bs_bs_banner

Business and Society Review 117:4 443475

Framework for Understanding

Fair Trade Disintermediation
JONATHAN DOH AND KENNETH TAYLOR

ABSTRACT
Our research seeks to answer the question of how a
conventional commodity supply chain can be transformed into a disintermediated commodity supply chain
in the context of the fair trade (FT) movement. We
present a normative framework for conceptualizing
the disintermediation process, exploring the variables
bearing on this process using the case of FT coffee to
illustrate our insights. We highlight the motivational
sources driving FT, suggesting that it is increasingly to
the advantage of multinational enterprises to leverage
their market power to circumvent intermediaries in the
supply chain and, in so doing, shift a greater share of
income and wealth to producing communities. A
research agenda centered on building an FT supplychain disintermediation index is proposed.

Jonathan Doh is a Professor of Management and Operations, Villanova University, Villanova,

PA. He is the Herbert G. Rammrath Endowed Chair in International Business and a Director
at Center for Global Leadership, Villanova University, Villanova, PA. E-mail: jonathan.doh@
villanova.edu. Kenneth Taylor is an Assistant Professor of Economics, Villanova University,
Villanova, PA. He is also an Associate Director at Center for Global Leadership, Villanova
University, Villanova, PA. E-mail: kenneth.taylor@villanova.edu.

2012 Center for Business Ethics at Bentley University. Published by Blackwell Publishing,
350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.

444

BUSINESS AND SOCIETY REVIEW

INTRODUCTION

n this article we seek to answer the basic question of how and

why a conventional commodity supply chain is transformed
into a disintermediated commodity supply chain. On the
surface, many scholars find the disintermediation process both
illogical and inefficient. Our investigation assumes that the
dynamics of fair trade (FT) underlie this process as the primary
motivator. We begin by further assuming that any conventional
commodity supply chain is a product of legacy participants,
market power, and the economic calculus of cost minimization
and profit maximization. The answer to our basic question leads
us into a discussion of the constituent stakeholders, their roles,
relative power, and ethical beliefs. We survey the various motivations for participating in this process and the historical changes
in the global economy that have created the context for FT.
Drawing upon and extending research on critical management
studies (CMSs), international business, stakeholder management,
and customer social responsibility, we propose a framework for
understanding the disintermediation process in the context of
FT.
FT has come to mean many things to different people. All agree
that FT seeks to rearrange the buyersupplier relationship using
a holistic partnership approach focused on promoting equality
and opportunity for the least-advantaged supply-chain participants. The end result of this process is supply-chain disintermediation to various degrees. While multiple perspectives on FT
have developed over the yearsfor instance, with FT labeling
standardsthe basic definition stated previously will constitute
our definition for this article. We began this study with an
expanded set of three interrelated questions. These were
1. How does the conventional commodity supply chain become
transformed to an FT disintermediated commodity supply
chain, as depicted in Figure 1?
2. What are the active variables bearing on this transformation
process?
3. Why would participants go to the time, trouble and expense
of altering an existing, efficient supply chain to create a new,
untested form?

DOH AND TAYLOR

445

FIGURE 1 Conventional and Disintermediated (Fair Trade)

Supply Chain for Coffee.

Conventional Commodity Supply Chain:

Coffee

SmallScale
Farmers

Intermediaries
Brokers

Plantation
Workers

Importers

Roasters

Distributors

Retailers

Consumers

Coffee
Plantations

Disintermediated Commodity Supply Chain:

Fair Trade Coffee
Advocacy
NGOs
(e.g. Oxfam)

Farmers

Cooperatives

Processing
Mill

Coffee
Companies

Consumers

Certification
NGOs
(e.g. Transfair)

While a comprehensive theory of FT disintermediation may

never be formulated, a framework for understanding the process
provides a foundation for establishing a research agenda to define
the extent to which any given industry has become disintermediated or the potential for this happening. In seeking answers, we
found it imperative to explore human motivations, ethics, multinational enterprises (MNEs), and consumer research, as well as
the implications of the development of modern mass communication mediums in the context of globalization. All of the factors to
be discussed have resulted in a transformation of the mindset of
many agents engaged in global supply chains. We begin by introducing our FT paradigm, using examples from the case study of
coffee to elucidate some of our insights and hypotheses.

446

BUSINESS AND SOCIETY REVIEW

FRAMEWORK FOR UNDERSTANDING SUPPLY-CHAIN

DISINTERMEDIATION
The most powerful agents in any global supply chain are the
MNEs. Given their market power, they possess a unique ability to
influence the terms of trade and stimulation of value-adding
activities. Along with MNEs, other agents involved in this story are
nongovernmental organizations (NGOs), consumers, and various
levels of government. We suggest that consumers and NGOs can
pressure MNEs to use their market position as major purchasers
of raw, semifinished, or finished goods produced in developing
countries that can, in turn, encourage greater value-adding activities in those countries. This process can make a contribution to
fairer income distribution by increasing economic opportunities
and growing incomes in developing countries. In addition, there
are other benefits in terms of conservation of natural resources,
establishing more predictable markets, and generating good
will. The role of government is more ambiguous and difficult to
summarize.
The disintermediation process can be characterized by the following normative equation:

D = (M , N , C, G )
D is the level of disintermediation present in the global supply
chain for a particular commodity at a particular point in time; M
is multinational enterprises; N is relevant NGOs; C is a consumer
market variable depended on the stage of development of the
movement; and G is the influence of government policy and
programs.
This equation is subject to the following constraints:
1. The presence and diffusion of global mass telecommunications.
2. That the upstream portion of the global supply chain originates in the developing world.
3. Social infrastructure in developing countries involved: objective rule of law, level of corruption, economic and political
stability, presence of democratic institutions, efficacy of

DOH AND TAYLOR

447

public institutions, regulatory framework, openness to trade,

etc.
4. Third party verifications, corporate codes of conduct, existing
trade agreements, and related treaties and standards.
The role of MNEs in this equation can be negative or positive.
MNEs are the most powerful agent in the disintermediation
process yet they have historically tended to be reactive.
As an example from the FT coffee story, in the late 1980s, the
Dutch NGO Solidaridad approached the major coffee MNEs operating in The Netherlands to source and sell FT coffee, but after
consideration, these MNEs decided that doing so would hurt their
competitiveness and consumers.1 It would take the development
of a significant consumer social movement during the 1990s to
stir the major coffee MNEs into action. Given the growth of
socially responsible consumption (SRC) around the world, the
increased application of corporate socially responsibility polices
within MNEs, and the revealed long-term advantages of integrating social justice dimensions into their products and operations,
we hypothesize that MNEs will become a more consistently proactive factor in the disintermediation processes in the future.
NGOs have been a first mover in the disintermediation process.
They have a positive influence that increases with the number,
size, and nature of NGOs involved, the activist policies employed
(e.g., boycotts), and the types of social injustices they seek to
ameliorate. The story of FT coffee in fact begins with actions taken
in 1988 by two Dutch NGOs having the goals of reducing poverty
and addressing perceived social injustices in rural Mexico. They
contacted an FT coffee cooperative in Oaxaca, Mexico, with some
new ideas for bypassing the existing MNEs global supply chain,
but in a way that held promise for enhancing sales and supporting a higher price for the cooperatives coffee. Further, we hypothesize that when MNEs chose to partner with NGOs, their impact
on supply-chain disintermediation can be amplified.
Consumers are seen as the ultimate gatekeeper in the FT movement. We will further argue that given the biological roots of human
fairness and altruism, expressed through systems of virtue ethics,
we have witnessed the rise of the socially responsible consumer.
Critical to the strength of this variable is consumer awareness
reaching critical mass and passing into the tipping point to become

