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(2013),"Social entrepreneurship theory and sustainable social impact", Social Responsibility Journal, Vol. 9 Iss 2 pp. 188-209 http://
dx.doi.org/10.1108/SRJ-07-2011-0013
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Engineering (NITIE), in international trade. It contributes to sustainable development by offering better trading
Mumbai, India. conditions to, and securing the rights of, marginalized producers and workers – especially in the
Mayank R. Khandelwal is an South (EFTA, n.d.).
Associate at the Yes Bank Fair trade is an organized social movement and market-based approach which links the
Ltd, Mumbai, India. buyers and sellers to form a winning combination. Fair trade works towards empowering
developing countries producers by ensuring that their produce gets the right value in the
market. It promotes sustainability, which is linked to working with small producers and
farmers to help them move from a position of vulnerability to one of security and economic
self-sufficiency. The primary focus of fair trade is to increase the exports from developing
countries to developed countries. Fair trade is considered by many to be a representation of
a new generation of social movements, which influences the economy towards political or
social ends. The history of fair trade shows that it has evolved from multiple alternative trade
practices and has been gradually institutionalized due to which it can now be considered a
real trade system that questions, as much as it renews, the traditional economic system
(Gendron et al., 2009).
For an organization to get established as a fair trade organization, it has to follow the ten
standards of fair trade and also has to approach the right organization in the fair trade
hierarchy depending on its objectives. The prominent agencies that are involved in fair trade
have been mapped in the flowchart (Figure 1). In this paper an attempt has been made to
understand social entrepreneurship as a concept and the same has been established
through the case of IRFT. The role of FTF in establishing and promoting fair trade in the
country has been examined.
DOI 10.1108/17515631111155179 VOL. 12 NO. 4 2011, pp. 209-215, Q Emerald Group Publishing Limited, ISSN 1751-5637 j BUSINESS STRATEGY SERIES j PAGE 209
Figure 1 Fair trade labels – flowchart of various labels (global and Indian)
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Recently there has been an increased focus of the academia on social entrepreneurship and
many case studies have been conducted on social entrepreneurs who have been able to
create sustainable businesses out of ventures originally started for social upliftment. One
such case has been written by Jyotsna Bhatnagar, in her paper ‘‘An emerging social
entrepreneur: Raj Kunwar Jat’’ (Bhatnagar, 2008). In her paper she explores a case of a
social entrepreneur and the innovative, proactive strategies she utilizes to generate social
and financial capital for her village, as a village Woman head/sarpanch. Cases like these are
a testimony to the fact that social entrepreneurship is catching up with rural India. K.L.
Srivastava in his article ‘‘Benefiting from social entrepreneurship and social businesses in
India’’ proposes an interesting perspective regarding social entrepreneurship in India.
According to him the change agents have been present in India for decades in spite of the
opposition from certain elements in society. These change agents have tried to influence by
various means like setting personal examples, advocacy, practical grass root activities, etc.
Some event took political, legal or religious and spiritual routes for changing the society. The
author states that since the social realities in India are often daunting a much more poetic
vision and entrepreneurial energy is needed in India. The article indicates that there is
tremendous potential in social entrepreneurship and social businesses to address the
problems faced by India. However, for a business to become successful, it must be able to
differentiate itself from the competition either in its products, services, pricing, etc. Fair trade
is one such differentiation factor that the social entrepreneurs can rely on in order to make
their ventures profitable. The consumer preference for fair trade has been seen in various
consumer behavior studies. Changing consumers’ attitudes may not be the best strategy to
bring consumers to purchase fair trade products and abstract information may lead to a
greater amount of money spent by consumers (d’Astous and Mathieu, 2008). Fair trade can
contribute to sustainable development of a business by offering better trading conditions to,
and securing the rights of, disadvantaged producers and workers (Bezencon and Blili,
2009). Fair trade is understood as having three components: the organization of alternative
trading networks; the marketing of fair trade labeled products through licensed conventional
traders and retailers; and the campaign-based promotion of fair trade to change both
purchasing practices and the rules of conventional trade (Wilkinson, 2007). These three
components can be exploited by social entrepreneurs for capacity building and market
share expansion. In the coming paragraphs, various aspects of fair trade have been
discussed that will help social entrepreneurs understand the relevance of fair trade to their
businesses.
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Size of fair trade market
Between 2004 and 2007 the growth in US and Canadian sales for fair trade was 102 percent
according to the Fair Trade Federation Interim Report on fair trade. The size of the fair trade
market in 2008 was $4.12 billion in sales as per the data provided by the UK’s Fair Trade
Foundation. These numbers indicate that there is a significant growth in the fair trade market
size in the past five years. The participation has also significantly increased – there were 76
percent women engaged in non-agricultural fair trade production in 2008, according to the
fair trade Federation’s 2009 Market Trend Report (up from 70 percent in 2004). A total of 7.5
million – individuals were directly benefited from fair trade certified production in the year
2008 alone according to the Fair Trade Labeling Organizations International (n.d.).
