Applying a Moral Framework
The Muller 2016 case study unravels an ethical dilemma faced by IKEA, the world’s leading furniture store in its quest to expand to Russia. According to Garvey (2017), the retailer had expanded throughout the US and some parts of Europe. The collapse of USSR provided a suitable opportunity to penetrate the Russian market through the provision of cheaper, durable alternative and by specifically targeting the 20- 30 years market category. However, the company faces a stumbling block, owing to the prevalence of corruption in the region.
The major ethical dilemma rose from a detrimental threat by a corrupt bureaucratic environment in Russia against the company’s desire to adhere to its ethical standards (Müller, 2016). Muller notes that it would have been impossible to get anything done in Russia without offering bribes to authorities. The Mueller case study reveals details that the city of Moscow halted the opening of the stores a few weeks before its completion. Consequently, authorities gave an ultimatum for IKEA to pay a bribe before the official opening, citing it as a “special service fee”. Notably, this scenario was just one case amongst dozens that would follow in the pervasive corrupt business milieu.
For a long time, IKEA had wanted to do business in Russia since the 1960s while it was still the Soviet Union (Garvey, 2017). Previous in 1991 and 1993 efforts to set up turned futile due to the collapse of the Soviet Union and the Russian constitutional that resulted in an unsuitable economic scenario. Before its entry in 2000, the company faced the dilemma of fulfilling its long-time ambition against compromising its integrity through offering bribes to various departments such as health and safety, tax, fire and electricity departments. For example, Mueller cites that several weeks to the opening of the store, a local utility company vowed not to provide services to the company unless a bribe was offered. Such situations prove to be dilemmatic to Lenart Dahlgren who was leading IKEA’S expansion into Russia.
Boardman & Klum, (2016) assert that corruption within an organization compromises the value of its service. Thus IKEA faced an uphill task of dealing with corruption within its employees as much as it strove to survive in corruption- controlled Russia. Similarly, for the business to succeed, it needed to have sound ethical practices that contributed to its integrity and effectiveness. The ethical tone of an organisation can impact on its efficiency, decision making, staff commitment and job satisfaction.
IKEA had been successful at developing a brand known to have an uncompromising attitude towards corruption in other parts of the world (Garvey, 2017). However, it was not as successful in ensuring its employees reflect the same stand. Employees in senior positions such as management are likely to influence the ethical behaviors of their juniors. Therefore, it’s imperant that IKEAs senior employees like Dahlgren maintain ethical behavior to guard the reputation against aberrant norms. Here, the dilemma is evident for the employees who must safeguard company policy and reputation but still deliver in a system setting known to tolerate and cultivate corruption.
Jondle & Ardichvili, (2017) outlines several factors that contribute to ethical dilemmas. They include pressure from management, ambition and discrimination. Different companies have varied culture as some may tend to stress on profits above everything else. Some firms may turn a blind eye to employees who breach the ethical code of conduct. While their employers may not directly imply it, MacKinnon & Fiala, (2016) note that the workers feel immense pressure to do immoral activities to please their bosses resulting in an ethical dilemma.
Pollock, (2016) highlights opportunity, little fear of exposure, lack of ethical leadership and support, and cultural acceptance of unethical behavior as some of the factors that contribute to unethical dilemmas. Some environments have poor systems that provide the opportunity for unethical standards without fear or likelihood of detection. For example, the Russian environment had poor systems at the time of IKEA establishment and Dahlgren could have maneuvered through had he wished to violate the company’s corporate social responsibility. Moreover, the cultural acceptance of corruption as a means of business survival in Russia increases pressure on the management to fall into unethical practice.
Individual factors cannot be ruled out as they may significantly contribute to ethical behavior (Nair & Saiz-Álvarez, 2018). Values dictate peoples’ judgments and some people perceive unethical practice as just a usual way of conducting business. work situations tend to be affected by personal ambitions whereby if one’s personal goal is to accumulate wealth, they may be susceptible to corrupt behaviour in future. An employee’s personality, therefore, plays a critical role in subduing ethical dilemmas. This factor juxtaposes with Lenart Dalhgren’s values during his tenure as IKEA chief executive officer.
Ambitions could drive individuals and companies as a whole into ethical dilemmas (Jondle & Ardichvili, 2017). For employees, they may feel a thirst for recognition while firms may fall into ethical dilemmas while trying to attain ambitions. IKEA’s ambition to set up shop in Russia is arguably a critical factor that adds to its dilemma. Based on statistics, the retailer is certain of positive results in the Russian market. However, to achieve dominance quickly, they have to resolve into unethical practices uncommon to its brand.
This essay recommends the utilitarian approach and the common good approach for IKEA to conquer the Russian market without engaging in unethical practices. Utilitarianism theory posits that in the event of an ethical dilemma, the best action to take is the one that leads to the least harm (MacKinnon & Fiala, 2016). It provides a significant balance of good over evil and ensures that all stakeholders namely the corporation, the society and the government suffer the least harm. In this case, IKEA would choose against corruption as it’s a retrogressive unethical behavior that serves o benefit a few parties but causes more harm to the majority. The company would set a bad precedence for its future business in the region if it decided to succumb to insistent solicitation of bribes from government departments.
The common good approach, associated with Aristotle promotes ethical actions that are beneficial to society at large. The theory differs from ethical egoism which mainly focuses on individual selfish interests. Instead, the Common good approach encompasses the society’s will and considers the best for people as a whole (MacKinnon & Fiala, 2016). Similarly, IKEA should be guided by compassion for their customers. By submitting to corruption, the company would abet practice that affects the most vulnerable, increases costs while hindering economic development by distorting markets.
In conclusion, IKEA should uphold corporate social responsibility by making choices that front social good beyond its interest as a company. By partaking in corruption, the company would advance short term goals at the expense of its long term ambition. In the long run, such a move would affect organisational integrity, reputation and competitiveness of its products not only in Russia but across the world.
References
Boardman, C., & Klum, V. (2016). Building organizational integrity. Corruption and Anti-Corruption. https://doi.org/10.22459/cac.03.2013.05
Garvey, P. (2017). Unpacking IKEA. Unpacking IKEA, 1-26. https://doi.org/10.4324/9781315760704-1
Jondle, D., & Ardichvili, A. (2017). Ethical business cultures in emerging markets. Cambridge University Press.
MacKinnon, B., & Fiala, A. (2016). Ethics: Theory and contemporary issues. Cengage Learning.
Müller, U. (2016). Corruption in Russia: IKEA’s expansion to the east (A-D). Emerald Emerging Markets Case Studies, 6(2), 1-25. https://doi.org/10.1108/eemcs-11-2015-0199
Nair, S., & Saiz-Álvarez, J. (2018). Handbook of research on ethics, entrepreneurship, and governance in higher education. IGI Global.
Pollock, J. M. (2016). Ethical dilemmas and decisions in criminal justice. Cengage Learning.