, and financial investors but ignore other important stakeholders, such as non-governmental organizations, and effective methods for committing to and communicating with them. This focus on certain types of stakeholders prevents an overall analysis of CSR commitment and communication. In response, this study combines qualitative and quantitative methods to examine how different stakeholders perceive, react to, and influence CSR commitment and communication. Different types of stakeholders vary in their perceptions of the organization's CSR; therefore, the organization must be transparent in its commitments and credible in its communication. Overall, this study recommends the development of more comprehensive CSR models that can be tailored to different stakeholders. Keywords Corporate social responsibility; communication; stakeholders; IKEA; skepticism; transparency
Abbreviations CSR: corporate social responsibility; IFBWW: International Federation of Building and Wood Workers; NGO: non-governmental organization; WWF: World Wildlife Fund.
INTRODUCTION For many researchers and observers alike, it remains difficult to understand fully how organizations design their CSR policies and communicate them to different stakeholders. They also have trouble determining different stakeholders' complex perceptions of and attitudes toward the organization, which means managerial guidelines are virtually nonexistent in this important area. Although prior work focuses on organizational commitment to and communication with customers (e.g., Brown and Dacin, 1997; Carrigan and Attala, 2001; Webb and Mohr, 1998), employees and prospective employees (e.g., Davis, 1973; Greening and Turban, 2000; Williams and Bauer, 1994), and financial investors (e.g., Anand and Cowton, 1993; Purcell, 1979; Rivoli, 1995; Webley et al., 2001), it fails to consider other stakeholders, such as nongovernmental organizations (NGOs), whose influence over CSR policies continues to grow (Argenti, 2004; Doh, 2003; Guay et al., 2004; Ottaway, 2001; Stafford et al., 2000; Teegen et al., 2004). Furthermore, previous studies generally address one type of stakeholders (e.g., Sen and Bhattacharya, 2001; Turban and Greening, 1997), which prevents them from offering an overall analysis of the value of commitment and communication in CSR. We contribute to the literature by reporting on one organization's CSR commitments and communications and relating them to different stakeholders. Specifically, we report on IKEA's CSR commitments and communications and their relation to the organization's different stakeholders, which enables us to examine stakeholders' perceptions of and attitudes toward IKEA and its CSR policies and thereby gain an understanding of how stakeholders themselves influence CSR commitments and communication. By including a variety of stakeholders, our case approach provides insight into the dynamics that occur among stakeholders. We structure the remainder of this article as follows: First, we review the literature. Second, we provide details of the case developed for this study. Third, we present and discuss the findings. Fourth and finally, we identify some theoretical and managerial contributions and conclude with research limitations and opportunities for further research. LITERATURE REVIEW Being a socially responsible organization seems like a necessary criterion to do business in the 21st century (Altman 1998), which suggests that responsible management links inextricably with corporate survival. Together with the emergence of concepts such as sustainable development (World Commission, 1987) and global business citizenship (Wood et al., 2006), pressure from and demands by various stakeholders help explain the key role of CSR during the past decade. In particular, various entities have gained ground, such as the anti-globalization movement, NGO campaigns, careful and thorough examinations of sustainable investments, changing consumption behaviors that promote ethical buying, city council participation, and government oversight (Crane and Matten, 2003).
Moreover, the widespread distribution of the worldwide web as a global communications device provides consumers with nearly instant information about an organization, its products, and services, which increases their expectations (McIntosh et al., 1998). A 2004 survey of 6,350 European consumers by Sofinco-Ipsos found that 53 percent believe changing their consumption behavior means that organizations must change and become ethically more responsible (Canal IPSOS, 2004). A 1999 survey by NFO Research of 1,000 U.S. consumers also noted that 54 percent of respondents consider an organization's labor practices, business ethics, social role, and environmental impacts very important (Environics International, 1999). As consumers increasingly adhere to certain ethical values or even a particular cause, they search for applicable information about the organization, its products, and services, including employee, social, and environmental issues. Consumption thus expresses not only product preference but also how consumers feel as though they can relate to the organization's values or cause (Lauer, 2004). Pressure to become a better corporate citizen also stems from business customers who purchase components and raw materials from suppliers and want them act in environmentally correct and ethically sound manners. Many large organizations require suppliers to provide details of their own CSR policies, and this pressure for better employee, social, and environmental performance moves along the value chain (Warhurst, 2001). Such pressure creates a formidable force—large organizations can effectively exclude suppliers from the marketplace if they are not socially responsible. Within this context, the use of child labor and social diversity protections have emerged as crucial issues (Lindgreen and Swaen, 2004). These developments also have led to widespread changes in how organizations respond to the pressures and demands they face with regard to their employee, society, and environment policies. CSR AND STAKEHOLDERS Since Bowen (1953, p. 6) argued that businesses have a duty "to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society," few have question the importance of CSR (e.g., Carroll, 1999; Drucker, 1984; McWilliams and Siegel, 2001; Wood, 1991). As a result, CSR has mushroomed to such an extent that it comprises a vast plethora of theories and approaches, some of which use different terminologies (Garriga and Mele, 2004). With little consensus about meanings, CSR remains a hot and controversial research topic (De Bakker et al., 2005), but carefully distilling CSR literature suggests a general consensus that it is no longer enough for organizations to be concerned about increasing profits. In addition to their economic and legal obligations, organizations have ethical and discretionary responsibilities to society (Carroll, 1979; Donaldson and Dunfee, 1994), and to comply with these considerations, they develop CSR policies that endorse employee, social, and environmental concerns, which provides them with social legitimacy (Wartick and Cochran, 1985). 5
Carroll (1979) conceptualizes CSR as different obligations, which underlines the central role that stakeholders play. That is, "CSR represents societal expectations of corporate behavior; a behavior that is alleged by a stakeholder to be expected by society or morally required and is therefore justifiably demanded of a business" (Whetten et al., 2002, p. 374). A stakeholderoriented approach to CSR emphasizes that organizations exist within large networks of stakeholders, all of which stake claims on organizations. Within the organization, the interests of these various stakeholders meet and interact with one another and the interests of the organization. When organizations face demands from stakeholders to recognize the importance of CSR, they generally translate those demands into CSR objectives and develop CSR policies; sometimes, however, organizations attempt to change their stakeholders' expectations (Lamberg et al., 2003). Within the organization, managers must integrate stakeholders into the decision-making process, convince them to support the corporate strategic course, and facilitate multipartite participation (Dontenwill, 2005). CSR AND COMMUNICATION In responding to CSR pressure and demand, some organizations follow a substantial strategy, whereas others develop a symbolic strategy (Capron and Quairel, 2004). The former implies that the organization modifies its objectives and business processes; the latter refers to institutional, opportunistic CSR communication that does not alter the organization's criticized behavior. In both cases, CSR communication represents an important issue for managers. However, several questions remain unanswered in relation to the impact of CSR communication on stakeholders' perceptions and attitudes. On the one hand, previous studies report a positive impact of CSR on corporate image (Mascarenhas, 1995) and consumer goodwill (Murray and Vogel, 1997; Sen, 1993). For example, information pertaining to CSR policies positively influences consumers' buying intentions (Brown and Dacin, 1997; Creyer and Ross, 1997), and an organization enjoys an enhanced reputation when stakeholders perceive it has contributed to the common social good (Fombrun and Shanley, 1990). A reputation as a socially responsible organization even can protect an organization during a crisis (Tombs and Smith, 1995). On the other hand, organizations engaging in the most CSR often are those criticized the most (Social and Environmental Efficiency, 2001). Those that proclaim themselves socially responsible must be prepared to deal with criticism when stakeholders believe they have behaved irresponsibly (Mohr et al., 2001), and if they choose not to respond to that criticism, they can face a serious crisis, as Nestlé, Nike, and Shell discovered. Finally, in certain conditions, a CSR initiative can decrease consumers' purchase intentions toward the socially responsible organization, for example when consumers' support for a particular CSR aspect or product quality is low (Sen and Bhattacharya, 2001). Taking these conflicting findings and lack of guidelines into account, we attempt three objectives with this study. First, we examine IKEA's CSR policies and their development in a wider context (i.e., employee, social, and environmental) by considering the influence of multiple, various stakeholders. 6
