Fair Trade Organizations and Social Enterprise. Social Innovation through Hybrid Organization Models

For several decades, Fair Trade Social Enterprises (FTSEs) have set up partnerships with producer groups in the South and distributed the latter’s products through different types of channels in the North. However, while pioneers in the early years were relatively homogeneous (nonprofit organizations relying on voluntary work and selling through “worldshops”), organizational diversity has tremendously increased in recent times, including other types of legal forms, architectures, and governance models (volunteer-based, manager-based, multi-stakeholder, etc.). As a result, different categories of FTSEs now coexist in the sector with diverse missions and strategies. Since Fair Trade (FT) is a hybrid concept, entailing economic, social and political dimensions, the diversity of organizational models might reflect or enable different ways of articulating these dimensions. In other words, different organizational models might be suited for different ways of conceiving and practicing FT. Such an articulation through specific forms has been suggested by previous concepts that can be related to FT, such as cooperatives, the social economy, the solidarity economy, and, more recently, social enterprise. The latter is particularly useful as an umbrella concept that embraces the diverse types of FTSEs and accounts for their use of market mechanisms to pursue social innovation.
This research first aims to explore and to structure FTSEs’ organizational diversity. For that purpose, the managers of 57 FTSEs were interviewed in four European regions: Belgium, France (Rhône-Alpes), the United Kingdom (England) and Italy (Rome). Based on the combinations of different elements of the organizational form, five categories emerge: individual FTSEs; entrepreneurial, business-form FTSEs; volunteer-based FTSEs; multi-stakeholder cooperative FTSEs; and group structures. Although certain FTSEs share features corresponding to several models, these categories seem adequate in the sense are relatively homogeneous and distinct from each other.
The second question examines the factors or forces that lead FTSEs to adopt particular and diverse organizational forms. Using sociological and economic “new institutional” approaches, this book explores the influence of a number of factors on the organizational form: age, size, region, goals, activities, resources, and leaders’ profiles. From an economic standpoint, organizational diversity may be explained by the fact that FTSEs do not all produce the same types of goods when practicing FT. Thus, FTSEs will adopt the organizational form that minimizes their transaction costs in the production of particular goods. From a sociological standpoint, the analysis suggests that weak and sometimes conflicting institutional pressures explain organizational diversity. Indeed, uniformity is limited (within certain generations of FTSEs or in particular regions), although there is a dominant trend toward a stronger business orientation in the models.
The third question examines how organizational actors within FTSEs experience and foster hybridity at the field level, thereby contributing to organizational diversification. Looking at six cases of FTSEs covering the different types of models, the strategic role of FTSEs is examined, as “institutional entrepreneurs” capable of influencing the environment in a way that legitimizes their own organizational model and secures their access to crucial resources. This strategic analysis allows for a more dynamic view of organizational models as “institutional bricolage”. Finally, the book ends with a number of recommendations for FT entrepreneurs on the strengths and the weaknesses of each organizational model.