P – Political
Fair trade can increase employment opportunities, which will get Government policy might get influenced by big industries which
political support might make operations of small handlooms and artisans
Government initiatives to encourage small scale industry in rural expendable
India
E – Economic
Increased bank funding for small and medium enterprises Economic slowdown might result in poor demand in the country
Obligation of the financial institutions to work with the Priority The recovery from recent crisis has severely dented the demand
Sectors from USA and Europe
S – Social
Increased awareness about poor condition of workers; Onus on Failures of prior initiatives by Govt. and other bodies will make it
inclusive growth difficult for the small artisans to invest with confidence in capacity
building for the sake of Fair trade
Willingness of the small and marginal farmers and artisans to look at
markets beyond their local area
T – Technology
The increased connectivity via mobile and internet has made it Technology might make some of the traditional products extinct
easier for rural producers to stay in touch with their urban buyers
The flow of information has significantly improved helping the entire Handicrafts and hand-woven production methods are finding tough
supply chain to compete against technologically advanced production
methods
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VOL. 12 NO. 4 2011 BUSINESS STRATEGY SERIES PAGE 211
Committees and consultation processes producers can influence prices, premiums,
standards and overall strategy. Thus not only are the farmers empowered the consumers are
also benefited. Shoppers can buy products in line with their values and principles where as
the small producers get access to the export markets. Since its launch in 2002 the fair trade
mark has become the most widely, recognized social and development label in the world.
Fair trade rewards and encourages farming and production practices that are
environmentally sustainable and so producers are encouraged to strive toward organic
certification. The farmers must work out and monitor the impact of their activities on the
environment. Then they must make a plan of how they can lessen the impacts and keep
checking that this plan is carried out.
The impact analysis of fair trade on social entrepreneurship will be incomplete without
exploring the challenges that are provided by fair trade. These issues are discussed in the
next paragraph.
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was formed in September 2000. Since then it has been able to attract membership from
producer groups, trade organizations and intelligentsia who believe in/practice fair trade
standards, as members. With close to 75 members it works with more than 4000 þ producer
groups/societies and more than 80,000 þ artisans/producers.
Case study
International Resources for Fairer Trade was established under the Bombay Public Trust Act
in the year 1995. Since then, IRFT has been providing farmers and artisans the access to
mainstream markets while at the same time encouraging large businesses to incorporate
social responsibility into their businesses. IRFT follows the business model where they work
at both ends of the supply chain and help build capacity. At IRFT, they work closely with
farmers and artisans to enhance their skills that would help them sell their products and give
them access to a sustainable livelihood. IRFT also conducts transparent ethical audits,
provides standards training, and encourages corporate social responsibility to companies
so that they can do the at most for their producers and their profit. IRFT is deeply involved in
the fair trade movement and they promote fair trade certification in India through their
domestic Fair Trade Promotion Programme.
IRFT plays a stewardship role in propagating the principles of fair trade. It promotes the
principles of fair trade to all stakeholders along the supply chain through Capacity Building and
long-term process Training. IRFT develops communication strategies to address different
meets on fair trade. It works in partnership with fair trade networks like FTFI and try to fill the gap
as fair trade change agents. Since its inception, IRFT has always taken a lead role in fair trade
awareness at all forums. IRFTaims at ensuring that the common man understands fairness in
trade and what it represents and how it affects his decision to make a change in buying.
IRFT has two primary programs – Community Business Programme (CBP) and Ethical
Business Programme (EBP) which are woven into the fair trade principles. Under the CBP
program groups of small farmers and artisans often work within a larger organisation to
access support services. These larger organizations are called Community Based
Enterprises, and IRFT equips them with the knowledge and training to give the best
possible support to their members. CBEs often find it difficult to compete in the mainstream
economy because of their lack of knowledge concerning markets, planning, design,
strategy, process, etc. Companies are generally designed to focus on increasing their
bottom line and while doing so, they tend to lose focus on their responsibility to others in their
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own supply chain. An ethical business emphasizes this responsibility, ensuring that workers
are paid fairly, health and safety standards are followed, and everyone is provided with a
sustainable livelihood. The Ethical Business Programme consists of services, which aim to
promote, encourage, and monitor social and ethical aspects of business.