Second, we analyze how IKEA communicates its CSR policies and commitment to various stakeholders. Third, we study the value added by this commitment and communication and the effect on stakeholders' perceptions of and attitudes toward the organization. METHODOLOGY Qualitative methods are appropriate for complex phenomena and when numerous variables may influence the issue(s) at hand (Eisenhardt, 1989; Hamel and Dufour, 1993; Yin, 2002). We select a case study as our research methodology, in accordance with the principles outlined by Yin (2002). First, we obtain a comprehensive understanding of IKEA's contextual setting so that we may develop our theory in context. Second, we use secondary data and multiple interviews to gather rich insights and provide a basis for the greater generalizability of our findings. We select this particular case using theoretical sampling (Strauss and Corbin, 1998). IKEA, the world's largest multinational, flat-pack furniture retail chain, has enjoyed high-profile marketing successes. Furthermore, it offers greater simplicity in terms of competitive scenarios and strategic responses compared with larger, more complex furniture manufacturers and retailers. In addition, the policies described in the case have largely been developed and entered an evolutionary phase, whereas during data collection, many other furniture manufacturers and retailers were undergoing substantial change processes with uncertain outcomes. IKEA offers a remarkably fertile case for examining CSR. The organization's retail turnover has increased by 400 percent during the past decade. Its business model is based on gaining control over strategic resources, particularly through logistical coordination of a network that consists of 1,500 suppliers in 50 (often developing and emerging) countries. These suppliers ignore mediators and deliver directly to IKEA, which minimizes the retailer's costs so that IKEA can offer low-priced furniture. However, the seeming eradication of the world's forests has resulted in increasing pressure on IKEA from environmental activists, and its worldwide perspective has made it a target of anti-globalization protesters. Therefore, IKEA includes issues of sustainability specifically in its CSR policies. Data Collection and Analysis We collect data for this case using various methods. To increase our familiarity with the issues, we reviewed more than 200 pieces of written documentation, including promotional materials, previous case studies, and IKEA Web sites. These data are comprehensive, particularly with respect to CSR elements and their implementation. We also rely on and refer back to this information during and following our depth interviews, which we describe next. Finally, to determine how IKEA communicates its CSR policies, we visited six stores in Belgium, France, and the Netherlands on several occasions and analyzed the 2004–2005 media campaigns by reviewing all of IKEA's 36 national and international Web sites, IKEA catalogs for each individual
country, English and French newspaper articles and advertising, television and billboard displays, and press releases from IKEA and its partner NGOs. In addition to this document-based research, we interviewed two senior IKEA managers in depth, both formally and informally. Twenty external stakeholders, who could impact IKEA's CSR policies in some way, participated in interviews as well. These stakeholders include nine NGOs (five international) that dealt with human rights and environment issues; two trade unions; one interest group for small and medium-sized enterprises; four organizations specializing in CSR consulting, promotion, and monitoring; three city councils; and an international research foundation. These latter interviews serve to corroborate or challenge the findings we obtained in our in-depth interviews with the IKEA representatives. For both types of interviews, we kept our questions deliberately broad to allow respondents as much freedom in their answers as possible (Glaser and Strauss, 1967). For the interviews within IKEA, the questions focused on the organization's CSR commitments, the historical development of these commitments, issues raised by NGOs and trade unions, and CSR communication and marketing policies. The questions for the external stakeholders focused on the nature of the relationship between the stakeholder and IKEA, the stakeholder's perception and knowledge of IKEA's CSR commitments and communication, and the stakeholder's opinion about IKEA's CSR policies. Our interviews continued until we reached saturation, that is, when extra interviews yielded no more additional insights (Strauss and Corbin, 1998). Each interview lasted an average of one hour (range: 30 minutes to two hours). This process resulted in a transcript of 193 pages (12point font, single spaced). The IKEA interviewees, who had been involved in developing the organization's CSR policies, represent the richest source of information for investigating the issues at hand, whereas the external stakeholders make appropriate interviewees because of their work in dealing with a variety of CSR issues and, more particularly, because they had been critical of IKEA's CSR policies. To obtain customer feedback, we distributed a self-administered questionnaire to 150 customers who had visited at least one IKEA store in the previous 36 months. We handed out the questionnaire to the general public—people in offices, on trains, or queuing (convenience sample). Our goal with this questionnaire is to determine how much customers know about IKEA's CSR policies, how they come to know about these policies, how they perceive these policies, and what their attitudes toward these policies are. Together, these data collection methods improve the robustness of our findings, compensate for the weaknesses of any one data collection method, improve the quality of our final interpretation, and help ensure triangulation (Jick, 1979; Strauss and Corbin, 1998; Yin, 2002). The unit of analysis we use is IKEA's CSR policies, commitment, and communication. Therefore, we combine the information from each set of interviews and the secondary sources into one final case manuscript.
Next, we analyzed the case using Eisenhardt's (1989) method. That is, we first attempt to gain a richer understanding of the process IKEA underwent in terms of its CSR. Therefore, we create a timeline that includes information about how different stakeholders have influenced its CSR policies. Using open and axial coding procedures, we elaborate on the emergent theoretical categories (Strauss and Corbin, 1998). Throughout the analysis, we tacked back and forward between the literature on CSR and the data, which enables us to develop five theoretical categories and 141 subcategories (Spiggle, 1994). In addition, our analysis relies on ATLAS-Ti to keep track of the data, facilitate coding, and check for relationships. Throughout this study, we adopted several methods to improve the quality of the research. Experts helped select the case organization and the external stakeholders; three independent researchers provided their individual interpretations of the findings; we conducted multiple interviews; and interviewees could provide feedback on our initial findings, all of which reinforces the reliability of our study. Although all the authors performed independent coding of the transcripts, the interviews were conducted by the same interviewer, which reduces the potential for bias (Lincoln and Guba, 1985; Strauss and Corbin, 1998). Findings Although IKEA's leitmotiv historically has been cost effectiveness, the organization has now added the element of altruism, so that its guiding philosophy is to "create a better everyday life for the many people […] and to offer a wide range of home furnishings with good design and function at prices so low that as many people as possible will be able to afford them" (IKEA UK website, 2006). IKEA's stated ambition is to consider and integrate social and environmental considerations into its daily operations to "make products which have minimum impact on the environment and [...] manufacture them in a socially responsible way" (IKEA Group, 2006, p. 2). These CSR policies, which IKEA established for itself, derive from prevailing norms and institutional relationships common in Nordic countries, which culturally tend to think of ethical values, politics, and economics as constituents of a virtuous circle (Christopherson and Lillie, 2005). Through this virtuous circle, IKEA believes it can reduce the conflict between CSR and profit functions. STAKEHOLDERS IN THE CSR DEVELOPMENT PROCESS IKEA receives pressure from various external stakeholders. To a large extent, this pressure exists because IKEA's business is modeled on cost effectiveness and the organization engages in activities in developing countries. Since the end of the 1980s, these policies have resulted in criticism from NGOs in particular. For example, IKEA has come under scrutiny with regard to child labor in Asia, working conditions in Eastern Europe and Asia, and wood from questionable forests in Indonesia and Russia. For an overview of the impact of various external stakeholders on the development of IKEA's CSR policies, please refer to Figures 1a and 1b.
Figure 1a. External stakeholders' influence on the development of IKEA's CSR policies 1981-1998 (first code of conduct)
Main criticisms and scandals faced by IKEA from 1980 to 1998
1981: Target of an aggressive public campaign in Denmark regarding the presence of high levels of formaldehyde in particleboards. Sued and condemned for violating Danish law. Temporary 20% loss of sales in Danish market
Reactions to critical situations and main steps in CSR policies development from 1981 to 1998
1981: Development of a large testing laboratory for products. Introduction of new supplier requirements. Discussions with BASF and ICI in Germany to find ways to reduce formaldehyde exposure in IKEA products
Late 1980s: Intensification of criticism about environmentally related issues like packaging wastes and use of PVC plastics that contain dioxins (Germany); catalogs criticized for amount of waste generated inproduction, use of chlorinebleached paper, andnumber of trees felled each year to produce
1990-91: internal report about environmental impact of IKEA’s activities: IKEA is described as an "environmental gangster.” Officially adopts first environmental policy in 1991.
