How do supply companies perceive customer company’s Ethical Trading practice?: A study on the case of IKEA's code of conduct in Vietnam

Abstract

This study explores ethical trading practices in Vietnam. Ethical trading is considered to be a major part of corporate social responsibility (CSR) and emerged partly as a response to anti globalization and anti corporate sentiment especially for multinational companies. Ethical trading means that a company at one part of the supply chain (normally a brand, retailer or other companies with a public profile) takes responsibility for the social and environmental performance at the other stages of the chain, often located in developing countries. This study specifically explores how different actors perceive purposes and implementation of ethical trading practices in supply companies in Vietnam. The case study was conducted on IKEA’s Code of Conduct implementation in its Vietnamese supply companies. One study result was that within IKEA’s Vietnamese supply companies, people made sense of ethical trading(IWAY Code of Conduct) in terms of both normative values(worker’s right and benefit) and strategic and instrumental values.(long term benefit for the company, customers demand) Different variables influenced individual perceptions on what it meant to implement IWAY. Normative values were learnt mainly through IWAY trainings and having contact with IKEA staff. Strategic and instrumental values were gained mostly through benefits they observed and experienced as well as trainings. In everyday conduct of IWAY, especially, managers were striving to achieve high compliance by translating each code to a language that is more socially rooted and agreeable to workers. One notable result in the present study was how people talk about IWAY governing practice (Trainings, Auditing). Trainings and auditing were considered as useful in practical terms. Especially, managers in supply companies were legitimizing having trainings and auditing using only economic reasoning. Moral reasons for improvement of social and environmental conditions were notably absent, known as ‘moral muteness’.