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Outsourcing governance: Fairtrade's message for C21 global governance

Mick Blowfield (Senior Research Fellow, Smith School of Enterprise and the Environment at University of Oxford, UK)
Catherine Dolan (Lecturer at Said Business School, Oxford, UK)

Corporate Governance

ISSN: 1472-0701

Article publication date: 11 August 2010

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Abstract

Purpose

This paper seeks to bring together ethical governance theory and empirical findings to examine the shifting nature of governance in global value chains, and the implications of this shift for mainstream companies. In particular, it aims to examine one of the more mature models of ethical value chain governance, Fairtrade, and how this is being used by business.

Design/methodology/approach

Information is derived from a longitudinal study of multi‐stakeholder co‐governance in Kenya and the UK, and an analysis of the literature on similar co‐governance models.

Findings

The paper shows that mainstream companies are looking to multi‐stakeholder models not only to protect their reputation, but as a way of governing ethical dimensions of their value chains. However, rather than a form of co‐governance, it has become a way of outsourcing governance, enabling companies to strengthen their public credibility, while simultaneously transferring an especially difficult element of modern value chain governance to organizations enjoying high consumer trust. Yet, primary data suggest that these governance systems are not delivering the benefits promised, at least at the producer level.

Practical implications

By outsourcing governance to initiatives with dubious credibility in this way, companies may seem at risk. However, the mismatch between the promise and delivery of Fairtrade does not seem to be affecting consumer confidence and, until it does, companies may continue to benefit from the halo effect of being a Fairtrade ally. But there are also opportunities for companies to use Fairtrade's weaknesses to make the value chain a better avenue for delivering ethical governance, with implications for similar co‐governance models.

Originality/value

The study draws on one of the very few pieces of longitudinal field research on the impacts of Fairtrade. It approaches Fairtrade from a governance rather than reputations perspective, and emphasizes the implications for mainstream business rather than the co‐governance movement.

Keywords

Citation

Blowfield, M. and Dolan, C. (2010), "Outsourcing governance: Fairtrade's message for C21 global governance", Corporate Governance, Vol. 10 No. 4, pp. 484-499. https://doi.org/10.1108/14720701011069704

Publisher

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Emerald Group Publishing Limited

Copyright © 2010, Emerald Group Publishing Limited

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