1992(a): Swedish documentary blames IKEA for child labour in Pakistani factories and shows on television children chained to weaving machines.
1991: IKEA, with the help of Greenpeace , prints millions of IKEA catalogs on chlorine-free paper. Also with Greenpeace on PVC issue.
1992(b): New, unexpected crisis linked to formaldehyde in Germany regarding the world-famous Billy Bookshelf. Media coverage is worldwide with significant impacts. Costs are estimated at $ 6.5 million from product recalls alone. It costs IKEA and suppliers more than $10 million.
1992(a): New business manager, Marianne Barner, halts contracts with the implicated Pakistani supplier and adds a standard clause forbidding child labour in suppliers’ contracts. She travels to Pakistan, India, and Nepal to check work conditions, andmeet collaborators in buying offices, suppliers, and NGO representatives. Cooperation with Save the Children launched to find solutions to child labour issues IKEA faces.
1994: German documentary claims 5–6 year old children have made IKEA-carpets near Delhi, India, since 1990. The story hits the international press before the claims are refuted as fabrications. The impact in terms of public relations is severe. Different stakeholder groups (press, unions, consumers, human rights activists) initiate investigations into IKEA’s practices and call for boycotts and demonstrations.
1992(b): Deepens joint efforts with The Natural Step, initiated in 1990. Environment al policy transformed to a plan of action with concrete practices. The developed structures seem efficient.
1994: Barner immediately fires the Indian company. Management feels pressure and demands the opinions of experts, assistance unions, and international organizations such as ILO and UNICEF.
1997(a): Another document ary reports underage children work in factories in Vietnam and the Philippines that supply IKEA.
1997(b): New allegations about two Indian textile suppliers that would have recourse to child labour. Evidence of abuses is not officially provided.
1997-98(a): Contract with Philippian supplier suspended when it refuses to cooperate and improve work conditions in its factory. Cooperation with UNICEF deepens.
1998: Nordic Woodworkers Federation, with direct links to IFBWW, threatens to organize a boycott of IKEA after a Sunday Times article highlights lamentable work conditions in sawmills and factories of IKEA suppliers.
1997(b): Monitoring of minimum working age tightened by IKEA.
1998: Unions require meeting with IKEA executives. At first sceptical, IKEA agrees to adopt ILO standards for working conditions. An agreement with the IFBWW is signed that covers all subsidiaries of the IKEA group and constitutes its first code of conduct.
Figure 1b. External stakeholders' influence on the development of IKEA's CSR policies from 1998 to 2006
Main criticisms and scandals faced by IKEA from 1998 to
1998-1999: By end of the 1990’s, pressures from environmental groups intensify, especially over wood procurements issues in Russia and Indonesia. A lack of clarity and transparency is underlined by, among others, Robin Wood in Germany (which employs spectacular actions) and Greenpeace.
Reactions to critical situations and main steps in CSR policies developme nt from
1998: IKEA initiates partnership with UNICEF to prevent child labour and accompanies families in their fight against poverty in India.
1999: IKEA in the centre of a French crisis when a polemic sent by the French marketing director mentions it is preferable not to recruit coloured staff for some functions related to direct client contact.
1998-99: After launching, with a Malaysian foundation, the Sow a Seed project to replant millions of trees on Borneo, IKEA works with Greenpeace and officially commits in 1999 to phase out all purchases of products from unknown sources of wood to ensure that no wood originates from ancient forests. Only exception is wood from ancient forests coming from FSC-certified forestry.
2003: Dutch Foundation SOMO publishes a study of labour conditions in IKEA’s supply chain, commissioned by the Dutch union FNV. The report details several violations of IKEA’s code of conduct in different factories, essentially at the social level but also at an environmental sense (mainly wage levels, freedom of association, work hours, etc.). Impact of the study is curiously low.
2000: IKEA injects $500,000 into UNICEF programs aimed at helping children in India and vaccination projects in collaboration with WHO.
2000: IKEA engages with Global Forest Watch (World Resource Institute) to map ancient forests and propels the project by funding it with $2.5 million.
2001: IKEA adopts its own IWAY voluntary code of conduct pertaining to social and environment al matters.
2002: WWF and IKEA join forces in a formal partnership to cooperate in support of responsible forestry at a worldwide level. Forest certification and education in forestry management constitute the heart of the commitments.
2003: IKEA launches a twoyear global causerelated marketing operation with UNICEF to finance projects in Uganda and Angola.
2005-2006: IKEA the target of a public interpellation campaign by Oxfam Belgium, stressing poor wage levels in Southeast Asia and IKEA consumption model. Book is published in 2006: IKEA: Models to assemble, a model to dismantle.
2000-2004: In 2003-2004, IKEA launches several cause-related marketing operations with Save the Children (STC) in different countries. After 2000, IKEA funds STC projects in Kosovo ($500,000 in 2004), contributes to studies in Vietnam and Bangladesh, and supports STC literacy programs in the US.
2004: IKEA joins in the UN’s Global Compact
Three elements are apparent from Figures 1a and 1b: (1) the role of external stakeholders in developing socially and environmentally responsible business practices and codes of conduct (cf. Maignan and McAlister, 2003), (2) the role of NGOs in implementing and enforcing CSR agreements and codes of conduct (cf. Doh and Guay, 2004), and (3) the mix of reactive and proactive actions taken by IKEA. We consider each element next. Role of External Stakeholders External stakeholders play a key part in developing IKEA's CSR policies. For example, the International Federation of Building and Wood Workers (IFBWW) prompted changes to its code of conduct in 1998, based on an agreement reached in 1996 between IKEA and IFBWW through negotiations among representatives from Greenpeace, Save the Children, and the World Wildlife Fund (WWF). To gain knowledge about developments in the CSR field and facilitate its CSR commitments, IKEA has established relationships with various NGOs (see Figures 1a and 1b). For example, because wood represents 70 percent of IKEA's raw materials, environmental issues related to forestry rank among the organization's major concerns, as evidenced by its certification efforts, planning operations, and collaborations with Global Forest Watch, Greenpeace, a Swedish university, and the WWF. In the area of child labor, IKEA works with UNICEF and Save the Children and, as part of this process, has created a position within its organization that deals specifically with this issue. Role of NGOs IKEA's local purchasing departments monitor the implementation of their CSR agreements and codes of conduct (the IKEA Way or "IWAY"), such as whether suppliers adhere to IKEA's requirements, while its internal compliance and monitoring group follows up with developments on a global basis. Monitoring is verified by independent auditing companies that simultaneously play consultancy roles for implementing codes of conduct (PriceWaterhouseCoopers, 2006). Third-party verification represents an important element of the internal audit process. In biannual meetings, IKEA communicates these audit results to the IFBWW and, in a reduced version, to the wider public through its annual social and environmental report. Independent organizations continuously assess and challenge the social and environmental measures implemented by IKEA; for example, Greenpeace, Robin Wood (a German environmental protection NGO), and SOMO (a Dutch research foundation) have repeatedly attacked IKEA for not respecting its environmental, social, and human rights responsibilities. As recently as 2006, studies identified serious problems in the way that IKEA implemented its codes of conduct, such as in terms of freedom of association and collective bargaining, salary levels, work conditions, and workers' rights (Bailly et al., 2006; de Haan and Oldenziel, 2003). Reactive and Proactive Actions taken by IKEA As a result of these external pressures, IKEA has integrated its CSR objectives more systematically into its management philosophy and business operations. For example, IKEA decided to adapt in a response to social demands from public regulators (e.g., in Denmark and Germany), trade 12
unions (e.g., IFBWW, FNV), the media, and NGOs (e.g., Greenpeace, Robin Wood, Save the Children). Our findings demonstrate that IKEA reacts quickly when its image or reputation is challenged. For example, at the beginning of the 1980s, a high proportion of poisonous substances was found in IKEA particleboards sold in Denmark. The same year, IKEA's management established large-scale testing of its products and introduced new requirements for its suppliers. Because of its success in responding to such external criticism, IKEA has been nicknamed the "Teflon company" (Miller, 2001). However, IKEA also proactively seeks to anticipate stakeholders' demands. At the beginning of the 1990s, to transform its environmental policy into an efficient plan of action with concrete business practices, IKEA initiated a collaboration with Natural Step, an international, not-for-profit, research, educational, and advisory organization that uses scientifically developed system frameworks to help individuals, organizations, and communities take meaningful steps toward sustainability. IKEA also is a member of various business networks, including Business for Social Responsibility and Global Compact. For these and other partnerships, collaborations, and engagements we refer to Table 1. Table 1. IKEA's main partnerships, collaborations, and engagements Environmental
Social and Humanitarian
Respect Table Network
In 2002, IKEA and the WWF joined forces in a formalized partnership to cooperate, develop, and implement responsible forestry management practices in different parts of the world. The cooperation involves informing and educating about responsible forestry management practices.
