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Governance, legitimacy, and stakeholder balance: lessons from Fairtrade International

Elizabeth A. Bennett (Lewis & Clark College Department of International Affairs, Portland, Oregon, USA)

Social Enterprise Journal

ISSN: 1750-8614

Article publication date: 7 November 2016

1541

Abstract

Purpose

This paper aims to explain why Fairtrade International (FI), an organization committed to empowering the producers of Fairtrade certified products, at times (paradoxically), excluded them from its highest bodies of governance. A within-case study of Fairtrade’s inclusive and exclusive reforms over 25 years, along with insights from the social enterprise, hybrid governance and political sociology literatures, is used to generate several propositions about how voluntary sustainability standards-setting organizations (VSSSOs) engage stakeholders – especially producers – in governance.

Design/methodology/approach

This study uses process-tracing methodology, which focuses on the sequential, intervening processes that link potentially important variables within a single case. It draws on data from over 100 interviews and nearly 6,000 archival documents collected from FI and its member Max Havelaar Netherlands. Causal process observations were extracted from the documents and compiled to create a 68,000-word chronological narrative used to evaluate six potential explanations of Fairtrade’s governance reforms: legitimacy, resources, identity, oligarchic tendency, leadership and producer mobilization.

Findings

This study finds that Fairtrade’s inclusion/exclusion of producers reflected its desire to increase its moral legitimacy among external actors and understanding of how to signal legitimacy. The discussion proposes that VSSSOs, especially in times of heightened competition, leverage their comparative advantages to differentiate themselves from other organizations. In cases (like FI) in which the advantage is legitimacy, changing notions of legitimacy may have a destabilizing effect on governance.

Originality/value

This evidence-based account of FI’s governance decisions should help resolve some debates about the nature of FI’s relationship with producer groups. The broader propositions offer guidance for future cross-case research aiming to explain VSSSOs’ governance structure and hybrid governance, more generally. Because FI includes producers in governance to a much greater extent than most VSSSOs, it is an important case.

Keywords

Acknowledgements

The author expresses heartfelt gratitude to those who provided feedback on this project, including Gianpaolo Baiocchi, Mark Blyth, Maryann Bylander, Ross Cheit, Michael Conroy, Martin Hart-Landsberg, Ronan Le Velly, Bob Mandel, Doug Murray, Laura Raynolds, and Sarah Warren. The author is also greatly indebted to two anonymous reviewers and the journal editors for their invaluable suggestions. The project was immeasurably improved by the questions, comments and discussion offered by colleagues at several conferences, including the Fair Trade International Symposium in Milan in 2015 and the “Fairtrade, History, and Governance” Conference at the Centre for Globalisation Research, Queen Mary, University of London, and Centre for the Evolution of Global Business and Institutions, University of York, London, in 2011. Thank you to the author's research assistants Sophie Owens, McLane Harrington, Benjamin Beecroft and Ellen Schwartz for help with writing, revision and manuscript preparation. Data collection would have been impossible without the commitment, efforts, and talent of Benjamin Falk. The author is also grateful for support from the American Council on Germany, the German Academic Exchange Service, the Hazeltine Fellowship, the Stephen Robert Fellowship, the Tinker Foundation, the Watson Institute for International Studies and the Brown University Graduate School. The author is also indebted to the Center for Fair and Alternative Trade (CFAT), especially Laura T. Raynolds and Doug Murray, who provided the opportunity to analyze data while in residence as a visiting scholar; Lewis & Clark College for funding assistants and providing writing retreats; and the Department of International Affairs at Lewis & Clark for enthusiastic support and a provocative intellectual home. Finally, the author is most grateful to the many fair trade founders, leaders, movers, shakers and innovators who allowed the author into their offices, homes, computer servers and filing cabinets in pursuit of knowledge, understanding and a more fair system of trade.

Citation

Bennett, E.A. (2016), "Governance, legitimacy, and stakeholder balance: lessons from Fairtrade International", Social Enterprise Journal, Vol. 12 No. 3, pp. 322-346. https://doi.org/10.1108/SEJ-08-2016-0038

Publisher

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Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited

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