448

BUSINESS AND SOCIETY REVIEW

a social and commercial movement. The tactic suggested by the

Dutch NGOs in the Oaxaca coffee cooperative case focused on
developing a socially conscious, consumer-centered promotion
campaign to be launched in Europe using the first FT labeling
initiative: Max Havelaar. In the story of coffee, this turned out to
be a critical element in triggering widespread consumer awareness.
In general, once the tipping point is reached, the subsequent
network effects can generate profitable market niches that cannot
be ignored by MNEs. When these conditions are present, we
witness more pervasive and permanent changes appearing in
global commodity supply chains.
Before the tipping point, the supply chain is characterized by a
small number of advocates, developing world producers, and
NGOs circumventing the dominant supply chain to attain their
ethical objectives (i.e., tangential disintermediation). For instance,
the FT coffee cooperative in Oaxaca, Mexico, which goes by
the Spanish acronym UCIRI (Unin de Comunidades Indgenas de
la Regin del Istmo), had already been selling FT coffee to alternative trading organizations in The Netherlands and Germany
since 1985 within a slowly evolving, tangential disintermediated
network. This minor tangential disintermediation had roots in the
counterculture movement of the 1960s and 1970s that brought
into existence a small core of socially conscious consumers. After
the tipping point is entered, the entire supply chain begins to
transform, with disintermediation becoming more pervasive and
embedded. Therefore, we hypothesize that the consumer variable
has a bifurcated effect on the disintermediation process with the
division temporally defined by the tipping point of the associated
consumer social movement.
The government variable likely needs to be disaggregated into
sub-variables: supranational, national, and local. While the supranational and national levels are mostly responsible for creating an
embedded liberal framework, the local level can have a much
greater impact on the disintermediation process. Still, it is difficult
to make any generalizations on the impact these lower levels will
have on the disintermediation process other than to say it may
matter significantly. The impact can range from extremely positive,
to neutral, to extremely negative. The development of FT coffee is a
good example of how national governments can have a positive
impact on supply-chain disintermediation. The European Union

DOH AND TAYLOR

449

(EU) embraced the United Nations (UN) Millennium Development

Goals (MDGs), and in 2005, the European Commission specifically
singled out FT as a tool for poverty reduction and sustainable
development. In 2006, the European Parliament formally recognized the value of the FT movement and in a resolution calling for
the creation of an EU-wide policy to support FT through a coherent
policy framework. The importance of this regional move within the
27 EU nations is that it set standards and harmonizes policies with
the effect of creating stable, extensive markets for MNEs to respond
to the production of FT products and in altering supply chains to
come into EU policy compliance (i.e., disintermediation). We can
generalize by saying that the ideal national government would be
one that pursues policies of macroeconomic stability, a strong rule
of law, upholds democracy, and a pro-market stance. In other
words, supports a liberal framework in which freedom and justice
can be pursued by all.
We have one final hypothesis to propose: The more complex the
global supply chain for a product, the more difficult it becomes to
create a disintermediated supply chain. The disintermediation
process has manifest in commodity supply chains for two reasons.
First, they are comparatively simple, and second, the disadvantaged participants are relatively easy to identify. Given what evolutionary biologists have identified in human nature, to evoke an
altruistic response based on a perceived lack of fairness demands a
face or cause, no matter how abstract, on the receiving end of the
consumer response. This is easier to provide with simple supply
chains than with complex ones. We would predict, therefore, that
the outcomes we discuss in our case of FT coffee are unlikely to be
witnessed in the future for, say, automotive parts or computer
chips. An in-depth discussion of the agents involved in the disintermediation process and associated theory will help the reader to
understand these hypotheses and the assumptions we make more
thoroughly. We next present a brief review of the literature concerning the central agent in disintermediation.

GLOBALIZATION AND THE ROLE OF MNES IN

DEVELOPING COUNTRIES
MNEs are not typically viewed as contributors to poverty alleviation nor are they seen as agents of ethical or FT in developing

450

BUSINESS AND SOCIETY REVIEW

countries. Criticism of the role of MNEs in developing countries

extends back more than four decades.2 One set of criticisms have
focused on the activities of MNEs such as Nike, Levi Strauss,
United Fruit, and others whose sourcing practices in developing
countries have been alleged to exploit low-wage workers, take
advantage of lax environmental and workplace standards, and
otherwise maximize import of cheap raw materials or semifinished
goods, preserving the value-added activities for developed country
production.3 Many governments, international organizations, and
local and international NGOs have criticized the low-cost, laborseeking behavior of MNEs in developing countries, suggesting
such firms scan the globe for the cheapest, least regulated, and
most exploitive situations in which to source raw materials and
semifinished products.4
With the acceleration of economic globalization, a new group of
critics has emerged. Indeed, globalization has been a frequent
topic of discussion in both the academic and popular press, with
authors exploring the costs, benefits, and challenges of this
important phenomenon. Partly in response, MNEs have been
called upon to make positive contributions to the social and
environmental conditions of the countries in which they operate.
In particular, NGOs have advocated that MNEs consider their
sourcing policies as an explicit mechanism to advance ethical
trade, often enlisting consumer groups and wholesalers/retailers
to support their efforts.5
The emergence of globalization over the past half century was
accompanied and supported by a technological revolution in
telecommunications. The development and dispersion of radio,
television, fax machines, computers, mobile phones, and the
Internet assisted MNEs in the managing global operations and
marketing of their products and services. Outside of MNE operations, telecommunication technology has had myriad and significant social, cultural, political, and economic impacts.
Specifically, instantaneous and comprehensive access to news
and information to a growing number of people has brought
awareness of the myriad dimensions of these same MNE operations. Further, this same communications technology has
aided the organization and actions of advocacy groups and
NGOs in response to the perceived deficiencies and abuses of
MNEs.6

DOH AND TAYLOR

451

Management theory and MNEs have responded in numerous

ways to these developments. One response has been the gradual
evolution and implementation of the stakeholder model of governance.7 Stakeholder theory explores those interests and actors
who affect, or in turn are affected by, the corporation.8 According
to a study by Mitchell et al., stakeholder management focused on
identification of key stakeholders, and their relative salience was
based on managerial assessments of stakeholders possession of
one or more of three relationship attributes: power, legitimacy,
and urgency.9 Further, a party to a relationship has power to the
extent it has or can gain access to coercive, utilitarian, or normative means, to impose its will in the relationship.10 Legitimacy
is defined as a generalized perception or assumption that the
actions of an entity are desirable, proper, or appropriate within
some socially constructed system of norms, values, beliefs, and
definitions, while urgency is reflective of the degree to which
stakeholder claims call for immediate attention.11
As employers, communities, and societies in developing countries take on more of the stakeholder qualities, often as a result of
intervention of NGOs, other types of watchdogs and monitoring
organizations emerge. These organizations, often new NGOs, are
facilitated by electronic communications and other forms of mobilization. In the face of an expanding, external stakeholder
network, MNEs would be expected to, and justified from a competitive and shareholder perspective, consider shifting greater
shares of value-added activities to their emerging economy facilities or subcontractors. T. M. Jones argues that honest, trusting,
and ethical relationships result in positive reputation effects and
minimize opportunism, as contracting parties interact and grow
to depend on the reliable behavior of their business partners.12
Importantly, this voluntary but genuine trust-building further
reinforces positive responses, and serves as a constraint to opportunism. Jones also proposes that such behavior can have measurable impacts on competitive advantage, and because ethical
solutions to commitment problems are more efficient than mechanisms designed to curb opportunism, it follows that firms contracting, through their managers, with their stakeholders on the
basis of mutual trust and cooperation will have a competitive
advantage over firms that do not.13 For example, in the face of an
expanding stakeholder network, Nestle, Sara Lee, Kraft, and

