Advances in Management and Applied Economics

The exchange of knowledge: a case study

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  • Abstract

    The Brundtland Report (1987) is the first formalization of the relationship between development and environment: "Development is sustainable if it meets the needs of present generations without compromising the ability of future generations to meet their own needs." In the sixties and seventies, economists began to study the relationships that exist between the economic and natural environments. Before then, standard economics had not considered the natural capital as a factor of exhaustible production; a process accelerated by rapid economic growth, technological innovation, and international trade. One can underline how the integration of social responsibility into corporate strategy is a factor of competitiveness in the market. Such an integration internalizes the positive externalities generated, achieving the full involvement of all stakeholders. A prime example of this is found in the world’s leading furnishing company IKEA. Widely regarded as one of excellence in the field of environmental responsibility, IKEA is a Swedish company which aims to make sustainable development the core business value. Among the company’s many activities, we will be examining IKEA’s transportation infrastructure; as it has the greatest impact on the environment. The efficient allocation of resources has always been a goal of the science of economics and in the realization of this objective, companies play a dominant role, especially when one considers the importance assumed by the social and environmental sustainability of development. Companies, in fact, interact with the environment through the exchange of matter, energy, information and knowledge. The optimal allocation of resources cannot be left to the impersonal forces of markets that are often inefficient and one cannot but recognize that there is an ethical judgment in every business decision which may favor one stakeholder at the expense of another. According to the view held by stakeholder theorists (Carroll, 1979), corporate social responsibility is expressed not only in the legal and economic fields but also has a dimension of ethical responsibility. In other words, the separation between ownership and control leads one to conclude that managers cannot act in shareholders’ or their own interests without taking into account the higher interest of society as a whole. The company, in fact, does not only engage in market transactions, but establishes actions of a cooperative and competitive nature with a large number of individuals and groups. The company’s mission, therefore, must take into account its social responsibility which has to be present at all stages of the production process and in all relationships that the company has with the various stakeholders. Among these an important role is played by suppliers, with whom the firm sets itself in a position of internal auditor, recognizing that the creation of knowledge also comes through cooperative behavior. Businesses, therefore, being able to encode and transfer knowledge to suppliers, become organizations that facilitate the production of benefits for the community in the medium to long term. In the light of these considerations, the present work, focusing on a business case, represented by IKEA, the world leader in furniture, sets out to illustrate how suppliers, having integrated IKEA directives into their production processes and supported by the transfer of the latter’s knowledge, in the long term obtain a competitive advantage, whilst at the same time ensuring the IKEA brand is more reliable. The importance of the exchange of knowledge between companies and suppliers that takes place during the adoption of rules of conduct is discussed in the theoretical part of the paper, while the empirical aspect remains based upon results of surveys directed towards the top management of IKEA Italy in the social and environmental fields, IKEA’s Italian suppliers and the company’s accounts.