Ikea

Journal of International Business Studies (2011) 42, 10791102
& 2011 Academy of International Business All rights reserved 0047-2506

www.jibs.net
International expansion through flexible

replication: Learning from the
internationalization experience of IKEA
Anna Jonsson1
and Nicolai J Foss2,3
1
Department of Business Administration, School
of Economics and Management, Lund University,
Lund, Sweden; 2Department for Strategic
Management and Globalization, Copenhagen
Business School, Denmark; 3Department of
Strategy and Management, Norwegian School
of Economics and Business Administration,
Bergen, Norway
Correspondence:
A Jonsson, Department of Business
Administration, School of Economics and
Management, Lund University, PO Box
7080, SE-220 07 Lund, Sweden.
Tel: 46 46 222 36 48
Fax: 46 46 222 42 16
Email: [email protected]
Abstract
Business organizations may expand internationally by replicating a part of their
value chain, such as a sales and marketing format, in other countries. However,
little is known regarding how such international replicators build a format for
replication, or how they can adjust it in order to adapt to local environments and
under the impact of new learning. To illuminate these issues, we draw on
a longitudinal in-depth study of Swedish home furnishing giant IKEA, involving more than 70 interviews. We find that IKEA has developed organizational
mechanisms that support an ongoing learning process aimed at frequent
modification of the format for replication. Another finding is that IKEA treats
replication as hierarchical: lower-level features (marketing efforts, pricing, etc.)
are allowed to vary across IKEA stores in response to market-based learning,
while higher-level features (fundamental values, vision, etc.) are replicated in
a uniform manner across stores, and change only very slowly (if at all) in response
to learning (flexible replication). We conclude by discussing the factors that
influence the approach to replication adopted by an international replicator.
Journal of International Business Studies (2011) 42, 10791102.
doi:10.1057/jibs.2011.32
Keywords: primary data source; case theoretic approaches; internationalization theories
and foreign market entry; knowledge-based view; organizational learning
Received: 18 September 2009

Revised: 28 June 2011
Accepted: 8 July 2011
Online publication date: 8 September 2011
INTRODUCTION
Business organizations may expand from their home countries to
foreign countries by setting up replicas (of parts of) their value
chains in those foreign countries. Well-known examples of such
organizations are those that expand internationally by replicating
a format aimed mainly at distribution, such as McDonalds
(Watson, 1997), The Body Shop (Quinn, 1998), Starbucks (Schultz
& Yang, 1999), Hennes & Mauritz (Bengtsson, 2008), and IKEA. The
replication of a fixed format is associated with benefits, such as
economies of scale and brand recognition (Winter & Szulanski,
2001). However, the international business literature, and notably
the integrationresponsiveness framework (Bartlett & Ghoshal,
1989; Devinney, Midgley, & Venaik, 2000; Prahalad & Doz, 1987),
has long recognized that such benefits often need to be traded
off against the benefits of local adaptation. This raises the issues
of how and to what extent international replicators combine
replication and adaptation, and what explains these choices.
International expansion through flexible replication
Anna Jonsson and Nicolai J Foss
1080
Unfortunately, there is a dearth of research

literature in international management that explicitly addresses international replicators in terms of
how they build a format for replication, adapt it to
local circumstances, transfer new learning from
such adaptation, and otherwise manage the process
of expanding by means of replication (although
descriptive work exists on international franchise
chains; Quinn, 1998; Schultz & Yang, 1999; Watson,
1997). The research literature in strategic management that deals explicitly with replication, namely
the replication-as-strategy literature (e.g., Winter &
Szulanski, 2001), concentrates mainly on national
firms (but see, e.g., Szulanski & Jensen, 2006, 2008).
Our knowledge about these issues is therefore
rather scant, warranting a small-N research design
(Piekkari, Welch, & Paavilainen, 2009).
Specifically, we undertake a detailed study of
the internationalization process and practices of
the retailing part of the value chain of Swedish
home furnishing giant IKEA. Based on this study,
we show that most of IKEAs international expansion over almost five decades has, following a
period of initial exploration, proceeded in terms
of replicating a format. However, this is not the
exact replication of a fixed format as recommended
by the replication-as-strategy literature (e.g., Winter
& Szulanski, 2001). Rather, IKEA seeks to combine
the advantages of format standardization with
local adaptation. Local adaptation, for example,
by country-specific IKEA service offices, results in
explorative learning. The acquisition and internal
transfer of the knowledge that results from such
learning is coordinated and systematized through
organizational means. These include dedicated
units that are responsible for intra-firm knowledge
sharing, as well as organizational principles, such
as corporate values that stress the importance of
co-workers questioning existing solutions and continuously engaging in knowledge sharing.
IKEA thus succeeds in combining the advantages
of replication with the advantages afforded by
being able to adapt and transfer the resulting
new knowledge across the MNC a practice
that we refer to as flexible replication. The key to
implementing and managing flexible replication
successfully lies in treating the format as a hierarchy of more or less flexible features (Clark, 1985):
features at the top of the hierarchy notably,
the guiding principles embodied in IKEAs Idea
Concept are fixed, whereas features that are
closer to the bottom of the hierarchy (what IKEA
refers to as the Concept in Practice, i.e., specific
Journal of International Business Studies
product offerings, pricing, etc.) are allowed to vary

in response to new learning. Based on the case of
IKEA, we put forward propositions regarding the
factors that influence the proportion between fixed
and flexible features in the format for replication.
We thus strive towards a contingency theory of
international replicators.
Overall, we link up with classic issues in international management theory, such as how MNCs can
gain and exploit experiential knowledge from
entering new markets (Johanson & Vahlne, 1977),
and combine local responsiveness with global integration (e.g., Bartlett & Ghoshal, 1989; Devinney
et al., 2000). We specifically advance empirical
knowledge about an important international replicator, illustrate how it handles the specific integrationresponsiveness tradeoffs (Devinney et al., 2000)
it faces, and build on the IKEA case to develop
propositions about international replicators. We
thus directly address what has recently been
identified as an important missing element in
current research on internationalization, namely
an understanding of how the organizational
characteristics of an internationalizing firm influence its internationalization process (Malhotra &
Hinings, 2010: 331).
REPLICATION IN THE CONTEXT OF

INTERNATIONAL MANAGEMENT THEORY
In the following we briefly review research that
explicitly takes replicators as the unit of analysis,
that is, the replication-as-strategy literature developing from Winter and Szulanski (2001), as well as
international business theory that has a bearing
on (international) replicators. Replication is fundamentally a growth strategy (Winter & Szulanski,
2001). As international replicators clearly exist
(although only, so far, implicitly discussed and
theorized), replication is a potential strategy for an
organization that seeks to expand by internationalization. However, this expansion strategy is not
treated in any detail in the international business
literature.
Replicating Organizations
In principle, business organizations may expand
internationally by replicating their entire value
chain across countries. However, in the context
of strategic management research, replication
conventionally denotes the creation of highly
similar sales outlets that deliver a typically uniform product or service (i.e., the McDonalds
approach; Winter & Szulanski, 2001). Replication
1081
aimed at mass-distributing products or services

characterizes a host of industries, from fast food
to mobile communication services, and they have
a highly significant international presence.
A related, and arguably more general, notion of
a replicating business organization relates to the
transfer of routines and capabilities from the replicating organization to related units that in key
respects copy features of the replicating organization (Nelson & Winter, 1982). Thus characterized, it
may be argued that there is an element of replication to all MNCs, because there will be substantial
overlap across subsidiaries with respect to the
routines, standard operating procedures or other
intangible assets that they deploy to their economic
activities, and this overlap is brought about by
knowledge transfer. Indeed, replication could be seen
as a particular manifestation of global integration
(Bartlett & Ghoshal, 1989; Prahalad & Doz, 1987).
In spite of the obvious connotations to international business on the level of phenomena as well
as on the level of theory the international
business literature has not dealt systematically
with international replicators, beyond case studies
such as Watson (1997), Quinn (1998), and Schultz
and Yang (1999) and subsuming them under
the integrationresponsiveness framework. The
replication-as-strategy framework has mainly, if
not exclusively (see Szulanski & Jensen (2006) on
Mail Boxes Etc., and Jensen & Szulanski (2007) on
Rank Xerox), been developed with reference to
national firms. This means that we possess relatively little theoretically informed knowledge about
what features of a business model international
replicators replicate across countries, how much
local variation they allow for, whether they garner
local learning and utilize this elsewhere in the
organization, how they modify the traits that they
replicate, and so on. However, the replication-asstrategy literature represents an excellent starting
point for an inquiry into these issues. In effect, we
build on this literature and extend it more explicitly to an international setting.
The Replication-as-Strategy View

The founding contribution to the replicationas-strategy view is Winter and Szulanski (2001);
see also Baden-Fuller and Winter (2007), Jensen and
Szulanski (2007), Nelson and Winter (1982),
Szulanski and Jensen (2006, 2008), and Williams
(2007). Winter and Szulanski (2001) build a twophase model of replication in which an initial
phase of exploring in the space of possible formats
for replication is followed by a phase of exact

exploitative replication of the decided-upon format. Key to their thinking is the notion of the
Arrow Core: that is, the full and correct specification
of the fundamental, replicable features of a business
model and its ideal target applications (Winter &
Szulanski, 2001: 733).
It specifies which traits are replicable, how these attributes
are created, and the characteristics of the environments in
which they are worth replicating. This information set
could be thought of as the complete answer to the question,
What, how, and where should the replicator be trying to
replicate?
The Arrow Core is, however, an ideal that a

replicating firm cannot reach, because of ignorance
about the various features of the Arrow Core. Thus
the specification of replicable attributes of the
business model, and the procedures for replication
that the organizations search efforts result, in will
at best approximate the Arrow Core.
Given the costliness of such search, freezing an
imperfect template is the optimal strategy (e.g.,
Winter & Szulanski, 2001: 736).1 Unfortunately,
Winter and Szulanski do not identify the exact
tradeoffs that determine the point at which
explorative search has to stop, and the template is
frozen to allow for exploitative replication. They
merely note that at some point, business considerations will make leveraging a priority (Winter
& Szulanski, 2001: 736). Such considerations
indeed suggest that exploitative leveraging must
take precedence at some point, as gathering new
knowledge, transmitting it, codifying it, embodying it in a revised format, and feeding the new
format back into the replication process are costly
processes. Economizing such costs indeed suggests
that continuous revision of the format is inefficient.2 However, Winter and Szulanski seem to
conclude that any revision, once the format has
been decided upon, is inefficient; replicating organizations should expand on the basis of an entirely
fixed format, and learning gained during the
process of expansion cannot be allowed to influence the format. As we shall argue, this conclusion
may not be warranted in the face of the heterogeneous environments that firms confront during
their process of internationalization, and the
learning this process gives rise to.
Learning and the Internationalization Process