452

BUSINESS AND SOCIETY REVIEW

Tchibo signed a Common Code for the Coffee Community in

2004 to improve working and environmental conditions on the
coffee farms from which they sourced their beans. Among other
things, this Code requires producers to pay minimum wages to
coffee workers, cease using child labor, permit union memberships, and abide by international environmental standards. By
the mid-2000s, new rules and regulations began to be imposed by
coffee MNEs that altered the relationship between their extensive
supply-chain linkages feeding into both the American and European markets.14
As applied to corporate social responsibility (CRS), Jones suggests that certain types of corporate social performance are
manifestations of attempts to establish trusting, cooperative firm/
stakeholder relationships and should be positively linked to a
company financial performance. Corporate social performance
would then be defined in terms of the contracting relationship
rather than particular behavior.15 This integration of agency and
stakeholder perspectives, supported from the theoretical basis of
ethical decision making and relationship building, provides a
powerful justification for MNEs to consider shifting more valueadded, productive, and sustainable activities to the developing
country markets in which they operate.

THE SOCIALLY CONSCIOUS CONSUMER

The previous section stated that corporations have come under
increasing pressure to account for the social and environmental
consequences of their actions.16 One avenue by which civil society
expresses its preferences in relation to corporate conduct is via
consumer sentiment.17 Such sentiment can take the form of purchase behavior, protests, boycotts, or other means.18 FT by definition represents a marriage of ethics and global commerce.
Ethics itself emerged as a social construct based on human
relations. Human relations are an expression of innate human
nature. Thus, to understand the socially conscious consumer, we
must briefly step back and summarize the consumer mindset.
For the past several decades, evolutionary biologists have been
studying the strong prosocial tendencies of humans to be
empathic and cooperative.19 These scholars argue that this has

DOH AND TAYLOR

453

come about through a process of accumulated adaptation over

millions of years of human evolution. It is now well established
that humans care deeply about fairness and justice. Results from
the study of the ultimatum game by behavioral economists
confirm the primacy of fairness in human exchange.20 A noted
fact is that peoples actions often transcend even the logical
constraints of reciprocal altruism. People give to charity, they
vote in elections knowing that they alone cannot influence the
outcome, they tip hotel staff that they will never see again, and
they buy FT goods although they will never meet the poor farmer
who grew the beans used to brew their morning coffee. To economists, this type of behavior appears to be nonutility maximizing
behavior but in fact represent behavior, which does increase
utility, but in a nonpecuniary, intangible fashion. It represents a
form of psychic utility associated with our innate sense of fairness
and justice.21 Given these biological propensities, it is only logical
that the emergence of civilization brought numerous new opportunities for social interaction, cooperation, and personal advancement, and with them scholarly reflection leading to the discipline
of ethics.
A cursory review of the philosophical context of ethics permits
a deeper understanding of the FT phenomenon and the various
analytic approaches developed to better govern corporate behavior
and supply-chain management. The ideological basis of FT is
philosophically complex, being a mixture of consequential, deontological, and teleological thinking.22 Aristotle placed justice (i.e.,
fairness) as the reigning virtue, echoing the conclusions of
modern evolutionary biology. Further, he argued that if one used
means deemed unethical it would not justify an ethical outcome.
Today this point of view is characterized as nonconsequential23
An example of the way in which this approach would be expressed
by an FT advocate would be when an individual focuses on social
justice, working for equality of the poor in developing nations
through either existing forums for resolving differences (e.g.,
World Trade Organization [WTO]) or in promoting alternative
approaches compatible with the existing objectives of economic
participants (e.g., establishing stakeholder structures within
MNEs, FT labeling, etc.).
Consequential ethics, as the name suggests, focuses on ethical
ends that are important to achieve with more relaxed rules over

454

BUSINESS AND SOCIETY REVIEW

means. The phrase the ends justify the means is a common way
to encapsulate the essence of consequential ethics, although there
are many variations. In the early nineteenth century, John Stuart
Mill best articulated one form of consequentialism in his article on
hedonistic utilitarianism.24 Essentially, this approach holds that
what matters in the end is aggregate happiness and that if a
particular persons happiness is reduced in the pursuit of an
increase in total happiness, this is ethically justifiable. It can be
said that utilitarianism, in its most generalized form, favors the
greatest good for the greatest number of people under a given set
of constraints.25 This ethical approach could manifest in several
ways within the FT movement. An FT consumer might choose a
more expensive FT product as she or he places the happiness of
the developing world poor above greater personal happiness. For
an FT developed world advocate, this could be displayed by engaging in boycotts against the goods produced by offending MNE, or
even in acts of violence against MNEs. Developing world workers
agitating for radical revolution against the established order
toward the end of establishing a more just order would be
another example of how consequential ethics could be expressed.
What is common to all these manifestations is action supporting
equality of outcomes under the assumption that the end result
will be a net gain in aggregate happiness.
Immanuel Kant is often attributed with developing the primary
structural framework for deontological ethics. Ethical behavior, he
argued, must be based on a set of universally held principles
where the outcomes are less relevant than principles lived by. The
elements in the set of universally held principles were based on
what Kant termed the categorical imperative: an ethical principle that must be followed in all personal actions. The phrase
equality of opportunity is Kantian in that the actual outcome is
less important than the provision of opportunity for personal
advancement. A Kantian, deontological FT advocate will live his or
her life strictly in accordance to the beliefs of social and economic
justice, sustainable business practices, and environmental integrity. Further, this person would believe that living by ones principles, or categorical imperatives, is critical to personal integrity.
While a more just world is desired, that is, outcome is less
important than doing the right thing. This person is willing to
carry a placard and walk for hours in protest in front of the

DOH AND TAYLOR

455

corporate offices of an offending MNE, even though such action is

highly unlikely to result in the desired outcome.
We would be remiss if we did not present one other powerful
source of ethical principles: theology. Organized religion is essentially deontology, as well as teleological, and has been significant
in the development of the FT movement. Religion, in particular
Christianity, had a global footprint long before MNEs. Their strong
moral and ethical beliefs along with their work with the poor in
the developing world put them in a unique position as witnesses
and advocates. It is hardly surprising that FT in the United States
was pioneered by the Mennonite Central Committee (i.e., Mennonite church). Ten Thousand Villages, founded in 1946, is a nonprofit organization that sells native crafts, as well as FT coffee,
obtained through Mennonite missionary activities.
Regardless of ones particular ethical beliefs, when expressed
within the economy, they give rise to the phenomenon of the
socially conscious consumer. Such an individual is one who takes
into consideration some global impact of consumption, related to
their ethical values, in the purchasing decision. It is typically
assumed in the SRC literature that these consumers attempt to
effect positive social change through their actionsthe deontological positionwhich may indeed be the dominant consumer
sentiment.26 The field of SRC has grown along with the FT movement, examples of which are often used in case analysis. To make
an informed choice, the socially conscious consumer must have
accurate, comprehensive information on a given product. Because
consumers cannot possibly know all the pertinent details concerning some global supply chain, they most often rely on information provided by intermediary advocacy groups (i.e., NGOs), FT
labeling schemes, and the media.
One pertinent question is how do we go from the socially
conscious consumer to an FT consumer movement? The FT phenomenon goes back to the late 1940s (i.e., Ten Thousand Villages), although some push this date back earlier in the century.
Regardless, the FT coffee phenomenon did not reach its tipping
point with rapidly expanding FT network effects until the 1990s.
It was mentioned earlier that in 1988, the first FT certification
initiative was created in The Netherlands under the name Max
Havelaar. This marked a significant step toward the tipping point
since for the first time FT goods could move out of worldshops