In 1998, IKEA engaged in a partnership with UNICEF to prevent child labor and support families in their fight against poverty. The work involves 650 villages in Uttar Pradesh in northern India. Cause-related marketing – sometimes involving all IKEA stores – to finance child-related programs in Africa. UNICEF postcards sold in IKEA stores. www.unicef.org.
RTN is a discussion forum on social and environmental themes defining itself as "a forum for corporate leaders who actively seek to create a new role for business governance in addressing common challenges and finding common solutions by linking the power of markets with universal principles for a more just and sustainable world". It includes companies such as ABB, DHL, HP, Interface, MTV, and NCC. www.respecteurope.org.
Global Forest Watch
Save the Children
At the beginning of 2000, IKEA made a donation of more than US$2.5 million to help launch Global Forest Watch, a project of the World Resource Institute, with the objective of mapping intact natural forests. This collaboration still operates.
Save the Children contributed to the elaboration of the code of conduct concerning child labor issues. Collaborations in Vietnam and Bangladesh through studies aiming at learning more about child labor practices and their implications. IKEA contributed through its donations to Save the Children educative projects in Kosovo and the United States. Joint cause-related marketing operations. www.savethechildren.net.
Business Leaders' Initiatives on Climate Change is a RTNrelated international program for industry leaders whose members officially and actively encourage their collaborators and suppliers to reduce their waste emissions and energy consumption. It includes companies such as IVECO, McDonald's Europe, MAERSK, and DHL.
Social and Humanitarian
UN Global Compact
IKEA and Greenpeace are not engaged in formalized collaborative actions relative to particular projects but in a dialogue process, particularly with regard to forestry. In the 1990s, collaborations on the elaboration of a chlorine-free paper catalogue, reducing PVC in products, and an agreement obtained regarding responsible forestry represented several significant steps in developing the dialogue between both organizations.
IKEA signed in 1998 an agreement with the International Federation of Building and Wood Workers (IFBWW). The agreement concerned working conditions and rights of the workers, with a child labor code of conduct in the appendix. This agreement still applies and gave birth to IKEA's code of conduct: "The IKEA way on Purchasing Home Furniture." IFBWW is the only "external" organization officially receiving information related to the implementation of the code of conduct through biannual meetings. www.ifbww.org.
The United Nations Global Compact officially brings companies together with UN agencies, labor, civil society, and governments to advance universal environmental and social principles to foster a more sustainable and inclusive world economy. Global Compact corporate partners include Shell, BP, Nike, Novartis, Aventis, Bayer, BASF, and DaimlerChrysler.
Swedish University of Agronomy
IKEA funds a scholarship allowing students from Russia, Poland, and the Baltic countries to take part in a sylviculture program at the Swedish university of Alnarp.
Business for Social Responsibility is a global organization that helps member companies achieve success in ways that respect ethical values, people, communities, and the environment. BSR provides information, tools, training, and advisory services to make CSR an integral part of business operations and strategies. It includes participants such as Coca-Cola, BP, Chiquita, H&M, Wal-Mart, and McDonald's. www.bsr.org.
CSR COMMUNICATION Our analysis of IKEA's advertising to the general public through the media indicates that the organization seldom includes direct references to its CSR commitments. There is, for example, no mention of CSR in the nine key messages IKEA conveys to its customers: the "IKEA concept," the "IKEA product range," "home furnishing specialist," "low price," "function," the "right quality," "convenient shopping," a "day out for the whole family," and "Swedish" (IKEA UK website, 2006; Lewis, 2005). Instead, IKEA stresses its emphasis on the family and the environment, its Swedish roots, and, in turn, the solidarity and egalitarianism traditionally associated with Sweden. Explains Jean-Louis Baillot, CEO of IKEA France, "people consider that IKEA has an environmental behavior" because of its Scandinavian roots, which means that "it is ultimately not inevitably necessary to speak about it" (Comité 21, 2004). 14
Traditional Means of Communication Prior to 2005, IKEA used its stores, product catalogs, and product packaging to communicate its CSR policies to the public. For example, the stores' brochures contained information relating to various products' environmental impact, and the 2004 catalog included two pages that centered on CSR themes. Inside stores, customers could also read about IKEA's cause-related marketing campaigns and cooperative actions with Save the Children and UNICEF, as well as review "green panels" that advised them about good consumption practices. Since 2005 though, such descriptions of IKEA's environmental and social efforts no longer appear in catalogs. In most countries, the only ways to find information about the organization's CSR polices, codes of conduct, brochures, and annual reports are through the national IKEA Web sites. Specific Means of Communication IKEA's first social and environmental responsibility report was published in 2004 (for the year 2003). This report described how IKEA had incorporated CSR into its entire supply chain and its collaboration with various NGOs. Anders Dhalvig, CEO of IKEA, declared that IKEA's partners "have been eager to start working seriously with these issues and have progressed step by step, but it is only now, when we have accomplished a little more, that it seems right to start telling the rest of the world about it." The CEO also stressed that it was best to remain humble about what the organization had accomplished so far, "because there is so much more that still remains to be done" (IKEA Group, 2003). Overall, this first report provided transparent communication about IKEA's CSR. However, the report lists few numerical objectives and virtually no performance indicators. The 2005 and 2006 reports contain such information, though both objectives and indicators remain very general, which makes it difficult to judge the extent to which IKEA truly integrates CSR considerations into its business models. For example, its IWAY code of conduct contains several different performance levels, the first of which details the minimum requirements a supplier must meet to work with IKEA. But published reports do not clearly indicate the level of responsibility the organization and its suppliers have achieved in different areas. Approximations appear to be the rule rather than the exception in these reports, as illustrated by the following quote from the 2005 CSR report: Most suppliers are in compliance with a majority of the issues. An average IKEA supplier fulfils approximately 90 percent of the requirements. 47 percent of IKEA suppliers fulfill all the 90 criteria in IWAY. Most of the violations against IWAY occur in a few areas (IKEA Group, 2006, p. 26). When it comes to solutions it has implemented, IKEA remains vague in its descriptions, though it claims to have set up more CSR objectives and employ additional CSR indicators to guide its internal operations. On the basis of this description, the reports might best be regarded as a specific means of communicating with the general public.
Why has IKEA been so reluctant to place social and environmental labels on its products, even though the products meet criteria for products made of tropical wood materials? Our findings suggest the rationale is not rooted in cost and administrative considerations but rather in the organization's consciousness that the IKEA brand itself should "be a guarantee of environmental consideration and social responsibility" (IKEA Group, 2006, p. 11). Another reason IKEA has chosen to be cautious in communicating about its CSR is to avoid promoting "itself as a target for anti-globalization organizations who focus on big brand names like ours despite our many community- and environment-friendly policies and contributions" (Marianne Barner, qtd. in Lewis, 2005, p. 175). The next logical question pertains to perceptions of IKEA's communication. We find that the organization has not developed a particularly structured dialogue with its external stakeholders. Although IKEA states it collaborates with various external stakeholders throughout the world, NGOs and trade unions (except IFBWW) are not invited to participate in monitoring and auditing IKEA's CSR policies. Instead, these organizations receive completed audits and reports containing CSR information. Thus, these stakeholders (but not consumers) generally perceive a lack of transparency or clarity in relation to IKEA's CSR communication and consider it unsystematic, overly general, and imprecise. In contrast, IKEA's communication with international partners or formal or legal partners, such as city councils and governmental organizations, is more transparent and comprehensive. Finally, though 40 percent of the surveyed consumers claim they have received information relating to IKEA and its CSR achievements, and 77 percent say they do not know much about IKEA's CSR, these stakeholders rarely ask for additional CSR communication. Impact of CSR Commitments and Communication on Diverse Stakeholders Although generally appreciated, IKEA's efforts to reduce the negative environmental impact of itself and its products seem too slow to many stakeholders. Greenpeace, Robin Wood, and other NGOs specifically assert that IKEA could be clearer and more transparent in communicating its CSR commitments. According to one researcher with an organization that analyzes multinational organizations, including IKEA: I would like to know what they are doing actually, but it's not very transparent, not even when we have spoken to them. They were open, but we didn't know what we could expect from them, they were not really clear. Another observer, a member of an German organization that advocates forest protection and has criticized IKEA's environmental practices, characterizes the organization's communication as: A lot of words, but not very concrete. I'm not sure. But they communicate very little concrete stuff, and therefore it is hard to judge them. This is what they want. They want to be in the grey zone.