Far from representing internationalization as a
smooth process of rolling out a fixed format across
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new markets, an important research stream in

international management analyzes internationalization as a path-dependent process of learning
(Johanson & Vahlne, 1977, 1990; Johanson &
Wiedersheim-Paul, 1975).3 In the Uppsala model,
internationalization is modeled as a process of
incremental resource commitments, driven by
increasing experiential knowledge. The process starts
from domestic markets, moves on to culturally and/
or geographically close countries, and subsequently
moves to culturally and geographically more distant
countries. In the process, foreign operations typically
move from exports to using more demanding
operation modes (sales subsidiaries, etc.). Thus state
aspects (i.e., market knowledge and current market
commitment) drive change aspects (i.e., decisions
about future commitments and activities).
Experiential knowledge is vital to the internationalization process, because it not only yields a
reduction of the risks involved in going abroad, but
also provides a vehicle for acquiring knowledge of
internal and external resources and of opportunities for combining them (Eriksson, Johanson,
Majkgard, & Sharma, 1997: 340; see also Petersen,
Pedersen, & Sharma, 2003). Obviously, for such
organizational learning to happen, the acquired
knowledge has to be somehow shared with the rest
of the internationalizing firm. Johanson and
Vahlne (1977, 1990) are less forthcoming about
this particular aspect,4 and they have been criticized for this (Blomstermo & Sharma, 2003;
Eriksson et al., 1997; Forsgren, 2002; Petersen
et al., 2003). Thus Forsgren (2002) argues that the
Uppsala model should go beyond the notion that
knowledge is held primarily by subsidiaries in one
particular market, and should develop by embedding its view of knowledge as a driver of internationalization in a view of organizational learning
in MNCs. Eriksson et al. (1997: 353) add that the
internalization process is
not only a matter of learning about foreign markets and
institutions. Knowledge must also be gained on the internal
resources of a firm, and what the firm is capable of when
exposed to new and unfamiliar conditions. y a firm must
develop structures and competence, and that can guide the
search for experiential knowledge about foreign markets
and institutions.
In other words, for understanding how internationalization progress, we need to understand how
knowledge flows within an MNC, and how MNCs
can deploy administrative machinery to influence
such flows in desired directions and at desired
levels.
Research on internationalization has for a long

time emphasized the driving role of knowledge
transfers from headquarters (HQ) to subsidiaries
(Dunning, 1958; Vernon, 1966). The notion of the
projection of a home-market-based advantage to
foreign markets may be seen as consistent with the
replication-as-strategy view and the role of the
center for knowledge transfer of the replicated
format. However, as argued in recent work on the
MNC (e.g., Ambos, Ambos, & Schlegelmilch, 2006;
Doz, Santos, & Williamson, 2001), the role of HQ as
the sole or even dominant source of knowledge is
changing: subsidiaries have become important
providers of knowledge necessary to stay competitive in an increasingly global and competitive
environment (e.g., Frost & Zhou, 2000; Gupta &
Govindarajan, 2000; Holm & Sharma, 2006;
Kogut & Zander, 1993; Nohria & Ghoshal, 1997;
Schlegelmilch & Chini, 2003). Therefore MNCs
are no longer seen as repositories of their national
imprint but rather as instruments whereby knowledge is transferred across subsidiaries, contributing
to knowledge development (Minbaeva, Pedersen,
rkman, Fey, & Park, 2003: 587). Many scholars
Bjo
have linked this to the change in many MNCs
from hierarchical HQsubsidiary relations to more
network-based, responsive structures (Bartlett &
Ghoshal, 1989; Doz et al., 2001; Hedlund, 1986;
Prahalad & Doz, 1987) that can meet different
demands of innovation and knowledge creation in
a dynamic global economy (Nohria & Ghoshal,
1997: 3; see also Frost & Zhou, 2000). Yamin and
Otto (2004) characterize such MNCs as weakly
coupled organizations (Weick, 1976). One advantage of such an organization is that it can undertake
multiple explorative efforts simultaneously, for
example in corporate R&D as well as in subsidiary
functions such as retailing, and integrate the
resulting knowledge by means of knowledge flows
facilitated by dedicated administrative apparatus
(Gupta & Govindarajan, 2000; Kogut & Zander,
1993; Miesing, Kriger, & Slough, 2007; Moore &
Birkinshaw, 1998; Mudambi & Navarra, 2004).5
However, Ambos et al. (2006: 295) argue that while
many scholars have focused on knowledge flows
within the MNCs, only a few have actually studied
how MNCs learn at the periphery and benefit
from the knowledge gained from and shared by
subsidiaries.
Overall, the thrust of the learning literature
on internationalization and MNCs is that MNCs
stand to benefit from harvesting and transferring
locally produced, experiential knowledge on a
1083
rather continuous basis, and that it may be

necessary to deploy dedicated administrative apparatus to also handle lateral and reverse knowledge
flows. This view of flexibility and ongoing organizational learning in the process of international
expansion is in rather stark contrast to the view of
firm expansion in the replication-as-strategy view.
Learning-based Internationalization and

Expansion through Replication
International management theory, and specifically
internalization theory (Rugman & Verbeke, 2003),
has long maintained that firms need proprietary or
ownership advantages to offset the liabilities of
foreignness when they enter foreign markets (e.g.,
Zaheer, 1995). Relatedly, a key theme in the recent
knowledge-based MNC literature is the transfer
within a firm of knowledge that is fungible that
is, specific to the firm but less specific to uses or
locations (e.g., Kogut & Zander, 1993). A format for
replication is an example of knowledge that is
both proprietary and fungible: replicating a template is a means of maximizing the capture of rents
from proprietary advantages, such as a strong brand
name.
However, there are also important differences
between the replication-as-strategy literature and
the mainstream of international management
thinking. Thus highly influential thinking on
global strategy stresses the importance for certain
industries and countries of exercising local responsiveness in terms of product offerings, services, etc.,
and analyzes the tradeoffs that arise between global
integration and such local responsiveness (Bartlett
& Ghoshal, 1989; Prahalad & Doz, 1987). In its
original formulation, the Winter and Szulanski
model rules out local responsiveness. Thus the
ideal template, the Arrow Core, is a specification
of which traits are replicable, how these attributes
are created, and the characteristics of the environments in which they are worth replicating (Winter
& Szulanski, 2001: 733). However, it may not be
possible (or worth it) to replicate a template
across very heterogeneous environments, and
the Arrow Core is therefore not defined for such
environments. This raises the question: to what
extent can the replication-as-strategy literature
be applied to understand international expansion beyond rather homogeneous international
environments? Also, the knowledge-based MNC
literature portrays multinationals as engaged in
ongoing organizational learning that involves the
dissemination of best practices (in a broad sense)
across units located in established as well as new

markets. In the Winter and Szulanski model
organizational learning does take place, but only
in the initial, explorative phase while the firm is
searching for a replicable format. This raises the
further question whether in international expansion organizational learning can somehow be
combined with replication.
From an empirical perspective, it is worth noting
that the empirical basis of the replication-asstrategy literature is mainly national firms, and it
contains virtually no discussions of replication as
strategy in the context of internationalization. And
yet international replicators, such as those mentioned in the Introduction, exist and thrive, even
in the context of heterogeneous international
markets. This raises the puzzle of how replication
is possible in a world of heterogeneous markets.
This may sound like a restatement of the familiar
problem of how global integration and local
responsiveness can be aligned. However, the international management literature has not yet, at least
to our knowledge, studied international replicators in a systematic way, including detailing the
mechanisms by which such replicators balance the
need for global integration with local responsiveness. This makes a small-N empirical approach
warranted (Geertz, 1973; Ghauri, 2004). Specifically, we develop a single detailed case (Siggelkow,
2007).
METHOD
Small-N Research Designs
Small-N research designs are often regarded as
somewhat suspect, as heavy sample bias implies
problems of external validity (Bryman, 2001; King,
Keohane, & Verba, 1994). However, a basic lack of
knowledge about which variables matter, how they
are causally related, etc., often warrants explorative
research based on small-N samples (Birkinshaw,
Brannen, & Tung, 2011; Doz, 2011; Eisenhardt,
1989; Ghauri, 2004; Malnight, 2001; MarschanPiekkari & Welch, 2004; Merriam, 1998; Westney &
Van Maanen, 2011). As noted by Doz (2011: 588),
qualitative research methods offer the opportunity
to help move the field forward and assist in
providing its own theoretical grounding. And, as
Dyer and Wilkins (1991: 617) explain, if executed
well, case studies can be
extremely powerful [when] authors have described general
phenomenon so well that others have little difficulty seeing
the same phenomenon in their own experience and
1084
research. We turn to the classics because they are good

stories, not because they are merely clear statements of a
construct.
Such good stories are successful in terms of

identifying generative mechanisms that other
researchers can recognize in the cases they investi m, 2005). Therefore Dyer and Wilkins
gate (Hedstro
(1991: 615) argue that the ultimate goal of case
study research is to [y] provide a rich description
of the social scene, to describe the context in which
events occur, and to reveal [y] the deep structure
of social behavior.
Piekkari et al. (2009: 584) observe that in many
small-N studies in IB, authors were not clear about
the theoretical purpose of their studies [y] and
case studies were often very thin in terms of the
variety of data sources used per case. In contrast,
the present case study is informed by a priori theory
on the mechanisms that may be operative when
firms internationalize by means of replication:
specifically, we relate our study to the replication-as-strategy literature and the knowledge-based
literature on internationalization and the MNC. We
approach the case armed with theory, because this
increases requisite variety [y] it takes a complicated sensing device to register a complicated set of
events (Weick, 2007: 16). The relevant theories
help to organize data collection and interpretation,
and metaphorically serve as a dialogue partner for
the data. We contribute to the growing need for,
and interest in, more qualitative research within
the IB field, and especially research focusing on
international management of MNCs and the role of
knowledge flows (e.g., Birkinshaw et al., 2011; Doz,
2011).
Data Collection and Analysis

The data for this study were collected from three
overlapping sources: in-depth, semi-structured
interviews; documents; and observation studies.
These sources were triangulated to maintain the
integrity of the analysis (Miles & Huberman, 1994;
Silverman, 2006). We relied on the notion of
purposeful sampling, and interviewed managers
about the international expansion of IKEA from
1963 to 2009; how this expansion has been
supported by knowledge sharing across units in
the IKEA network; how IKEA replicates, allowing
for local adaptation; and how it modifies its format
for replication.
In total, 70 interviews were carried out with IKEA
employees from 2003 to 2009 (see the Appendix).
Interviews were conducted in Russia (23), China