456

BUSINESS AND SOCIETY REVIEW

and into the mainstream of mass market retailing. Social psychologists define group intelligence as a process by which a
broad, disaggregate group of individuals concurrently come
together in common awareness on the same plane of knowledge.27
Within business studies, social psychological research has been
applied in the subdisciplines of marketing and behavioral finance
toward the end of forecasting consumer and investor behavior.
Once convergence on a certain plane of knowledge occurs (e.g., of
FT products and why buying them matters) a large group can
bring about significant change in related socioeconomic constructs (e.g., global supply chains). A related process, herd mentality, describes the manner in which individuals influence peers
to follow trends and embrace new behaviors (e.g., purchase FT
goods). An applicable work by Malcolm Gladwell explores the
process by which economic, social, and cultural factors join to
create new trends in consumer behavior.28 He defines tipping
points as being a short temporal interval of critical mass, in
regard to some new social phenomenon, after which the momentum for change becomes unstoppable.
What began to alter the commercial landscape for the major
coffee MNEs was the continued development of FT labeling, which
moved distribution into mainstream retailing, as well as the
growth of European inspired coffeehouses in the United States,
most notably Starbucks. Small coffee NGOs success was based in
part on selling high quality beans, emphasizing country of origin.
In 2000, Starbucks made the decision to serve FT coffee through
all of its cafes in the United States, with this decision eventually
being extended to its university foodservice outlet operations in 20
other countries. In the same year, the giant supermarket chain
Safeway agreed to sell FT coffee in it stores. This growing and
successful niche market would not be ignored for long by the five
large coffee MNEs. Seeing commercial opportunity, by late 2003
Procter & Gamble launched its own FT coffee under its Millstone
brand, being the first large MNE to do so in the North American
market.29 Passage into a tipping point and formation of a social
movement is not an instantaneous event but rather one that
unfolds over several years. For FT coffee, this passage took place
during the decade of the 1990s, so that by the year 2000 the
movement was firmly established in both Europe and the United
States.

DOH AND TAYLOR

457

Gladwell further argues in his discussion of agents of change

that this transformative process is often led by key individuals.
These individuals can be connectors, who link the associated
network together; mavens, who acquire, distill, and share intelligence; and salesmen, who persuasively and indefatigably
promote the cause. There are examples of each of these types of
individuals in the FT literature, many of whom became leaders or
active members of FT related advocacy groups and NGOs. His
work is further relevant for an analogous process unfolds within
corporations and along global supply chains. Within corporations,
the tipping-point process may be reactive, for instance in
response to a boycott, or proactive, as with many stakeholder
initiatives. Starbucks 2000 decision to sell FT coffee in all of its
U.S. cafes is a reactive example. At first, Starbucks resisted calls
to sell FT coffee, arguing that there would be insufficient demand.
The San Francisco-based Global Exchange waged a year-long
campaign to change this decision, and when this NGO began to
organize a 29-city protest against Starbucks, the company backed
down, agreeing to sell FT beans. Since then, Starbucks has reorganized its supply-chain structure to embrace principles for
ethical sourcing under the banner they call Coffee and Farmer
Equity Practices.
It has now been established in several studies that consumers
are willing to pay a premium when presented with the option of
FT products.30 Others have persuasively argued that SRC is
strongly linked to the concept of CRS.31 In a stakeholder sense,
these scholars argue that CRS delineates a list of the major
responsibilities of a corporation, one of which is responding to
evolving consumer sentiment and buying preferences. The SRC
literature has matured to the point of developing indices measuring the degree of corporate SRC sensitivity, as reflected through
various measurable internal behaviors.32 An SRC analysis studying buying behavior across nine countries revealed the overarching rationale associated with the decision to buy or not to buy FT
products is not bound to culture.33 While these conclusions are
tentative due to small sample size, this finding would be expected
given the innate, universal propensities of humans to judge fairness. This research further reveals that ethical or unethical
conduct by business influences the behavior of consumers in a
reciprocal fashion. If these research findings hold up to further

458

BUSINESS AND SOCIETY REVIEW

empirical testing, it will reinforce the perception that FT is a

global rather than just a western, niche-market phenomenon. It
would further suggest that ethical MNE behavior reinforces rising
SRC. As the world becomes wealthier and more interconnected,
FT would be forecast to become more prevalent throughout global
markets and in associated supply chains.
Increased media coverage of business, fed by the global diffusion of mass communications technology, has increased public
awareness of, and scrutiny of, all aspects of MNE activity. The
business ethics literature has grown immensely these past several
decades, interpreting the morality of corporate behavior through
its effects on a broader set of people and outcomes. Companies
have responded, recognizing that proactive implementation of
ethical policies through a stakeholder approach enhances corporate culture, has marketing advantages, and strengthens sustainability of both global supply chains and the environments in
which they operate. The origin of increased media attention and
new business policies is found in public awareness campaigns
championed by NGOs. We now turn to a focused discussion of
their catalytic role in this disintermediation process.

THE ROLE OF NGOS

A major element in the FT operational calculus is the role of NGOs
in pressuring corporations to adopt more socially responsible
policies, in this case, related to adoption of FT practices. When
individuals or groups within civil society work together to advance
a broad common set of interests, and these interests become a
significant force in shaping the direction of society, the outcomes
of this process are often called social movements. Social movements can be thought of as broad societal initiatives organized
around a particular issue, trend, or priority.34 The fair and ethical
trade movement, especially in Europe, has taken on characteristics of a true social movement. When civil society groups come
together to form more organized relationships, the entities that
emerge are often referred to as NGOs.
NGOs come in many forms, with differing levels of operations,
orientation, and objectives. They can be international, national,
urban, or community based. Further, their orientation can be

DOH AND TAYLOR

459

toward empowering, participation, service, or charity. Any given

NGO often is found to have more than one of these orientations
and objectives or possesses multiple levels of operation. Estimates
of the number of NGO vary greatly, yet all analysts put the
number in excess of 50,000 while agreeing that their presence has
increased dramatically over the past three decades.35 Their growth
has coincided with that of mass media telecommunications and
the rise in awareness of perceived global injustices and increased
scrutiny of MNEs behavior and associated supply chains. In
addition, they have been peopled by the various types of activists
characterized by Gladwell. Feeding their growth is the perception
that many supranational organizations, such as the WTO, are too
biased toward the interest of developed world corporate interests.
Also, the intractable nature of poverty in the developing world
along with the perceived failure of national governments to deal
with injustices led many to action.
Yaziji and Doh argue that there are three necessary and sufficient conditions that collectively set the stage of the emergence of
NGOs and related social movements.36 First, there needs to be a
critical mass of dissatisfaction with either a social, economic,
political, or technological facet of society. Second, this segment of
the population must share a common awareness of a failure by
existing sociopolitical channels in addressing the issue of concern
(i.e., have moved into the tipping point). Third, given the concern,
there needs to be agreement that supporting an NGO is a viable
and legitimate means for addressing their dissatisfaction. This set
of conditions establishes the context in which NGOs are witnessed
to emerge. Once established, NGOs efforts are directed in myriad
forms and directions.
Corporate relations with NGOs have developed over time to be
complex and multidimensional. Research on these relations has
revealed strategic adaptations, at times leading to new organizational forms and/or strategies that are termed coevolutionary.37
This is often brought about through the efforts of NGOs and often
arises from an initial conflictual campaign, such as the boycott of
Nestle in the late 1970s. Eager to improve their corporate citizenship credentials, MNEs often seek to partner with an NGO to
monitor and implement business practices. This may in turn lead
to the rise of voluntary industry standards or the joint crafting
of legislation leading to new legal standards governing those

460

BUSINESS AND SOCIETY REVIEW

practices. There is no doubt that NGOs have become influential

organizations within civil society and that they constitute an
important variable in the supply-chain disintermediation process.