With regard to the supply chain, most stakeholders perceive IKEA positively but criticize those involved in auditing and reporting. Many interviewees, such as the Belgian trade unionist quoted next, consider the inclusion of trade unions and NGOs highly important: IKEA won't work with the unions in developing its CSR policies. However, it would really be better if they did. Likewise, they don't want to work with NGOs. They work alone. Finally, the manner in which suppliers are monitored seems not fully clear or evident to IKEA's stakeholders. Frequently, IKEA receives criticism that its stores destroy the local economy and put local businesses out of work. However, stakeholders also recognize that IKEA stores offer employment and access to a commercial network. These stakeholders remain concerned though about IKEA's labor contracts, which often offer work only when there is an actual need for it. On a general level, our investigation suggests stakeholders want to support IKEA in its CSR implementation efforts, even though most of them remain skeptical about its CSR commitments and communications. In Table 2, we provide a summary of our findings; we also consider each in turn in Table 3.
Table 2. External stakeholders' perceptions and attitude toward IKEA's CSR policies Type of Stakeholder
Perception of IKEA's CSR Commitments
Perception of IKEA's CSR Communication
Attitude to IKEA
NGOs with formalized partnerships or collaboration with IKEA
Positive IKEA considered proactive BUT - Too slow in implementation
Positive High perceived credibility BUT Too sporadic communication with the general public **
- Supportive - IKEA considered a stellar organization BUT - Still critical
Other NGOs that only sometimes have partnerships with IKEA
- Relatively positive BUT - Too slow in implementation - Not enough involvement of stakeholders in the process
*** Lack of transparency BUT Too sporadic communication with the general public
- Supportive BUT - Still critical - Sometimes skeptical
Organization s that have publicly criticized IKEA about CSR issues
Public authorities (Belgium)
- Sincere about its commitments BUT - Too slow in implementation - Dangerous strategic option - IKEA considered as a reactive organization *
- Lack of transparency - Lack of independent monitoring
- Demanding - Skeptical - Protesting, expressing opposition to IKEA
- Positive - IKEA considered proactive
- Positive - Perceived transparency - High perceived credibility
- Supportive BUT - Still demanding
- Relatively positive BUT - Too slow in implementation - Not enough involvement of stakeholders in the process
- High perceived credibility BUT - Lack of transparency Too sporadic communication with the general public
- Supportive BUT - Still critical
Specialized organisms (e.g., PR, consultancy)
- Relatively positive BUT - Much more to do in the field **
- Lack of transparency Too sporadic communication with the general public - Reduced range of strategic options *
- Respectful and supportive BUT - Still skeptical **
Notes: For each stakeholder, the average estimated perception and attitude toward IKEA's CSR policies uses a scale of 0 (worst) to three (best) stars.
Table 3. Excerpts of external stakeholders' opinions about IKEA's CSR commitments Type of Stakeholder
Resulting Attitudes Toward IKEA
Formalized collaborations or partnerships
IKEA's CSR policies are good and serve as an example to other companies. They have very progressive targets and firm commitments and strategies in place to implement them.
I would say pro-active but hesitant. IKEA are not so open.
[...] Considered as a stellar example of CSR.
IKEA really has firm commitment to social and environmental issues. Compared to other companies, IKEA are actively using their CSR policies to improve their business. They are trying to create a win-win situation out of CSR. Note that IKEA's policies and commitments are considered as a stellar example of CSR.
We are not at a point to say that IKEA are doing just nice talks with us. But, how much it has already changes, I don't know. They are very careful and only say something when they can be a thousand percent sure that they can really stick to it. We still don't know how serious they are. I think we would expect more openness about how IKEA is managing its suppliers in terms of working times and conditions, salary, etc. More transparency. However, I don't feel that many companies do that.
IKEA is still supportive but, at the same time, critically watching and observing what they do. From our point of view, it requires regular assessment of the situation. Also, we continue CSR as long as we think it is valuable and that we feel some environmental and social progress on the ground. We are aware that if it turns out to be mainly a PR gimmick we would end the relation. However, we are often somewhere in a grey zone.
You can see that IKEA are trying to be a little bit better than the average. Other collaborations or partnerships (e.g., former partners, national divisions of international partners)
I think IKEA has an active approach. They draw on the knowledge of others, they engage in partnerships with NGOs that can made some of their needs materialize. It is an active approach.
I treat IKEA as any other sponsor − I distrust. That's it because if they come to us it means that they have something to hide or at least that they want to modify their image on something they don't do in a fair way.
Positive opinion, yet critical.
It's sure that we could probably say sometimes that IKEA doesn't move enough fast. I don't know exactly where they are today in terms of CSR.
I have a relatively good perception of IKEA. I know they are doing a lot of responsible work, often very beneficial, and that is not always easy. IKEA is pro-active and conscious. They find CSR important − the environment, the equilibrium between economy and ecology.
I had the feeling IKEA was on the right way, They took necessary measures, and this is what we wait for. However, now I don't really see improvements because they are not transparent. I begin to wonder.
Yes, I think that IKEA develops a CSR policy in line with what our organization expects from an organization of that scale. I think that critical-skeptical would be the most appropriate − not aggressive, not indifferent, not considered as an example. I don't think IKEA misuses our organization. I trust the cooperation between IKEA and our organization, and I don't believe it would be acceptable for us − at the international level − to develop such cooperation. But it right that sometimes that they are moving forward too slowly. We trust IKEA.
Type of Stakeholder
Resulting Attitudes Toward IKEA
Organizations that have publicly criticized IKEA about CSR issues
I think IKEA is somewhere in the middle. I think that when it comes to forestry − which is our concerns − they stay in the middle. In Germany there is a DIY organization that is quite ahead of IKEA. Other organizations are behind. I would put IKEA exactly in the middle.
I think IKEA could be better when it comes to forestry. They keep very much their image in mind and react accordingly.
Critical-skeptical − I think I would say offensive.
I think I understand IKEA much better now than before we got in contact with them.
IKEA cannot check their own labor conditions. What they call external verifications is not external. They hire them, they pay them, and they make them check their own labor conditions. Obviously, we would like another model.
In my opinion, IKEA is a multinational organization that reasons only in terms of earnings and profitability, and nothing more.
I think IKEA should state the directions where they are going. They don't. They say they are a responsible organization. That's it. I don't have the impression that much changes. I think IKEA has many problems in the supply chain, and they should really work on it. It's an irresponsible organization, a socially irresponsible organization. I think most of the work is still ahead of IKEA, but that they have taken some steps in the right direction. But it is still far away from our vision of what a real responsible organization is supposed to be.
We are not happy with the actions IKEA has taken so far. Protest, critical-skeptical. No relationship at this time. I'd like to have one with IKEA. Protesting, aggressive, and demanding.
Type of Stakeholder Public authorities (Belgium)
Neutral/Favorable Opinions It's an organization that to me has proven that they are pro-environment and that they are engaged in developing CSR. IKEA is proactive. When I say proactive, it's proactive.
Resulting Attitudes Toward IKEA
IKEA wants to respond to consumers' expectations. The important thing is then to pursue and to be more concrete, to really work on it. I would like to see it is not just window dressing. At the moment, I'm not sure if this is not the case.
Supportive. IKEA represents an opportunity for the town in terms of developing the local community
Let's say IKEA has implemented the Scandinavian philosophy. Also, they have a responsible aspect. I cannot say if it is real, however.