(11), and Japan (17).6 The reasons for focusing on
these markets were that, by the time the study
commenced, these were all new markets to IKEA;
they were clearly quite distant in cultural terms
from IKEAs home market (cf. Johanson & Vahlne,
1977, 1990); and they represent different degrees
of development (China and Russia are emerging
markets, and Japan is a mature market). Thus
they may serve to explore ideas about learning
from the periphery of the organization. Interviews
were undertaken mainly with managers within
the IKEA group, but store-level employees were
also interviewed. Interviews were also conducted
with employees at Inter IKEA Systems AB, which
is the part of the IKEA organization that is responsible for the IKEA brand and concept. In
addition to this, 20 interviews were conducted at
the global service office in Sweden, as well as with
IKEA of Sweden (IoS) and Trading & Distribution
and IKEA Inter Services AB. These latter interviews
focused specifically on IKEAs internationalization approach, strategic orientation, culture, and
values.
All interviews started with open questions
about IKEAs international expansion, and the
management and control of that process. As the
interviews progressed, the questions gradually
became more structured, delving into procedures
and mechanisms for knowledge sharing within
IKEA, and the specific challenges that IKEA faces
when entering new markets. Interviews with
employees working in IKEA stores focused more
on the routines for how knowledge was shared and
used at the store level. An important aim of these
interviews was to understand fully how best
practices are shared. All interviews lasted between
90 and 180 min. Our final interviews were with
the global HR manager of the IKEA group and
with the managing director of Inter IKEA Systems
AB, and focused specifically on IKEA as an international replicator, and the features of the format for
replication that IKEA applies in its expansion
process. In addition, non-participant observations were made in an IKEA store in Japan during
one week in 2005 in order to develop our understanding of daily work routines, and of how
replicated best practices were used in a market
that IKEA had recently entered. Finally, we examined relevant documents, such as IKEA manuals, as
well as books and magazines about IKEAs history
and business ideas (e.g., Salzer, 1994; Torekull,
2006). IKEAs intranet, which provides access to
1085
manuals and tools, was systematically examined.

The documents not only supplied additional
information, but also allowed us to control for
memory bias by comparing interview statements with the collected document data (Miller,
Cardinal, & Glick, 1997).
To analyze the data, we began from Yins (2003)
pattern-matching method of analysis. In this
approach the empirical patterns of the case (and
the embedded cases) are compared with those
of theory. To emerge at patterns, interviews were
transcribed. A basic coding took place by means
of a color system that focused on key words and
phrases. Following triangulation with company
documents and (to a smaller extent) observation,
this procedure allowed for the derivation across
the interviews of patterns relating to:
(1) knowledge sharing behaviors within IKEA
stores;
(2) knowledge transfer between units in the IKEA
network;
(3) the development over time of IKEAs
internationalization; and
(4) the current practice of replication in IKEA.
In the following, these patterns are used to present
an account of the internationalization process of
IKEA, and the role of replication in that process. In
order to further strengthen validity, respondent
validation was also applied (Silverman, 2006).
IKEAS PROCESS OF INTERNATIONALIZATION:

EXPLORATIVE INTERNATIONALIZATION, RIGID
REPLICATION, AND FLEXIBLE REPLICATION
During its 68-year history IKEA has grown from a
small, family-owned home furniture company into
a global retailer with 321 stores in 38 countries
Phases: Explorative internationalization

(1963 end of 1970s)
1963
Key events:
IKEAs Internationalization Process

Explorative internationalization
IKEA began its international expansion in 1963
when it entered the neighboring Norwegian market
Rigid replication
(1980 mid-1990s)
1980
Swiss entry
(1973)
Flexible replication
(mid-1990s current)
1995
Failed JP entry
(end of 1970s)
Testament of a
furniture dealer (1976)
Figure 1
(as of April 2011), of which the IKEA group owns

280 stores in 26 countries (the rest, 41 stores in 17
countries, are franchise operations). The company
employs 127,000 people. IKEA is a privately held
company owned by Stichting INGKA Foundation.
Global sales were h23.1 billion in 2010. The
Foundation, worth US$36 billion in 2006, and
ostensibly created to promote and support innovation in the field of architectural and interior
design (Economist, 2006), is registered in the
Netherlands, and is effectively controlled by the
Kamprad family.
Beginning almost five decades ago, IKEA has
embarked upon a massive international expansion
effort, supported by firm-specific knowledge-based
assets, notably reputational capital, a distinct
marketing offering, and well-developed standard
operating procedures for identifying, acquiring,
and transferring knowledge between units in
the IKEA network. In the following, we detail
IKEAs process of internationalization in terms of
three successive stages of development: an initial
explorative stage of internationalization, characterized by much trial and error activity (1963 to the
end of the 1970s); a stage characterized by heavy
exploitation by means of replication of a fairly rigid
format for replication (approximately 1980 to the
mid-1990s); and the current stage of what we refer
to as flexible replication. See Figure 1, which maps
the three overall stages of IKEAs internalization
experience, and the key events during these stages.
Table 1 maps this process in terms of the various
market entries from 1963 until today.
Failed US entry (1985)
IKEA Idea Concept

and Concept in
Practice codified
Kraft 80
IKEA Values (1996)
Inter IKEA Systems BV established (1982)
Timeline of IKEAs internationalization process.
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Table 1
entries
IKEAs internationalization process in terms of market
IKEA first store/market entry

lmhult
1958 Sweden: A
1963 Norway: Oslo (Nesbru)
1969 Denmark: Copenhagen (Ballerup)
1973 Switzerland: Zurich (Spreitenbach)
1974 Germany: Munich (Eching)
1975 Australia: Artamona
1975 Hong Kong: Hong Kong (Tsim Sha Tsui)a
1976 Canada: Vancouver (Richmond)
1977 Austria: Vienna (Vosendorf)
1978 Netherlands: Rotterdam (Sliedrecht)a
1978 Singapore: Singaporea
1980 Spain: Gran Canaria (Las Palmas)a
1981 Iceland: Reykjavika
1981 France: Paris (Bobigny)
1983 Saudi Arabia: Jeddaha
1984 Belgium: Brussels (Zaventem and Ternat)
1984 Kuwait: Kuwait Citya
1985 United States: Philadelphia
1987 United Kingdom: Manchester (Warrington)
1989 Italy: Milan (Cinisello Balsamo)
1990 Hungary: Budapest
1991 Poland: Platan
1991 Czech Republic: Prague (Zlicin)
1991 United Arab Emirates: Dubaia
1992 Slovakia: Bratislava
1994 Taiwan: Taipeia
1996 Finland: Esbo
1996 Malaysia: Kuala Lumpura
1998 China: Shanghai
2000 Russia: Moscow (Chimki)
2001 Israel: Netanyaa
2001 Greece: Thessalonikia
2004 Portugal: Lisbon
2005 Turkey: Istanbula
2006 Japan: Tokyo (Funabashi)
2007 Romania: Bucharesta
2007 Cyprus: Nicosiaa
2009 Ireland: Dublin
Total
Number of
stores in 2011
17
6
5
10
46
7
3
12
7
12
2
13
1
28
3
6
1
38
18
18
2
8
4
2
1
4
5
1
9
12
1
3
3
5
5
1
1
1
321
a
Indicates that IKEA has at least one franchise operation in the relevant
country.
as a direct consequence of the saturation of the

Swedish market, and based on a belief that larger
volumes could enable it to exploit economies of
scale and learning that would support price-based
competitiveness. Six years later, IKEA entered the
neighboring Danish market. While the two initial
foreign market entry decisions are consistent with
the emphasis on sequential, incremental entry
in the Uppsala model (Johanson & Vahlne, 1977),
the third one, the 1973 entry into the Swiss market,
and a number of those that followed, are not. Thus
Kamprads rationale for entering the Swiss market
was that it was probably the most conservative European furniture market. If IKEA could be
successful there (Martensson, 1988), it probably
could be successful in other markets as well (Salzer,
1994). The process and decision are described by
an IKEA manager in the following way (in Salzer,
1994: 5960):
Have you heard about how we started abroad? By then we
had entered Norway, but that was by mistake, you know y
a kind of consultant who had duped us to buy some
building lot. And then they pondered, which market is the
most conservative when it comes to furniture? Well, its
Switzerland. So they took the train to Switzerland. Well, it
was Janne [ Jan Aulin] and Kamprad. And they stood outside
the shops that sold modern furniture in Switzerland,
you know, and they stood there and they asked the people
who stopped and looked in the windows. y And when they
had been standing there for half a day they were assured
that there were enough people who liked that kind of
furniture but that it was too expensive, so there must be a
market, they thought, and then they went back to Sweden.
And so we bought a building and started the first store in
Switzerland.
A somewhat more systematic approach than the

above example of rather casual market research was
the opening during the 1970s of so-called test
stores in city centers to test whether there was an
interest in IKEA products. Still, IKEAs initial process
of entering new markets can be described as a
highly explorative one of trials based on hunches
and intuition, and on learning from the errors that
often followed trials.
A vivid example of the latter is the rather painful
and expensive entry into Japan during the late
1970s. The entrance into Japan was essentially
unplanned, and occurred because an internal IKEA
unit, the export department, had started to sell
IKEA products to Japanese firms, which led to IKEA
products being sold at high prices in small IKEA
corners inside big malls. This was in flagrant
violation of the IKEA concept. Although IKEA had
set up a joint venture with a Japanese partner, it
decided to withdraw from the Japanese market
altogether, owing to the violation of the IKEA
concept, and because it was not able to control the
operation. The export department was soon closed
down as IKEA realized that it had to control the
international expansion of IKEA in a superior
manner. Prompted by the problems in Japan, a
special unit, Inter IKEA Systems, was established
1087
to take control of the IKEA non-owned/franchise

outlets as IKEAs greenfield investments, as these
were not always undertaken in a sufficiently
controlled manner. However, the Japanese experience was also instrumental in leading to the
recognition at the IKEA top management level that
much more effort had to be put into in conceptualizing the IKEA business idea in the context of
internationalization. This became an exercise directed at homogenizing the IKEA product offering
across countries. The case of the entry into Japan
was a decisive learning experience: It was taken as
an example of excessive exploration, and was seen
as a call for cutting down on explorative efforts. In
fact, for some time the pendulum moved towards
the exact opposite direction, namely towards a
strong emphasis on exploitation.
Exploitative internationalization
The emphasis on defining the IKEA concept and
explicitly begin building a formula for replication
that took place in the years around 1980 was
strongly motivated by an attempt to realize the cost
efficiencies from exploiting massive economies of
scale that replication on the basis of a relatively
fixed format would entail. The process of conceptualizing the IKEA business idea in the context of
internationalization started with an internal document drafted by Kamprad in 1976. This document
the Testament of a furniture dealer is fundamentally
an attempt to codify and document fundamental
IKEA values and beliefs. While these had arguably
been present since the founding of the firm, they
had not yet been explicitly codified. Armed with
this (re)statement of fundamental beliefs and
values at the end of the 1970s, IKEA moved towards
a new phase of its international expansion process,
and started to build a well-defined format for
replication.
Consistent with the Winter and Szulanski (2001)
two-stage model, the second phase of IKEAs
internationalization process had a much more
exploitative character than the first, highly explorative phase. Notably, increasing emphasis was placed
on standardized market(ing) solutions. Beginning
towards the end of the 1970s, format stores were
developed, and the blue-and-yellow store concept
was used in all new locations. Stores were also
standardized to economize on building costs, and
to support brand awareness. One example of such
efforts was the decision to paint all IKEA stores
blue and yellow, which was made as a result of
IKEAs entry into the German market. Initially,