OTHER AGENTS IN THE

DISINTERMEDIATION PROCESS
Supranational, national, and local governments and their agencies can have a negative, neutral, or positive influence on the
disintermediation process. Supranational organizations do not
actively become involved in FT, yet create context and validate FT
activities. The UN 1948 Universal Declaration of Human Rights is
often cited by those in the FT movement to morally justify activities. While not a treaty or a formal part of international law, the
Declaration has created a diplomatic instrument that has often
been used to pressure governments that are in violation of its
articles. It further guides the UN in their activities and policies. In
2001, 192 UN members and numerous international organizations agreed to the MDGs. These goals, to be achieved by 2015,
are in harmony with the Declaration and cover a broad swath of
social objectives in the developing world from the reduction in
poverty and environmental sustainability to the development of
a global partnership for development. FT activists embrace of
MDGs for the promotion of FT is seen as a means to augment
efforts to attain nearly all stated goals. Agencies of the UN, such
as the UN Development Program, the UN Childrens Fund, the
World Health Organization, and the World Food Program, to name
a few, all have operations on the ground in developing countries
where they engage in a variety of social justice and human development activities. UN operations on the national and local level
often complement those of fair traders and bring awareness to
domestic producers and citizens of efforts on their behalf and
related opportunities.
The World Bank works with and is related to the UN but was
formed as a separate organization through the Bretton Woods
Agreement signed in 1944. FT NGOs often criticize the policies of
the World Bank and accuse it of being a tool of more developed
countries and their MNEs. However, having as its goals economic
development and poverty reduction means that their activities in

DOH AND TAYLOR

461

the developing world have an analogous impact to that of the UN

in raising awareness and creating context. It can also be said that
the research staff of the World Bank conducts considerable
research on the impact of FT initiatives as a means to attain both
poverty reduction and development. In summary, the collective
efforts of supranational organizations have served to create a
supportive international framework for FT to develop around
embedded liberal ideals.
Developed world governments, with their role at the downstream
portion of global supply chains, are in a unique position to influence the disintermediation process. Some nations, such as the
United States, have taken a distinctive laissez faire approach to FT
products. Others, like the aforementioned 27 members of the EU,
have taken deliberate steps to support FT initiatives with the goal of
promoting developing world economic sustainability and poverty
reduction. To this end, they enacted uniform policies and standards, providing preferential access of FT products to European
markets. Complying with these policies and standards resulted in
many MNEs disintermediating portions of their supply chains.
The governments of developing nations vary in their response to
FT. Some are openly supportive (e.g., Costa Rica) while others are
totally hostile (e.g., North Korea). The range of response is so
varied that we are unable to generalize about this level of government. When openly supportive of FT initiatives within their
borders, national governments direct support is often limited to
financial assistance through enterprise development and financing initiatives.38 These agencies can be helpful in providing advice,
such as on accessing loans, business partners, and export opportunities. They can also offer business training, direct financing,
and help in the development of business plans. Local government
authorities often have close links with provincial level economic
development and financing units. Many of these individuals are
likely to have commercial interests, often agricultural, so local FT
activists approach them for help with ambivalence. The record of
support is mixed at this governmental level and depends upon
such factors as the people involved, the strength of the legal
system, and the level of corruption present in the local political
environment. Even when local government officials are supportive, local FT cooperatives and activists complain that the
government-support programs for domestic enterprise develop-

462

BUSINESS AND SOCIETY REVIEW

ment and financing agencies are often difficult to access, bureaucratic, and limited in support service offerings. We can conclude
by saying that when available, national, provincial, and local
governments can act to improve needed infrastructure (e.g.,
roads, irrigation systems, etc.), provide grants and credits to
support FT activities, and assist in negotiations with MNEs and
their supply-chain subsidiaries.
When national, provincial, and local governments lack either
the capacity or willingness to assist domestic producers and
workers in obtaining fairer treatment, NGOs often step in to fill
the void. Acting on behalf of indigenous people, such as in the
aforementioned case of the Dutch NGOs working with the cooperative in Oaxaca, Mexico, NGOs essentially become host government surrogates, having a more direct say in the operational
relationship between domestic cohorts and MNEs. Once representative authority is obtained, NGOs gain bargaining power to assist
in negotiations between indigenous groups (i.e., local NGOs),
MNEs, and host governments.39 When successful, this surrogate
process can effectively contribute to disintermediation.

SUPPLY-CHAIN DISINTERMEDIATION: THE CASE

OF COFFEE CONCLUDED
In this section, we tie together the threads already introduced
concerning the story of FT coffee in order to highlight an industryspecific case illustrating our disintermediation framework. In relation to this framework, we describe the mechanisms designed to
promote additional processing in developing countries, circumvent price markups by intermediaries, establish premium brand
recognition for products produced using sustainable or organic
methods, avoid products fashioned under oppressive working conditions, and otherwise promote greater awareness and support for
developing country working conditions and income needs. We
focus on a primary commodity because it is in such sectors that
globalization of production has had particularly radical, and often
disruptive, impacts within developing countries. These types of
goods have been problematic to the development process due to
relative price volatility and low global income elasticity (i.e.,
Engles Law).

DOH AND TAYLOR

463

Coffee is the essential FT story for a host of reasons. First,

according to UN Conference on Trade and Development, coffee is
the second most valuable primary commodity good exported from
the developing world. Tens of millions of developing country
farmers and workers depend on coffee for their livelihoods. Its
global industry structure made it ideal for FT activism. The global
coffee industry is oligopolistic with five MNEs, Kraft, Procter &
Gamble, Nestle, Sara Lee, and Tchibo purchasing almost half of
the global supply of green coffee beans.40 While 70 percent of
global production is grown on plantations of less than 25 hectares, within this number, we find small family farmers producing
nearly 50 percent on farms less than 5 hectares in size.41 This
dichotomy in market structure between the downstream and
upstream of the coffee commodity supply chain led to accusations
of MNE abuse of power by FT promoters. In their advocacy campaigns it was easy to replace the happy, robust figure of Juan
Valdez and his donkey, used for promotion by the National
Federation of Coffee Growers of Colombia since 1960, with a
realpolitik image of destitute developing world workers struggling
to survive in unsafe work and unsanitary living conditions.
The traditional coffee supply chain is long and complicated (see
Figure 1). Coffee may pass through as many as 50 hands on its
way to each cup. Coffee beans are first grown on either small
farms or large estates. Brokers (aka coyotes) buy beans from
farmers and then sell them directly to exporters/importers
without ever actually possessing any coffee. The beans move on to
developed world importers who then sell the beans to roasters
who in turn roast and package the coffee. The coffee is then sold
to retailers who sell the beans to consumers in one form or
another.42
While there were parallel stories of the development of FT coffee
in the United States and Europe, the European story embodies in
a more complete sense FT activism at its finest. In both regions,
NGOs began the process of spreading awareness, moving consumer sentiment toward the tipping point and initiating the FT
movement. Many pieces of this story were shared earlier, beginning with two Dutch NGOs approaching the FT coffee cooperative
in Oaxaca, Mexico, in 1988. The initiating NGO, Solidaridad, is
organized as a foundation that collects donations from religious
groups and then awards these funds as grants to cooperatives in

