Research Proposal

Topic: The role of the Management Accounting and Controlling in Supporting IKEA’s
transition to a Circular Economy.

Abstract

Introduction
Sustainability is a growing concept which is affecting all organization aspects and
customers tend to demand sustainable products and services. All Businesses and managers
are developing new sustainable models to fulfill consumers and other interested parties’
requirements considering ways to incorporate a balance between Environment, Economic
and Social impact into their business models.

Management accounting and controlling can help managers to develop and monitor
organizational activities supporting businesses’ sustainability concept. Management
accounting (MA) emerged as a means of responding to the shortcomings of financial
accounting, which focuses essentially on controlling and recording relations with third
parties, variations in equity and determining the net result in a global context (Hardan and
Shatnawi 2013)

The circular economy involves reusing, repairing, refurbishing, and recycling existing
materials and products as long as possible. In a society in which overconsumption,
increased waste and environmental emissions have caused serious environmental problems,
the Circular Economy (CE) has gained attention as a promising way to streamline resource
utilization and increase global sustainability (Bocken et al., 2016; George et al., 2015;
Ghisellini et al., 2016).
This paper investigates the role of the Management Accounting and Controlling on Circular
Economy using IKEA Sweden as a case study. IKEA wants to create a sustainable business
model and transform the way of working to a circular model committing to regenerating
resources, protecting ecosystems, and improving biodiversity.
Theoretical point of departure and problematization
The transition to a circular economy contributes and involves a shift from the traditional
economy perspective which is a “take-make-disposal” model to a new system where the
products are designed for more longer time, reusable and recycled. This enrollment is
affecting various aspects of the business, such as product designing, financial practices and
supply chain management. Accordingly, the Management accounting and controlling has a
unique role on the subject matter and still it has not been focused sufficiently. Therefore,
this research aims to address the following key areas;
  What are specific management accounting and controlling practices are relevant to
the IKEA’s transition to the circular economy?
 How the above practices are impacted on the circular economy principles and
sustainability goals?
 What are the challenges and opportunity do IKEA arise with the implementing
circular economy principles from the financial and control perspective?
 How can management accounting and controlling systems of the IKEA’s to be
optimized and response to the circular economy goals?
Tentative research question(s) for further studies
Based on the problematization, the below tentative questions are proposed with this
research:
1. How IKEA is using MAC to monitor and assess its progressing towards its circular
economy goals?
2. In what ways does IKEA use MAC to figure out and evaluate circular economy
opportunities?
3. How is IKEA allocating resources to the Circular economy initiatives?
4. How does the IKEA use MAC to motivate and reward employees and clients for
their contribution to the circular economy goals?
5. What can other similar firms learn from the IKEA’s approach to MAC for the
circular economy?
Suggested method

To acquire a deep understating about the topic, a case study approach will be applied
including both qualitative and quantitative approaches.
Data Collection:
1. Qualitative Data
Structured interviews with the key managerial roles of IKEA, including
management accountants, sustainability officers and responsible officers for circular
economy activities and with academic literature review.

2. Quantitative Data
Analyzing IKEA annual reports, sustainability reports, and other pertinent financial
and operational data from IKEA, as well as performing a review of the academic
literature.

Data Analysis:
1. Qualitative Analysis
Thematic analysis of interview data to identify important of management
accounting and controlling procedures and the connection with the circular
economy.
 2. Quantitaive analysis
Analyzing financial and operational data to evaluate the how circular economy
activities are impacting to the sustainability of the environment and financial
performance of the firm.

References:

1. Hardan, Abdullah Salah, and Tareq Mohd Shatnawi. 2013. Impact of Applying the
ABC on Improving the Financial Performance in Telecom Companies. International
Journal of Business and Management 8: 48.

2. Bocken, N.M.P., de Pauw, I., Bakker, C., van der Grinten, B., 2016. Product design
and business model strategies. J. Ind. Prod. Eng. 33, 308e320.

3. George, D.A.R., Lin, B.C., Chen, Y., 2015. A circular economy model of economic
growth. Environ. Model. Softw 73, 60e63.

4. Ikea Sustainability Strategy - People & Planet Positive – Published- June 2018