IKEA had chosen to place a moose on top of the
roofs of the German IKEA stores (Torekull, 2006).
However, when the Germans started to show
greater interest in the moose than in the IKEA
brand, it was decided to take it down. To build a
presence in Germany, it was decided to push the
Swedish origin of IKEA. To emphasize this, stores
were painted in the colors of the Swedish flag,
blue and yellow. IKEA soon realized that painting
the stores blue and yellow would make it easier
for them to stand out in other areas with many
other retailers. All IKEA stores were now painted
blue and yellow, an example of knowledge gained
on one market affecting the whole of IKEA. One
more effort towards codification and documentation was the outcome of a project called Kraft 80,
which was initiated in 1979.7 The project resulted
from a concern that IKEA had been growing too
fast, and was in danger of sacrificing the economies
of scale that the firm so strongly pursued (Salzer,
1994: 66). A global HR manager explains: we grew
so fast and there was a notion that IKEA should
be different on different markets y we called it
market units. The ambition with these market
units (southern Europe, northern Europe, eastern
Europe, and North America) was to source more
locally and adapt more to the regional markets.
However, this organizational setup was not successful, and resulted in a situation with a large and
highly dispersed product range, in conflict with the
IKEA concept. The same manager explains that it
was ultimately Ingvar Kamprad himself who said
stop; we shall be one IKEA, one business idea
and one culture. Kraft 80 marked an attempt to
re-capture those economies of scale by carefully
codifying the business format that would be
replicated in new markets. Kraft 80 and the
experiences of moving away from the IKEA concept
led to IKEA values, an internal document that
Kamprad wrote in 1996 (i.e., 20 years after he
wrote Testament of a furniture dealer) in order to
further explicate the overall IKEA concept.
The present ownership and overall organizational
structure also emerged as a consequence of the
major strategic changes going on at the end of the
1970s towards uniformity and replication of a
standardized format. Thus in 1982 ownership of
IKEA was transferred to the INGKA Stitching
Foundation. IKEA was restructured, and the three
legs IKEA Group (the blue group), Inter IKEA
Systems (the red group), and IKANO (the green
group) were created. The green group, IKANO,
1088
is owned by the Kamprad family, whereas the red

and blue groups are owned by INGKA Holding BV.
The red group, Inter IKEA Systems BV, is the owner
of the IKEA concept (aka the idea concept) and the
brand name of IKEA. This part of the organization plays a very important role in IKEAs replication process, and will be discussed further below.
Three percent of all IKEA store revenue is paid to
Inter IKEA Systems BV as equity that bolsters IKEA
against economic hardship. INGKA Holding BV is
the ultimate parent company for all IKEA Group
companies, including the industrial group Swedwood, which manufactures IKEA furniture, the
sales companies that run the stores, as well as
purchasing and supplying functions, and IoS,
which is responsible for the design and development of products in the IKEA range. INGKA
Holding BV is wholly owned by the Stitching
INGKA Foundation. Figure 2 shows the overall
organization of IKEA.
Excessive exploitation
While IKEA had learned the importance of
standardizing its format uniform stores, promotion, and product range the hard way, it is
arguable that it came to resemble too much the
view of a precisely replicating firm in Winter and
Szulanski (2001). Explorative efforts became fully
concentrated in HQ functions, and there was no
awareness of any need to learn from subsidiaries,
or transfer experiential knowledge gained by
subsidiaries back into the rest of the network. At
the very best, individual learning took place as the
IKEA cowboys moved from one market to

another, setting up new stores, but these lessons
were not shared at a corporate level. However, in
the 1980s a few notorious failures helped IKEA
learn that exploitation in the form of indiscriminate replication would not always work, and that
it was necessary to keep an eye on learning
experiences in subsidiaries that is, in the periphery of the organization.
One particularly important failure was the 1985
entry into the US market (Torekull, 2006). A typical
problem of the US entry was the unwillingness
of IKEA to increase the sizes of beds and kitchen
cabinets, because part of its concept was to offer a
single, global range. These kind of events prompted
broader reflections on the viability of the indiscriminate exploitation model that IKEA was following,
and amply illustrates the adaptationreplication
dilemma. In the words of an IKEA manager:
Its more than an issue of product design it extends to how
much we should adapt our organization and culture.
Humility may be a virtue in Europe, for example, but
should we impose it to our US organization? y Should our
business drive our culture, or should our culture drive our
business? (cited in Bartlett, 1990: 11)
Such self-examining reflections were strongly present throughout the expansion of the 1980s and
early 1990s.
Towards flexible replication

Eventually, IKEA began to realize that successful
international expansion by means of replication
Stiching INGKA The Foundation

Foundation
Inter IKEA
Systems B.V.
IKEA Services B.V.

IKEA Services AB
INGKA
Holding B.V
The Parent
Company
The IKEA Group
Industry
Swedwood
Group
Purchasing
Figure 2 The organizational structure of IKEA.

Source: www.ikea-group.ikea.com.
Distribution
& Wholesale
Range
IKEA of
Sweden
Retail
1089
required the company to allow for local exploration within the confines of the IKEA concept,
alongside the successful sharing of practices and
standard operating procedures that embodied
experiential learning gained by subsidiaries. A
specific lesson learned from the US entry was that
IKEA should stick to one product range, but that,
when needed, it should adjust its products to the
local market, while maintaining, as best as it
could, a focus on high volumes. The US experience
was arguably also instrumental in making IKEAs
approach to adaptation to local markets more
presumptive (Szulanski & Jensen, 2006). Part of
this presumptiveness is that although the transfer
and implementation of well-documented practices
and standard operating procedures have high
priority, there is no requirement that IKEA stores
must copy exactly (Winter & Szulanski, 2001).
The aspects that arguably come closest to the copy
exactly ideal are the standardized marketing
solutions, which include important parts of store
format and design, the catalogue, and the product
range.8 These solutions encompass approximately
100 practices that are viewed as proven solutions,
and are mandatory in the sense that they must be
applied as long as there are no better solutions. One
such solution is that there must always be blue-andyellow bags in the stores. Another is that all IKEA
stores must have a set in-store pattern, which starts
with the presentation of five living rooms for the
customer. Those living rooms must reflect four
IKEA design styles: Scandinavian, country, modern,
and young Swedish. The idea is that customers
should know what to expect, and the layout,
products, and shopping experience should be
basically the same, regardless of the store location
( Jonsson, 2007; Lindqvist, 2009). However, beyond
the proven solution, variation is tolerated. Moreover, in actuality, experimenting with the proven
practices is tolerated, and to extent to be encouraged. This reflects a corporate culture that stresses
the questioning of proven and taken for granted solutions, an explorative approach that is
explicitly expressed as one of IKEAs ten corporate
values.
THE CURRENT FLEXIBLE REPLICATION MODE

OF IKEA
The IKEA Idea Concept and the Concept in
Practice
A discussion of IKEAs current replication mode
may usefully begin from the distinction between
IKEAs Idea Concept and a Concept in Practice. This

distinction reflects how IKEA explicitly thinks of
replication as a hierarchical process, in which some
features (embodied in the Idea Concept) must stay
fixed, while other ones (embodied in the Concept
in Practice) are allowed to be more flexible. The
need for such flexibility stems from variation in
local markets, as well as the need to modify the
format for replication under the impact of new
learning.
The idea concept

The IKEA Idea Concept contains the guiding
principles, vision, and culture that management
wants to underpin IKEAs operations and development, including its process of internalization. An
IKEA managers explains that the
IKEA concept has evolved over more than 50 years as a
result of serious opportunities and experiences, both large
and small in many different areas. The result today is a
strong, tried and tested concept, which has proved that it is
possible to combine global business ideas with local
business opportunities.
The Idea Concept is described as the unique asset

that differentiates IKEA from the competition.9
A manager at Inter IKEA Systems elaborates on
the nature of the Idea Concept:
[It] outlines how we shall offer products for the many
people, our business idea, how to work with low prices, etc.
There are certain eternal truths that will never change. This
is the starting point for all that we do. y The Idea Concept
is something that we will never adjust. For instance we shall
always offer the lowest price, we shall serve the many
people, etc.
The concept in practice

The Idea Concept is a set of overall guiding
principles that, while replicated across the IKEA
network, offers only general instructions on store
design, HR management, etc. As a manager at Inter
IKEA Systems explains:
Everything shall not be clear and in detail. Because then
it will not move. We are an organism that takes the
opportunity. If we should have clear definitions then it
would turn into a lubricated machine and it would not be
IKEA any more.
As this suggests, flexibility and a commitment to

continuous exploration are at the core of IKEAs
self-understanding. While the guiding principles of
the Idea Concept remain unchanged, the Concept
in Practice that is, the current embodiment of the
Idea Concept in terms of product offering, store
1090
design and location, pricing policy, and so on is

frequently modified. In the words of another IKEA
manager:
The Concept in Practice relates to our latest proven
solutions regarding how to run an efficient home furnishing business, the size of the stores, range, etc. All of those
things need to change over time but it has to be in line
with the Idea Concept.
In general, IKEA thinking on the Concept in

