Institutional environments and the livelihood impacts of voluntary sustainability standards: A Village‐based analysis from southern Sumatra's coffee sector

Abstract

Lead roasting firms are operating through Indonesia's coffee exporters to introduce voluntary sustainability standards (VSS) in an attempt to secure supply, and to simultaneously meet corporate social responsibility requirements, even as empirical studies continue to show uncertain benefits for producer livelihoods. Value chain interventions like VSS, however, are not rolled out over a blank canvas, and many contributing factors determine their overall impact on livelihoods, particularly the local institutional environment. This study assesses the extent to which variability of empirical outcomes is determined by the institutional environment, by identifying specific processes through which VSS interact with pre‐existing social, political and economic institutions to influence livelihood outcomes. These include: firm‐specific corporate strategies (including producer training); livelihood strategies of households (including access to assets); government programs; and local political economy, as manifest particularly through patronage between traders and suppliers. VSS have thereby become an additional institutional layer shaping livelihood strategies and regional development outcomes, best viewed as providing access to a new social network that may be exploited by producers. The interaction between VSS programs, livelihood strategies and pre‐existing institutional environments in a particular place often dictates the variable outcomes for producers, making attribution of impact causation to VSS enrolment problematic.