Fair trade’s split analysed, how to define positive corporate behaviour and the potential mobile money transfer bonanza in Africa
Fair trade schism
Fair trade is all about helping poor farmers, right? You’d think so. And it is. What began as an experiment to help a handful of coffee growing cooperatives in Oaxaca, Mexico, now extends to 1.3 million producers in 70 countries. Yet a split in 2011 between the movement’s two big players – the UK-based Fairtrade International and Fair Trade USA – has raised a fundamental question: is fair trade really about farmers, or is it more about the consumer (who, in various degrees, is interested in the farmers’ welfare)?
Philippe Rosinski’s work on cultural orientation demonstrates the divided characteristics between the two factions. On the one hand, Euro-centric Fairtrade International is pro-state, pro-collective-action and anti-globalisation. On the other, Fair Trade USA is presented as pro-market, pro-individual-control and in favour of the current economic system. The result is a fundamental dispute over the function of fair trade. The former sees it as an opportunity for consumers to show solidarity with farmers and to challenge the powers that control international trade. The latter views it as a conduit to get as many fairly-traded goods to consumers as possible, thus helping farmers along the way.
The two positions derive from markedly different cultural and ideological perspectives, but Modelo believes they needn’t be mutually exclusive. One can help deepen the principles of fair trade (“quality”); the other can expand its reach (“quantity”). There’s no reason the two sides can’t keep working together – just as long as everyone is mindful of the cultural sensitivities.
Modelo, M (Winter 2014) “The Paradox of Fair Trade”, Stanford Social Innovation Review, (12:3) pp.40-45.
Going beyond the call of duty
Companies often go one step further than they strictly have to. That’s welcome, but it presents academics with a headache. How do they explain why businesses do this? Historically, they’ve lumped these so-called “supererogatory actions” – ie those that “go beyond the call of duty” – into one of two theoretical categories: corporate social responsibility, or the concept of “positive deviance” as described by the Positive Organisational Scholarship (POS) movement. Neither is particularly satisfactory, it would seem.
Take corporate responsibility first. Archie Carroll’s 1979 authoritative theoretical framework suggests companies’ responsibilities fall into one of four main “duties”: economic, legal, ethical and discretionary. The second two appear to fit the supererogatory bill, but Carroll’s definition of “duty” is problematic. The law may not (in some countries) mandate against underage employment, for example, but social pressures effectively make it a duty not to employ child workers. Organisational scholarship also shows how companies are liable to succumb to “mimetic, coercive, or normative isomorphic pressures”; namely, the industry version of keeping up with the (responsibly minded) Joneses.
Examples of “positive deviance” (ie when a company departs from “the norms of a referent group in honourable ways”) suffer the same problems. Primarily, its proponents fail to consider the criticism or punishment if companies fail to act in a discretionary manner relating to a moral dilemma. For the most part, companies are therefore acting in response to changing societal norms, rather than undertaking exceptional moral actions.
The paper suggests that a clearer understanding is available in philosopher David Heyd’s (1982) definition of supererogatory actions, which rests on four primary conditions: permissibility, immunity from critical reaction, moral value, and altruistic intention and merit.
The difference between Heyd and Carroll’s definition lies in the “good” that beyond-the-call-of-duty actions deliver. In Heyd’s version, this must be greater than if an action were undertaken merely to fulfil a moral obligation. Critical also to Heyd’s conceptual distinction is that the supererogatory label be determined by the actual act itself, not by the individual making the decision or the firm as a whole.
Mazutis, D (Winter 2014) “Supererogation: Beyond Positive Deviance and Corporate Social Responsibility”. Journal of Business Ethics, 119:517–528.
Africa’s mobile money market
A lot of noise is being made about mobile financial services – or “mobile money” – in sub-Saharan Africa, but case studies of successful businesses in the space remain few and far between. To test the latent market potential, Gallup carried out a study to assess market potential in 44 nations in sub-Saharan Africa. Kenya, the one country to have cracked the mobile money market, provides the benchmark. Having identified the trends behind Kenya’s success, these were then applied to the raw data of separate nations in sub-Saharan Africa to create baseline reference points that were subsequently used to develop individual market projections.
The findings reveal that more than half (54%) of adults in sub-Saharan Africa make one or more long-distance payments a month, representing money flows of about $760bn. Between 50% and 60% of these transactions are in cash. Were sub-Saharan countries to shift from cash to digital for people-to-people payments at the same rate as in Kenya (ie 70%), the digital money market would be worth about $7.7bn in royalties (assuming payments remain static). The figure jumps to $11bn if other types of payments, such as wages and payments for goods, are included. Were payments to increase as well, e-payment revenue would exceed its baseline by about 5%, reaching up to $16bn.
Kendall, J & Smadja, E (February 2014), “Sub-Saharan Africa: A major potential revenue opportunity for digital payments”, McKinsey Quarterly, pp3-8.
Campus news
The Centre for Corporate Citizenship at Boston College is running a one-day workshop on the topic of materiality in CSR strategy and reporting on April 16.
Academic news Business School Bulletin Fairtrade