Practice stresses its process and learning aspects.
Kamprad consistently emphasizes the importance
of maintaining the entrepreneurial spirit, and
the necessity of always questioning proven solutions. According to IKEA lore,10 for Kamprad the
worst situation would be one in which co-workers
did not make mistakes. In fact, one of the ten
explicit values in the IKEA culture stresses that
[m]aking mistakes now and again is the privilege
of the dynamic co-worker they are the ones who
have the ability to put things right.
Still, the components that constitute the Concept
in Practice are ordered in a hierarchical manner,
depending on how much they are allowed to
change and vary. IKEA considers the product range
as fairly fixed over the short to medium term.
Whereas some products, such as the BILLY bookshelves or the KLIPPAN sofas, have been present in
the product offering for a very long time, other
products may be replaced after just a year. Pricing is
also fixed, but only over the 1-year period covered
by the IKEA catalogue. Prices are set at the country
level, but must follow the Idea Concept guideline
that IKEA shall offer low prices for the many
people. However, a store manager has the authority to lower a price immediately if a similar product
is being offered by any competitor at a lower
price.11
In addition to the overall Idea Concept, which
is supposed to be replicated across the whole IKEA
network, the (current) format for replicating
IKEAs retail part may be described in terms of a
set of variables, the key ones being the product
range, pricing, store format, store design, standard
operating procedures, and local HRM; the variables
are allowed to vary within more or less well-defined
ranges.
Product range
The number of products has obviously increased
since the founding of the first IKEA store in 1958,
but over the last decade has reduced to approximately 9500 products, a significant part of which
comprises ready-to-assemble furniture pieces. A

persistent feature of IKEAs replication process since
lmhult location
the first expansion beyond the A
in the beginning of the 1960s is that any store,
wherever it is located, must carry the core product
range (e.g., the BILLY bookcase and the KLIPPAN
sofa). Beyond the fixed product range that any store
must carry there is considerable discretion for each
store and each market with respect to selecting
from the overall product range. This means, for
example, that a store in Japan may choose to sell
smaller sofas than a store in the US. The basic idea
with a core product range is that the consumer
should be able to recognize the IKEA store and IKEA
products no matter whether he or she visits a store
in Sweden or in Japan. Having one core range, of
course, also implies possibilities for economies of
scale and lowering costs. The product range and
price is part of the Idea Concept, and viewed as
holy to the business idea. So rather than adapt the
product range to local markets, it is the product
offering that is adapted to fit the taste and homes
of that markets consumers.
Pricing
Overall, IKEAs competitive strategy emphasizes
cost leadership. IKEA positions itself as a vendor
for people who happily trade off service against
lower costs (Porter, 1996). When designing a new
product, the price tag always comes first, as it were
(Edvardsson, Enquist, & Hay, 2006). However,
recently sustainability has been added to that
strategy, aiming for more sustainable products,
production, and distribution. However, the emphasis is not just on low prices, but on stable prices.
When the yearly IKEA catalogue has been published, prices cannot change until the next catalogue is printed. Finding the right price level in
new markets is particularly important in order to
attract the target consumers. This is an example of
local adaptation. This has been especially challenging in markets with high import duties, such as
China and Russia. Such challenges have led to
a need for more local production, as it is difficult
to change the consumers view of acceptable
prices a lesson learned in the Polish market,
where it took IKEA several years to convince
consumers that it had lowered its prices to meet
the many people. The issue of finding the right
price level was a big concern that was extensively
discussed before the market entrance into Japan in
2006. However, when falling back to the Idea
1091
Concept, IKEA decided to fit with the strategy of

offering products at low prices.
Store format and design

IKEA stores follow a fixed basic format. The size of
an IKEA store has increased over the years.
Currently the smallest standard stores that are built
are 32,000 square meters and the largest are 45,000
square meters. Having standard stores is also in
line with the general cost-efficiency goal. As land is
expensive to buy in some markets, IKEA has
currently developed buildings with several floors,
with parking lots both in the basement and on the
roof. This is an example of how the Concept in
Practice needs to be adjusted to meet local peculiarities. A selection of furniture is displayed in roomlike settings, adjacent to which is the self-service
warehouse section, with the ready-to-assemble
furniture placed in boxes on pallets. All stores also
follow a traffic flow that takes customers through
the store in a manner that maximizes the exposure
of IKEA products in different settings (Bartlett,
1990). All stores have a restaurant with essentially
the same menu (IKEA is Swedens largest food
exporter), in-store child care in the form of
supervised play areas and ballrooms, hot dog/hot
sausage stands, and food markets with traditional
Swedish food near the exits, etc. As stressed, the
characteristic blue and yellow facade emerged in
the mid-1970s, and has been an IKEA fixture ever
since.
Standard operating procedures
IKEAs early expansion phase was characterized by
the establishment of standard operating procedures
in new stores by means of instruction of new
employees by experienced IKEA personnel
(Torekull, 2006). During the 1980s standard operating procedures became increasingly codified, and
the number of manuals detailing procedures has
been increasing ever since. However, expatriates
play an important role in ensuring that standard
operating procedures actually function in new
stores. It is stressed that it is important to understand the IKEA culture and the IKEA Idea Concept
in order to implement and apply standard operating procedures. Prior to the entry into Japan in
2006 there was a concern that Japanese employees
would consider best practices as eternal truths. An
experienced store manager was therefore recruited
in order to share his experiences about the
difference between the Idea Concept and the
Concept in Practice.
HRM
While IKEA is extremely HRM conscious at the
corporate level, local stores have considerable
discretion with respect to such practices as job
rotation within stores, buddy arrangements (used
to socialize and educate new employees), and
recruitment.
Managing Flexible Replication: Mechanisms for
Intra-IKEA Knowledge Sharing
IKEA management stresses that a fundamental
facilitator of its internationalization process is
corporate-wide knowledge transfer, notably the
transfer of changes in those practices that constitute the IKEA format for replication. In fact, the
emphasis on knowledge sharing has clearly
increased over the years. In a strategic company
document, the 2001 document Ten jobs in ten years,
the importance of knowledge transfer and sharing
is strongly emphasized:
When managers and co-workers are genuinely interested in
sharing and accepting ideas from each other, then we will
be using the competence and resources of the whole
company. For this to happen we must be prepared to move
our people and to move information across borders. We
must break down all barriers between functions and
markets, and build an open and trustful working climate,
and that way, act as one IKEA.
Another goal set out in the document is that in

2010 IKEA will have a new generation of homegrown managers, building an even more trustful
and motivating working climate, sharing knowledge across the organization and bringing IKEAs
business and culture forward. The organizational
mechanisms that are deployed in the service of
IKEA-wide knowledge sharing are: dedicated organizational units; standard operating procedures
for gathering, codifying and disseminating experiential knowledge; documents (manuals, internal
journals); values; and the use of expatriates.
Standard operating procedures for gathering,

codifying and disseminating experiential knowledge
The IKEA policy of intensive documentation and
codification of routines and solutions has, if anything, been strengthened over the last three
decades. The mandatory routines and solutions
that must be implemented at the store level are
described in manuals that provide instructions on
how to present, for example, a sofa in a store, or
how to sell food in an IKEA restaurant. In total,
IKEA works with approximately 75 manuals, of
1092
which the first known as the mother of all

manuals describes the IKEA Idea Concept.
Manuals are available in each IKEA store (each
store manager owns his or her set of manuals), and
on IKEAs intranet, where other tools for sharing
IKEA knowledge are also accessible. In order to
support and secure a successful market entry,
forward knowledge flows (i.e., knowledge flowing
from headquarters) are considered crucially important. In order to support a market entry, best
practices and standardized work routines are transferred and implemented locally. Much of this
knowledge is explicit, and shared via IKEAs intranet or manuals from headquarters to subsidiaries.
However, there is also a significant amount of
reverse knowledge flow that is, knowledge flowing from lower-level units to headquarters. Thus
exploration of new work methods or new products
is strongly encouraged, and takes place at a daily
basis at the store level in all markets. New storelevel ideas are passed on to the service office in
the relevant store, then on to the service office in
the relevant market, and finally to the global
service office. The idea may be rejected, or passed
on to the next stage at each consecutive stage. If
an idea does not fit the Idea Concept, feedback is
provided to the store, and it is communicated on an
information wall why the idea was not developed
further and exploited to other markets. If an idea
relates to a product, it is IoS that is responsible for
developing this idea further. If an idea relates to a
new way to present, for instance, an IKEA product
in the store, it is Inter IKEA Systems that is
responsible for developing and communicating it
via IKEA toolbox and the various manuals. This
exemplifies how IKEA learns from the periphery of
the organization.
There is clear awareness at the corporate level
of the importance of reverse knowledge flows
to IKEAs process of organizational learning. For
example, when IKEA was planning the entry into
Japan (which eventually took place in 2006), the
chairman of the board of directors of IKEA Group
argued that an entry into Japan, where packaging
is crucially important, would probably provide
IKEA with valuable experiences that would be
of use in making more precise demands on IKEAs
suppliers. IKEA top management in general
strongly stressed the new learning experiences that
would be produced by the entries into Russia,
China, and Japan.
Another formal, organizationally embedded routine for identifying new ideas and gathering
experiential knowledge from lower-level IKEA

units, notably local stores, is the commercial
review. This is, first and foremost, an internal audit
to ensure that the IKEA concept is followed
(specifically, whether the stores adhere to the
manuals). However, it is also a means of identifying new best practices and new business opportunities. Those best practices or proven solutions,
sometimes referred to as examples from reality,
explored in the review process are published on
the intranet or in the manuals provided by Inter
IKEA Systems BV, such as Range presentation in the
store the IKEA way or How to improve childrens
furnishing. Inter IKEA Systems BV is responsible for
identifying, evaluating and sometimes improving
certain solutions (i.e., best practices) found in
different markets, as well as for sharing this knowledge with the rest of the IKEA network. A set of
manuals is provided to each store manager, and all
other IKEA employees receive a light version of
these manuals in a booklet called Basic knowledge.
The commercial review process may focus on the
presentation of IKEA products in various settings in
the showrooms. When opening a new store in a
new market, new solutions are often discovered. In
Japan, for instance, Comin, a special unit working
with the presentation of products in the stores,
worked hard at presenting IKEA products so that
they would fit a typical Japanese home setting. In
order to convince Japanese consumers that IKEA
products could fit Japanese homes, 30 showrooms
were set up in a park in Tokyo. The purpose of the
commercial review is therefore to ensure that the
concept is followed, but also to accumulate experiential knowledge in order to build new business
opportunities and new best practices that is, to
renew the format for replication.12 The commercial
review is thus a formalized tool for securing reverse
knowledge flows. A manager at IKEA Russia argues
that the ability to be able to contribute to reverse
knowledge flows is crucial, because motivation
is increased by being able to contribute to the
whole of IKEA. However, a precondition for this
is an understanding of how IKEA is organized
(cf. Lindenberg & Foss, 2011). The manager
explained this in the following metaphorical terms:
It is a story about two guys visiting a quarry and they went
to one guy and asked what are you doing here? Im sitting
here and I am to make a square block from this damned
stone. And they went to another guy who was doing exactly
the same thing and asked what he was doing, and he said
Im part of building the Monument! And I think that this is
very much the way IKEA would like to do it when you
1093
have the information and you know what your part is

