Corporate Social Responsibility: An illustration of Supplier Codes of Conduct Management in MNCs -A case study of IKEA and its suppliers in Thailand

Abstract

Following the increasing international business focus on developing economies, global sourcing and procurement are gaining importance in MNC operations. Simultaneously, due to the increasing stakeholders pressures mainly the customers, Corporate Social Responsibility (CSR) has become a major business performance indicator over the last decades. Consequently an essential dimension of CSR today is the business responsibility of foreign suppliers from whom MNCs‟ procure goods and services to meet global demand. The literature on CSR covers a large spectrum of areas, mainly supply chain sustainability; stakeholder theories; agency theories all of which model various CSR and supplier codes of conduct (SCC) implementation processes from different angles. In this study the main purpose is to find out motivations and obstacles for suppliers‟ commitment to MNCs‟ SCC focusing on the labor issues. Our analyses empirically supported utilizing the example of IKEA‟s SCC-IWAY- implementation among suppliers in Thailand. A total of 49 interviews have been carried out with IKEA and supplier company representatives both in Sweden and Thailand. Findings indicate MNCs‟ commitment, suppliers‟ management view and strength of business relationships as the main features which drive CSR compliance.