Fair trade coffee and inclusive globalization: a metamorphosis of institutional entrepreneurship

Abstract

PurposeInitiated by non-governmental organizations (NGOs) over half a century ago, fair trade has successfully evolved from a regional business discourse to a global social movement within international trade. In the matter of fair trade coffee, this global social movement has transformed the traditional coffee trade structure of inequality and unfairness into a conglomerate of international institutions that embrace equity and inclusivity – a metamorphosis that can be attributed to NGOs’ institutional entrepreneurship.Design/methodology/approachIn this exploratory study, the authors examine the fair trade coffee industry and trace the actions of NGOs along with other stakeholders at the organizational field level, in moving toward an inclusive model of globalization.FindingsDeparting from exploitative globalization, fair trade practices advocate inclusive growth through the promotion and establishment of greater equity for all as well as higher environmental standards in global value chains.Research limitations/implicationsThis study contributes to nascent research on inclusive growth by analyzing how fair trade promotes inclusive growth and trade in GVCs. This study also contributes to research on institutional entrepreneurship by examining two enabling conditions – the shift in institutional logics and the peripheral social position of NGOs – that enabled NGOs to serve as institutional entrepreneurs in the initiation phase of institutional entrepreneurship.Practical implicationsPolicymakers may encourage collaboration between profit organizations and nonprofit organizations to provide entrepreneurial opportunities for trials, errors, and revisions. The evolution of fair trade coffee provides such an example.Social implicationsThe coevolution of NGOs and MNEs has made the globalization of fair trade practices possible. The collaboration between NGOs as institutional entrepreneurs (operating on the community logic) and MNEs as institutional followers (operating on the financial logic) support inclusive globalization and sustain fair trade practices.Originality/valueDrawing on the process model of institutional entrepreneurship, the authors seek to understand the role of NGOs as institutional entrepreneurs in the dynamics of initiating, diffusing and sustaining fair trade coffee practices.