about, and you have a feeling y and that is very much
about that everyone at IKEA is needed, we cannot afford as a
low-price company to have many people running around
who are not needed. And when you are needed, you also
need to know what part of this monument Im creating.
And I think that this is really motivating! And I think that
everyone has to have a broad knowledge about what we try
to create and what I can contribute with. Its a very open
organization.
As another example of a formal routine designed

to foster IKEA-wide knowledge sharing, in November every year all IKEA country managers meet in
lmhult, Sweden, for the so-called range week.
A
During this week IoS introduces the coming years
product range, thus offering forward knowledge
flow. The week after, all sales leaders responsible
for their countries meet in order to get even more
detailed information about the range. In addition
to IKEAs intranet, information is provided on
wallpaper close to the staff canteens. Read Me, a
co-worker magazine offered in 15 languages that
reaches about 90% of people in their mother
tongue, is another example of how to transfer
knowledge in a forward manner.
In terms of more informal routines, situations
arise in which IKEA finds it useful to share ideas and
experiences, via lateral knowledge flows, from one
market with other markets with similar challenges.
For example, IKEA in Russia, China, and Poland
developed a joint project for the exchange of ideas
on meeting the specific challenges presented by
consumers with low purchasing power. IKEA in
Japan consulted IKEA in Germany on distributionrelated questions prior to market entry. In the
context of lateral knowledge flows, reciprocity
between units is stressed, and seen as a way to
ensure a cumulative development of experiential
knowledge. As a manager in IKEA Russia argues, it is
important to
take advantage of other colleagues experience, if it has been
a success in the other store, other country, it should be
stupid of us if we should go into the same area and not use
their experience, reinventing the wheel, and then we try to
do it even better. But then if it isnt a success, then we will
take the next step and try to do it a little bit and develop it
further on.
Often these initiatives for how to improve the

concept in practice are taken by experienced
employees with a huge personal network within
IKEA. Stories about such initiatives and their outcomes are disseminated both through storytelling
and more formally in internal magazines, such as
IKEA Ideas. IKEA stories are also told online via

the IKEA toolbox or in printed booklet versions.
The idea is to share
opportunities and experiences that have built the IKEA
concept. IKEA Stories preserves and spreads the stories of
co-workers who helped form the IKEA concept, and gathers
and shares stories from todays IKEA organizations. The
ultimate goal of IKEA Stories is to help maintain a strong IKEA
culture, which is a crucial factor for the continued success of
the IKEA concept. (Inter IKEA Systems B.V., 2006: 3)
Values
The ultimate goal of IKEA Stories is to help maintain
a strong IKEA culture, which is a crucial factor for
the continued success of the IKEA concept (Inter
IKEA Systems BV, 2006: 3). In general, IKEA works
hard to make knowledge sharing an integral part of
the IKEA corporate culture. An important IKEA
value is that youll be able to contribute to the
development of others, for example in the form
of knowledge sharing. In general, such values are
made very transparent, and all employees receive
training in these values. IKEAs ten values were
codified in 1996 as IKEA Values, when Ingvar
Kamprad felt that there was a need to restate his
earlier Testament of a furniture dealer. A marketing
manager explains that although manuals are
important, it is crucial to grasp that IKEA is based
on values, so that values steer the firm and y put
the person in center y Togetherness is a central
word for us (Halt, 2010).
Dedicated organizational units
The central IKEA organization Inter IKEA Systems
BV, which owns and controls the Idea Concept and
IKEA brand, and IKEA Group, which owns most
IKEA stores plays an important, coordinating role
in ensuring that experiential knowledge is acquired
from different markets and fed into the format that
is replicated. Inter IKEA Systems BV is vested with
the specific responsibility of orchestrating the
transfer of best practices. When changes are made,
or new solutions are developed for example,
regarding how to present the product range in
different settings, or how to build an IKEA store
with three floors instead of the usual two floors
the relevant knowledge is transferred to a global
service office controlled by the IKEA Group. New
practices are examined, and if deemed worthy of
dissemination they are further documented and
shared through manuals and via an application
on the IKEA intranet called the Toolbox.
1094
Expatriates
Part of IKEAs strategy when entering new markets
is to send expatriates to the new market to share
their knowledge about IKEA. Expatriates and current employees are responsible for sharing this
knowledge with new employees. Buddy practices,
in which an experienced IKEA employee helps
a newcomer to the firm, foster the sharing of
store-level tacit knowledge. In each country, one
IKEA store functions as a learning center for new
IKEA stores in that country, and it is given the
responsibility for training new employees in accordance with IKEA concepts and procedures. In cases
of new market entry, where learning centers do not
yet exist in the relevant country, new employees
are sent to other countries to learn about IKEA.
Expatriates are not only employed for the purpose
of entering a new market and setting up the
business, but also to train local employees.
FLEXIBLE REPLICATION: A THEORETICAL

DEVELOPMENT
IKEAs Use of Replication as an Internalization
Strategy
The dominant theory of replication in management (Winter & Szulanski, 2001) predicts that replicators will follow a two-stage approach, in which an
initial stage of explorative search in the space of
formats for replication is followed by a stage of
exploitative replication of the chosen format. This
partly describes IKEAs internationalization experience. However, as we have stressed, IKEA has
moved on to a third stage, flexible replication, which
escapes the Winter and Szulanski (2001) model.13
Key to that model is the notion of the unique and
presumably stable Arrow Core that describes the
ideal specification of the replicable template. IKEAs
strategic thinking implies a denial that there is an
Arrow Core (and that it may be stable). Thus an
internal document, The future is filled with opportunities (Salzer, 1994: 61), explains that:
Today you will find IKEA all over the world and IKEAs size
will give rise to new problems, problems that will be solved
in the same unconventional way that IKEA has always
solved its problems. IKEA will never be completely finished.
Life will feed IKEA with new problems. Problems that create
new ideas and new solutions. Solutions that will change
IKEA.
That is, the sheer diversity of the environments

that IKEA confronts and the ongoing changes
in those environments call for frequent local
adaptation, not the rigid rollout of a fixed format

for replication. Thus an IKEA Group manager
explicitly denies that replication in IKEA means
copying exactly:
To replicate perhaps means y perhaps sometimes 90% and
sometimes 70%, but there must always exist something that
is unique there and then it is important to incorporate
experiences, local knowledge etc.
Such thinking is nourished by the IKEA belief

system, which stresses the value of ongoing problemistic search for superior solutions (Cyert &
March, 1963; see also von Krogh & Cusumano,
2001). Thus, to IKEA, replication is a process that
should allow for flexible adaptation and learning,
not only as a means of staying competitive and
innovative (locally harvested learning is disseminated internally), but also as a means of managing
the complexity of entering and operating in
different markets. As expressed by a manager at
Inter IKEA Systems BV:
It is an evolution. We must be able to hold it together and,
at the same time, bring home the experiences and knowledge. There are many that believe that IKEA builds on gut
feeling but that is not the case. y We have tested many
things. A lot of the concept is based on simple tests of how
the customer reacts.
Overall, we may conclude that the case of IKEA

suggests that there is a need to go beyond the
Winter and Szulanski two-stage model of replication for the purpose of understanding international
replicators. In the following we rely on the case of
IKEA to develop propositions about international
replicators.
Theoretical Development
Small-N studies, such as the present case study
of IKEA, are usefully carried out for the purpose
of theory-building. IKEA represents the case of an
international replicator that has succeeded in
combining replication with ongoing, MNC-wide
learning and local adaptation that is, flexible
replication. As we do not have a theory of flexible
replication, it is important to discuss what can
be learned and proposed, theory-wise, from the case
of IKEA.
The key to IKEAs ability to combine replication
with learning and local adaptation is the distinction between the Idea Concept and the Concept in
Practice, the former embodying the fixed features
of what is replicated, the latter embodying those
parts that are more or less flexible in the process of
replication. This approach is akin to the notion of a
1095
design hierarchy in the product development literature that is, the notion that some functional or
aesthetic features should stay fixed, while others
may change in response to local customer and
market demands (Clark, 1985). Keeping some
features of the format fixed allows for scale
economies from the reuse of procedures, routines,
principles, and so on across the countries where the
format is replicated. Moreover, some international
replicators may decide that certain products are
essentially fixed features of the format, and this
obviously also allows for substantial scale economies (as well as brand recognition advantages). In
the case of IKEA, the KLIPPAN sofa and the BILLY
bookshelves arguably are such products. Allowing
other features to vary allows for adaptation to local
circumstances. Moreover, updating of the format
for replication, notably as a result of organizational
learning, takes place in terms of modifying these
features. We conjecture that this approach to
replication may be used by other international
replicators than IKEA. This reasoning gives rise to
our first proposition:
Proposition 1: International replicators will
realize a higher performance when they adopt a
hierarchical approach to replication rather than a
copy exactly approach.
The logic behind the proposition is in line with our
overall argument: The hierarchical approach to
replication allows for simultaneously realizing scale
economies and learning economies. A copy exactly
approach eliminates the latter, almost by definition. There is, of course, still a tradeoff between
these two economies. However, as the case of IKEA
suggests, the tradeoff can be influenced in various
ways, notably by the design of the format that is
replicated, and by organizational means (in particular, organizational mechanisms that orchestrate
knowledge flows across the MNC). Consider each of
these in turn.
A fundamental design issue concerns the choice
of an optimal proportion between the fixed and
variable features of the format. What determines
this proportion? Thinking relating to the integrationresponsiveness framework (Bartlett & Ghoshal,
1989; Devinney et al., 2000; Prahalad & Doz, 1987)
identifies basic tradeoffs between the need for
integration (e.g., the importance of scale economies) and the need for responsiveness (i.e., the
benefits from being able to service heterogeneous
customer demands). As argued above, it makes
sense to keep certain features of the template fixed,