Very good. This has been the implementation of any business plan that was the easiest for us on all account − all because IKEA is proactive. We support IKEA, but we keep objective in our relationship with them.
At the social and socioeconomic levels, IKEA first of all brings employment, which is already valuable. Now that we have collaborated, my perception of IKEA' CSR commitments is even more favorable. I consider IKEA a lot more favorably than other organizations in the retail and furniture sectors. Unions (Belgium)
I mean that when IKEA advance something, they also do it.
A growing number of precarious jobs. Full time jobs have almost disappeared.
IKEA's CSR policy is certainly interesting because it goes deeper that in other organizations. However, it stays hidden in the sense that there is very little communication about it.
If IKEA could do without unions, they would cheerfully go without them. At a corporate level, they don't see a need for unions. In the field, it is different, however.
Overall, I have a positive image of IKEA's CSR principles and commitments.
IKEA won't work with the unions in developing its CSR policies. However, it would be really better. Likewise, they don't want to work with NGOs. They work alone. So to which extent goes the respect of the code of conduct and of the workers' rights when you work with subcontractors that subcontract to other subcontractors? It is difficult to check. This is a real problem.
We support IKEA. In a certain way, we cannot expect a lot more for what concerns CSR. Now does it meet our expectations? It is clear that we would like to see IKEA go further. At the union level, it is not a relationship of conflicts. But there is always the daily little argument.
Type of Stakeholder
Resulting Attitudes Toward IKEA
Specialized organisms (e.g., PR, consultancy)
I find it interesting that in environmental matters, IKEA have engaged in several areas that others never have. And it must be said that they cannot do everything.
The 2004 CSR report illustrates that there are good initiatives that are apparently managed with a certain level of care even if the global approach is not inevitably CSR. Therefore, it is possible that everything only depends on the willingness of the ones that must take care of this or that, and that it is not really integrated in the general orientation and management of the organization.
I would say respectful and also maybe in a certain extent considered as an example. However, it doesn't prevent one to keep a critical attitude and to cautiously consider the information brought to us or which we find.
I have the feeling that IKEA are quite less reactive, that they are more proactive than reactive. I have a relatively favorable perception of IKEA in terms of CSR matters. At a CSR level, IKEA is committed. I think IKEA develops a well founded work. It's an organization that bases its philosophy on a responsible dimension. But I think it's an organization that doesn't look for communicating or sharing its strategy, its way of working. Even if every single approach could be improved, IKEA generally is an example to follow.
CSR is more a risk management. I have the feeling that they are focused on a few points, on certain responsibilities, on the topics that are important to them. But there are other areas that would deserve to be treated and about which they are absolutely not feeling concerned.
We support IKEA even if some approaches can be improved We would appreciate having IKEA in our network. We are opened to a lot of different types of organizations. It is sure that IKEA has a strategy that could be interesting for an organization like ours.
But I think that in details, there are better to do as well on the field than on the communication side. But it is a personal appreciation.
Consumers Although they feel they have little knowledge of IKEA's CSR commitments, consumers consider those commitments somewhat positively, and only 5.4 percent had formed unfavorable perceptions of IKEA's CSR initiatives. Our survey also identifies that consumers exposed to communication from IKEA about its CSR initiatives hold a more favorable opinion of IKEA's CSR than do other consumers (t-test, sig.: 0.017), in support of the importance of communicating CSR. Our analysis also shows that consumers who most associate social equity, ecology, responsibility, and ethics with the image of Sweden (N = 68) have a more favorable opinion of IKEA's CSR than do consumers (N = 60) who least associate these terms with Sweden (t-test, sig.: 0.0009). This difference appears crucial, in that 95 percent of the surveyed consumers actually named Sweden as the country of origin for IKEA in a multiple choice question. Also, though 40.6 percent of the surveyed customers indicated they would boycott IKEA if the organization performed badly on the CSR indicators they considered important, a positive impression 22
about CSR initiatives was not sufficient reason for these consumers to buy IKEA's products. We cannot establish any significant relationship between appreciation for IKEA's CSR policies and behavioral intentions toward the brand, which supports the proposition that socially ethical consumption is more a matter of principles than actual practice. Long-term Partners Those NGOs and other organizations that collaborate, often internationally and formally, with IKEA on social, socioeconomic, and environmental matters have some access to privileged information that is unavailable to the general public. Therefore, these partners maintain a positive view of IKEA's CSR commitments and regard it as a proactive organization that does not want to exploit its image as a responsible corporate citizen: IKEA's CSR policies are good and serve as an example for other companies. They have very progressive targets, and a firm commitment and strategies in place to implement them (representative of an international nature protection organization). Although IKEA has not realized its CSR policies fully, these partners believe the organization is on the right track, and they […] expect more openness about how they are managing their suppliers in terms of working times, work conditions, salary, etc. More transparency. But, I don't feel that many companies do that (representative of the Danish national division of an international child protection organization). Partners also support IKEA's attitude toward CSR but simultaneously stress that they continue to observe the organization's CSR commitment and communication: I believe they are on their way, but at the moment we would welcome more detailed communication on progress toward their social and environmental goals (representative of an international nature organization). Organizations other than Partners In the past, organizations such as Oxfam Belgium, Robin Wood, and Somo, with which IKEA has no partnerships, have criticized IKEA regarding its CSR commitments. Believing that much work still needs to be accomplished, these organizations blame IKEA's CSR guidelines for being unclear and its implementation for being too slow. More important, they regard the slow implementation of CSR policies as a sign of IKEA's lack of determination: I think most of the work is still ahead of them and that they have taken some steps in the right direction. But it is still far away from our vision of what a really responsible corporation is supposed to be (campaigner from an international nature protection organization that has developed a regular, but informal dialogue with IKEA since the beginning of the 1990s). 23
In contrast with long-term partners, most of these other organizations regard IKEA as reacting more than acting when it comes to CSR: They can't check their own labor conditions. What they call external verifications is not external. They hire them, they pay them, and they make them check their own labor. Obviously we would like another model as sometimes in other industries (researcher with an organization that analyzes multinational companies' activities and IKEA in particular). However, similar to long-term partners, other organizations are skeptical about IKEA's CSR communication, especially when it comes to transparency: I would ask them to be more transparent.... I think that for a multinational organization like IKEA, which is sourcing all over the world, the customer should have the possibility to check what is going on in the shops. Also, the organization that claims to be socially and environmentally responsible should give the customer the opportunity to verify this (campaigner with a German forest protection organization that has criticized IKEA's environmental practices). City Councils Because of its socioeconomic impact, most city councils favor IKEA setting up stores in their neighborhood; any potential loss for the traditional socioeconomic network gets compensated for by the creation of economic clusters around IKEA's massive stores. As one member of a Belgian economic affairs committed summarized it, "At the social and socioeconomic levels, they first bring employment, which is valuable." IKEA's presence affects not only the level of employment (particularly among unskilled workers) but also regional visibility and commercial activities. Furthermore, city councils consider IKEA superior to other large organizations in terms of how it deals with social and environmental issues: It's an organization that has proved to me, with facts, that they are for the environment and that they are engaged. I consider IKEA a lot more favorably than other organizations in the retail and in the furniture sectors (representative of a Belgian committee in charge of environmental and socioeconomic permits). Trade Unions Trade union representatives working with IKEA regard the organization's CSR policies as more developed than those of other organizations. But they also consider IKEA's communication about its CSR policies insufficient: The CSR policies are certainly interesting because they go deeper than in other organizations. But, they stay hidden, in the way that there is very little communication about them (Belgian trade unionist). These stakeholders want IKEA to develop their CSR policies further as well:
In a certain way, we can't expect a lot more in terms of CSR. Now, does it meet our expectations? It is clear that we would like to see them go further (Belgian trade unionist). Overall, the trade union representatives support and encourage IKEA in its CSR commitments, though they maintain their somewhat critical attitude. Organizations S§pecializing in CSR Many organizations that specialize in CSR consulting, promotion, and monitoring indicate a positive view of IKEA. They share the feeling that, when it comes to CSR, IKEA is more proactive than reactive, though they challenge the organization for focusing on very specific CSR issues, such as child labor and environmental concerns, at the expense of other issues, such as human resource management and workers' rights in developing countries. Similar to other stakeholders, these organizations also see weaknesses in IKEA's communication efforts: They have much to develop when it comes to the interface with the consumers, on the marketing side, because they almost don’t speak. Also, what they say seems to generate questions and, potentially, controversies (French senior business consultant specializing in sustainable development issues). These organizations also regret that IKEA rarely partakes in local programs designed to share best practices in CSR. Although IKEA plays an active part in large, international, CSR-oriented networks, the organization still is perceived as weak in this area, as: … an organization that bases its philosophy around a responsible dimension, which sees itself as really responsible. But, I think it's an organization that doesn't look for communicating or sharing its strategy, its way of working (director of a European business and society network). Even despite these complaints, these organizations generally respect IKEA for its CSR commitments. This contrast among different stakeholders clearly demonstrates that, on the one hand, NGOs, city councils, and trade unions maintain positive attitudes toward IKEA and its CSR commitments, largely because they stay in regular and direct contact with IKEA regarding social or environmental issues. On the other hand, other organizations, which have publicly criticized IKEA about CSR-related issues, express relatively serious worries and doubts about its implementation of its CSR commitments; some (former) partners share this view as well. Quite a few stakeholder groups express a critical view of IKEA's CSR communication and the transparency of this communication. This critique results in a skeptical attitude, especially if the stakeholder does not engage in direct dialogue with IKEA.