464

BUSINESS AND SOCIETY REVIEW

the developing world. The Mexican cooperative UCIRI was known

to Solidaridad since it had been involved for some time in a slowly
developing tangential disintermediated network in Northern
Europe. The new labeling initiative, Max Havelaar, was seen as a
branding strategy that would raise awareness and bring higher
consumption of FT coffee. The Dutch public is familiar with Max
Havelaar as a character in a famous novel who defended the basic
rights of Indonesian coffee farmers during the period of Dutch
colonial rule. Thus using this name was a branding approach that
fits in nicely with the theory of socially conscious marketing.
Solidaridad argued that the value added by certification would
entice importers and retailers to participate by stocking their
shelves with certified coffee produced by UCIRI, for which Solidaridad would collect a fee.43 This approach was successful, and
in the ensuing years, other NGOs began their own FT labels such
that by the late 1990s there were 17 distinct FT labels throughout
Europe, North America, and Japan. During this time, FT coffee
was moving toward a tipping point of general awareness as NGOs
promoted their labeling initiatives and their numbers multiplied.
The social psychology surrounding FT coffee rose toward the
necessary critical mass to move into the tipping point, creating a
social movement. All of this placed increasing pressure on the
dominant MNEs to respond or miss out on a rapidly growing,
potentially lucrative niche market.
In the United States, small independent importers, small-scale
roasters, and NGOs (aka alternative trade organizations) began
importing FT coffee from farming cooperatives in Central America
during the 1980s. Thus, tangential disintermediation followed a
similar developmental path as that witnessed in Europe in these
early years. The first real sign of an American FT coffee movement
is typically associated with the formation of Equal Exchange in
1986 by FT advocates and their decision that year to import coffee
from poor farmers in Nicaragua. As with other FT goods, their
coffee was initially distributed though worldshops and other specialty outlets. The Equal Exchange label was present from the
beginning yet their labeling standards developed over the next few
years, eventually harmonizing with those emerging in Europe
when Equal Exchange joined the European FT network.
As one would expect with tangential disintermediation, the
impact on the global supply chain was limited in these early years

DOH AND TAYLOR

465

of FT coffee. European and American NGOs bought directly from

farmer-owned cooperatives thereby displacing the middleman, or
coyote, shifting a small portion of value added to the cooperatives
while satisfying their loyal cohort of socially conscious consumers.
This middleman link has often been deemed exploitive so removal
was viewed as increasing local social justice. Some Latin American cooperatives also began milling operations that, in these
cases, further increased the shift in supply-chain value to cooperatives and coffee farmers. It was noted earlier that during the
late 1980s, Solidaridad approached the major coffee MNEs operating in The Netherlands soliciting their involvement in FT coffee,
but their appeal was rebuffed. From this, we can infer that the
tipping point that would result in a social movement had not yet
been breached.
The major MNEs began to face a shifting commercial landscape
as FT labeling became more widespread and accepted by the
consuming public. In the United States, the growth of European
type cafes helped to move the distribution of FT coffee into mainstream retailing. As the niche market for FT coffee grew, it slowly
dawned on the five major coffee MNEs that there was profit
potential in the growing movement. The 2000 Starbucks decision
outlined earlier in this article was a catalytic event within the
American MNE market segment of the coffee industry, leading
the social movement in this region to its tipping point. In Europe,
the continued success of this specialty coffee market led to the
major coffee MNEs making fundamental changes to the global
supply chain. In particular, the 2004 decision by Nestle, Sara Lee,
Kraft, and Tchibo to jointly agree to a Common Code for the
Coffee Community to improve working and environmental conditions on their coffee-source farms indicated that disintermediation was becoming pervasive. Nonetheless, none of these
companies would have made a move in these areas absent consumer and NGO pressure, reflecting the important role of the
socially responsible consumer and FT advocates in the process of
adoption of FT principles and products. By the opening years of
the twenty-first century, the FT movement was entrenched on
both shores of the North Atlantic.
It was noted earlier that by the late 1990s, there were over 17
different FT labeling schemes. These schemes addressed differing
social and environmental factors in the developing world and

466

BUSINESS AND SOCIETY REVIEW

were seen to be in conflict. Since 1997, most of the labeling

initiatives have been harmonized under the umbrella group Fairtrade Labeling Organizations International. Headquartered in
Bonn, Germany, this organization sets minimum standards to be
met under all FT labeling schemes. Uniformity brings confidence
to the socially responsible consumer, creates a more unified
movement, and strengthens the FT network while stabilizing
market structure.44
FT has encouraged small farmers to stay small in an effort to
create sustainable coffee production, although the beans from
these farms are often pooled and roasted in cooperatives. Many
FT farmers integrate their coffee crops into an existing environment in a process that is known as shade-growing. In fact, over
80 percent of FT coffee sold in the United States is shade-grown,
with the intent of preserving natural habitats of many plants,
insects, birds, and animals.45 Furthermore, 85 percent of FT
coffee is also certified organic indicating that it was farmed using
only natural fertilizers and pest control. It is reported that farmers
receive an extra 15 cents above FT prices for certified organic.46
Even coffee grown by small farmers that is not certified organic is
generally better for the environment as small farmers often cannot
afford chemical fertilizers and pesticides.47 According to a 2002
report from the World Bank, these practices benefit farmers and
farm workers who have less contact with the chemicals, and the
general public from less use of agrochemicals.
Recent research on the financial impact on participants due to
FT disintermediation suggests that the process does indeed shift
value to developing world participants. A study of the before and
after effects of disintermediation on small coffee producers in
Nicaragua showed that retained value by those farmers increased
274 percent per FT unit of coffee sold in the final market, while
the value that used to be captured by domestic wholesalers (i.e.,
coyotes) was transferred to the coffee growers cooperative.48 This
supply-chain comparative example, depicted in Figure 2, is associated with the FT instant coffee operations of Nestl and Cafdirect in Nicaragua. It further illustrates that the processing and
retail side of FT instant coffee becomes more expensive, in part
because of the small volumes traded. A final point to note is that
while the value retained by farmers and cooperatives does indeed
increase within FT disintermediation, the majority of the value

DOH AND TAYLOR

467

FIGURE 2 Allocation of Supply-chain Value per Unit Pre- and

Post-disintermediation (Fair Trade): The Case of
Coffee in Nicaragua. Source: Adaptation from data
presented by Mendoza and Bastiaensen.48

468

BUSINESS AND SOCIETY REVIEW

continues to be retained by roasters and retailers. In fact, the

absolute value received per unit sold increases for roasters and
retailers in the FT case.
This suggests that as volumes continue to grow, MNEs stand
to benefit from the fast-growing market for FT coffee. FT coffee
shipments reached 19,872 metric tons in 2003.49 FT coffee sales
(by volume) grew by 71 percent from 2004 to 2005 in the United
States, and by 34 percent in the United Kingdom.50 According to
Transfair, in 2005, 44 million pounds of green coffee imports were
FT certified in the United States, which amounted to about $500
million in retail sales.51 This represents an average year-over-year
growth of nearly 90 percent since 1998. Despite this growth in
sales of FT coffee, they still make up only about 3 percent of the
developed world coffee market.52 Regardless, new mainstream
coffee companies and retailers, such as Britains Marks and
Spencer, are attracted by the growing markets and healthy profits
for FT certified coffee. Finally, in terms of oversight and compliance of global commodity chains (GCCs) and standards, Taylor et
al. report that Fair trades alternative governance arrangements
have made significant progress toward establishing and maintaining fairer social relations among its participants. . .53

