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The Effectiveness of Market-Based Social Governance Schemes: The Case of Fair Trade Coffee

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  • Schuler, Douglas A.
  • Christmann, Petra

Abstract

Market-based social governance schemes that establish standards of conduct for producers and traders in international supply chains aim to reduce the negative socio-environmental effects of globalization. While studies have examined how characteristics of social governance schemes promote socially responsible producer behavior, it has not yet been examined how these same characteristics affect consumer behavior. This is a crucial omission, because without consumer demand for socially produced products, the reach of the social benefits is likely to be limited. We develop a comprehensive model that links two characteristics of market-based social governance schemes—(1) stringency and enforcement of requirements, and (2) promotion—to two conditions required for governance schemes to generate significant social benefits: (1) socially responsible behavior of participating firms; and (2) consumer demand for socially produced products which, in turn, expands products produced according to social governance schemes, and thus, the quantity of social benefits. We discuss market-based social governance schemes in the context of fair trade coffee.

Suggested Citation

  • Schuler, Douglas A. & Christmann, Petra, 2011. "The Effectiveness of Market-Based Social Governance Schemes: The Case of Fair Trade Coffee," Business Ethics Quarterly, Cambridge University Press, vol. 21(1), pages 133-156, January.
    • Handle: RePEc:cup:buetqu:v:21:y:2011:i:01:p:133-156_01
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    Citations

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    Cited by:

    1. Jared Peifer, 2014. "Fund Loyalty Among Socially Responsible Investors: The Importance of the Economic and Ethical Domains," Journal of Business Ethics, Springer, vol. 121(4), pages 635-649, June.
    2. Michal Carrington & Andreas Chatzidakis & Helen Goworek & Deirdre Shaw, 2021. "Consumption Ethics: A Review and Analysis of Future Directions for Interdisciplinary Research," Journal of Business Ethics, Springer, vol. 168(2), pages 215-238, January.
    3. Pavel Castka & Charles J. Corbett, 2016. "Governance of Eco-Labels: Expert Opinion and Media Coverage," Journal of Business Ethics, Springer, vol. 135(2), pages 309-326, May.
    4. Kutaula, Smirti & Gillani, Alvina & Leonidou, Leonidas C. & Christodoulides, Paul, 2022. "Integrating fair trade with circular economy: Personality traits, consumer engagement, and ethically-minded behavior," Journal of Business Research, Elsevier, vol. 144(C), pages 1087-1102.
    5. Norma Schönherr, 2022. "Same Same but Different? A Quantitative Exploration of Voluntary Sustainability Standards in Agriculture," Sustainability, MDPI, vol. 14(9), pages 1-18, April.
    6. Molinillo, Sebastian & Japutra, Arnold & Ekinci, Yuksel, 2022. "Building brand credibility: The role of involvement, identification, reputation and attachment," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    7. Frances Bowen, 2019. "Marking Their Own Homework: The Pragmatic and Moral Legitimacy of Industry Self-Regulation," Journal of Business Ethics, Springer, vol. 156(1), pages 257-272, April.
    8. Cristel Antonia Russell & Dale W. Russell & Heather Honea, 2016. "Corporate Social Responsibility Failures: How do Consumers Respond to Corporate Violations of Implied Social Contracts?," Journal of Business Ethics, Springer, vol. 136(4), pages 759-773, July.
    9. Frank Wijen & Mireille Chiroleu-Assouline, 2019. "Controversy Over Voluntary Environmental Standards: A Socioeconomic Analysis of the Marine Stewardship Council," PSE-Ecole d'économie de Paris (Postprint) halshs-02071504, HAL.

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