IKEA and Unbonded Child Laborers Case Study

Tags: pest analysis india ikea harvard business school customer service supply chain human rights child labor culture business trade debt brand management

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Total Length: 997 words ( 3 double-spaced pages)

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Executive Summary

IKEA’s core founding value was based on the concept of making life better for people by giving them access to affordable products (Bartlett, Dessain & Sjoman, 2006). The problem that arose for IKEA in the 1990s, several decades after IKEA’s founding, was the issue of child labor and whether or not IKEA should continue to source rugs from a supplier that had been reported as using child labor in its manufacturing of rugs. From a social issues standpoint in the Western perspective, IKEA had to break ties with the supplier; however, in countries like India, unbonded child labor was not viewed as heinously as it was in the West: on the contrary, it was socially acceptable because children worked under the guidance of their parents and learned their trade in this manner. To break ties with a supplier that was simply engaging in a traditional custom of its country could be hypocritical. This paper examines the case and provides a recommendation for IKEA to assess whether the child laborers are bonded or unbonded—and if the latter then the company should continue to source from the supplier without worry as this would actually help Indian families.

Case Analysis

An IKEA supplier of Indian rugs has been the subject of a German television news report on child labor. This is problematic for the company because the CEO of IKEA “was being urged to sign up to an industry-wide response to growing concerns about the use of child labor in the Indian carpet industry” (Bartlett et al., 2006, p. 1).

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The Swedish Save the Children organization and a collective of “manufacturers, importers, retailers, and Indian nongovernmental organizations (NGOs)” were applying pressure to IKEA to “do the right thing” and sever ties with suppliers who used child labor in the production of their rug products in India (Bartlett et al., 2006, p. 1).

While on the face of it, child labor appears unethical—there are actually two types of child labor that exist in India: 1) bonded child labor and 2) unbonded child labor. In the former case, the child is basically in indentured servant who is used like a slave to pay off the debts of his or her parents at such high interest rates that it often takes a lifetime and sometimes longer to pay them off, in which case the debt is passed on to the next generation. This type of child labor is particularly offensive to Westerners. The other type of child labor involves the working of the child typically alongside the parents in whatever field they are in, whether in rugmaking or agriculture, etc. The child learns the parents’ trade by working alongside them and this is an ancient custom that simply seems foreign to modern sensibilities because in the modernized….....

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References

Bartlett, C. A., Dessain, V., & Sjöman, A. (2006). IKEA's Global Sourcing Challenge: Indian Rugs and Child Labor (A). Boston, MA: Harvard Business School.

Orlitzky, M. (2017). Virtue signaling: Oversocialized “integrity” in a politically correct world. In Integrity in business and management (pp. 190-206). Routledge.

Smolin, D. M. (2000). Strategic choices in the international campaign against child labor. Hum. Rts. Q., 22, 942.

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