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Does Market Innovation Moderate the Association Between Fairtrade Practices and Financial Performance of Certified Small Tea Producer Organizations in Kenya

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  • Fredrick Mutwiri Mutea
  • Francis Ndungu Kibera
  • Mary Wanjiku Kinoti
  • Winnie Gacugu Njeru

Abstract

Tea is a vital cash crop in Kenya, supporting around 560,000 smallholder farmers and significantly contributing to the national economy. Fairtrade certification aims to promote ethical production, equitable compensation, and sustainable development for these farmers. While Fairtrade has improved market access and income stability, recent research highlights on-going challenges, particularly limited adoption of market innovation, which hampers adaptability, competitiveness, and long-term financial sustainability. This study examines how market innovation moderates the relationship between Fairtrade practices and financial performance among certified small tea producer organizations in Kenya. Financial performance was assessed using Return on Assets (ROA), Quick Ratio, Stock Turnover Ratio, and Bonus earnings (Ksh/Kg of Green Leaf). Grounded in integrative social contract theory, the study employed a descriptive cross-sectional design, collecting data from 67 KTDA-affiliated organizations across 17 tea-growing counties. Analysis using SPSS, including ANOVA, revealed that Fairtrade practices significantly improve financial performance, and this effect is strengthened when market innovation such as product diversification, new marketing strategies, and technology adoption is integrated. The findings underscore the importance of combining ethical trade frameworks with innovation to enhance competitiveness and sustainability. The study offers practical insights for stakeholders aiming to support smallholder tea producers through socially equitable and market-responsive strategies.

Suggested Citation

  • Fredrick Mutwiri Mutea & Francis Ndungu Kibera & Mary Wanjiku Kinoti & Winnie Gacugu Njeru, 2025. "Does Market Innovation Moderate the Association Between Fairtrade Practices and Financial Performance of Certified Small Tea Producer Organizations in Kenya," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 14(2), pages 1-1.
    • Handle: RePEc:spt:fininv:v:14:y:2025:i:2:f:14_2_1
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    References listed on IDEAS

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    1. Raluca Dragusanu & Eduardo Montero & Nathan Nunn, 2022. "The Effects of Fair Trade Certification: Evidence from Coffee Producers in Costa Rica," Journal of the European Economic Association, European Economic Association, vol. 20(4), pages 1743-1790.
    2. Joni Valkila & Anja Nygren, 2010. "Impacts of Fair Trade certification on coffee farmers, cooperatives, and laborers in Nicaragua," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 27(3), pages 321-333, September.
    3. Markelova, Helen & Meinzen-Dick, Ruth & Hellin, Jon & Dohrn, Stephan, 2009. "Collective action for smallholder market access," Food Policy, Elsevier, vol. 34(1), pages 1-7, February.
    4. World Bank, 2024. "Kenya Economic Update, June 2024," World Bank Publications - Reports 41706, The World Bank Group.
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