USING MARKET POWER TO DISINTERMEDIATE

SUPPLY CHAINS
Research in the role and influence of various players in GCCs
provides an interesting heuristic for understanding the position
and potential of MNEs, producers, host governments, and NGOs
to promote FT in global value chains.54 GCC examines the sources
and influence of market power that allow firms to generate
surplus rents by arbitraging their production and distribution
across national boundaries.55 GCC provides a lens through which
to view and measure the degree to which MNEs can erect and
sustain entry barriers in the face of pressures from competitors to
erode market power and commoditize products and services. The
dynamics of GCC analysis show how the spatial structure of a
value chain and the power relations among the constituent actors
can result in market power derived from the construction and
protection of unique assets and capabilities.56

DOH AND TAYLOR

469

As applied to commodities, GCC provides a theoretical rationale

for the current state of power asymmetry and uneven distribution
of benefits from the production and distribution of commodities in
both their raw and finished form. Recent GCC research related to
FT and similar initiatives has focused on the concept of embeddedness.57 Taylor et al. argues that the organizational and governance processes of FT, the Forest Stewardship Council, and
other related initiatives, are shaped by the embeddedness of their
operations in conventional markets, practices and assumptions.58 More broadly, CMSs have added an additional perspective to research in global commodity chains by viewing MNEs as
exploitive actors that are able to dominate the terms of trade
within developing countries. As Eden and Lenway have argued,
MNEs, by definition, span national borders, but local firms and
organizations in developing countries may be more geographically
restricted. The resulting asymmetry in mobility means that the
less mobile may pay more of the costs of globalization, incur
greater instability in earnings, and see their relative bargaining
power fall.59
As GCC and CMS have demonstrated, MNEs have significant
market power to influence the terms of trade between developing
and developed countries. As MNEs have become more active in
developing countries, they are viewing emerging regions both as
new consumer markets as well as sources of inputs for finished
goods produced in their home countries, demonstrating the integration of rent- and market-seeking goals. The production by
MNEs of FT products can be viewed as part of an internal supply
chain in which MNEs manage the entire production and distribution process, or, alternatively, as part of outsourcing strategies
in which MNEs source supply from subcontractors. By sourcing
directly, MNEs may be in a position to contribute to more fair and
equitable trade by shifting income and stimulating higher valueadded activities to poorer regions. In so doing, MNEs may be able
to accelerate economic development and, in some cases, facilitate
more sustainable business practices and better working conditions in developing countries. In practice, these actions are often
initiated in response to real and anticipated pressure by NGOs
and consumers of final products in developed country markets,
although high growth in demand for FT products appeals to
MNEs market-seeking tendencies. They may also be motivated by

470

BUSINESS AND SOCIETY REVIEW

potential competitive benefits to the MNE resulting from access to,

and ability to, influence quality and stability of supplies, as well
as product differentiation and brand identity. In addition, MNEs
and producers benefit by the role that MNEs play as a channel
through which market intelligence is transmitted to producers,
allowing them to learn more directly about market trends and
preferences in developed country markets.60

SOCIALLY RESPONSIBLE TRADE: IMPLICATION

AND FUTURE RESEARCH
The evolution of the global economy, and the role of MNEs within
it, has posed intense challenges for researchers, government officials, international development institutions, and societies. In this
article, we have sought to contribute to an understanding of these
challenges by redirecting discussions away from critical indictments of MNEs and instead offering a positive but realistic normative perspective that incorporate new conceptualizations of the
role of MNEs. Importantly, this role requires prodding of MNEs by
consumers and NGOs in advancing fairer and more ethically
sound trading relationships. This proposed research perspective
is not only important for developing countries, but also to MNEs.
Given the normative nature of the process outlined in the
article, the proposed research agenda should be focused on creating an FT supply-chain disintermediation index that could then
be used to substantiate the hypotheses shared in this article.
Product, industry, or MNC rankings could then be complied in
regard to certain features, such as degree to which a supply chain
is or could be disintermediated, the degree to which various MNCs
have embraced the principles of the FT movement, etc. In our
discussion of the literature on SRC, it was mentioned that an
index had been developed to measure the degree of corporate SRC
sensitivity.61 These scholars compiled a Socially Responsible Purchase and Disposal (SRPD) scale using a self-identified socially
responsible consumer behavior survey device incorporating a pool
of 147 responses. Building on recent developments that have
occurred in theory and practice has resulted in the development
of numerous such indices (e.g., Transparency International Corruption Perception Index). Such an FT disintermediation scale, as

DOH AND TAYLOR

471

with the SRPD scale, would be a multifaceted construct including

weighted survey results from a representative sample of the FT
stakeholders presented in this article (surveys of producers,
vendors, employees, government officials, suppliers, NGOs, etc.).
Along with the aforementioned rankings, the results of this
research agenda will permit other questions to be answered and a
clearer picture of the nature and extent of disintermediation to be
more clearly revealed across global industries.
Much more needs to be done to develop and test this emergent
framework of supply-chain disintermediation and the hypotheses
proposed. In this article, we have argued that a richer, more
interconnected world will demand more FT goods and that MNEs
are evolving to embrace a stakeholder model under the banner of
CRS. All of the evidence suggests that as the twenty-first century
unfolds MNEs will become a more significant contributor to social
justice, economic development, and promotion of a sustainable
global economic order.

NOTES
1. G. Fridell, Fair Trade Coffee: The Prospects and Pitfalls of MarketDriven Social Justice (Toronto: University of Toronto Press, 2007), 54.
2. F. H. Cardoso and E. Faletto, Dependence and Development on
Latin America (Berkeley, CA: University of California Press, 1979); T.
Moran, Multinational Corporations and the Politics of Dependence: Copper
in Chile (Princeton, NJ: Princeton University Press, 1974); A. G. Frank,
Capitalism and Underdevelopment in Latin America (New York: Monthly
Review Press, 1967); R. Prebisch, Proceedings of the United Nations Conference on Trade and Development (Geneva: United Nations, 1964).
3. A. Harrison and J. Scorse, Improving conditions of workers?
Minimum wage legislation and anti-sweatshop activism, California Management Review, 48, 2(2006): 144160.
4. P. Singer, One World: The Ethics of Globalization (New Haven, CT:
Yale University Press, 2002).
5. J. P. Doh and H. Teegan (Eds.), Globalization and NGOs: Transforming Business, Government, and Society (Westport, KS: Praeger Publishers, 2003).
6. M. Yaziji and J. P. Doh, NGOs and Corporations: Conflict and
Collaboration (Cambridge, UK: Cambridge University Press, 2009).