MANAGERIAL IMPLICATIONS This study examines how IKEA commits itself to CSR and how it communicates its policies to multiple stakeholders. In particular, we identify the important role that stakeholders play in IKEA's CSR policies and the added value associated with CSR commitment and communication. We also note that IKEA often develops its CSR policies in response to criticism. On the basis of the case study findings and our analysis of these findings, we draw several key managerial implications. Analyzing changes in the organization's external environment, identifying key stakeholders, and regarding CSR as a promising path Their increasing dependence on financial investors' expectations about their performance and public opinion means that organizations must demonstrate their thorough understanding of the changes in their external environments. In particular, organizations must be aware of who their stakeholders are and what expectations they hold. Our case study reveals that IKEA has faced many potential crises, including those related to work safety, wood from certified sustainable forests, and CO2 emission levels, which prompted it to engage in discussions and negotiations with trade unions, its supplier network, NGOs, and the media. In dealing with these different crises, IKEA has found that its CSR can deliver promising solutions and ultimately lead to better corporate performance. Including, engaging, and integrating external stakeholders in CSR policies By letting IKEA know how they perceive the organization, whether by criticizing it publicly or entering into a collaborative, constructive relationship with it, external stakeholders have influenced IKEA's CSR policies significantly at various times. In response to external stakeholders' expectations or requirements, IKEA has changed its business practices. In some cases, IKEA has been quick to anticipate demands that external stakeholders may place on the organization, whereas in other cases, it has resolved a situation or a problem successfully after the crisis occurred and used communication to inform concerned stakeholders how it was dealing with the problem. IKEA's strategy thus involves carefully managing its CSR commitments in a strategic manner. Initially reactive to CSR complaints, the organization has gradually increased its proactive policies and coupled them with reactive responses when needed. This dual strategy partially explains why IKEA experiences crises but never has had to endure them for a prolonged period. Communicating with external stakeholders using appropriate tools IKEA has not felt the need to advertise its CSR commitments; rather than relying on advertising rhetoric, it trusts in factual information. In addition, IKEA uses appealing elements, such as family, cultural, and ethical values, to portray its CSR commitments. Furthermore, IKEA carefully and efficiently maintains its image, then selects some specific CSR commitments, such as children's rights and reduced environmental impact, to communicate. With regard to organizational and institutional stakeholders, IKEA uses specifically adapted communication means, such as its annual CSR report. Our findings 26
highlight the complexity associated with reaching decisions about the nature and level of communication. For example, the need to communicate varies depending on the type of stakeholder and the importance that the stakeholder places on CSR, as well as the stakeholder's potential influence. In the case of IKEA, NGOs and trade unions have been more influential than consumers, so communication with these external stakeholders adds more value. Transparent communications with external stakeholders Skepticism takes a central role in stakeholders' perceptions of and attitudes toward an organization. Therefore, modern organizations absolutely must engage in transparent dialogue with their stakeholders. When they do so, according to our findings, stakeholders become less skeptical about and exhibit a more positive attitude toward the organization. Modest approach: Involving external stakeholders in monitoring and communicating achievements Although its commitment to CSR and attempts to communicate that commitment positively influence IKEA's image in the most cases, its decision to keep surveys confidential and exclude most external stakeholders from implementing and monitoring different CSR initiatives means it has missed some opportunities to improve its CSR policies. Organizations must realize that engaging with stakeholders in a constructive manner requires both time and effort. In the case of IKEA, for example, the organization paid considerable attention to its relationships with WWF and UNICEF. The parties entered into an ongoing dialogue, trusted each other, and made compromises along the way, resulting in highly successful relationships. This example demonstrates the importance of involving external stakeholders in the monitoring process, which indicates the organization is willing to change its CSR policies and thereby signals its credibility to the outside world. Similarly important is the organization's voluntary communication of its progress, and what remains to be achieved, as it implements its CSR policies. Organizations should avoid being overly modest in their communication, as IKEA often has been in the past, because such coyness could be considered an attempt to fool external stakeholders, which only generates suspicion and unwanted scrutiny. CONTINUOUSLY DEVELOPING CSR POLICIES The developments that have taken place in IKEA's external environment highlight the need to reconsider CSR policies regularly and through dialogue with the organization's various stakeholders, who want to be kept informed on how its commitments to CSR are being honored or improved. If such adaptations do not occur, organizations risk significant criticism. To achieve successful communication, organizations should integrate external stakeholders in the way we depict in Figure 2. First, by including a feedback loop for stakeholders' perceptions of the organization, organizations acknowledge that their CSR policy involves a continuous process. Second, the framework awards a central role to external stakeholders whenever organizations revisit their CSR policies or communicate with the external
environment. Third, the dialogue between the organization and its stakeholders must be transparent and constructive. Figure 2. External stakeholders' role in the integration and development of IKEA's CSR policies
Pressure from the external environment
Management philosophy and business idea
Organizational culture and vision External sources of information about organizations
Recognizing CSR within the organization
Strategic response of the organization
Implementation of CSR
Communication on CSR
Transparency of the stakeholder dialogue
Feedback loop The stakeholders' perceptions and attitudes of the organization's CSR policies
CONCLUSIONS AND DISCUSSIONS Drawing from our development of the case, we outline some key strategic implications for IKEA and organizations interested in CSR in general. The effective influence of stakeholders in the CSR development process and the variability of their perceptions about CSR activities and communication should prompt researchers to analyze CSR development issues and conduct impact analyses in a more comprehensive manner than currently exists. The crucial role of stakeholders' differential perceptions about the transparency and credibility of information about an organization's CSR commitments should remain central to any research effort; thus, our identification of different stakeholders' unique attitudes toward IKEA represents an important contribution. As does most research, this study has several limitations that affect our interpretation of the findings and suggest directions for further research. First, our study is based on a single-case approach. Second, though we interviewed stakeholders from various European countries, the Belgian context predominates in the interviews of union representatives and local authorities and therefore may influence or bias the analysis. In addition, though we gathered information from a representative sample of external stakeholders, we could not address every category of stakeholder. Third, we integrate end customer input only through surveys. Direct end customer input, particularly with regard to ethical attributions, could increase the validity of our customer value analysis model. Fourth, our research is limited to an a posteriori analysis of CSR policies in a particular industry, which does not allow us to observe the formation or shifts in the key stakeholders' perceptions and attitudes directly. Real time and longitudinal data, rather than historical information and interviewee recall, would therefore extend our study effectively. Moreover, follow-up case studies that address the entire CSR implementation cycle, as well as other industry contexts, are needed to generalize our results and establish a comprehensive framework of CSR commitments and communication. Further research also might consider additional cases to highlight any similarities and differences across cases and possible reasons for those differences. For example, researchers might analyze different organizations in different sectors to distinguish the roles of the content and nature of CSR policies, an organization's historical background in CSR in terms of stakeholder perceptions and attitudes, and the organization's origin, as well as the respective influences of perceived CSR levels and CSR communication alternatives. Other potential future research avenues include a comparative analysis of the role of various stakeholders in the organization's development of its CSR policies. In this sense, it would be worthwhile to evaluate comprehensively and systematically the influence of different stakeholder groups on organizational changes demanded by the integration of CSR principles into corporate strategy. Related CSR communicational choices thus might be revised and tailored to the expectations of each particular category of stakeholders. Finally, the impact of organizational and strategic changes on 29
the perceptions and attitudes of various stakeholders should be highlighted during different steps of the integration process. ACKNOWLEDGMENTS The authors contributed equally. They offer our sincere thanks to the organizations that participated in the study. They also thank Martin Hingley and Joëlle Vanhamme for critical comments to an earlier version of this paper.
