Paper info

Managing Product Development the IKEA way-The role of accounting and control in networks

Enrico Baraldi and Torkel Strömsten

The paper was published at the 25th IMP-conference in Marseille, France in 2009.

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 This paper examines the role of accounting and control in inter-organizational product development.  We use two in-depth case studies from IKEA and the coffee table Lack, a product sold in over 2.5 million items annually since its introduction in 1981. In the development of this product, IKEA applied, albeit implicitly, an accounting technique known as target costing. By using this technique IKEA has kept the price of this product constant for over 20 years: Lack costs today as much as it did in 1981, that is, €9.9. The key issues that the IKEA cases helps us illustrate are (1) how product development and the use of control mechanisms in this process has been applied in relation to and in interaction with the network of suppliers and partners which are constantly involved in developing the Lack table, and (2) how the various social and technical/physical resources spread across this network have been treated from a management control point of view by IKEA and the other actors.