essentially for the purpose of meeting needs for
integration, while allowing other features to vary
in time and across countries to meet the need for
responsiveness. In other words, the proportion
between fixed and variable features of the format
chosen by an international replicator can be seen as
the concrete way in which it balances these two
needs.
The key environmental contingencies that influence this proportion are the heterogeneity and
dynamism of the markets in which the replicator is
present. Suppose those markets were homogeneous
and static. Given this, there would be no advantages to keeping parts of the format for replication
variable, but plenty of advantages to freezing the
format and replicating in an entirely uniform
manner. This is essentially the Winter and Szulanski
(2001) two-phase model of replication.14 While
IKEAs internationalization experience until about
the mid-1990s can be described in terms of this
model, IKEA has moved on to a new stage of flexible replication, in recognition of the diversity of the
environments in which it is present, as well as the
need to feed new learning into revising the template.
The IKEA case suggests that the more heterogeneous the underlying customer or client preferences, the stronger the pull towards allowing for
flexibility in the format for replication. Similarly,
the greater the dynamism of the markets in terms
of changes in customer or client preferences that
the replicator targets, the greater the pull towards
format flexibility. Such changes may be entirely
local, in which case it makes sense to delegate
adaptation to local units. Or they may be changes
that characterize many markets, for example, in a
region, in which case adaptation becomes more of
corporate issue. The above reasoning motivates the
following proposition:
Proposition 2: The proportion of fixed to flexible
features in a format for replication depends
negatively on the heterogeneity and dynamism
of the target markets. Thus replicators that target
very heterogeneous and dynamic markets will
have relatively many flexible features in their
formats for replication; and replicators that target
very homogeneous and static markets will have
relatively few such features.
The IKEA case furthermore suggests that the adaptability to local circumstances afforded by such
flexibility may yield distinct learning benefits.
1096
Thus, as we have shown, IKEA systematically

harvests local learning and seeks to transfer it
internally through reverse and lateral knowledge
flows. In turn, such knowledge transfers allows for
the format for replication to be updated by
embodying new solutions in the format. IKEA has
deployed numerous organizational mechanisms to
organize this learning process; notably, the Inter
IKEA Systems BV part of the central IKEA organization is fundamentally in charge of the process of
modifying the format for replication. While it may
be that some lateral and reverse knowledge flows
would happen even in the absence of such
mechanisms, the case description and analysis
suggest that their presence in IKEA has greatly
contributed to organizational learning in IKEA.
This suggests a more general proposition:
Proposition 3: International replicators that
deploy organizational mechanisms for lateral
and reverse knowledge flows will be better able
to identify, harvest, and transfer local learning
that is useful for the purpose of revising the
format for replication.
Organizational units that are dedicated to MNCwide knowledge management are, at least in the
case of IKEA, an integral part of the internationalization of an international replicator. Proposition 3
thus suggests that replication as an internalization
strategy can in fact be aligned with the knowledgebased view of the MNC and its internationalization
process.
Finally, it should be remembered that IKEA took
decades to arrive at its current flexible replication
approach in a highly path-dependent process of
internationalization. During this process it moved
from a highly explorative to a highly exploitative
mode of internationalization, before settling on the
flexible replication mode. There is little evidence
that IKEAs environment(s) changed in a way that
warranted the extremes of a high degree of exploration and a high degree of exploitation. However,
rather than modulate between the extremes in an
attempt to achieve an average fit with the environment (cf. Nickerson & Zenger, 2005), IKEA gradually learned to practice the flexible replication
approach, very much as a result of a series of
failures of the highly exploitative approach in the
face of heterogeneous environments. As shown,
however, the flexible replication approach has
involved establishing dedicated routines and organizational units that take care of IKEAs flexible
replication, and nurturing corporate values and

culture that support the overall approach. This
involves irreversible, costly investments in processes, organizational design, belief management,
and so on. Such investments are likely to be warranted only in the face of a clear understanding of the
costliness and failures of either a highly explorative
or a highly exploitative approach to internationalization. Such an understanding is typically the
result of actually trying it out. It is also an understanding of the IKEA corporate culture (the IKEA
values) that is outlined in the Idea Concept for
replicating IKEA. In sum, we do not expect an
international replicator to adopt a flexible replication approach at the onset of its internationalization process. This is in coherence with the ideas
about experiential knowledge (e.g., Eriksson et al.,
1997; see also Petersen et al., 2003), and also fits
well with the original ideas in the Johanson and
Vahlne (1977) framework that the more knowledge
a firm gains the more resources and commitment.
Specifically, we suggest that:
Proposition 4: International replicators adopt a
flexible replication approach only after substantial experience with either one of the alternatives
of highly explorative or high exploitative internationalization, or both.
CONCLUSION
International replicators have emerged as important actors in many industries. Replication is clearly
a strategy of international expansion. However,
little explicit attention has been given in the
international business literature to how these
organizations build a format for replication; how
they trade off the benefits of replicating a format
with the benefits of adapting locally; how they
modify a format under the impact of experience
gained through the internationalization process;
how they organize this process; and what determines the proportion of fixed to flexible features of
a format for replication.
In addition to providing a historical account of
how IKEA arrived at its current flexible replication
approach, our detailed study of IKEAs international
expansion and its current replication mode contributes to an understanding of these questions.
While the Winter and Szulanski (2001) two-stage
model is broadly descriptive of IKEAs internationalization process until the mid-1990s, IKEA has,
as it were, moved beyond this model.15 IKEAs
1097
hierarchical approach to the format for replication

is a distinct approach to international replication.
Its flexible replication mode not only represents a
way to resolve the integrationresponsiveness challenge, but also facilitates organizational learning:
local learning experiences are fed back to rest of the
network through reverse and lateral knowledge
flows orchestrated by dedicated administrative
mechanisms and units. By highlighting experiential learning in the replication phase, and the
organizational mechanisms that facilitate the
MNC-wide use of such learning, the IKEA case
suggests that research on ambidexterity (Gibson &
Birkinshaw, 2004; He & Wong, 2004; Raisch &
Birkinshaw, 2008) may be useful for further understanding how replicators can cope with the challenges introduced by flexible replication. This
research represents a first attempt in that direction.
International replicators have different organizational forms. Extant, largely descriptive, work
on international replicators is usually concerned
with international franchising chains (Quinn,
1998; Schultz & Yang, 1999; Watson, 1997) that
is, hybrid and non-firm governance structures
(Williamson, 1996). In contrast, internationally
replicating firms have captured much less interest
from IB scholars. However, the difference between a
franchising chain and a firm may matter to what is
the preferred replication strategy. Because firms can
better deploy organizational instruments such as
authority and other modes of control, it may be
argued that they are more successful than franchise
chains in managing lateral and vertical knowledge
flows (Nickerson & Zenger, 2004; Williamson,
1996). They may therefore be more successful in
implementing and executing a flexible replication
strategy.
In terms of managerial implications, the case of
IKEA suggests that flexible replication is a viable
international expansion strategy that is particularly
well attuned to heterogeneous international markets. International expansion may be particularly
challenging for retail firms as compared with
manufacturing firms because of the particular
importance of closeness to end consumers, and
it thus requires specific considerations (e.g.,
Alexander, 1997; Burt & Carralero-Encinas, 2000;
Elg, 2003). However, the IKEA case also suggests
that flexible replication requires strict management, dedicated organizational units, and a strong
corporate culture. There is no doubt in IKEA
regarding who controls and maintains the Idea
Concept, as well as the Concept in Practice. There
may be sometimes considerable latitude for local

experimentation, but such activity is constrained
by the concepts and the hierarchical ordering of
the format for replication. In order to yield valid
managerial implications, future research should
address the extent to which other international
replicators adopt a similar approach to replication.
A comparative case approach may usefully begin
from the four tentative propositions outlined in
this paper.
ACKNOWLEDGEMENTS
We thank (without implicating) Tamer Cavusgil, Ulf
Elg, Kristina Eneroth, Jasper Hotho, Ram Mudambi,
Torben Pedersen, Bent Petersen, Claus Rerup, Sidney
Winter, and, in particular, Peter rberg Jensen, Julian
Birkinshaw, and the three reviewers of this journal for
excellent comments on earlier drafts as well as
discussions. Anna Jonsson would also like to thank
Handelsbankens research foundations, HUR, SSAAPS,
and SI for funding the case study, as well as the
co-workers at IKEA for their help and contributions.
NOTES
Thus the exploitation/exploration tradeoff they
examine is more of a life cycle phenomenon than a
tradeoff existing at any given point of time. Accordingly, the dynamic capabilities they deem relevant are
primarily those residing in the corporate center related
to matching knowledge of the business model in its
template form with the ability to recognize a suitable
environment in which to deploy that model. In other
words, exploration takes places at the corporate
center.
2
Moreover, for some replicators, part of the business
proposition is that the format stays relatively fixed,
spatially and temporally. This is likely to be true for
those replicators where maintaining or expanding the
value of brand name capital is an important concern
(Klein & Leffler, 1981). The basic value proposition of
such replicators (e.g., McDonalds and Starbucks) is to
deliver uniform quality, potentially including service,
type of location, styling, etc., and having outlets that
differ in ways that influence the customers perception
of quality is viewed as distinctly counter-productive.
For such replicators, the case for freezing the template
in the process of replication seems strong.
3
Among the many contributions to this stream are
Chetty and Eriksson (2002), Eriksson et al. (1997),
Fletcher (2001), Pedersen and Petersen (1998), Araujo
and Rezende (2003), Blomstermo and Sharma (2003),
Steen and Liesch (2007), Petersen, Pedersen, and Lyles
(2008), and Malhotra and Hinings (2010).
1
1098
In their later article Johanson and Vahlne (1990)

acknowledge that general experience from internationalization activities may have an influence, but they do
not develop this at any length.
5
For example, Bjorkman, Barner-Rasmussen, and Li
(2004) examine how MNCs can control intra-organizational knowledge transfer, specifically focusing on
the role of personal networks for lateral knowledge
flows. Inter-unit communication has also been emphasized as a means for lateral, as well as reverse, knowledge flows (Ghoshal, Korine, & Szulanski, 1994), and
some research has considered the role of temporary
and permanent integrative mechanisms in influencing
lateral knowledge flows (Person, 2006).
6
In each country, interviews were carried out with
employees from different parts of IKEA, including
national service office and store managers, as well as
a number of employees responsible for certain product
categories in the stores (see Figure 2 for an organizational chart).
7
Kraft is the Swedish word for force or power.
8
IKEA conducts an annual audit (called Brand
Capital), which measures how consumers perceive
IKEA, in terms of low price, product preferences, store
layout, etc. The survey is motivated by the recognition
that local adaptation may be required in order to
project the business idea of IKEA consistently that is,
to create a better everyday life for the many people by
offering a wide range of well-designed, functional
home furnishing products at prices so low that as many
people as possible will be able to afford them. For
example, in new markets, such as Russia and China, it is
important to find an appropriate price level so that IKEA
can reach the many people, as addressed in the IKEA
business idea. In markets such as Japan low price is
sometimes perceived as low quality, and in order to
attract the many Japanese people more emphasis was
placed on the product offering, and how it could be
placed in a Japanese home, than on price.
9
As Anders Dahlvig, former CEO of the IKEA Group,
explains: We have taken the concept and planted it in
many different countries. Since the concept has been
unique and together with the Swedish touch, in terms
of Scandinavian style, we have stood for something
different from the local, domestic competition. That
uniqueness has given us the same advantages in each
country that we had in Sweden in the early days
(Kling & Goteman, 2003: 32).
10
IKEA lore is explicitly regarded as a tool for
maintaining the IKEA culture.
11
Note that while IKEA has in-house R&D, design,
production, and logistics that tend to follow replicable
formats across regions, we have restricted our focus to
the format stores. The consideration of value-chain

