Social responsibility entrails management’s obligation to take actions that protect and improve the welfare of society in conjunction with the interests of the organization. Based on the Challenge Case, IKEA protects and improves its communities through innovation in the conservation of resources as well as the charitable work of the IKEA Foundation. IKEA makes substantial contributions by applying its resource-saving ideas to its own products and processes and by helping its suppliers operate more sustainably. Making such investments in the welfare of society is essential to being a good business citizen. Corporations, however, must also take steps to protect their own interests while making social investments. For example, by operating more efficiently in its use of energy and packaging resources, IKEA saves money. It then passes along the savings, and the lower prices attract more customers without cutting into its profits.

IKEA should commit to benefiting society because of the vast power the company possesses for creating such benefits. It should be remembered, however, that the costs of social responsibility activities can be passed to consumers, and action should be taken only if it is financially feasible. For IKEA to invest in social responsibility activities to its own financial detriment would be socially irresponsible, given the company’s commitment to employees and stockholders.

IKEA can and does become involved in many different areas of social responsibility. Currently, however, the business focuses on its sustainable use of natural resources. In addition, its IKEA Foundation supports environmental concerns as well as charitable work that targets children and disaster relief. No matter how much IKEA does in pursuing social responsibility goals, it will no doubt be criticized by some people for not doing enough. At this point, IKEA’s activities in the area of social responsibility appear to be highly significant.

IKEA’s activities within the sphere of social responsibility could result in a short-run decrease in profits simply because of the costs of those activities. For example, constructing energy-efficient buildings, installing solar panels, and upgrading light fixtures have initial costs. At first glance, such actions might seem unbusinesslike, but the company forecasts long-run savings and may obtain other benefits. Performing social responsibility activities could also significantly improve IKEA’s public image and could be instrumental in generating increased sales.

Some social responsibility activities are legislated and therefore must be performed by businesses. Most of the legislation requiring these activities is aimed at large companies. Examples of legislated activities include required levels of product safety and employee safety. Because IKEA is not required by law to support causes such as sustainable forestry or child welfare, whatever IKEA contributes to these causes would be strictly voluntary. In making a decision about how to support society, IKEA’s managers should assess the positive and negative outcomes of such support, over both the long and the short terms, and then establish whatever support, if any, would maximize its success and offer some desirable contribution to society. IKEA should also communicate to all organization members, as well as society, which causes it will support and why. The use of its website would greatly facilitate this communication.

In addition, IKEA should strive to maintain a relatively high degree of social responsiveness when pursuing its social responsibility activities. To do this, management should make decisions that focus on IKEA’s established social responsibility areas and approach meeting those responsibilities in appropriate ways. In terms of supporting children’s health and education, for example, management must first decide whether IKEA has a social responsibility to become involved, through the design and application of its products or efforts, in these issues. Assuming managers decide that IKEA has such a responsibility, they must then determine how to accomplish the activities necessary to meet the responsibility. For example, IKEA might employ its expertise to develop more ideas for refugee housing. Making appropriate decisions will help IKEA meet social obligations effectively and efficiently.

In terms of implementing an approach to meeting social responsibilities that will increase IKEA’s social responsiveness, management should try to view the company as having both societal and economic goals. In addition, management should attempt to anticipate social problems and actively work to prevent them. Managers at IKEA should know that pursuing social responsibility objectives is a major management activity.

IKEA’s managers must understand that for the company to succeed in meeting social responsibility objectives, it must be able to meet two major challenges. The first challenge is conducting a useful social audit, which would measure IKEA’s social responsibility activities in order to assess its social responsibility performance. The IKEA social audit, at a minimum, should measure and evaluate the company’s activities that focus on economics, quality of life, social investment, and problem solving.

The second challenge for IKEA’s management in meeting social responsibility objectives is making philanthropy work. IKEA’s philanthropic efforts should strive to increase the welfare of humanity while benefiting IKEA and its future. Criticism expressing that such donations are completely self-serving should not distract IKEA’s managers. They must instead keep in mind that most people would agree that IKEA’s first social responsibility is to its stakeholders and that any donations that do not in some way benefit these stakeholders is socially irresponsible.

IKEA management should also continue to focus on the company’s efforts to be a sustainable organization, one that meets its operational needs without compromising the ability of future generations to meet their needs. In heeding such a focus, IKEA should concentrate on activities like minimizing waste and protecting natural resources like air, water, and land. IKEA should continue to benefit from such activities through increases in profit, productivity, and innovation.

IKEA’s management would want corporate decisions to be sustainable—that is, able to meet the company’s present needs without compromising the needs of others in the future. It would be up to management to determine the steps the company must take to improve organizational sustainability. For example, the chief sustainability officer may need to hire additional staff with the expertise to help IKEA improve its sustainability.

To measure the level of sustainability at IKEA, managers could use the triple bottom-line approach. With this yardstick, managers would assess IKEA’s activities in economic, environmental, and societal terms. For example, they would ask these questions:

• Is IKEA performing profitably and providing a fair return to stakeholders? (economic)

• Is IKEA reducing its carbon footprint, minimizing its energy use, or otherwise improving the natural environment through its work methods? (environmental)

• Is IKEA enhancing the overall quality of life in the communities in which it does business? (societal)

Answers to these questions will help IKEA’s management determine whether the company’s policies are appropriate.

Assuming managers at IKEA are ethical, their decisions should reflect only the highest moral code in order to enhance the well-being of all company stakeholders. In essence, managers should act in the way that they want others to act in their dealings with IKEA. Decisions at IKEA will be ethical if they are truthful and fair to all concerned, if they build goodwill and better relationships, and if they are beneficial to all concerned. IKEA management can use the Virtue, Rights, and Utilitarian Standards to help ensure that all actions taken are ethical.