472

BUSINESS AND SOCIETY REVIEW

7. J. L. Cummings and J. P. Doh, Identifying who matters: Mapping

key players in multiple environments, California Management Review, 42
(2000): 83104.
8. R. E. Freeman, Strategic Management: A Stakeholder Approach
(Boston, MA: Pittman, 1984).
9. R. K. Mitchell et al., Toward a theory of stakeholder identification
and salience: Defining the principle of who and what really counts,
Academy of Management Review, 22 (1997): 853886.
10. Ibid, 865.
11. Ibid, 867.
12. T. M. Jones, Instrumental stakeholder theory: A synthesis of
ethics and economics, Academy of Management Review, 20 (1995): 404
437.
13. Ibid, 422.
14. L. T. Raynolds, Consumer/producer links in fair trade coffee
networks, Sociologia Ruralis 42 (2002): 404424.
15. Jones, Instrumental stakeholder theory, 435.
16. C. Smith, Corporate social responsibility: Whether or how? California Management Review, 45, 4(2003): 5276; D. L. Spar and L. T. La
Mure, The power of activism: Assessing the impact of NGOs on global
business, California Management Review, 45, 3(2003): 78101.
17. C. B. Bhattacharya and S. Sen, Doing better at doing good:
When, why, and how consumers respond to corporate social initiatives,
California Management Review, 47 (2004): 924; R. Harrison, Corporate
social responsibility and the consumer movement, Consumer Policy
Review, 13, 4(2003): 127131; S. Sen and C. B. Bhattacharya, Does
doing good always lead to doing better? Consumer reactions to corporate
social responsibility, Journal of Marketing Research, 38 (2001): 225243.
18. J. G. Klein et al., Why we boycott: Consumer motivations for
boycott participation, Journal of Marketing, 68, 3(2004): 92109.
19. F. De Waal, The Age of Empathy (New York: The Crown Publishing
Group, 2009). M. D. Hauser, Moral Minds (New York: HarperCollins,
2006). R. Dawkins, The Selfish Gene (Oxford: Oxford University Press,
1976).
20. W. Gth and M. Yaari, An evolutionary approach to explain
reciprocal behavior in a simple strategic game, in Explaining Process and
ChangeApproaches to Evolutionary Economics, ed. U. Witt (Ann Arbor,
MI, University of Michigan Press, 1992), 2334; G. E. Bolton, A comparative model of bargaining: Theory and evidence, American Economic
Review 81 (1991): 10961136.

DOH AND TAYLOR

473

21. H. Gintis, Game Theory Evolving (Princeton, NJ: Princeton University Press, 2000).
22. F. Schuurman, Beyond the Impasse: New Directions in Development (London: Zed, 1993).
23. C. Fisher and A. Lovell, Business Ethics and Values: Individual,
Corporate and International Perspectives, 3rd ed. (Upper Saddle River, NJ:
FT Press, Pearson Education, 2003).
24. J. S. Mill, Utilitarianism (Oxford: Oxford University Press, 1998).
25. W. Frankena, Ethics, 2nd ed. (Engelwood Cliffs, NJ: Prentice-Hall,
1973).
26. J. Roberts, Profiling levels of socially responsible consumer
behavior: A cluster analytic approach and its implications for marketing,
Journal of Marketing Theory and Practice 3, 4(1995): 97114.
27. C. Sunstein, Infotopia: How Many Minds Produce Knowledge
(Oxford, Oxford University Press, 2006).
28. M. Gladwell, The Tipping Point: How Little Things Can Make a Big
Difference (Boston, MA: Little, Brown & Co., 2002).
29. C. Peale, Fair Trade Coffee has New Home at P&G, The Cincinnati Enquirer, 16 (September 2003), http://www.enquirer.com/editions/
2003/09/16/biz_wwwbiz1coffee.html.
30. P. Auger et al. What will consumers pay for social product features, Journal of Business Ethics 42 (2003): 281304.
31. L. Mohr et al. Do consumers expect companies to be socially
responsible? The impact of corporate social responsibility on buying
behavior, Journal of Consumer Affair 35, 1(2001): 4572.
32. D. Webb et al. A re-examination of socially responsible consumption and its measurement, Journal of Business Research 61 (2008):
9198.
33. R. Belk et al. Consumer ethics across cultures, Consumption,
Markets, and Culture 8, 3(2005): 275289.
34. H. Teegen et al. The importance of nongovernmental organizations (NGOs) in global governance and value creation: An international
business research agenda, Journal of International Business Studies, 35
(2004): 463483.
35. Yaziji and Doh, NGOs and Corporations, 1516.
36. Ibid.
37. A. Y. Lewin and M. Koza, Empirical research in co-evolutionary
processes of strategic adaptation and change: The promise and the
challenge, Organization Studies 22, 6(2001): 512.

474

BUSINESS AND SOCIETY REVIEW

38. For an example see South Africas small enterprise development

agency, http://www.seda.org.za
39. J. P. Doh and H. Teegan, eds. Globalization and NGOs: Transforming Business, Government, and Society. (Westport: Praeger Publishers,
2003).
40. A. Hira and J. Ferrie, Fair trade: Three key challenges for reaching the mainstream, Journal of Business Ethics 63 (2006): 107118.
41. A. Nicholls and C. Opal, Fair Trade: Market Driven Ethical Consumption (London: Sage, 2005).
42. Oxfam International, Mugged: Poverty in Your Coffee Cup (Oxford:
Oxfam International, 2002).
43. Fridell, Prospects and Pitfalls, 5354.
44. Raynolds, Consumer/producer links, 404424.
45. Transfair USA, Fair Trade Coffee Backgrounder, 2006, http://
www.transfairusa.org/pdfs/backgrounder_coffee.pdf
46. Transfair USA, Fair Trade Coffee Fast Facts, 2006, http://
www.transfairusa.org/pdfs/fastfacts_coffee.pdf
47. Transfair USA, Fair Trade Coffee Backgrounder.
48. R. Mendoza and J. Bastianensen, Fair trade and the coffee crisis
in Nicaraguan Segovias, Small Enterprise Development 14, 2(2003):
3646.
49. Fair Trade Labeling Organization, Worldwide Fair Trade Sales
Rise by a Third in 2005, 2006, http://www.fairtrade.net/sites/news/
news.html
50. Fair Trade Labeling Organization, Why FLO Deals with Coffee,
2006, http://www.fairtrade.net/sites/products/coffee/why.html
51. Transfair USA, Fair Trade Coffee Fast Facts.
52. Fair Trade Labeling Organization, Worldwide Fair Trade.
53. P. L. Taylor, In the market but not of it: Fair trade coffee and
forest stewardship council certification as market-based social change,
World Development 33 (2005): 129147; P. L. Taylor et al., Keeping trade
fair: Governance challenges in the fair trade coffee initiative, Sustainable Development 13 (2005): 199208; L. T. Raynolds, The globalization
of organic agro-food networks, World Development 32 (2004): 725
743.
54. G. Gereffi et al. The governance of global value chains, Review of
International Political Economy 12 (2005): 78104; G. Gereffi and M.
Korzeniewicz, (eds.), Commodity Chains and Global Capitalism (Westport,
KS: Praeger, 1994).

DOH AND TAYLOR

475

55. S. Ponte and P. Gibbon, Quality standards, conventions and the

governance of global value chains, Economy and Society 34, 1(2005):
131; Gereffi and Korzeniewicz, Commodity Chains.
56. J. Bair and G. Gereffi, Upgrading, uneven development, and jobs
in the North American apparel industry, Global Networks 3 (2003):
14369.
57. Taylor, Market-based social change, 129147; Taylor et al.,
Keeping trade fair, 199208; Raynolds, Agro-food networks, 725743.
58. Taylor et al., Keeping trade fair, 200.
59. L. Eden and S. Lenway, Multinationals: The Janus face of globalization. Journal of International Business Studies 32, 3(2001): 388.
60. M. Fairbanks et al., Plowing the Sea: Nurturing the Hidden Sources
of Growth in the Developing World (Boston, MA: Harvard Business School
Press, 1997).
61. Webb et al., Socially responsible consumption, 9198.