replication introduces additional complexity, and is
beyond the scope of this paper.
12
The Commercial Review was recently modified. It
used to consist of a list of items that were somewhat
mechanically checked and evaluated, which resulted
in a score that would tell the management how well a
given store met the concept. However, in order to
eliminate the risk that some stores would focus only on
items on the list (i.e., dimensions on which they are
easily measured) rather than always striving to do all
things right, or constantly trying to improve and
search for new opportunities (cf. Kerr, 1978), the
Commercial Review was revised. It now focuses more
on the work processes in the store rather than on
evaluating certain issues following a predefined list,
and is conducted over a span of several days, in which
representatives from different parts of the organization
join store management to examine the store in detail.
13
In a discussion of Winter and Szulanski (2001),
Bengtsson and Lindkvist (2006: 25) also question the
replication-as-strategy model, and point out that what
may happen in a third phase or later life stages is not
discussed, as it is beyond the analytical scope of their
article.
14
Presumably, environmental changes may render a
format ineffective, leading to new explorative search in
the space of formats for replication, followed by
another phase of exploitative replication, as in a
punctuated equilibrium model (Gersick, 1991). However, this is not modeled in their paper.
15
However, caution is called for with respect to
exploring the implications of the IKEA case for the
strategy-as-replication literature. In fact, it is conceivable that IKEAs approach is simply inefficient, and
that it persists because IKEA does many other things
well, leading to an acceptable aggregate performance.
While this possibility cannot be entirely ruled out, it is
not particularly plausible, given the strong financial
and growth performance of IKEA over several decades.
Still, further inquiry into the performance consequences of different approaches to replication seems
warranted.
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APPENDIX
Table A1
List of interviews
Position
Date
Location
25 June 2003
13 October 2003
16 October 2003
28 October 2003
29 October 2003
28 October 2003
3 November 2003
13 November 2003
20 November 2003
11 December 2003
4 March 2004
22 March 2004
22 March 2004
22 March 2004
15 December 2004
30 August 2005
20 September 2005
11 January 2006
17 October 2006
9 September 2008
3 September 2009
Helsingborg
Helsingborg
Helsingborg
lmhult
A
Helsingborg
lmhult
A
Helsingborg
lmhult
A
Helsingborg
lmhult
A
Helsingborg
lmhult
A
lmhult
A
lmhult
A
lmhult (Focus Japan)
A
Helsingborg
Lund; Lecture
Helsingborg
Lund; Lecture
Berlin
Helsingborg
Russia
Store manager, IKEA Khimki store
Bedrooms BA manager, IKEA Khimki store
Childrens BA manager, IKEA Khimki store
Store Manager, IKEA Teplyie store
Bedrooms BA manager, IKEA Teplyi Stan
Childrens BA manager, IKEA Teplyi Stan
Purchase manager, IKEA Russia
Supply manager, IKEA Russia
New Product Development, IKEA Russia
In-store logistics manager, IKEA Russia
Marketing manager, IKEA Russia
PR manager, IKEA Russia
Property manager, IKEA Russia
HR manager, IKEA Russia
Country manager, IKEA Russia
Store manager, IKEA Dybenko store
Project leader, new store opening
Sales manager, IKEA Dybenko store
Trading manager
Childrens personnel, IKEA Dybenko store
HR manager, Childrens IKEA, IKEA Dybenko store
PR and environmental manager
1 December 2003
1 December 2003
1 December 2003
2 December 2003
2 December 2003
2 December 2003
3 December 2003
3 December 2003
3 December 2003
4 December 2003
4 December 2003
4 December 2003
4 December 2003
5 December 2003
5 December 2003
6 June 2004
7 June 2004
8 June 2004
8 June 2004
9 June 2004
10 June 2004
12 June 2004
Moscow
Moscow
Moscow
Moscow
Moscow
Moscow
Moscow
Moscow
Moscow
Moscow
Moscow
Moscow
Moscow
Moscow
Moscow
St Petersburg
St Petersburg
St Petersburg
St Petersburg
St Petersburg
St Petersburg
St Petersburg
China
Country manager, IKEA China
Range and sales manager, IKEA China
Marketing manager, IKEA China
HR manager, IKEA China
PR manager, IKEA China
Shanghai store manager
17
17
18
18
18
19
Shanghai
Shanghai
Shanghai
Shanghai
Shanghai
Shanghai
Sweden
Assistant to Ingvar Kamprad (founder) and Anders Dahlvig
Assistant to HR manager Lars Gejrot
Global purchasing manager
Assistant to HR manager, IKEA Sweden
Project leader of a push-and-Pull program at IKEA
Commercial manager, BA3
Managing director, Inter IKEA Systems AB
Managing director, Distribution
Compensation and benefit manager, Retail
HR manager, Distribution Global
HR manager, Distribution North
Competence manager, Global, IKEA of Sweden
Chairman of the Board, IKEA Group
HR manager, Global, IKEA Group
CEO, IKEA Group
HR manager, Global, IKEA Group
Managing director, Inter IKEA Systems AB
(CEO)
(CEO)
(CEO)
(CEO)
(CEO)
May
May
May
May
May
May
2004
2004
2004
2004
2004
2004
1102
Table A1 Continued
Position
Bedrooms BA manager, IKEA Shanghai store
Childrens BA manager, IKEA Shanghai store
Expansion manager, IKEA China
Manager for trading, IKEA area central China
Deputy logistics manager, IKEA China
Japan
Country manager, IKEA Japan
Asia Pacific manager
Supply and Logistics, IKEA Japan
Store manager, IKEA Japan
PR manager/market support manager, IKEA Japan
Country manager (former retail manager)
Supply and Logistics, IKEA Japan
Group leader, BA9 cook shop, IKEA Funabashi store
BA 9 manager, cook shop, IKEA Funabashi store
BA 1 group leader, sofas, IKEA Funabashi store
Full-timer BA9 cook shop, IKEA Funabashi store
Full-timer BA9 cook shop, IKEA Funabashi store
Customer service back-office manager, IKEA Funabashi store
BA 5 manager, Work IKEA, IKEA Funabashi store
Logistics administration manager, Funabashi store
Store manager, IKEA Funabashi store
ABOUT THE AUTHORS

Anna Jonsson holds a PhD in Business Administration at Lund University, School of Economics
and Management. Her research interests include
knowledge sharing, the internationalization process of the firm, and qualitative research methods.
Jonsson is a post-doctoral researcher financed by
the Jan Wallander scholarship at Lund University
derbergs foundation at Stockholm
and by Ragnar So
School of Economics.
Date
19
19
20
20
21
May
May
May
May
May
Location
2004
2004
2004
2004
2004
10 March 2005
19 April 2005
19 April 2005
20 April 2005
25 April 2005
17 November 2006
28 November 2006
29 November 2006
29 November 2006
30 November 2006
30 November 2006
30 November 2006
30 November 2006
1 December 2006
1 December 2006
1 December 2006
Tokyo
Tokyo
Tokyo
Tokyo
Tokyo
lmhult Sweden (seminar)
A
Tokyo
Tokyo
Tokyo
Tokyo
Tokyo
Tokyo
Tokyo
Tokyo
Tokyo
Tokyo
Nicolai J Foss is Professor of Strategy and Organization at the Copenhagen Business School
and the Norwegian School of Economics. His
main research interests are strategic management,
knowledge governance, the theory of the firm,
and the methodology of social science. Fosss
work has been published in leading management
journals.
Accepted by Julian Birkinshaw, Guest Editor, 8 July 2011. This paper has been with the authors for four revisions.
Shanghai
Shanghai
Shanghai
Shanghai
Shanghai

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Journal of International Business Studies (2011) 42, 10791102

& 2011 Academy of International Business All rights reserved 0047-2506

International expansion through flexible

Received: 18 September 2009

International expansion through flexible replication

Anna Jonsson and Nicolai J Foss

Unfortunately, there is a dearth of research

Journal of International Business Studies

product offerings, pricing, etc.) are allowed to vary

REPLICATION IN THE CONTEXT OF

International expansion through flexible replication

Anna Jonsson and Nicolai J Foss

aimed at mass-distributing products or services

The Replication-as-Strategy View

for replication is followed by a phase of exact

The Arrow Core is, however, an ideal that a

Learning and the Internationalization Process

Journal of International Business Studies

International expansion through flexible replication

Anna Jonsson and Nicolai J Foss

new markets, an important research stream in

Journal of International Business Studies

Research on internationalization has for a long

International expansion through flexible replication

Anna Jonsson and Nicolai J Foss

rather continuous basis, and that it may be

Learning-based Internationalization and

across units located in established as well as new

Journal of International Business Studies

International expansion through flexible replication

Anna Jonsson and Nicolai J Foss

research. We turn to the classics because they are good

Such good stories are successful in terms of

Data Collection and Analysis

Journal of International Business Studies

Interviews were conducted in Russia (23), China

International expansion through flexible replication

Anna Jonsson and Nicolai J Foss

manuals and tools, was systematically examined.

IKEAS PROCESS OF INTERNATIONALIZATION:

Phases: Explorative internationalization

IKEAs Internationalization Process

(as of April 2011), of which the IKEA group owns

Failed US entry (1985)

IKEA Idea Concept

Timeline of IKEAs internationalization process.

Journal of International Business Studies

International expansion through flexible replication

Anna Jonsson and Nicolai J Foss

IKEAs internationalization process in terms of market

IKEA first store/market entry

as a direct consequence of the saturation of the

Journal of International Business Studies

A somewhat more systematic approach than the

International expansion through flexible replication

Anna Jonsson and Nicolai J Foss

to take control of the IKEA non-owned/franchise

IKEAs entry into the German market. Initially,

Journal of International Business Studies