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THE BUSINESS SCHOOL RESEARCH MEMORANDUM SERIES PLEASE NOTE THAT SOME OF THESE ARE AVAILABLE AT: http://www.hull.ac.uk/hubs/05/research/rm.htm 69 68 67
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P Drake, S Clarke (2007) Embedding a Systems/Lifeworld Approach in Information Security (Risk) Management and Broadening its Application A Lindgreen, V Swaen, W S Johnston (2007) Corporate Social Responsibility: an empirical investigation of US organisations J Headlam-Wells, J Craig, J Gosland, J Holdsworth (2007) Mentoring for Management Development: An evaluation of new communication models for E-mentoring A Dobele, A Lindgreen, M. Beverland, J Vanhamme, R van Wijk (2007) Why Pass on Viral Messages? Because they connect emotionally M Beverland, J Napoli, A Lindgreen (2007) Industrial Global Brand Leadership: a capabilities view K R Bhattarai (2007) Capital Accumulation, Growth and Redistribution: General equilibrium impacts of energy and pollution taxes in the UK A Rashid Malik (2007) The WTO Agreement on Textile and Clothing (ATC): An Impact Analysis with Reference to Pakistan L Han (2007) Signalling Process and Self-Selection Mechanism in Entrepreneurial Finance K R Bhattarai (2007) Is There Any Evidence on Unemployment-Inflation Trade-off in OECD Countries in Recent Years? J B Simon (2006) A Framework for Business Research: Using the Knowledge Vee G Mengesha and R Common (2006) Civil Service Reform in Ethiopia: Success in Two Ministries D Kumala (2006) The Achievements and Challenges of the New East African Community Cooperation T Butcher (2006) The Socio-technical Impact of RFID Technologies in Supply Chain Management J G Cegarro, J R Córdoba-Pachón (2006) Assessing and Developing egovernment use by SMEs R Common (2006) Globalisation and the Governance of Hong Kong C Hammond (2006) Technical Efficiency and Organisational Change in UK Public Library Systems: A Stochastic Distance Function Approach K R Bhattarai, E Okyere (2005) Welfare and Growth Impacts of Taxes: Applied General Equilibrium Models of Ghana K. R. Bhattarai, M K Armah (2005) The Effects of Exchange Rate on the Trade Balance on Ghana: Evidence from Cointegration Analysis A. Aritzeta, S. Swailes, B. Senior (2005) Team Roles: Psychometric Evidence, Construct Validity and Team Building G F Lanzara, M Morner (2005) Making and Sharing Knowledge at Electronic Crossroads: The Evolutionary Ecology of Open Source W Robson, J R Córdoba-Pachón (2005) What Research Methodology Suits Collaborative Research
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K R Bhattarai (2005) Economic Growth: Models and Global Evidence P Mould, T Boczko (2004) Standard-setting and the Myth of Neutrality: Boundaries, Discourse and the Exercise of Power P Murray (2005) ‘Learning’ with Complexity: Metaphors from the New Sciences D Kamala (2004) The Voices of the Poor and Poverty Eradication Strategies in Tanzania M R Ryan (2003) Vertical Integration Results and Applications to the Regulation of Supermarket Activity M A Nolan, F R Fitzroy (2003) Inactivity, Sickness and Unemployment in Great Britain: Early Analysis at the Level of Local Authorities K R Bhattarai (2003) An Analysis of Interest Rate Determination in the UK and Four Major Leading Economies K R Bhattarai (2004) Macroeconomic Impacts of Consumption and Income Taxes: A General Equilibrium Analysis J Paez-Farrell (2003) Business Cycles in the United Kingdom: An Update on the Stylised Facts J Paez-Farrell (2003) Endogenous Capital in New Keynesian Models P Kitchen, L Eagle, L Rose, B Moyle (2003) The Impact of Gray Marketing and Parallel Importing on Brand Equity and Brand Value M Afanassieva (2003) Managerial Responses to Transition in the Russian Defence Industry J R Córdoba-Pachón, G Midgley (2003) Addressing Organisational and Societal Concerns: An Application of Critical Systems Thinking to Information Systems Planning in Colombia J Evans, R Green (2003) Why Did British Electricity Prices Fall After 1998? C Hemingway (2002) An Exploratory Analysis of Corporate Social Responsibility: Definitions, Motives and Values P Murray (2002) Constructing Futures in New Attractors S Armstrong, C Allinson, J Hayes (2002) An Investigation of Cognitive Style as a Determinant of Successful Mentor-Protégé Relationships in Formal Mentoring Systems N O'Neill (2001) Education and the Local Labour Market A Zakaria, Z Osemy, B Prodhan (2001) The Role of Accounting Information Systems in Rationalising Investment Decisions in Manufacturing Companies in Egypt A Mejía (2001) The Problem of Knowledge Imposition: Paulo Freire and Critical Systems Thinking P Maclagan (2001) Reflections on the Integration of Ethics Teaching into the BA Management Degree Programme at The University of Hull N R Romm (2001) Considering Our Responsibilities as Systemic Thinkers: A Trusting Constructivist Argument L Hajek, J Hynek, V Janecek, F Lefley, F Wharton (2001) Manufacturing Investment in the Czech Republic: An International Comparison Gerald M, J F Gu, D Campbell (2001) Dealing with Human Relations in Chinese Systems Practice Z Zhu (2000) Dealing with a Differentiated Whole: The Philosophy of the WSR Approach
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W J Gregory, G Midgley (1999) Planning for Disaster: Developing a MultiAgency Counselling Service L Pinzón, G Midgley (1999) Developing a Systemic Model for the Evaluation of Conflicts G Midgley, A E Ochoa Arias (1999) Unfolding a Theory of Systemic Intervention M Brown, R Packham (1999) Organisational Learning, Critical Systems Thinking and Systemic Learning G Midgley (1999) Rethinking the Unity of Science P Keys (1998) Creativity, Design and Style in MS/OR G Midgley, A E Ochoa Arias (1998) Visions of Community for Community OR G Midgley, I Munlo, M Brown (1998) The Theory and Practice of Boundary Critique: Developing Housing Services for Older People J Clayton, W Gregory (1997) Total Systems Intervention or Total Systems Failure: Reflections of an Application of TSI in a Prison L Pinzon, N Valero-Silva (1996) A Proposal for a Critique of Contemporary Mediation Techniques - The Satisfaction Story R L. Flood (1996) Total Systems Intervention: Local Systemic Intervention R L. Flood (1996) Holism and Social Action ‘Problem Solving’ P Dudley, S Pustylnik (1996) Modern Systems Science: Variations on the Theme? W Ulrich (1996) Critical Systems Thinking for Citizens: A Research Proposal G Midgley (1995) Mixing Methods: Developing Systems Intervention J Thompson (1995) User Involvement in Mental Health Services: The Limits of Consumerism, the Risks of Marginalisation and the Need for a Critical Systems Approach P Dudley, S Pustylnik (1995) Reading the Tektology: Provisional Findings, Postulates and Research Directions W Gregory, N R Romm (1994) Developing Multi-Agency Dialogue: The Role(s) of Facilitation N R Romm (1994) Continuing Tensions between Soft Systems Methodology and Critical Systems Heuristics P Dudley (1994) Neon God: Systems Thinking and Signification M C Jackson (1993) Beyond the Fads: Systems Thinking for Managers S M Green (1993) Systems Thinking and the Management of a Public Service Organisation M C Jackson and R L Flood (1993) Opening of the Centre for Systems Studies
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