In May 1995, Marianne Barner faced a tough decision. After just two years with IKEA, the world’s largest furniture retailer, and less than a year into her job as business area manager for carpets, she was faced with the decision of cutting off one of th

In May 1995, Marianne Barner faced a tough decision. After just two years with IKEA, the world’s largest furniture retailer, and less than a year into her job as business area manager for carpets, she was faced with the decision of cutting off one of th

In May 1995, Marianne Barner faced a
tough decision. After just two years with IKEA, the world’s largest furniture
retailer, and less than a year into her job as business area manager for
carpets, she was faced with the decision of cutting off one of the company’s
major suppliers of Indian rugs. While such a move would disrupt supply and
affect sales, she found the reasons to do so quite compelling. A German TV
station had just broadcast an investigative report naming the supplier as one
that used child labor in the production of rugs made for IKEA. What frustrated
Barner was that, like all other IKEA suppliers, this large, well-regarded
company had recently signed an addendum to its supply contract explicitly
forbidding the use of child labor on pain of termination.

Even more difficult than this short-term
decision was the long-term action Barner knew IKEA must take on this issue. On
one hand, she 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. A
recently formed partnership of manufacturers, importers, retailers, and Indian
nongovernmental organizations (NGOs) was proposing to issue and monitor the use
of “Rugmark,” a label to be put on carpets certifying that they were made
without child labor. Simultaneously, Barner had been conversing with people at
the Swedish Save the Children organization who were urging IKEA to ensure that
its response to the situation was “in the best interest of the child”—whatever
that might imply. Finally, there were some who wondered if IKEA should not just
leave this hornet’s nest. Indian rugs accounted for a tiny part of IKEA’s
turnover, and to these observers, the time, cost, and reputation risk posed by
continuing this product line seemed not worth the profit potential.


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