The Russians Love Ikea, But The Government Isn't So Crazy About the Company or Its Electric Generators — The Ethical BarometerThe Ethical Barometer

When Ikea was poised to open a flagship store outside Moscow in 2001, its executives were approached by employees of a local utility.Â If Ikea wanted electricity for its planned grand opening, some bribes were needed.Â Ikea rented diesel generators and thumbed its nose at corruption.Â Bravo!Â Â By not succumbing to, “Well, you either bribe or you don’t do business there,”Â Ikea found an end-run, a creative solution to international business’s ubiquitous either/or conundrum:Â To bribe or not to bribe.Â Not so fast, warns the Barometer.Â Corruption does have ways.Â Ikea discovered that one of its managers was accepting kickbacks from the rental companyÂ that furnishes Ikea with theÂ generators for operating its stores.Â Ikea ended the manager’s Ikea career as well as the contract with the rental company and went to court in Russia to seek damages.Â Ah, but who runs the courts?Â Judges who are, apparently, quite fond of utility workers who demand bribes. Ikea ended up owing damages to the rental company for its breach of contract.Â As one Ikea board member noted, ” . . . this is unlike anything” the international company has encountered in any of its operations.Â Ikea is still running stores in Russia, but not expanding.Â Its disclosure of the details of its electricity/generator experience was done by design:Â The company hopes that the public can sway corrupt officials into a more transparent atmosphere for doing business.

The Barometer hopes so too.Â The citizens of Russia deserve openÂ and free markets and an economy not hampered by theÂ unknowns of how much a company will have to pay, to whom, how often, and for how long.Â Sometimes the inevitable question a company must face in international expansion is not to bribe or not to bribe.Â The better question is:Â Are we prepared to do business in a country where corruption makes operations, expansion, and even litigation complete unknowns in quantification and result?Â

One Response to The Russians Love Ikea, But The Government Isn’t So Crazy About the Company or Its Electric Generators

Dennis R. Lisonbee says:

September 14, 2009 at 7:22 PM

Perhaps a better question: Is America on the way to becoming a country where government and private sector corruption makes operations, expansion, and even litigation complete unknowns in quantification and result?

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The Russians Love Ikea, But The Government Isn’t So Crazy About the Company or Its Electric Generators

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One Response to The Russians Love Ikea, But The Government Isn’t So Crazy About the Company or Its Electric Generators

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