Corruption in Russia: IKEA’s expansion to the East (A-D)
Publication date: 18 June 2016
Abstract
Subject area
Business ethics corruption governance and compliance integrity management international management intercultural and cross-cultural management internationalization corporate social responsibility (CSR).
Study level/applicability
The case has successfully been used with a wide range of audiences from masters/MBAs to Executives. It will also work with undergraduates.
Case overview
This four-part case series can be used to discuss business ethics, compliance/governance, integrity management, reacting to and preparing against corruption in the context of internationalization and allows to also briefly touching upon the issue of CSR. Case (A) describes a challenge IKEA was facing, while trying to enter Russia in 2000. The company was preparing to open its first flagship store on the outskirts of Moscow, only the first of several planned projects. After substantial investments in infrastructure and logistics, IKEA focused on marketing, but quickly faced a sudden complication. Its major ad campaign in the Moscow Metro with the slogan “[e]very 10th European was made in one of our beds” was labeled “tasteless”. IKEA had to stop the campaign because it “couldn’t prove” the claim. Soon Lennart Dahlgren, the first general manager of IKEA in Russia must have realized that the unsuccessful ad campaign was going to be the least of his problems: A few weeks before the planned opening, the local utility company decided not to provide their services for the store if IKEA did not pay a bribe. What should IKEA and Lennart Dahlgren do? Was there any alternative to playing the game the Russian way, and paying? The subsequent cases (B), (C) and (D) describe IKEA’s creative response to the challenges described in case (A), and then report about new challenges with alleged corruption within IKEA and in the legal environment, and finally raise the question whether IKEA can be considered to have a (corporate social) responsibility to fight corruption on a societal level to build the platform for its own operation in Russia.
Expected learning outcomes
Responding to a threatening corruption demand (here: responding to an outside demand for a bribe), avoiding corruption from the outside, cross-cultural differences in drawing the line for corruption, preventing corruption within the organization, (corporate social) responsibility of firms to improve the political/legal/social/moral environment in which they operate are the expected learning outcomes.
Supplementary materials
Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.
Subject code
CSS 5: International Business
Keywords
Acknowledgements
The author wishes to thank: Derek Abell for his support in the design of the case series and his attempt to collect additional information. Amanpret Singh, Daniel Rettich, Martha Ihlbrock and Tonisha Robinson for their support of researching, editing, translating and formatting of the case study, teaching note and supplementary material. A sanitized version of this case study series has previously been published in the Emerald Emerging Case Study Collection under the title “Corruption by design? L’Antimarché’s struggles in Russia (A-D)”.
Citation
Müller, U. (2016), "Corruption in Russia: IKEA’s expansion to the East (A-D)", , Vol. 6 No. 2. https://doi.org/10.1108/EEMCS-11-2015-0199
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited