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Sanchez Blandine and Fanise Nathan
Impact of Managerial Innovation
on Corporate Social Responsibility
IKEA Case Study Analysis
Business Administration Master’s Thesis
30 ECTS
Term: Spring 2013
Supervisor: Inger Roos
ACKNOWLEDGEMENTS
This Master thesis was written in spring 2013 as a final project for a Master in
Service Management at Karlstad University. Many people supported us in the
successful completion of our thesis. We would like to thank them for their
contributions to this academic paper. Foremost, we would like to take the
opportunity to acknowledge the assistance of Magnus Engstrand – Local IT
and Sustainability coordinator at IKEA Karlstad, who provided us with all the
necessary information to develop our thesis. We also wish to express our
sincere thanks to the employees and managers of the IKEA Karlstad store for
their cooperation. Finally, we wish to express our deep sense of gratitude to
Associate Professor Dr. Inger Roos who guided us with many valuable
suggestions during the writing of our thesis.
Blandine Sanchez
Nathan Fanise
Abstract
The purpose of this master thesis is to provide a deeper understanding of managerial innovation impact on companies through Corporate Social Responsibility (CSR). For this objective, IKEA Karlstad was chosen for the empirical part in order to apply the theoretical framework to practical relevance. The method used for this thesis was a case study design including data collection from literature in different databases: Emerald, Business Source Premier, Scopus as well as Google Scholar. Regarding data collection for the case study, three qualitative questionnaires were also distributed to IKEA: two designed for the local IT and sustainability coordinator Magnus Engstrand and one targeting employees. A quantitative questionnaire was distributed to IKEA employees too. An interview was set up with Magnus Engstrand according to the unstructured interview guidelines. The theoretical framework focuses not only on understanding the links between managerial innovation and CSR, managerial and technological innovations but also on the companies’ motivation to implement these actions and their impact on employees, organizations and community. From our analysis of the literature it can be stated that managerial innovation is stimulated by an internal element of the company. Managerial innovation helps partly or entirely to develop CSR actions resulting in the creation of positive value: tangible or intangible; or negative value according to value resonance or value dissonance. The case study analysis brought examples of how managerial innovation brings value without involvement of any technological innovation contradicting certain theories exposed in the theoretical framework. At IKEA, the three different types of managerial innovations are management, administrative and organizational innovations which are used to develop CSR actions and constitute a minor or major part of their implementation. The impact of managerial innovation on CSR is translated at IKEA Karlstad as an intangible value for the company and its stakeholders. This thesis contributes to a better comprehension of managerial innovation concepts in general as well as its application in a CSR strategy through concrete examples. It can also be used as a demonstration of how managerial innovation can be used to improve the internal and external images as well as employees’ welfare and perceptions. Further qualitative research is needed to measure the manner of managerial innovations as well as quantitative studies to generalize its impact on a larger scale. Keywords: Managerial innovation, technological innovation, innovation, corporate social responsibility, value, values, intangible value, tangible value, values resonance, values dissonance.
Table of Contents
1. INTRODUCTION ................................................................................................................ 1 1.1. BACKGROUND ........................................................................................................................... 1 1.2. PROBLEM IDENTIFICATION ..................................................................................................... 2 1.3. MOTIVATION OF THE STUDY................................................................................................... 3 1.4. PRESENTATION OF THE CASE STUDY..................................................................................... 4
1.4.1. General Presentation ...................................................................................................... 4 1.4.2. Vision and Values of IKEA Group .............................................................................. 5 1.4.3. Corporate Social Responsibility at IKEA................................................................ 6
1.5. THESIS OBJECTIVES .................................................................................................................. 6 1.6. THESIS PURPOSE....................................................................................................................... 7 1.7. THESIS STRUCTURE ................................................................................................................. 7
1.7.1. Chapter 2: Theoretical Framework ......................................................................... 7 1.7.2. Chapter 3: Methodology ................................................................................................ 8 1.7.3. Chapter 4: Presentation of the results .................................................................... 8 1.7.4. Chapter 5: Analysis and discussion of the case study results ....................... 8 1.7.5. Chapter 6: Conclusion .................................................................................................... 8
2. THEORETICAL FRAMEWORK ....................................................................................... 9 2.1. CONCEPT OF MANAGERIAL INNOVATION ........................................................................... 10
2.1.1. Definition of Management Innovation ................................................................ 10 2.1.2. Definition of Managerial Innovation ................................................................... 10 2.1.3. Links between Managerial Innovation and Management Innovation . 11
2.2. CONCEPT OF CORPORATE SOCIAL RESPONSIBILITY (CSR) ............................................ 12 2.2.1. Definition of CSR ............................................................................................................ 12 2.2.2. Links between CSR and Managerial Innovation ............................................. 13 2.2.3. Indicators to measure the value created by CSR ............................................ 13
2.3. DETERMINATION OF TECHNOLOGICAL INNOVATION AS A TRIGGER ELEMENT FOR
MANAGERIAL INNOVATION .................................................................................................................. 14 2.3.1. Technological Innovation is a key component of Managerial Innovation ............................................................................................................................................... 15 2.3.2. Technological Innovation requires Managerial Innovation to create value 15 2.3.3. Reflection on the positioning of Technological Innovation and Managerial Innovation ..................................................................................................................... 16 2.3.4. Technological Innovation as a trigger element of Managerial Innovation ............................................................................................................................................... 16 2.3.5. Reflection from Service Innovation literature ................................................. 17 2.3.6. Hypothesis 1: selection of the model..................................................................... 18
2.4. THE VALUE CONCEPT: RESULT OF MANAGERIAL INNOVATION ON CSR ....................... 18 2.4.1. Hypothesis 2: Tangible Value and Intangible Value ..................................... 18 2.4.2. Hypothesis 3: Values may drive value .................................................................. 19
2.5. COMPOSITION OF CORPORATE SOCIAL RESPONSIBILITY ................................................ 20 2.5.1. Corporate Philanthropy ............................................................................................. 20 2.5.2. Risk Management .......................................................................................................... 20 2.5.3. Creating Shared Value (CSV) ................................................................................... 21
3. RESEARCH METHODOLOGY ....................................................................................... 22 3.1. GENERAL KNOWLEDGE ABOUT RESEARCH METHODS ...................................................... 22 3.2. DATA COLLECTION ................................................................................................................. 23
3.2.1. Literature review ........................................................................................................... 23
3.2.2. Qualitative data ............................................................................................................. 23 3.2.3. Quantitative data .......................................................................................................... 24
3.3. MOTIVATION OF THE CASE STUDY DESIGN ......................................................................... 24 3.4. WHY IKEA? ............................................................................................................................ 25 3.5. RESEARCH QUESTIONS AND LIMITATIONS ........................................................................ 25 3.6. DISCUSSION OF VALIDITY AND RELIABILITY IN OUR THESIS ........................................... 26
4. PRESENTATION OF THE RESULTS ........................................................................... 27 4.1. CURRENT INDICATORS TO MEASURE CSR AT IKEA......................................................... 27 4.2. INNOVATION AT IKEA ........................................................................................................... 27 4.3. FOCUS ON THE IKEA STORE IN KARLSTAD, SWEDEN ...................................................... 27 4.4. PRESENTATION OF CSR ACTIONS INCLUDING MANAGERIAL INNOVATIONS AT IKEA 28
4.4.1. Nomination of Steve Howard as Chief Sustainability Officer and People & Planet Positive Project (PPP) .................................................................................................... 28 4.4.2. Universal Code of Conduct ........................................................................................ 29 4.4.3. IWAY .................................................................................................................................... 30 4.4.4. Shopkeepers ..................................................................................................................... 31 4.4.5. Samhall .............................................................................................................................. 32
4.5. INTERPRETATION OF THE ANSWERS FROM THE QUALITATIVE QUESTIONNAIRE ........ 32 4.6. ANSWERS FROM THE QUANTITATIVE QUESTIONNAIRE ................................................... 34
5. ANALYSIS AND DISCUSSION OF THE RESULTS .................................................... 38 5.1. ANALYSIS OF STEVE HOWARD’ EMPLOYMENT .................................................................. 38
5.1.1. A CSR strategy stimulus .............................................................................................. 38 5.1.2. Organizational Innovation is the only component of Steve Howard’ employment ............................................................................................................................................ 38 5.1.3. An impact represented by intangible value through values resonance. 39
5.2. ANALYSIS OF THE PEOPLE & PLANET POSITIVE PROJECT .............................................. 39 5.2.1. A CSR strategy stimulus .............................................................................................. 39 5.2.2. People & Planet Positive project involves both managerial innovation and technology ..................................................................................................................................... 40 5.2.3. Values resonance impacting IKEA employees’ behaviour .......................... 40
5.3. ANALYSIS OF THE CODE OF CONDUCT AND TRUST LINE ................................................. 41 5.3.1. A Corporate Culture stimulus .................................................................................. 41 5.3.2. A combination of administrative and organizational innovations........ 41 5.3.3. A value resonance resulting in a neutral impact on IKEA.......................... 42
5.4. ANALYSIS OF THE IWAY ....................................................................................................... 42 5.4.1. A CSR strategy stimulus .............................................................................................. 42 5.4.2. An administrative and organizational innovation ........................................ 43 5.4.3. A values resonance resulting in a decrease of the corruption .................. 43
5.5. ANALYSIS OF SHOPKEEPERS’ IMPLEMENTATION .............................................................. 44 5.5.1. Unified Leadership as a stimulus ........................................................................... 44 5.5.2. Organizational and management innovations as a central element of shopkeepers ............................................................................................................................................ 44 5.5.3. A positive impact reflected by an increase of trust among workings teams 44
5.6. ANALYSIS OF SAMHALL COLLABORATION .......................................................................... 45 5.6.1. A CSR strategy stimulus .............................................................................................. 45 5.6.2. An important contribution of management Innovation and organizational Innovation to improve CSR ............................................................................. 45 5.6.3. Positive impact on IKEA employees and the community due to values resonance 46
5.7. DISCUSSION OF THE CASE STUDY RESULTS ........................................................................ 46 5.7.1. Discussion of Hypothesis 1: Involvement of technological innovation in value creation process ....................................................................................................................... 46 5.7.2. Discussion of Hypothesis 2: Different types of value are brought by managerial innovation ..................................................................................................................... 47 5.7.3. Discussion of Hypothesis 3: Values resonance and Values dissonance . 47 5.7.4. Discussion of managerial innovation involvement in CSR ......................... 48
5.8. LIMITATIONS OF THE STUDY ................................................................................................ 48
6. CONCLUSION .................................................................................................................... 50 6.1. FINAL CONCLUSION ................................................................................................................ 50 6.2. SUGGESTIONS FOR FURTHER RESEARCH ............................................................................ 50
7. REFERENCES .................................................................................................................... 52
8. APPENDIX ......................................................................................................................... 56
List of figures
Figure 1: IKEA Organization Chart (IKEA 2013e). ............................................... 5 Figure 2: Creation and Measurement of Value generated by Managerial
Innovation through Corporate Social Responsibility. ............................................. 9
Figure 3: Managerial Innovation inspired by Damanpour and Aravind (2011) as
well as Evan (1966). .............................................................................................. 11 Figure 4: CSR inspired from Tilcsik and Marquis (2013), Kytle and Ruggie,
(2005) as well as Porter and Kramer (2006). ........................................................ 12 Figure 5: Process from Managerial Innovation to measure created value inspired
from Balabanis et al. (1998). ................................................................................. 13 Figure 6: Managerial and Technological Innovations inspired from Kraus et al.
(2012). ................................................................................................................... 15
Figure 7: Managerial and Technological Innovations inspired from Chesbrough
(2010). ................................................................................................................... 15 Figure 8: Managerial and Technological Innovations inspired from Damanpour &
Aravind (2011). ..................................................................................................... 16
Figure 9: Managerial and Technological Innovations inspired from Birkinshaw et
al. (2008). .............................................................................................................. 17
Figure 10: Managerial and Technological Innovations inspired from Den Hertog
(2010). ................................................................................................................... 17 Figure 11: Hypothesis 2 on Managerial Innovation process including the notion of
value. ..................................................................................................................... 19 Figure 12: Hypothesis 3 on Managerial Innovation process including the notion of
values and value. ................................................................................................... 20 Figure 13: Definition of Risk (Kytle & Ruggie 2005). ......................................... 21
Figure 14: Organization chart of Karlstad IKEA store ......................................... 31 Figure 15: Bar chart representing the impact of CSR actions on the IKEA
employees. ............................................................................................................. 34 Figure 16: Bar chart representing the impact of CSR actions on the environment.
............................................................................................................................... 35 Figure 17: Bar chart representing the impact of CSR actions on the community. 35 Figure 18: Bar chart representing the values shared by the IKEA employees...... 36
Figure 19: Bar chart representing the impact of CSR actions on the employees
working life. .......................................................................................................... 36
Figure 20: Bar chart representing the impact of CSR actions on the employees’
life outside IKEA. ................................................................................................. 37 Figure 21: Bar chart representing the impact of CSR actions on the productivity
and well-being of IKEA employees. ..................................................................... 37 Figure 22: Analysis of Steve Howard’ employment ............................................. 38
Figure 23: Analysis of the People & Planet Positive Project ................................ 39 Figure 24: Analysis of the Code of Conduct and Trust Line ................................ 41
Figure 25: Analysis of the Iway. ........................................................................... 42 Figure 26: Analysis of Shopkeepers’ implementation. ......................................... 44 Figure 27: Analysis of Samhall collaboration. ...................................................... 45
1
1. INTRODUCTION
1.1. Background
In recent years, a heightened awareness of many companies regarding
environmental issues and the welfare of employees has contributed to their
development as major concerns on a global scale. This evolution indirectly
shows that the production-focused strategies, where costs and prices are
prioritised, are now out of date. Stakeholders recognized that production-
focused strategies do not consider the customers’ values, or social and
environmental aspects (Dawkins & Lewis 2003). Thus, Corporate Social
Responsibility (CSR) strategies have increasingly emerged as a manner to deal
with these concerns.
By definition, a CSR strategy integrates economic, environmental and social
aspects. Therefore, philanthropic actions involved in CSR strategies have
proliferated in order to establish a relation between organizations and their
environment (Garriga & Mele 2004). In addition to bringing value to the
community, the CSR strategies include, for example, recycling, employment of
local people and infrastructural improvements; in which these actions also
enhance both the external and internal image of corporations (Tilcsik &
Marquis 2013).
In parallel to this philanthropy, Human Resources’ role has become more
important in companies’ strategies because the productivity depends on the
motivation and the wellbeing of the employees in the workplace. Moreover,
CSR strategies that include internal social aspects normally involve the HR
department in projects such as the improvement of working conditions or the
integration of people in difficulty in the workplace. Hence Human Resource
managers need to implement some actions in order to increase the motivation
of the workers (Danna & Griffin 1999).
Since the importance of CSR and Human Resources has been rising, new
theories and concepts have also emerged to develop the science of human
resources as well as management practices (Porter & Kramer 2006). New
management practices that constitute a part of innovations in the area of
management are called managerial innovations which aim to develop productivity
through employees’ welfare as well as enhance the internal image of firms
2
(Damanpour & Aravind 2011). Furthermore, these innovations regarding
human resources bring a competitive advantage by implementing new
processes which do not exist in other corporations and are difficult to copy for
the competition. Accordingly, managerial innovations help to increase the
profitability of companies (Damanpour & Aravind 2011).
1.2. Problem identification
In the background, we presented the notion that managerial innovation and
human resources can be connected. Porter and Kramer (2006) actually specify
a link between managerial innovations and Corporate Social Responsibility but
the relation is not well defined. Thus, we identify two problems in relation
with managerial innovation that we discuss throughout this paper.
Damanpour and Aravind (2011) consider the impact of managerial innovation
on the company as hard to measure theoretically since they are qualitative data.
So these results are more difficult to measure than financial benefits for
companies. On the contrary, existing tools are available and used by firms to
measure the impact of CSR on communities and their corporations. However,
we think that the effects of managerial innovations could also be observed in
practice within organizations through employees’ welfare, motivation,
behaviour and other attitudes regarding companies. Thus, this is the first
problem of the research that will be studied by investigating the link between
managerial innovation and CSR to see if it could reveal the impact of
managerial innovation.
Another problem that will be discussed in this thesis is the relation between
managerial innovation and technological innovation. Kraus et al. (2012) thinks
that managerial innovation has to deal with technological innovations.
Technological innovations refer to innovations including a new technology.
These two categories of innovation are related because they bring values to
organizations. However, the nature of this relation is not well established by
scholars. For instance, Kraus et al. (2012) stipulate that managerial innovation
is dependent on technological innovation, while Birkinshaw et al. (2008)
support that technological innovation is not mandatory in order to create
value in the managerial innovation processes. These controversies highlight
the lack of studies focused on the managerial innovation area (Damanpour
and Aravind 2011). Thus, to study the impact of managerial innovation on
3
CSR, its relation with technological innovations will be clarified in the
theoretical framework.
According to the problems stated above, we set up three research questions as
follows:
1. What motivates managerial innovations in CSR actions?
2. In what way does managerial innovation affect CSR actions?
3. What is the impact of managerial innovation on the company and its
stakeholders?
1.3. Motivation of the study
This part will highlight why this thesis is important not only to the business
world, including both companies and employees, but also to students and
researchers.
First of all, as emphasized in the problem discussion, managerial innovation is
an area that has a shortage of studies. For example, Damanpour and Aravind
(2011) only focus on theory, method and process without any application to
practical problems. Other research papers use quantitative analysis trying to
establish general truths about managerial innovations. Hence, it is difficult to
find any paper that gives a concrete illustration of how managerial innovation
works in a company, or articles that deeply study managerial innovation with
CSR. This lack of research constitutes the first reason for our motivation
because, as students in Entrepreneurship and Human Resources, we find this
topic current and valuable for our future careers. Thus we want to deepen the
research in this area with a case study in order to complete the lack of articles
regarding the subject.
As mentioned in the introduction, environmental and social concerns in
companies have recently been of great interest to a large number of people.
Professionals can learn from this paper what benefits they can reap from
managerial innovation and CSR. Being students with several internships
experiences, we know that companies prefer to improve business based on
concrete examples rather than on theories. Managerial innovation linked with
CSR can bring a huge competitive advantage because a company’s internal and
external perceptions, structures and management practices are hard to copy.
4
Therefore, this thesis can be studied in order to understand the importance of
management within an organization with a practical relevance.
In conclusion, management students or those who are interested in managerial
innovation should find this thesis useful since managerial innovation practice
is very important both for a firm's point of view and for employee hindsight.
In addition, managerial innovation is especially crucial for students who will
become employees or managers one day. Broadening knowledge on topics,
which are not presently popular, can illuminate a better vision of internal
changes happening in firms.
1.4. Presentation of the case study
According to the research questions, we would like to focus on four subjects:
managerial innovation, Corporate Social Responsibility, technological
innovation and value. We chose the IKEA group to be the case for our study.
IKEA is specialized in furniture retailing, and has developed a strategy focused
on corporate social responsibility. Thus, IKEA regularly needs to innovate in
this area, with the aim of remaining competitive and keeping a good internal
and external image among stakeholders. By analysing this company, we shall
get a concrete example of managerial innovation implementation in CSR
actions.
1.4.1. General Presentation
The IKEA Group is famous for making interior design and furnishing
accessible to as many people as possible. The company also has established its
popularity with flat-pack furniture by launching the trend of “Do It Yourself”.
Its originality lies in the service offered to its customers. Stores are designed in
a way that allows customers to follow an in-store itinerary leading them to
experience the showrooms inside. Those rooms show them all the IKEA
product lines in everyday life situations. The aim of this concept is to keep
customers as long as possible in the store in order to help them discover all
the solutions that the company offers to make their lives easier. The group has
154 000 employees in 338 stores located in 44 countries through the franchise
system, Inter IKEA Systems B.V. The turnover of the group was 27.5 billion
Euros for the year 2012 (IKEA 2012a).
5
Figure 1: IKEA Organization Chart (IKEA 2013e).
The organization chart presented above introduces the structure of the IKEA
group whose the CEO is Michael Ohlsson (IKEA 2013a). At the top of the
diagram, the Interogo Foundation is the foundation developed by IKEA in
order to help people in the developping world ( IKEA 2013a). This fundation
owns the Inter IKEA holding S.A, which is the parent company of the Inter
IKEA group (IKEA 2013a). The IKEA group is composed of several
divisions, including franchise division, retail centre division, property division
and finance division. The production of IKEA furniture is subcontracted by
Swedwood group to ensure the production capacity of the company
(Swedwoos group 2013). Furthermore, the range department is managed by
another subsidiary, IKEA of Sweden AB. The main objective is to develop
and make the IKEA range available in all IKEA stores (IKEA 2013a). The
division Inter IKEA systems B.V is in charge of managing all the franchises
and auditing all the stores in accordance with the IKEA code of conduct and
values (IKEA 2013b). Vastint Holding BV and Inter IKEA Investment AB
offer management advice to all the franchisees of the brand IKEA (IKEA
2013a).
1.4.2. Vision and Values of IKEA Group
The spirit of IKEA is transmitted through these words: “create a better everyday
life for the many people” (IKEA 2012a). To achieve its vision, the group orients its
sales strategy to offer wide ranges of functional furniture at accessible prices.
The corporate culture is based on the Swedish culture, where IKEA was
founded in 1943 (IKEA 2013c). Thus, IKEA group has developed values
6
relying on simplicity, enthusiasm, humility, sense of challenge, responsibility,
teamwork, coaching and awareness of cost. Each employee forms an
important part of the company’s success. The golden organization values are
trust, integrity and honesty, which go along with the IKEA vision. In order to
ensure that these values are respected, the firm implements different control
means and charts for the protection of its business ethics, environment, and
employees’ well being (IKEA 2012a, 2013d).
1.4.3. Corporate Social Responsibility at IKEA
The CSR is an important aspect in the strategy of IKEA. All the products and
the communication are based on CSR and more particularly on the protection
of the environment. Currently, the IKEA group is working on a new CSR
strategy called People & Planet Positive, which will be explained and analyzed
later on. This new policy in development will help customers have better life
conditions while preserving the environment. It will also ensure that IKEA
will become independent in terms of energy and raw materials. Corporate
Social Responsibility will be extended intensively in the analysis part.
1.5. Thesis objectives
Based on our theoretical framework and the IKEA case analysis, the main
objective is to get more knowledge on CSR and managerial innovations links.
In collaboration with the sustainability coordinator and the Human Resources
department of IKEA Karlstad, we want to verify if technology-based
innovation is always required in order to create value for the firm, or it could
be considered as optional instead. In other words, we would like to see if we
can find examples of managerial innovations without technological
involvement that create value for IKEA.
Moreover, this thesis aims to explore the impacts of managerial innovation
whether it can be applied not only for economic goals, but also for social and
environmental issues, namely Corporate Social Responsibility. Managerial
innovation could bring two different types of values: intangible value, which
could be positive attitudes and trust, towards the company; and tangible value,
such as financial benefits.
When a company implements new managerial innovations in a CSR context, it
should result in an increase of positive external and internal images, and have a
7
repercussion on its economic performance. Several existing indicators to
measure CSR can help evaluating the value created by managerial innovations.
This thesis has the objectives to attest the possibility to measure managerial
innovation indirectly by including another element in its value creation
process.
To conclude, we would like to show that a well-known company has already
been implementing managerial innovation which has an impact on its financial
performance and image.
1.6. Thesis purpose
The purpose of this thesis is to show examples of managerial innovations’
impact on Corporate Social Responsibility. In other terms, it shows how
managerial innovation can be combined with social and environmental actions
to create value for the company in practical relevance. Additionally, this paper
tries to give examples of value that can be brought by the combination of
managerial innovation and CSR.
1.7. Thesis Structure
This thesis is divided into five main chapters beyond this introduction. First,
the theoretical framework will be developed. Second, the methodology used
for the empirical part will be described. Then, the results of the case study will
be presented followed by an analysis of IKEA’ innovations in terms of CSR
and management.
1.7.1. Chapter 2: Theoretical Framework
In the theoretical part, we introduce all the main concepts through Figure 2 to
explain how managerial innovation impacts CSR theoretically as well as how
companies can measure the value brought by these innovations. In the same
chapter, we give definitions about all the concepts involved in the elaboration
of our theoretical framework. Thus, these definitions allow the readers to
acquire a better understanding of the subject. A deeper presentation of
managerial innovation and CSR will conclude this chapter to obtain a better
comprehension about these concepts.
8
1.7.2. Chapter 3: Methodology
In the methodology chapter, we will introduce general theories about research
methods as well as our motivation regarding the choice of a case study design.
Thereafter, the selection of IKEA for this analysis will be developed.
Following the research questions and the limitations of our empirical part, the
method used for the data collection will be described as well as the structure
of the analysis.
1.7.3. Chapter 4: Presentation of the results
In the fourth chapter, we will further develop the CSR and management
aspects of IKEA. We will also provide more information on the IKEA store
of Karlstad. CSR actions including managerial innovations will be explained in
details.
1.7.4. Chapter 5: Analysis and discussion of the case study results
In this chapter, we will analyse the results in order to point out the relation
between managerial innovation and CSR as well as its impact on the company.
Then we will discuss the results of the study in comparison with our
hypotheses from the theoretical framework, and explain the limitations of the
study.
1.7.5. Chapter 6: Conclusion
We will draw a general conclusion of our analysis, and directions for further
research will be suggested.
9
2. THEORETICAL FRAMEWORK
Managerial Innovations, including management, organizational and
administrative innovations, are challenging to evaluate since the value created
is not always measurable in financial terms. Additionally, no tool exists to
measure the value brought by these innovations and no direct economic
results can be seen (Damanpour & Aravind 2011). Thus, the purpose of this
theoretical framework is to establish a system where the impact of managerial
innovation could be assessed. In order to confirm or refute the different
hypothesises stated in the thesis’ objectives, an intermediary had to be
introduced to facilitate the measurement of the value created for the company.
Corporate Social Responsibility, known as CSR, comports most of the time
indicators, which enable an evaluation of CSR actions (McGuire et al. 1986)
and consequently managerial innovations. For this reason, links between
managerial innovations and CSR have also been studied in this part. Figure 2
represents our contribution to the literature on CSR as well as managerial
innovation and the basis for comparison with our analysis from the empirical
part. In this system, managerial innovations are motivated by one or several
stimuli that can be either a CSR strategy or the implementation of a new
technological innovation or other trigger elements. These managerial
innovations can improve CSR which involves human resources and social
concerns. CSR creates different types of values for the firm that can be
evaluated with several indicators. All the elements of Figure 2 are described in
the following parts as well as the construction of the figure.
Figure 2: Creation and Measurement of Value generated by Managerial Innovation through
Corporate Social Responsibility.
10
First of all, definitions will be given to provide the keys to understanding this
diagram. As it is constructed, the schema comports two central elements:
managerial innovation and Corporate Social Responsibility, which will be
defined first. Two other elements also occur upstream and downstream of
managerial innovation and CSR in Figure 2. The first one, on the left,
constitutes the trigger element of managerial innovation and will be explained
right after the definitions of the concepts. The second one, on the right,
represents the impact of managerial innovation on CSR. In others words, it
represents what is created during the process. Last, the different types of value
will be developed.
2.1. Concept of Managerial Innovation
In order to fully understand CSR, managerial innovation is central in our
theoretical framework of the thesis. Consequently, definitions, processes and
examples will be detailed in the following part. The term of managerial
innovation was mainly used in the previous theories; however the literature
specifies two types of innovation in term of management: management
innovation and managerial innovation. The first step is to find out to what
these two concepts refer, and if there are any similarities or differences in their
effects and processes.
2.1.1. Definition of Management Innovation
According to Birkinshaw et al. (2008, p.825), “management innovation is the
generation and implementation of a management practice, process, structure, or technique that
is new to the state of the art and is intended to further organizational goals”. In other
words, this definition states the implementation of new processes, which
represent an organizational change for the corporation. Thus, innovation will
focus on systems and procedures rooted in the company and dealing with
production and employees (Birkinshaw et al. 2008). New procedures can be
implemented to improve not only supply-chain and production quality but
also quality of employee training. Through organizational innovations, the
company searches to remain competitive in the market. As explained earlier,
management innovation is motivated by a stimulus that can be of a
technological, social, environmental, organizational and financial nature. It
constitutes the starting point of the implementation process.
2.1.2. Definition of Managerial Innovation
In regard to managerial innovation, the definition given by Damanpour and
11
Aravind (2011, p.424) appears to be the most relevant. According to them,
managerial innovation is “the implementation of new organizational structures,
administrative systems, management practices, processes, and techniques that could create
value for the organization”. In fact, the term “managerial innovation” gathers
three types of innovation. As presented before, management innovation
constitutes one of them. In addition to the change in practices, processes and
structure management, Damanpour and Aravind (2011) add another element
by defining management innovation as the change of how managers operate.
In other words, these innovations focus primarily on the way managers take
their decisions. The second type of innovation is composed of organizational
innovations, which were shaped by scholars to separate innovation in terms of
management and organizational structures from technological innovations.
The last category represents administrative innovations. They have to be
differentiated from product innovations and technological innovations.
Administrative innovations are completely oriented towards the development
of business efficiency through processes and administrative systems of the
company. For example, administrative innovations include changes in
information systems or human resources. Evan (1966, p.51) explains
administrative innovation as “an idea for a new policy pertaining to the recruitment of
personnel, the allocation of resources, the structuring of tasks, of authority, of rewards”. The
definition of managerial innovation can be summed up as follows:
Figure 3: Managerial Innovation inspired by Damanpour and Aravind (2011) as well as
Evan (1966).
2.1.3. Links between Managerial Innovation and Management Innovation
The literature enables a link to be created between management and
managerial innovation processes. In their article, Damanpour and Aravind
12
(2011) also incorporate the process of Birkinshaw et al. (2008) for the
generation phase of managerial innovation process but with the addition of
one diffusion stage. Thus through these articles, it was concluded that
managerial innovation and management innovation have the same objective:
to answer an organizational, administrative and managerial need. Furthermore,
the article of Damanpour and Aravind (2011) establishes that management
innovation is in fact a part of managerial innovation alongside organizational
and administrative innovation.
2.2. Concept of Corporate Social Responsibility (CSR)
Like managerial innovation, the concept of CSR is central in our thesis. We
have dealt with the impacting concept before presenting the literature and
view on CSR. To demonstrate that managerial innovation can increase the
human and financial capitals of an organization, CSR can be used as an
intermediary, which can serve as both stimulus and results for managerial
innovation actions.
2.2.1. Definition of CSR
Corporate Social Responsibility (CSR) is a recent concept where companies
integrate the triple bottom line: social, environmental and economic concerns,
in their strategy (Enquist 2012). The aim of this model is to establish stability
for the long term and at the same time to lower the impact on the
environment as well as to answer the needs of society. By the means of CSR
actions, companies increase their institutional and internal image as well as
their profitability. Through different articles, three types of CSR’ approaches
have been identified by scholars represented in the following diagram.
Figure 4: CSR inspired from Tilcsik and Marquis (2013), Kytle and Ruggie, (2005) as well as
Porter and Kramer (2006).
13
2.2.2. Links between CSR and Managerial Innovation
CSR can be considered as a stimulus for managerial innovation but more
importantly as a result. All the actions that have to be put in place to increase
CSR have a direct link with managerial innovation. Indeed, firms have to
change their organization; their administrative system or their management
process related to the CSR actions they want to develop. As mentioned
previously with Damanpour and Aravind (2011), these three changes compose
managerial innovation in its entirety. Even if a managerial innovation will
occur with a stimulus other than CSR, these changes will impact CSR as
managerial innovation is related to social concerns. For example, when a
company takes the decision to change its human resources policy through
administrative innovation, it will influence not only employees but also CSR as
it aims to improve the well being of its workers or its stakeholders. Social
management indicators such as absenteeism, job rotation and productivity rate
are used to measure welfare at the workplace. Following these actions, the
company can develop its human capital and its economic performance
(Edvinsson & Malone 1997). As a conclusion, Balabanis et al. (1998) show
that different social and financial indicators can help to measure CSR. For
companies, knowing the impact of their actions is crucial because generally a
lot of funds are invested: therefore, creation of value is required.
Figure 5: Process from Managerial Innovation to measure created value inspired from
Balabanis et al. (1998).
2.2.3. Indicators to measure the value created by CSR
CSR actions can be evaluated with several indicators, which create awareness
among companies about their real impacts on the community and about their
economy (McGuire et al. 1986). The most current indicators are: expert
evaluation, annual rapport and other business documents as well as air and
water pollution. Nevertheless, to evaluate their actions, companies most often
use business documents such as sales rate, results and evolution from the
accounting balance compared to previous years. These indicators permit
companies to recognize and to measure the value brought by CSR actions
14
(Balabanis et al. 1998). Thus, new strategies can be oriented according to the
results of the new actions. For example, when a company has an
environmentally friendly production process and elaborate environmental
charts, the firm can communicate these assets to improve its image. This
action can then be measured not only by conducting surveys on customers but
also by analysing sales. By communicating their environmental values,
companies will attract new customers sharing the same values and thereby
increase consumption.
2.3. Determination of Technological Innovation as a trigger element for Managerial Innovation
As established in the first part, the perspectives of scholars and the data of
Figure 3 fix the definition of managerial innovations as being new
organizational structures, administrative systems, management practices,
processes, and techniques that could create value for the organization
(Damanpour & Aravind 2011). Managerial innovation or management
innovation can be represented by the following concepts well known to
professionals: just-in-time production, quality circles, and cost accounting as
well as 360 degree feedback or total quality management.
This explanation provides an outline of business techniques that can be
considered as managerial innovation. However, when it comes to innovation
in a corporate environment, the literature stipulates an important issue omitted
in the previous definition. As a matter of fact, different categories of
innovation involved in the creation of value have to be distinguished:
innovations based on technological progress, which are designated as
technological innovations and innovations related to pure management, called
managerial innovations. Even if these two classifications are different, Kraus et al.
(2012), Chesbrough (2010), Teece (2010), and Damanpour and Aravind (2011)
are unanimous on the fact that technological and managerial innovations are
connected even if they disagree on the nature of this link. These contradictions
clearly show a lack of studies in the managerial innovation area. Therefore, as a
key element to understanding the process and methods of managerial
innovation, it was essential to study the relation between technological and
managerial innovations. Within this context, numerous points of view from
scholars have been analysed and represented in the following diagrams to
make them more meaningful for readers.
15
2.3.1. Technological Innovation is a key component of Managerial Innovation
In order to create value for the company, some researchers such as Kraus et al.
(2012) support the necessity of technological innovations in the management
innovation processes. Without any technical progress, managerial innovations
may not lead to value. According to these authors, the combination of the two
is indispensable to obtain a maximum outcome for the firm. Their theory is
based on authors like Chesbrough (2010) and Teece (2010), which have also
been studied in this theoretical framework.
Figure 6: Managerial and Technological Innovations inspired from Kraus et al. (2012).
2.3.2. Technological Innovation requires Managerial Innovation to create value
Contradictions appear in the comparison between the analysis made by Kraus
et al. (2012) and other papers quoted as references. For Chesbrough (2010),
technological innovations motivate managerial innovation but they do not
constitute a relationship of reciprocity. In other words, when companies
innovate in terms of product or services, they need new structures,
management or processes to obtain an optimal profit from the technological
innovation. Conversely, it does not mean that a new structure requires
technology to create value. Teece (2010) reinforces this idea by affirming that
technological progress is lionized in most of present societies explaining why
the value of management innovation could be underrated. Thus, the value
perceived by technological innovations is higher than those by managerial
innovations, but the author considers these are of equal, if not greater
importance. These theories do not claim directly that managerial innovation
can bring value independently from technology, but at least offer different
lines of thinking to reflect on the relation between the two categories.
Figure 7: Managerial and Technological Innovations inspired from Chesbrough (2010).
16
2.3.3. Reflection on the positioning of Technological Innovation and Managerial Innovation
This opposition of thought between authors’ leads us to question the real link
of the two concepts. The conclusion after reading articles was that, perhaps,
the model applied may differ in function of the situation. In certain companies
or cases, Kraus et al.’ (2012) thoughts would be applicable, while in others
Chesbrough (2010) would be more relevant. However, one dimension is not
envisaged in the previous theories. A new point of view raising questions is
brought by Damanpour and Aravind (2011). After studying managerial
innovation, these two researchers cannot affirm in which order the elements
occur. Nonetheless, they reflect on the dynamics of managerial and
technological innovation by proposing three options: whether managerial
innovations lag, are complementary to, or lead to technological innovations
(Damanpour & Aravind 2011).
Figure 8: Managerial and Technological Innovations inspired from Damanpour & Aravind
(2011).
2.3.4. Technological Innovation as a trigger element of Managerial Innovation
The unclear link between the concepts has helped create another hypothesis in
the literature, which completely changes from the points of view exposed
above. In all the previous theories, even if they do not agree on the process to
create value, authors have one element in common: both technological
innovations and managerial innovations are included in the process. However,
a different way of thinking is introduced by scholars in the managerial
innovation area. They consider that technological innovation is foremost a
trigger element before other stimuli. Thus, the first stage of managerial
innovation is a motivation inside the firm, which can be not only technological
as seen in the previous theories but also factorial or conditional within the
company (Birkinshaw et al. 2008). For instance, the willingness of top
management to orient its organization to a CSR strategy can constitute a
stimulus that will motivate managerial innovation within the firm. Accordingly,
17
the supply chain could be modified to integrate recycling in the process.
Recycling could bring value to the company by improving its image among
customers and employees. This example can be taken as a possibility that
technological innovations are not necessarily involved in management
innovation processes.
Figure 9: Managerial and Technological Innovations inspired from Birkinshaw et al. (2008).
2.3.5. Reflection from Service Innovation literature
Another clue that confirms this hypothesis can be found in the literature from
other types of innovation. The four-dimensional model of service innovation,
designed by Den Hertog (2010), which is shown in the Appendix 1, allows us
to make certain affirmations. The first three dimensions quoted in the model
new service concept, new client interface and new service delivery systems are
similar to managerial innovation. Furthermore, technological innovation,
called technological options in Hertogs diagram, is considered as entirely
optional as a way to bring value to both customers and employees.
Accordingly, if methods and techniques from managerial innovation in other
areas are used to bring value without technology, it means that new
organizational structures, management practises, processes and techniques can
bring value independently.
Figure 10: Managerial and Technological Innovations inspired from Den Hertog (2010).
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2.3.6. Hypothesis 1: selection of the model
After evaluating different perspectives on the relation between managerial and
technological innovation, the model from Birkinshaw et al. (2008), Figure 9
will be used as a basis for the following hypotheses. The motivation for this
choice comes from the fact that their point of view gathers most of the
theories mentioned. Indeed, Chesbrough’ (2010) theory presented in Figure 7,
can be found in the selected model, Figure 9. If technological motivation
constitutes the stimuli, it will generate managerial innovations inside the
company. The questioning from Figure 8 can be interpreted as follows: if they
do not know where managerial innovation is situated compared to
technological innovation, it is perhaps because managerial innovation can
operate alone. Finally, figure 10 is reflected in the optional nature of
technological innovation in Figure 9.
2.4. The value concept: result of managerial innovation on CSR
Previously several diagrams were introduced in order to understand the
creation of value depending on managerial innovation. However value is a
broad concept, which has to be incorporated in this theoretical framework in
order to define the term’s value and explain its functioning. The next part will
focus more on the value generated for the company than for its customers.
2.4.1. Hypothesis 2: Tangible Value and Intangible Value
The literature mainly stipulates definitions regarding value for customers but
provides little on what value really is for an organization. “The value of a resource
enables to answer customer needs in the aim to be better satisfying or enables a firm to satisfy
needs at lower costs than competitors.” (Bowman & Ambrosini 2000, p.2) The
resources quoted in the definition are methods or techniques of managerial
innovation which on the one hand will certainly better satisfy the customers
and which on the other hand, will not necessarily satisfy the company’s needs
at a lower cost. In fact one element omitted in this definition is the non-
financial aspect of the value for the company. This missing element is covered
by Grönroos (2012, p.303): “Sometimes the value that has been created can be measured
in financial terms, for example through effects on revenues or wealth gained or through cost
saving, but value always has an attitudinal component, such as trust, affection, comfort and
easiness of use”. If this attitudinal component increases the trust or affection of
customers for a brand or a company, then it can also improve the
19
corporation’s image among other things. In this thesis, two types of value will
be differentiated: value measured in financial terms will be called financial,
value as a tangible value, and value related to attitudinal components will be
referenced to as intangible value. The first hypothesis then becomes as
presented in Figure 11 below: managerial innovation is encouraged by various
stimuli resulting in intangible and/or tangible value.
Figure 11: Hypothesis 2 on Managerial Innovation process including the notion of value.
2.4.2. Hypothesis 3: Values may drive value
The notion of value is however slightly more complex as it also involves the
concept of values. Value can be interpreted as a benefit in its general meaning
whereas values refer to standards, ideals, principles and ethics by which
companies live (Waddock & Bodwell 2007). For example, company values
could be: no waste, simplicity, responsibility, cost consciousness etc.
According to Enquist (2012) values drive value, which means that customers
and organizations perceive value not only from economic perspectives but
also from values. Thus, one concept envelops these theories: values
resonance/dissonance. Values resonance transpires when corporations share
the same values with all its stakeholders and the community, including:
employees, customers, local community, suppliers and global society. In an
opposing manner, values dissonance occurs when there are contradictions
between corporate values and stakeholders or community values. For instance,
if a company has “no waste” as one of its values and is implemented in a
country where the ecological aspect is truly important for the citizens, it can be
said that there is a value resonance. On the contrary, if a company in the same
country does not have any ecological values as corporate values, then the
concept of values dissonance can be seen. This concept brings another
element to the second hypothesis.
20
Figure 12: Hypothesis 3 on Managerial Innovation process including the notion of values and
value.
2.5. Composition of Corporate Social Responsibility
Even if corporate philanthropy, risk management and creating shared value are
three categories of CSR, they are actually very different in their purpose,
impact, benefits and value brought to the company.
2.5.1. Corporate Philanthropy
Corporate philanthropy towards non-profit organizations and the society
(Tilcsik & Marquis 2013) aims to provide funds and diverse skills through the
community’s activities. These actions are considered as a short-term strategy
and have an operational impact on companies. Benefits obtainable through
corporate philanthropy are limited because most of the time, the budget
allocated is small. Furthermore, these short-term operations have a limited
financial or institutional impact.
2.5.2. Risk Management
Risk management is directed toward social, political, technical and economical
risks (Kytle & Ruggie 2005). Objectives in managing the risks are obviously to
restrict risks and operational impacts on organizations while simultaneously
managing external relations that may pose a threat. Risk is defined as a lack of
controlling and measuring in comparison to environmental threats and
company weaknesses, Figure 12.
21
Figure 13: Definition of Risk (Kytle & Ruggie 2005).
The company should implement a detection system, which controls and
measures damages, loses and disruptions on the business market. Moreover,
this system allows the reduction of the impacts of external elements on the
firm’s economy and image. According to the think tank of the Kennedy
School of Government (Kytle & Ruggie 2005), CSR actions relative to risks
are varied and do not only influence philanthropy. They also affect relations
with stakeholders at the workplace, production, supply chain and the
community.
2.5.3. Creating Shared Value (CSV)
The creation of shared value means that value acquired by companies and
social welfare is interdependent (Porter & Kramer 2006). By social welfare,
Porter and Kramer (2006) take into consideration not only employees but also
available resources as well as the community. To create shared value includes
three divisions: reconceiving products and markets, redefining productivity in
the value chain, and enabling local cluster development. By reconceiving
products and markets, companies create their products with the intention of
better answering social needs such as recycling, lowering pollution, and
protecting rare resources. Redefining productivity in the value chain allows the
evaluation of a company’s production, product quality, costs and consumed
resources. Thus, control over rare resources, as well as social and economical
development, increases. Enabling local cluster development helps other
organizations in their economic growth and thus bring value to organizations.
In other words, a corporation needs infrastructures such as functioning roads
and telecoms etc. to develop its business and acquire value. The first aim of
the CSV is to allow companies to be profitable while respecting both social
and, environmental objectives and creating a competitive advantage with CSR
actions (Porter & Kramer 2006)
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3. RESEARCH METHODOLOGY
3.1. General knowledge about research methods
When it comes to research methods for the empirical study, Bryman and Bell
(2011) suggest that different options have to be distinguished among the
theories. Investigations can be quantitative, qualitative or both. Qualitative
researches use techniques, such as individual interviews or questionnaires to
collect data. Quantitative studies aim to find general truths about certain topic
using statistics and numbers, whereas qualitative studies tend to observe and
to describe a situation (Bryman & Bell 2011). Eisenhardt (1989) suggests that
combining these two methods in some cases can render a better analysis about
a particular situation and set of data. This combination allows researchers,
firstly, to have a general knowledge of a sample with quantitative methods, and
then focus on the subjects with qualitative techniques. However, this
combination is not always the best method because it depends on the nature
of the study’s subject and research questions (Eisenhardt 1989).
Another important differentiation is the dissimilarity between exploratory
research and descriptive research. Exploratory research enables insights into
formulated problems in order to generate new products ideas, establishes
priorities for further researches and clarifies concepts. In other words, it aims
to understand the problem itself through literature searches, experience
surveys, focus groups and case study analyses. On the other hand, descriptive
researches try to establish characteristics for a certain population by asking
what, when and how often. Descriptive research utilizes methods such as the
panel data and longitudinal and cross-sectional studies (Murthy & Bhojanna
2009). Exploratory research can be associated with qualitative methods
whereas descriptive research can be connected with quantitative methods.
Our three research questions intend to address the process in which
managerial innovation is impacting CSR. The process necessitates getting
sufficient knowledge about CSR actions from people who are actually
involved. To obtain clear explanations of the concepts, we chose to mainly
conduct a qualitative research. However, we decided to combine our
qualitative study with a quantitative one to establish statistics on the impact of
managerial innovation on CSR within IKEA. Understanding a process in
practical relevance requires insights into a company. This insight is particularly
23
provided by an exploratory design through a case study analysis that combine
qualitative and quantitative methods.
3.2. Data collection
3.2.1. Literature review
Initially, it is essential to widen our knowledge about the research field with
the aim of building a relevant basis for the theoretical framework. Reading
pertinent articles, research papers and book chapters from online databases
such as Google Scholar, Emerald, Business Source Premier and Scopus,
allowed us to collect a large quantity of information. For this research, the
main keywords were innovation, managerial innovation, technological
innovation, value, values, CSR and retailing. Due to the large amount of
articles related to our research subject, a selection of the best articles covering
the topic was made. In order to be more efficient, we shared the collection
and reading. Then through brainstorming, we developed a global vision on the
literature related to our main topics. With an acquired knowledge of all the
theories, the writing process of the theoretical framework started by linking all
the concepts.
3.2.2. Qualitative data
Methods from qualitative research have been used to collect the data from
IKEA. Magnus Engstrand, the Local IT and Sustainability Coordinator at
IKEA Karlstad, provided us with the information presented in the following
empirical part.
The first step of the primary data collection was sending a questionnaire to
Magnus Engstrand via email (see Appendix 2). From this we received the first
indication of the approach of managerial innovation and CSR at IKEA. Even
though the results provided interesting avenues for the thesis, much
information was missing. Therefore, a second questionnaire (see Appendix 3)
was sent to him in order to prepare for a face-to-face interview.
The interview occurred on April 2nd 2013 at the IKEA Karlstad store. During
the interview, questions regarding the process of CSR actions, the motivation
and results, involvement of managerial innovation, employees and customer
perception were addressed to Mr. Engstrand. The interview followed an
unstructured interview guide and allowed us to deepen our knowledge of
24
concepts that were relevant for our thesis. Mr. Engstrand gave us more details
on Planet & People Positive, the shopkeepers project, the Iway, Samhall and
the Code of conduct. During this meeting, we also collected paper documents,
such as the code of conduct, which are guidelines for the behaviour of each
worker; the Iway include guidelines for providers; and a booklet on VOICE, a
survey conducted among employees every semester.
This encounter also led to a connection with the Human Resources
Department intermediated by Mr. Engstrand. He continued working with us
by providing the documents about managerial innovations recently
implemented.
Finally, the last questionnaire (Appendix 4), targeting employees with different
diversities at IKEA, was distributed to generate more information about their
perception and the impact of managerial innovations on them. Twenty
questionnaires were returned and analysed.
3.2.3. Quantitative data
The quantitative questionnaire (Appendix 5) was built on the answers from the
qualitative questionnaire and was directed to IKEA employees to get their
perception of managerial innovation impact through CSR. With this
quantitative aspect of our case study, we would like to verify if our results
from the qualitative questionnaire could be generalized to the whole store. In
order too measure the impact of the new concepts on the employees,
environment and the community; scaled questions were used. The
questionnaire was sent to 78 employees on June 24th and 67 answers were
received on July 13th indicating a response rate of 85,90%. It was distributed
through our contact Mr. Engstrand via email. Answers were analysed with
Sphinx, an online software for the distribution of questionnaires and
processing of statistical data.
3.3. Motivation of the case study design
The aim of this thesis is not to provide processes that can be considered as
exclusive on what is happening in every company. On the contrary, our
approach is more observational as an attempt to collect more information on
CSR and Managerial Innovation links. A quantitative or qualitative research
method conducted separately would not help to understand profoundly the
25
models presented in the theoretical framework because it involves having an
inside view of an organization and its different business departments. We
needed to examine the motivations and consequences of certain changes and
the evolution over time rather than just to see a picture of a firm at a given
moment. Consequently, the combination of both qualitative and quantitative
studies was more relevant in relation to our objectives motivating the choice
of a case study design. An intensive analysis of a single case aims to provide an
in-depth elucidation of it (Bryman & Bell 2011). This case study represents an
opportunity to learn more about the topics mentioned in this thesis and find
out details omitted in the literature. As in many other research projects, our
case is based on a single organization: the IKEA store located in Karlstad -
Sweden.
3.4. Why IKEA?
The retailing sector was chosen for this thesis since it constitutes a wide area
for CSR actions. Zahra et al. (2000) found a positive relation between the size
of a company and managerial innovations. In other terms, a large company has
more recourse to managerial innovations than a small or medium corporation.
World’s Most Innovative Companies Ranking (Forbes 2013) supports this
theory. If we look at the top 20 list of Innovative Companies, many big
international firms can be found, such as Amazon.com, Apple, Google and
Nintendo. For our case, we needed a large company from the retailing sector
to combine both managerial innovation and Corporate Social Responsibility
aspects. IKEA represented an ideal company to study in our area as it has
shown a large degree of consideration for CSR through corporate values in its
code of conduct: works towards sustainability, does not tolerate harassment,
avoids conflicts of interest, and fights corruption (IKEA 2012a). Moreover,
with 338 stores in 44 countries around the world and 154 000 co-workers in
different functions, IKEA has a clear notion of managerial issues including
managerial innovations (IKEA 2012b)
3.5. Research Questions and Limitations
With this case study, we want to find concrete examples of managerial
innovations that lead or take part in CSR actions. To match our hypotheses
and theoretical framework, we excluded CSR activities that were not linked to
26
managerial innovations. Through the data collection presented below, we tried
to explore each project that was interesting for our research to find out why
these innovations were established, how they were implemented, in which
way(s) they are connected to CSR, and what are the results for the company or
stakeholders. In this analysis, we intend to answer these questions, as they
constitute the red thread of this empirical part.
3.6. Discussion of validity and reliability in our thesis
The validity of a case study design is often referred to as subjective because
information can be provided by a single source or can be misinterpreted by
investigators (Riege 2003). According to Yin (1994), three principles have to
be followed to overcome the subjectivity of a case study design: 1) use
multiple sources of evidence, 2) create a case study database, and 3) maintain a
chain of evidence. Thus, the data were collected not only from our contact,
but also from the employees who work in the Human Resources Department
and the Sustainability Department. The corporate website of IKEA and
business documents were also used to verify the data. Using multiple sources
of evidence brings a better objectivity to a research as it permits the
comparison of different points of view (Riege 2003). A case study database
was also created to gather all the documents and the information that was
collected for both empirical and theoretical parts. This enabled us to
objectively base our discussion and analyze the evidence. During the writing
process, we tried to maintain a chain of evidence since we intended to create
the links between theories and data that follow our research questions and the
evidence from the case study.
27
4. PRESENTATION OF THE RESULTS
4.1. Current Indicators to measure CSR at IKEA
To control the impact of its CSR actions on employees and customers, IKEA
uses various surveys. The first one, named VOICE and oriented to employees,
measures the satisfaction of the staff at the workplace. An external company
TNS Sifo conducts the VOICE survey twice a year1. The questions are related
to the feelings and well-being at the workplace as well as to CSR in order to
collect employees’ opinion about on-going projects and be aware of the
impact on them. Besides CSR and communication actions, another survey is
used in targeting customers. An in-store survey conducted by employees helps
IKEA to evaluate its impact on customers with questions on several topics
including CSR.
4.2. Innovation at IKEA
Currently, the IKEA group orients its strategy of innovation towards
technological innovation. Therefore the company strives to improve its
productivity through technological innovations and at the same time continues
to educate its employees to make sure that IKEAs values and its CSR strategy
are respected. Theoretically managerial innovations are the least developed,
but the main actions such as the code of conduct and “People & Planet
Positive” developed in the following analysis include several managerial
improvements. Even if technological innovations are part of these CSR
actions, they also concern and affect the communication, corporate culture
and other management aspects which cannot be neglected.
4.3. Focus on the IKEA store in Karlstad, Sweden
In the analysis part, most of the CSR actions will be detailed according to the
IKEA Karlstad store’s point of view. The Karlstad store opened in August
2007 and has a size of 26.000 m2 which welcomed 1 300 000 visitors in 2012.
This site has 214 employees of which 75% are female and 25% male2. Like
1 Magnus Engstrand Local IT and sustainability coordinator, survey on the 19
th March 2013
2 Magnus Engstrand Local IT and sustainability coordinator, email on the 16
th April 2013
28
every IKEA store, IKEA Karlstad implements different CSR actions shaped
by the parent company to help its community. For example, in a link with
IKEA foundation, the store organizes events to help homeless persons or
drug’ addicts. Furthermore, in an environmental concern the store works in
collaboration with the company O2, which is specialized in wind power
production in Nordic countries. Due to this partnership, the store is now
energy independent.
4.4. Presentation of CSR actions including managerial innovations at IKEA
4.4.1. Nomination of Steve Howard as Chief Sustainability Officer and People & Planet Positive Project (PPP)
Steve Howard was appointed new Chief Sustainability Officer of the IKEA
Group and started his assignment in January 2011 (IKEA 2013a). Before,
Steve Howard was the Chief Executive Officer and the founder of the Climate
Group, a non-profit organization working for a low carbon future through
inspiring and catalysing leadership (The Climate Group 2013). This
hierarchical title was created for him to launch IKEA into a new sustainability
strategy. Even though IKEA is a big company and by nature a sustainable
company, it saw itself as failing to communicate its values and actions to the
public.
The company’s previous initiative Never Ending List, NEL, which was
launched before Steve Howard’ recruitment, provided guidelines to respect the
environment. However, this initiative was not oriented on actions, thus
limiting its impact and communication. Consequently, Steve Howard was
approached to make a change in IKEA strategy regarding sustainability3.
“When I met with Ikea's CEO Mikael Ohlsson, I said: "If you're interested in being
incrementally less bad, I'm the wrong guy. If you're interested in transformational, I'm in."
Mikael's face lit up.” (GreenBiz 2013)
Steve Howard has the project to implement a new CSR strategy named People
& Planet Positive, which is composed of three main objectives. The first
objective is to create a sustainable everyday life for IKEA customers.
Accordingly IKEA created products, which use technological innovations in
their production to consume less energy and sell them at affordable prices.
3 Magnus Engstrand local IT and sustainability coordinator, survey on the 19
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The second objective is to become independent in terms of energy and
resources on a global scale. IKEA is conserving the environment by limiting
its waste and use its resources in an optimal way. The last objective is to create
a better life for the community. IKEA aims to improve the life of its co-
workers, employees as well as its providers (IKEA 2012c). Thus IKEA
planned quantitative goals that are spread over several years4.
By the end of 2013 all IKEA suppliers for home interior products will respect
the IWAY Chart. IWAY is the code of conduct reserved for suppliers and
which allows protecting the environment and the working conditions of co-
workers. Conditions and effects of the IWAY will be clarified later on.
By 2015, IKEA has the objective to produce its entire cotton products line in
accordance with “The Better Cotton” initiative. This certification promotes
and improves social and environmental impact of the cotton-farming sector.
By 2017, IKEA’s goal is to obtain at least 50 % FSC certified wood in its
products. The certification Forest Stewardship Council ensures to collect
wood from sustainable forests (FSC 2013). This certification is delivered by
an organization with the same name. Forest Stewardship Council has three
principal missions: respect of the environment by protecting the forest
biodiversity, social responsibility by involving communities and companies in
forest management, and make a sustainable economy from the forest
resources. To obtain this certification, IKEA needs to respect ten criteria as
well as the defence of forests with high conservation value, low environmental
impact or rights of indigenous peoples.
By 2017, IKEA will sell and use only LED lighting in their stores. LED
lighting is more respectful of the environment and saves energy.
Finally, by 2020, the amount of energy that the stores consume will be
generated by IKEAs renewable energy production. Presently in Sweden, the
group produces renewable energy from wind power plants to cover the usage
of the Swedish stores.
4.4.2. Universal Code of Conduct
The universal code of conduct is one of the latest managerial innovations
implemented on a global scale. As IKEA keeps moving into new businesses
and developing its supply chain, it is crucial for the organization to introduce a
4 Magnus Engstrand local IT and sustainability coordinator, survey on the 19
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code of conduct to guide employees in their actions as well as in the way to do
business. This booklet distributed to every worker is rooted in the culture and
shared values of IKEA. The code of conduct constitutes a basis for all
behaviour and helps IKEA to conduct business in a fair way all around the
world. Stakeholders share high expectations of the firm to perform business in
an open, honest and ethical way (IKEA 2012a). The code of conduct provides
guidelines on how workers should act, how they should work together, and
how the company handle external relations.
In addition to improving the internal and external images of the company, the
code of conduct aims to increase employee welfare as it includes regulations
on harassment, alcohol, drugs, and the respect of privacy. Moreover, the code
of conduct supports equal opportunities, which means that IKEA fights for
human rights and against discrimination. It also tries to inculcate the value of
sustainability for workers at every level of the hierarchy.
Alongside this innovation, the group has implemented the IKEA trust line at
an international scale too5. This project is a listening centre reachable by mail,
e-mail, online and telephone. The trust line is opened all the time, is free and
can handle employees concerns in their local languages. The purpose of this
centre is to give a voice to stakeholders if they have any concern regarding the
code of conduct or want to report behaviours that do not comply with the
latter.
4.4.3. IWAY
IWAY is the code of ethics created by IKEA Supply AG and is directed to
IKEA’s providers. This code aims to diffuse the corporate values to every
business partner. According to People and Planet Positive objectives, all the
providers in home interior products will have to respect the IWAY6. Besides
extending company values to suppliers, the purpose of the IWAY is to ensure
that social and environmental issues are respected through three guidelines:
What is in the best interest of children? What is in the best interest of the
worker? What is in the best interest of the environment? (IKEA 2008)
With this document, IKEA shows its recognition for the Universal Human
Rights and at the same time complies with the trade boycotts and embargos
decided by the United Nations (IKEA 2008). Another goal of this charter is to
decrease the corruption of companies in certain countries.
5 Magnus Engstrand local IT and sustainability coordinator, survey on the 19
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6 Magnus Engstrand local IT and sustainability coordinator, survey on the 19
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The IWAY defines suppliers as “any company, corporation or individual supplying
and/or delivering products, components, materials or services to the IKEA Group of
companies” (IKEA 2008). Thus, all entities mentioned in the previous definition
must respect the rules of IKEA if they want to establish a business
collaboration. Rules set in the IWAY concern for example the air quality,
noise, water and ground quality, chemicals products used, waste as well as
prohibition of child and forced labour (IKEA 2008). It also indirectly provides
the workers with guidelines regarding fire prevention, health, security at the
workplace, housing facilities, work and social laws, and struggle against
discrimination and harassment.
4.4.4. Shopkeepers
New managers called Shopkeepers were introduced in 2010 as a global setup.
The role of a shopkeeper can be identified as a department manager. They are
in charge of a specific department or area of an IKEA store. This department
is considered as their own little shop (Thomasdóttir 2011). For example at
IKEA Karlstad, there is one shopkeeper responsible for the living-room area,
one for the textiles department, one for lightning and so on as we can observe
in Figure 22. This new low-level manager position includes the same
responsibilities as a sales manager. They are in charge of the daily operations
supervision as well as managing the sales workforce of their department.
Figure 14: Organization chart of Karlstad IKEA store
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7 Magnus Engstrand local IT and sustainability coordinator, email on the 22
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At IKEA Karlstad, there were five managers in sales, which disappeared to
introduce ten shopkeepers. The purpose of this change was as the code of
conduct, work in the same way with leadership in sales worldwide and
increasing the number of managers to get a more present leadership in store.
The aim was also to have a greater focus and ownership from the shopkeeper
in their area of responsibility as well as to enhance and deepen skills,
responsibility and commitment8.
4.4.5. Samhall
The Karlstad IKEA store works in collaboration with Samhall, an organization
owned by the Swedish state. Samhall is specialized in the integration of
persons having trouble to enter the workplace (Samhall 2013). It includes:
people physically and mentally disabled and individuals having social
problems. Many IKEA stores collaborate with Samhall and also with
companies like Conexi in order to help people with autism and Asperger
syndrome to find jobs and allowing them to participate in the workplace9. The
goal of Samhall is to provide services and goods to companies while
developing the employment of people with disabilities. Samhall also provides
employees and specialized managers to take care of these workers (Samhall
2013). IKEA stores regularly employs people from Samhall, which has its own
office and managers inside the shop. Samhall employees have a supporting
role regarding customer services and sales with missions such as cleaning,
ensuring the availability of “shopping tools”, helping customers in picking
orders etc.
4.5. Interpretation of the answers from the qualitative questionnaire
Regarding the employment of Steve Howard, the answers to our questionnaire
are divided. Several employees did not answer our questions and some did not
know who Steve Howard is. For others, when they learned his background,
they found he was the right person to hire and liked the clear, new strategy. In
fact, the creation of a new hierarchical position appointed as organizational
innovation did not change the feelings workers have for IKEA. As they said, it
did not change their view on the company. In addition, some respondents
expressed good attitude towards the project People & Planet Positive.
8 Magnus Engstrand local IT and sustainability coordinator, survey on the 19
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April 2013 9 Magnus Engstrand Local IT and sustainability coordinator, email on the 23
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Opinions further diverge on the impact of PPP regarding our questionnaires.
Nevertheless, benefits brought to a majority of workers are more valuable than
in others concepts mentioned in our thesis. For example, education of
managers and workers in general, helped to explain to customers in what ways
IKEA could help them. A PPP slide presentation encouraged a lot of
employees to change their light bulbs to LEDs and now they even recommend
them to friends and customers. Some also said that PPP helped them make
better choices at home regarding environmental issues. Additionally, even
though a good clear strategy on how to move forward was really appreciated
by individuals, they also would like IKEA to show more of what they do. For
example, more communication on charity with soft toys selling would be
appreciated. To sum up, even if some people think PPP did not change
anything in their life, as they are already environmental friendly, it had an
important impact on two points. Firstly, it enhances the communication
between customers and employees on environmental issues, and thus it also
enhanced service quality. Secondly, it improves the quality of life for certain
workers at both the workplace and at home.
Among employees, the attitudes are mostly positive toward the IKEA Code of
Conduct. Relying on answers to our questionnaire, two main attitudes
regarding the code were observed. On the one hand, about half of the
respondents found that it was an opportunity to make people think and
discuss how behaviour can impact their colleagues. Furthermore, it increased
the awareness of each individual’s responsibility as well as the responsibility
that IKEA has for its personnel. On the other hand, a neutral attitude
regarding the code of conduct was found, due to the fact that the code
contains rules that are applied in most Swedish companies.
In other words, the respondents think that the code of conduct is good, but it
might not affect IKEA’s Swedish workers as much as other IKEA’s
employees in other countries. They quoted China as an example. Accordingly
employees answered unanimously that the code did not change anything in
their present working life. Regarding the trust line, comments follow the
previous tendency in that it has no impact, or at least not yet, at IKEA
Karlstad. Most of the employees think that they will not make use of this
platform. However, they do not perceive employees’ report on misbehaviour
as useful as it would be in other countries.
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4.6. Answers from the quantitative questionnaire
To enforce our qualitative results, we decided to generate statistics by
conducting a quantitative survey as detailed in the methodology. Each of the
following diagrams was based on the results from our quantitative
questionnaire available in Appendix 6.
Neutral answers are dominating regarding the impact on employees; followed
by the answers with positive impact. The number of answers for the negative
impact is very low. We can say that the CSR actions have an overall positive
effect. We can observe that”People and Planet Positive”, Shopkeepers as well
as Samhall have a real impact on the employees, while the IWAY, Steve
Howard and the Code of Conduct have a minor impact.
Figure 15: Bar chart representing the impact of CSR actions on the IKEA employees.
The impact on the environment is rather divided. A positive impact is
apparent for Steve Howard, PPP and IWAY. However, Shopkeepers, Code of
Conduct and Samhall have a neutral impact. Similarly to the previous bar
chart, the negative impact is almost non-existent. People and Planet Positive
has a huge impact (88.1%) on the environment. The low impact of
Shopkeepers, Code of conduct and Samhall can be explained by their goals
which are focused on employees and the community rather than the
environment.
35
Figure 16: Bar chart representing the impact of CSR actions on the environment.
Most of the actions have a positive impact on community. Once more, the
negative effect is nearly non-existent. However according to employees, Steve
Howard and shopkeepers globally have a neutral impact on the community
justified by their focus on the employees.
Figure 17: Bar chart representing the impact of CSR actions on the community.
In the first place we asked employees if they thought sharing the same values
with IKEA (Appendix 5). 94% of the respondents agreed sharing the values of
IKEA. Then, in order to test their answers, we asked them to select values
from a list made with the IKEA values and random ones. The six first values
selected by the respondents are shared by IKEA. Consequently, we can affirm
that IKEA values are deeply rooted in the company culture and employees
36
minds. We can also confirm that values resonance is occurring between the
company and its workers.
Figure 18: Bar chart representing the values shared by the IKEA employees.
Both the Shopkeepers and PPP projects have a major impact on the
employees working life. However the IWAY, the Code of conduct, Steve
Howard as well as the Samhall collaboration have no impact. Almost one third
of the interrogated employees did not answer the question because they did
not see any impact on their working life.
Figure 19: Bar chart representing the impact of CSR actions on the employees working life.
37
Only People and Planet Positive has a significant impact on the employees’ life outside the work. PPP action aims to improve the life of IKEA customers and IKEA employees. As the previous question, the non-response rate is very high (49.3%).
Figure 20: Bar chart representing the impact of CSR actions on the employees’ life outside
IKEA.
The above chart shows that only the Shopkeepers implementation has a real
positive impact on the productivity and the well-being of the employees.
Furthermore, the non-response rate is equally significant. We can conclude
that nearly 50% of employees think none of these actions have an impact on
their productivity or their well-being.
Figure 21: Bar chart representing the impact of CSR actions on the productivity and well-
being of IKEA employees.
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5. ANALYSIS AND DISCUSSION OF THE RESULTS
In this chapter, concepts from IKEA presented in the empirical study will be
analysed one by one following the structure of Figure 2 from the theoretical
framework. Firstly, the type of stimulus at the basis of the managerial
innovation will be determined. Secondly, we will identify which categories of
innovation are involved in each CSR action: technological, management,
administrative or organizational innovations. Then, the impact of these
managerial innovations through CSR within IKEA will be analysed. Finally,
hypotheses developed in the introduction will be discussed based on our
analysis.
5.1. Analysis of Steve Howard’ employment
Figure 22: Analysis of Steve Howard’ employment
5.1.1. A CSR strategy stimulus
According to Birkinshaw et al. (2008), the trigger element for managerial
innovation can be of different types. In this case, the stimulus cannot be
identified as technological innovation because no technology was involved.
The goal of this action is to secure the company future and the way IKEA is
conducting business. Kytle and Ruggie (2005) mentioned that risk
management is by definition a component of CSR. Consequently, the
employment of Steve Howard appears to be from a CSR strategy stimulus.
5.1.2. Organizational Innovation is the only component of Steve Howard’ employment
Damanpour and Aravind (2011) define organizational innovations as new
organizational structures in a company. The creation of a new position can be
interpreted as an organizational innovation since it modified the structure of
the Sustainability Department. Sustainability managers existed before Steve
39
Howard’ employment to control the CSR strategy in each store, but there was
no higher position leading the whole group10.
5.1.3. An impact represented by intangible value through values resonance.
As observed in the presentation of questionnaires’ results, no real impact of
value occurred at that time. According to the definition of value from
Grönroos (2012), there is no value measurable in financial terms for this
action. Nevertheless some positive attitudes towards the company have been
created through Steve Howard’ employment. These attitudes can be described
as an intangible value for the company. The positive value was created in
accordance with the concept of values resonance (Enquist 2012). As shown in
the Figure 18, employees share values such as friendship and responsibility
with IKEA. The background of Steve Howard and his sustainable values
matches the corporate values of IKEA, resulting in values resonance between
the new Chief Sustainability Officer and employees.
5.2. Analysis of the People & Planet Positive Project
Figure 23: Analysis of the People & Planet Positive Project
5.2.1. A CSR strategy stimulus
Such as Steve Howard’ employment, the motivation of PPP is from another
stimulus than technological innovation (Birkinshaw et al. 2008). According to
the information collected through the interview with Magnus Engstrand, the
motivation of this new strategy is purely CSR. IKEA has a sincere wish to help
its community and to reduce its impact on the environment as well as to
educate its customers. For instance, through actions like “better cotton” and
LED lighting, IKEA wants to improve the life condition of its customers with
more sustainable products. IWAY provides a protection for IKEA’s
community and suppliers’ employees by establishing strict rules regarding child
10
Magnus Engstrand local IT and sustainability coordinator, survey on the 2th April 2013
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labour, environment safeguarding and employee welfare. As defined in the
theoretical framework, the consideration of natural resources and the
community by IKEA belongs to creating shared value, which is a component
of CSR (Porter and Kramer 2006).
5.2.2. People & Planet Positive project involves both managerial innovation and technology
For People & Planet Positive, we observed that arising actions are composed
of both managerial and technological innovations. When a company develops
a strategy at a global scale, it is required to educate all the managers and
employees to diffuse at best its values to the customers. Educating falls under
management innovation category as it concerns the way managers operate
with their working teams and deal with the new system (Damanpour &
Aravind 2011).
Technological innovation is also involved as several actions are based on new
materials, or new ways to produce materials. For example LED is a new
technology reducing the consumption of energy from lighting. IKEA’
independence in terms of energy might as well lead to technological
innovations regarding the production of green energy. In this project, technical
progresses constitute with managerial innovation a key element to create value
for IKEA (Krauss et al. 2012)
5.2.3. Values resonance impacting IKEA employees’ behaviour
As PPP is a long-term strategy spread over seven years and some initiatives are
still at an implementation phase, results are not available yet. Outcomes of the
IWAY, which has the closest deadline, will be available in 2014. We cannot
analyse the impact of values resonance and created value based on IKEA’
documents. Values regarding environmental issues propagated by PPP match
the stakeholders’ values, resulting in values resonance (Enquist 2012). Most of
the employees (88.1%) think “People and Planet Positive” project has a
positive effect not only on the environment but also on them (41,8%) and on
the community (41,8%). Even if statistics from Figure 25 show that PPP has
not impact on the productivity and well-being of IKEA employees, it has an
important impact in two different aspects. Firstly, it enhances the
communication between customers and employees on environmental issues,
and thus it also enhanced service quality. Secondly, it improves a quality of life
on certain workers at both the workplace (20,9%) and the home (38,8%).
41
Therefore, the impact of this project can be categorized as intangible value
according to Grönroos (2012).
5.3. Analysis of the Code of Conduct and Trust line
Figure 24: Analysis of the Code of Conduct and Trust Line
5.3.1. A Corporate Culture stimulus
As the motivations in the two preceding actions, the stimulus of the Code of
conduct also differs from technological innovation. The purpose of this action
was to unify the culture and employees’ behaviour all around the world
according to IKEAs values. This stimulus could be referred to a corporate
culture stimulus.
5.3.2. A combination of administrative and organizational innovations
Regarding the different categories of managerial innovation, we can associate
the universal code of conduct to an administrative innovation according to the
definition given by Evan (1966). In other words, it influences the Human
Resources policy in terms of hiring and dismissals. All employees have to
respect this code to be part of the IKEA Company. The trust line can be
identified as an organizational innovation as it involves the creation of a new
internal structure (Damanpour & Aravind 2011).
We remain sceptical on the involvement of technology in reference to the trust
line. However from our point of view, it would not constitute a technological
innovation because even though the purpose and the name might be new, the
technology used is not innovative. All the scholars quoted in part 2.3 from the
theoretical framework, consider technological innovation as being
42
technological progress. Therefore a new call centre does not constitute a
technological innovation.
5.3.3. A value resonance resulting in a neutral impact on IKEA
Like the other projects, values transmitted by the code of conduct are IKEAs
corporate values, based on Swedish culture. Consequently, values resonance
occurs (Enquist 2012). In contradiction with the theoretical framework, it does
not result in positive value among employees. A majority of employees
(56.7%) answered the code of conduct had a neutral impact on them. The
neutral attitude towards the code of conduct and the trust line is due to the
sharing of common values. The quantitative study shows the majority (94%)
of employees share the values of the company. Results from qualitative
questionnaires state that it might be valuable in other countries where values
dissonance would occur. 61,2% of IKEA employees considers the code of
conduct as having a positive impact for the community. Answers from the
qualitative questionnaire highlight that the positive impact would occur if the
community does not share the IKEA values.
5.4. Analysis of the IWAY
Figure 25: Analysis of the Iway.
5.4.1. A CSR strategy stimulus
As stated in the presentation of the results, this chart was clearly created with a
CSR objective. Its environmental and social concerns regarding child labour,
welfare of the workers and the protection of the environment are part of
Created Shared Value described by Porter and Kramer (2006). Consequently,
its stimulus matches a CSR strategy.
43
5.4.2. An administrative and organizational innovation
The implementation of the IWAY within the IKEA group and its suppliers
involves changes in terms of managerial innovation. The diffusion of a new
official chart includes a global information system between the organization
and its business partners, as the IWAY requires an efficient communication.
IKEA needs to collect but also give information to their suppliers. A
modification of the information system has to deal with administrative
innovation (Evan 1966). To ensure the viability of its partners, IKEA had to
enforce its audit department to control that the chart is respected. Hence,
audit departments have been created in every country. Even if IKEA uses a
third party too for their auditing, they had to create a controlling network
alongside the IWAY. Consequently, the structure of the audit department has
been modified, which corresponds to an organizational innovation
(Damanpour & Aravind 2011). The new structure was created to fulfil specific
needs of IKEA.
The IWAY is a good example of how a company can implement a managerial
innovation without any need of technological innovation. Of course,
technology is used to collect data and to audit companies but there is no
technological innovation to create value following the theories of Den Hertog
(2010) and Birkinshaw et al. (2008).
5.4.3. A values resonance resulting in a decrease of the corruption
In regard to the results, the IWAY started to decrease the corruption between
IKEA and its providers11, which were chiefly represented by invitations to
restaurants, travels, goodies etc. So we can say that implemented managerial
innovations had a positive impact on communities and the company with
intangible value (Grönroos 2012). Our though is enforced by Figure 17, in
which IWAY is perceived as positive for the community (67.2%).
Communities are also positively impacted with the prohibition of child labour
and working conditions.
11
Magnus Engstrand local IT and sustainability coordinator, survey on the 19th
March 2013
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5.5. Analysis of Shopkeepers’ implementation
Figure 26: Analysis of Shopkeepers’ implementation.
5.5.1. Unified Leadership as a stimulus
Once more the stimulus is not technological and not particularly CSR. In the
same way as the code of conduct unifies the company culture, the
implementation of the shopkeepers aims to unify the leadership in all the
stores and gain more control over every department. The only link between
the stimulus and CSR would be risk management (Kytle & Ruggie 2005).
Unifying the leadership reduces risks linked to management problems.
5.5.2. Organizational and management innovations as a central element of shopkeepers
The shopkeeper project can be labelled as an organizational innovation
because it constitutes a change in the organizational chart of the company. It
can also refer to management innovation as it modifies the way managers take
decisions in regard to their new responsibilities (Damanpour & Aravind 2011).
To our knowledge, there is no technological innovation involved in the
shopkeeper implementation.
5.5.3. A positive impact reflected by an increase of trust among workings teams
The link between this managerial innovation and CSR is that the
implementation of low-level managers has enforced the relation between
employees and their managers. The implementation of the shopkeepers in the
store had the most significant effect on the employees (57.7%). This action
implies a positive impact on employees by the way of a structure more
efficient, a better sale process, and the creation of a trust relationship between
managers and the staff. According to Magnus Engstrand12, shopkeepers have
increased the trust within working teams in the different departments. The
12
Magnus Engstrand local IT and sustainability coordinator, survey on the 2th April 2013
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increase of trust can be categorized as intangible value (Grönroos 2012).
5.6. Analysis of Samhall collaboration
Figure 27: Analysis of Samhall collaboration.
5.6.1. A CSR strategy stimulus
According to Tilcsik and Marquis (2013), collaborating with an organization to
help the community refers to the first component of CSR: corporate
philanthropy. Thus, the stimulus for managerial innovation is a CSR strategy.
5.6.2. An important contribution of management Innovation and organizational Innovation to improve CSR
The integration of Samhall workers includes different managerial innovations
such as management and organizational innovations (Damanpour & Aravind
2011). IKEA has to educate its managers and personnel to be mindful of the
special status and needs of the Samhall workers in order to give them the best
integration within the store 13 . Furthermore Samhall employees need to be
trained and instructed to learn about the corporate culture, values and the
purpose of their missions. Consequently, this action can be qualified as a
management innovation because it involves many changes regarding the
education of employees and human resources management. Furthermore, the
integration of Samhall employees can be categorized as an organizational
change because it is part of a subcontracting process. Furthermore, Samhall
has an office and its own managers within IKEA, which leads to modifications
of IKEAs store structure.
13
Magnus Engstrand Local IT and sustainability coordinator, email on the 23rd
April 2013
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5.6.3. Positive impact on IKEA employees and the community due to values resonance
According to the results of our questionnaire among IKEA employees, we
observed positive feelings towards the Samhall workers. Employees think this
collaboration is both beneficial for the company and the community. IKEA
has a positive impact on the community (71.6%) and on the employees
(49,3%) with the Samhall collaboration. This result is explained by the efforts
IKEA make to employ disabled people and to integrate them in the
workplace. Due to the positive impact on the community we assume that the
internal and external image of IKEA is improving regarding CSR. Moreover,
Samhall allows IKEA employees to be more concentrated on their tasks by
doing their missions14.
5.7. Discussion of the case study results
5.7.1. Discussion of Hypothesis 1: Involvement of technological innovation in value creation process
Our first hypothesis mentioned that technological innovation could be
considered as a potential trigger element for managerial innovation
(Birkinshaw et al. 2008). Technological innovation is therefore optional in
bringing value to the company (Den Hertog 2010). What we learned from the
IKEA case study shows that these concepts can be applied with a practical
relevance. We cannot absolutely affirm or demonstrate this point as we
focused more on qualitative research rather than quantitative. However,
concrete examples go along with our first hypothesis and bring more details.
For instance, the implementation of shopkeepers did not necessitate any
technological innovations to increase trust between working teams,
contradicting theories from Kraus et al. (2012) and Chesbrough (2010). We
remain convinced that the code of conduct and IWAY will bring value in
other countries without any need of technological innovation (as well).
Additionally, the People & Planet Positive project brings another point of
view, which is presented in Figure 2 at the beginning of the thesis. Regarding
the answers from our questionnaire, PPP is one of the projects that has the
most important positive impact on the company; however this project
combines both managerial innovation and technological innovation. The
project PPP including LED innovation, enforced by the education of
employees, leads to a more sustainable and environmental friendly living both
14
Questionnaire on Managerial Innovation and Corporate Social Responsibility destined at the Karlstad IKEA store employees on the 26
th April 2013
47
professionally and personally for the workers. This observation supports the
theory of Damanpour and Aravind (2011) from the theoretical framework,
which emphasises that technological innovation can either be a trigger
element, a support element or a result of managerial innovation. To sum up,
examples support that managerial innovation can bring value alone but that
integration of technological innovation in the process is possible as well.
5.7.2. Discussion of Hypothesis 2: Different types of value are brought by managerial innovation
According to Grönroos (2012), we stated that managerial innovation could
bring three different types of value: intangible value, tangible value as well as
negative value. Regarding the analysis of the different actions released by
IKEA, we observed an absence of tangible value in the impact of managerial
innovation on CSR. This observation can be explained through two aspects.
The first aspect is that IKEA does not have the financial results from its
projects yet as they are mainly at the development or implementation stage.
Therefore, financial results will be available one business year after the end of
implementation processes. The second aspect is that there is no financial
impact on the company because the main goal of these projects is to create
intangible value. Financial value would be created indirectly by the increase of
employees’ productivity, service quality or well-being at the workplace
(Edvinsson & Malone 1997). Currently, the lack of financial documents does
not allow us to affirm or refute our second hypothesis. The case study shows
that managerial innovation can directly bring intangible value to the company
even at the early stage of implementation. Analysis of the projects also shows
that if managerial innovation has an impact on financial performance, it might
be indirect and appear later on.
5.7.3. Discussion of Hypothesis 3: Values resonance and Values dissonance
In the theoretical framework, we mentioned the need of values resonance
between companies and their stakeholders in order to create intangible value
(Enquist 2012). However in the empirical part, this hypothesis appears to be
contradicted in some regards. If we take a look at the results brought by the
implementation of the Code of Conduct, we observe that there is no real
impact on Swedish employees or at least not enough to be valuable here in
Karlstad with 56.7% of neutral answers. Regarding theories, Swedish
employees and IKEA share the same values so values resonance should occur
resulting in intangible value. Nevertheless, in answering our questionnaire,
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workers mentioned that this innovation did not bring a lot of value to them
but would be more valuable for countries which do not share Swedish values.
The gap between values should result in a value dissonance instead of having
positive results. Consequently, we assume that in certain cases, value
dissonance does not constitute a barrier for value creation. For example, the
code of conduct implemented in Asian countries could have a positive impact.
Working and living conditions of Asian employees at IKEA or suppliers’
workers could improve through the IWAY. The difference between values in
this case would lead to the creation of value for the personnel. We do not
refute that values may drive value but we found an example contradicting the
third hypothesis represented in Figure 12, which stated that value resonance
leads to positive value and value dissonance to negative value.
5.7.4. Discussion of managerial innovation involvement in CSR
As perceived in our case study, managerial innovation has a significant link
with Corporate Social Responsibility and plays an important role in these
actions. Nonetheless, its involvement can be different according to projects.
Thus, managerial innovation can either be a support or a central element of
the implementation process of CSR projects. These options can be illustrated
for example in People and Planet Positive, where managerial innovation only
concerns the education of managers and workers. It therefore constitutes a
supporting part of the process since PPP mainly depends on technological
innovation and other factors. On the contrary, shopkeepers or IWAY are
entirely based on managerial innovations. Implementation of these projects
would not be possible without these innovations, as they constitute the heart
of both projects. Additionally we can observe in the case study that all types of
managerial innovation can be used in order to complement CSR actions. In
IKEAs new concepts: management innovation is used to educate managers,
organizational innovations constitute the need of change regarding the
structure and administrative innovations concerns new corporate documents,
charts or information systems. These observations confirm the role played by
managerial innovation in CSR represented in the theoretical framework.
5.8. Limitations of the study
Regarding the amount of time to conduct this study, financial documents were
not available, thus limiting our analysis of potential tangible value brought by
managerial innovation. Although the thesis is analysing projects for a short
period, four months, these actions are planned over several years and could
49
change or evolve. Thus, the impact of managerial innovation might also
change from what we can observe presently. Our study is focused on IKEA
Karlstad and effects on its employees and community; therefore results cannot
be generalized throughout the group. Although quantitative aspects were also
considered at the beginning of the writing process, unfortunately surveys
documents were not accessible to us. By conducting our own questionnaires
targeting employees’ attitudes towards the CSR projects, we intended to
overcome this obstacle.
50
6. CONCLUSION
6.1. Final conclusion
The goal of this thesis was to get a deeper understanding of managerial
innovation’s impact on CSR. To achieve this purpose we intended to answer
the following research questions through IKEA case study:
We found that managerial innovation was motivated by different stimulus.
None of them actually included technological innovation, supporting our
arguments that it does not represent a mandatory element for managerial
innovation to impact CSR.
We observe that managerial innovation can be either a central or supporting
element of CSR actions. However, each type of managerial innovation can be
used to implement CSR actions in a company.
The observation was made that intangible value is the main impact of
managerial innovation on CSR. Tangible value such as financial aspects were
impossible to study since most of the projects were at the implementation or
planning stage. We did not observe negative value, only neutral attitudes from
employees toward some actions. Therefore we can only confirm that one of
the three types of value can be brought to a company. In contrast to the
theoretical framework, values resonance did not bring systematically value
whereas values dissonance may be positively valuable in certain cases.
6.2. Suggestions for further research
Considering the discussions highlighted in this thesis, further researches are
needed in the field of managerial innovation on several aspects. Firstly, direct
measuring means for the implementation of managerial innovations would
facilitate companies to identify its benefits. Considering managerial innovation
as a trigger element for CSR could bring deeper knowledge on managerial
innovation and CSR links. Which could generate an observation of how
different types of managerial innovations can create different types of value.
Further qualitative studies involving concrete examples are needed to make
this concept more accessible to professionals, companies, students and
researches. Following our discussion on value, more studies should be done to
51
develop a better understanding of values dissonance and resonance effects. As
our thesis was focus on qualitative analysis of the concepts and even if we
found contradictions to the theories in practical relevance, our results cannot
be generalized. Consequently, quantitative studies on managerial innovation
impact on companies have to be conducted at a larger scale.
52
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Appendix 2: Survey of Magnus Engstrand local IT and sustainability
Coordinator on the 19th March 2013
What are the latest actions implemented in terms of CSR within IKEA?
What are the main objectives of these actions?
Are you already aware of some results among employees/customers/partners?
How do you measure the impact of CSR on your customers?
How do you measure the impact of CSR on your employees/partners?
What are the latest managerial actions implemented to improve employee
productivity, company efficiency etc.?
What are the latest managerial actions implemented to improve the company's
image?
What was the process to implement these new managerial actions?
What was the motivation at the roots of these new actions?
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Appendix 3: Interview of Magnus Engstrand local IT and sustainability Coordinator, on the 2th April 2013
People & Planet Positive – You quoted several of your goals but can you give
us at least some examples of administrative, structural, or managerial changes
involved to reach them? Or detail all the main changes if possible for one goal
that we can analyse in our thesis.
Iway – Since when does the Iway was set up? What are the criteria present in
the Iway? From our point of view, the Iway involves administrative changes
and structural because you do your own audit, how do you process to select
your suppliers? Do you have a special department for this?
Survey on customers – Could you observe a change in the customers
perception of the company following to CSR actions you mentioned?
VOICE – Who is in charge of the survey? Does the questionnaire change
every year? Could you observe a change in employees’ perception following
some managerial innovations?
Technical innovation – Do you have a recent example? Does it include
managerial innovations to implement this one?
Shopkeepers – Is there any link with CSR actions, you speak about one
shopkeeper for textile area and you mentioned that one of your goal is that all
your cotton is according to the better cotton initiative. What does it involve
for the shopkeeper?
Code of conduct – What was the impact of this code on your employees? On
your image? What were the changes involve implementing this code.
Steve Howard – Does the position of Chief Sustainability Officer existed
before or was it created for him? How do you know it improved or will
improve your image?
Corruption – Can you develop a little more on the impact of the code of
conduct regarding to corruption with one example?
NEL – Can you explain us what is the Never Ending List?
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The testament of a furniture dealer – In this document, the values of the
company are presented. We just want to know if you have any survey or prove
that your customers and employees share the same values
IKEA foundation – What are the different soft toys you have? Does it involve
any managerial changes? Does the fact that one euro is donated is indicated to
the customers?
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Appendix 4: Questionnaire on Managerial Innovation and Corporate Social
Responsibility destined at Karlstad IKEA store employees
Survey context:
We are two French students from business school doing a double degree
program in service management at Karlstad University. We are presently
writing our master thesis on the impact of managerial innovation on
Corporate Social Responsibility. In other words, how managerial innovation
can be involved in CSR actions and what are the results of this combination.
This survey aims to provide some results, feelings from employees about some
CSR actions where managerial innovations were included. We want to see if
these actions brought value for IKEA and its employees.
Questions:
What are your thoughts regarding the code of conduct?
Did the code of conduct change your working life at IKEA? If yes, in which
way?
What benefits do you think the trust line can bring to you?
What benefits does IKEA offer to the “Samhall”? What advantage IKEA can
have working with Samhall?
Do you think Steve Howard brought a fresh new strategy to IKEA? Did his
employment change anything in your perception of IKEA?
What can of value do you think People Planet Positive (PPP) can bring to you
in your professional and personal life?
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Appendix 5: Qualitative questionnaire on Managerial Innovation and Corporate Social
Responsibility destined at Karlstad IKEA store employees
Survey context: We are two French students from business school doing a double degree program in service management at Karlstad University. We are presently writing our master thesis on the impact of managerial innovation on Corporate Social Responsibility. This survey aims to provide some results, feelings from employees about some CSR actions where managerial innovations were included. We want to see if these actions had a positive impact on employees, community and environment.
Question n°1: Estimate the impact of these projects: (1 = negative impact, 2 = rather negative impact, 3= neutral, 4 = rather positive impact, 5= positive impact)
Steve Howard Code of conduct On you On you 1 2 3 4 5 1 2 3 4 5
On the environment On the environment 1 2 3 4 5 1 2 3 4 5
On the community On the community 1 2 3 4 5 1 2 3 4 5
People and Planet positive project IWAY On you On you 1 2 3 4 5 1 2 3 4 5
On the environment On the environment 1 2 3 4 5 1 2 3 4 5
On the community On the community 1 2 3 4 5 1 2 3 4 5
Samhall Shopkeepers On you On you 1 2 3 4 5 1 2 3 4 5
On the environment On the environment 1 2 3 4 5 1 2 3 4 5
On the community On the community 1 2 3 4 5 1 2 3 4 5
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Question n°2: Do you think, you share the values of IKEA? YES NO
Question n°3: Could you pick 4 values that are important to you in this list? Autonomy Cohesion Diversity Friendship Give example
Hedonism Humility Individualism Responsibility Tradition
Question n°4: Which one of these projects had a positive impact on your working life?
Shopkeepers
Samhall
Steve Howard
employment
People & Planet Positive
Iway
Code of conduct
None of them
Question n°5: Which one of these projects had a positive impact on your everyday life outside the workplace?
Shopkeepers
Samhall
Steve Howard
employment
People & Planet Positive
Iway
Code of conduct
None of them
Question n°6: Did any of these managerial innovations improved your productivity or welfare at IKEA?
Shopkeepers
Samhall
Steve Howard employment
People & Planet Positive
Iway
Code of conduct
None of them
Appendix 6: Results of the qualitative study
Question n°1: Estimate the impact of these projects
Question n°2: Do you think, you share the values of IKEA?
Question n°3: Could you pick 4 values that are important to you in this list?
Question n°4: Which one of these projects had a positive impact on your working life?
Question n°5: Which one of these projects had a positive impact on your everyday life outside the workplace?
Question n°6: Did any of these managerial innovations improved your productivity or welfare at IKEA?