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3. Fundamentals of IKEA and the concept of CSR

In the following section, we will provide the reader with an overview of our chosen case company and of the development of the concept CSR.

3.1 Introduction to IKEA

IKEA is a global company which is present in 37 countries and has approximately 127 800 employees19. Ingvar Kamprad founded IKEA in 1943. In 1947, he started to sell furniture and in 1955 IKEA started to design its own furniture. IKEA started as a mail order company, but this soon changed and the first store was opened in Älmhult - later it became the model for all IKEA establishments. IKEA is regarded as one of the most respected and reliable companies in Sweden and has become one of the most popular companies to work for.20 In order to understand and analyze current CSR activities in IKEA, it is necessary to begin by looking into the foundation on which IKEA was built and the values and vision, which the founder Ingvar Kamprad instilled into the company culture from the beginning.

3.1.1 Corporate structure IKEA's corporate structure is very complex and complicated. It is divided into two main parts:

operations and franchising. Ingka Holding, a private, for-profit Dutch company, runs most of IKEA’s operations. The Stichting Ingka Foundation, a tax-exempt, non-profit foundation, in turn owns this company. Another Dutch company, Inter IKEA systems, owns the IKEA trademark and concept. Every IKEA store pays a 3% franchising fee to Inter IKEA Systems. According to I. Kamprad, the foundation for IKEA is that of taking a social responsibility, with democratic design. Nonetheless the corporate structure has been criticized as simply being a tax evasion scheme.21 IKEA's corporate structure mixes for-profit societies with non-profit societies and has very low transparency when it comes to costs: ”Someone who would like to look at and understand their [IKEA's] annual accounts cannot - it is a veritable maze”22. IKEA has even been nominated to a Public Eye Global Award; an ”award” that highlights corporate irresponsibility.23 Through its corporate structure, it has reduced it’s tax burden, yet the payment of taxes is recognized as a central element of CSR.24 Philanthropic activities have earlier not been practiced to any great extent. The purpose of the Stichting Ingka Foundation is to promote innovations in the field of architectural and interior design. Recently, it was announced that I. Kamprad is in the initial stages of opening up for a more general purpose of the foundation in order to be able to give charitable donations to wider range of causes.25 It is not known whether this is a result of previous criticisms26 of the Foundation or simply a necessity for a company of the size of IKEA. Nonetheless, there are many speculations as to what the future will bring and additionally several unanswered questions that stem from this complex group structure.

3.1.2 Company vision IKEA’s vision has from the start been “To create a better everyday life for the majority of people”.

IKEA’s business concept originates in the decision to meet a need that no other company appeared concerned with and led it to develop a niche market: manufacturing beautiful, inexpensive and

19 20 21 22 23 24 25 26

www.ikea.com. http://medieakademin.welcom.se/barometer2008.pdf. http://www.economist.com/business/displaystory.cfm?story_id=6919139. Interview, Edvardsson, B., 2008-10-13. http://www.evb.ch/en/p11676.html. Christensen, J. & Murphy, R. (2004). http://www.e24.se/branscher/konsumentvaror/artikel_872593.e24. http://www.economist.com/business/displaystory.cfm?story_id=6919139.

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