IRFT works with various organizations to improve their business performance, build their
organizational capacity, and access profitable markets. The services that are provided by IRFT
include marketing, finance, production, general management, brand building, networking,
fund raising, etc. Some of the current interventions with organizations are Bhopal Rehabilitation
(BR), Agrocel, Ahmedabad Women Action Group (AWAG), Professional Assistance for
Development Action (PRADAN), Mahiti Rural Development Centre (Dholera, Gujarat), C.C. Self
Help Centre (SHC) Mumbai, Sneh Samrudhi Mandal, Ratnagiri, Maharashtra and many more.
Over the years, IRFT has worked with numerous social entrepreneurs in India in order to help
them scale up their businesses. This has been in line with the core philosophy of IRFT, which is to
make social businesses sustainable. IRFT has helped these entrepreneurs/businesses by
providing technical and managerial guidance for capacity building, marketing, fund raising,
etc. This paper takes a brief look at how IRFT has helped some of the social entrepreneurs
embrace fair trade and make their ventures viable businesses.
Syngenta Seeds Inc, a Swiss-based company joined the Fair Labor Association (FLA) in
2004 as the first agricultural company to apply its monitoring methodology as a pilot
multi-stakeholder programme. IRFT got involved with Syngenta to help them build social
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awareness through training programs with Staff and other Stakeholders of Syngenta. The
primary aim was to help Syngenta field staff to effectively tackle compliance issues faced in
the field. Trainings were given to develop acceptance of the need to take positive steps in
code of conduct compliance, through effective communication tools that disseminate the
core messages and simplify the code of compliance as beneficial to all stakeholders
involved. This has been one of the multi-lingual, multi-state projects and has been
completed in three states of Maharashtra, Gujarat and Karnataka in India.
SHARE MarketPlace is a fair trade venture that aims at increasing economic opportunities for
low-income women in slums of Mumbai and empowering them to bring about changes in their
lives, their families and communities. MarketPlace works with several co-operatives consisting
of close to 500 artisans in India who produce high-quality women’s apparel. Recently, IRFT
conducted a training programme for Share MarketPlace producer groups on production
planning and developing accounting systems, towards achieving a better livelihood and
overall sustainable growth for women. The workshop conducted by IRFT has helped them
develop accounting systems that were almost non-existent; moreover they now have been able
to understand how to manage profit and loss accounts for production unit. Production planning
in turn has helped them to reduce costs and give timely delivery of orders.
Bhopal rehabilitation (BR) is a voluntary initiative to help the victims of 1984 Gas tragedy, in
their struggle to survive. BR was established to create employment opportunities and
redeem from other effects of the disaster. The organization is working in the area of leather
crafts and related areas as base with the home furnishing, fashion accessories and
corporate gifting etc. IRFT has been working with them since 2000 in the areas of capacity
building, market linkages and export promotion. With the IRFT assistance, the organization
took fair trade as their method of operation as they grew. In mid 1993 the turnover was 9.4
lakhs, which has crossed 80 lakhs by 2005.
The above cases clearly show how IRFT has been involved in expanding the horizons through
their initiatives. IRFT has shown the way forward for various social entrepreneurship ventures by
guiding them in various ways. It has shown the utility of fair trade to these organizations and has
helped them build capacity and marketing network to exploit this fair trade network.
Conclusion
Fair trade is more than 60 years old and it has evolved into its current form and size over the
years. Different organizations have contributed to the development of the concepts and Ten
standard for fair trade and its implication have been developed. It is important to understand
that adopting fair trade will contribute to sustainable development by offering better trading
conditions and securing the rights of marginalized producers and workers. However to
ensure all inclusive development in the country, different models/agencies have been
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working towards meeting the needs and thus social entrepreneurship has gained lot of
importance. An attempt has been made in this paper to establish the linkage of social
entrepreneurship with fair trade. A case of an organization IRFT has been presented which
reflects on the potential that exists. This organization has been working on the capacity
building, market linkages and export promotion for different social organization. One of the
organizations with the IRFT’s assistance, which took fair trade as their method of operation,
grew from a turnover 9.4 lakhs in 1993 to 80 lakhs by 2005. This reflects on the way forward
for various social entrepreneurship ventures the utility of fair trade and how the same can be
exploited to ensure all inclusive development.
References
Bezencon, V. and Blili, S. (2009), ‘‘Fair trade managerial practices: strategy, organisation and
engagement’’, Journal of Business Ethics, Vol. 90 No. 1, pp. 95-113.
Bhatnagar, J. (2008), ‘‘An emerging social entrepreneur: Raj Kunwar Jat’’, in SMS India Special
Conference held at ISB, Hyderabad from 12-14 December, 2008.
d’Astous, A. and Mathieu, S. (2008), ‘‘Inciting consumers to buy fairly-traded products: a field
experiment’’, Journal of Consumer Marketing, Vol. 25 No. 3, pp. 149-57.
European Fair Trade Association (n.d.), resources available at: www.efta.int/about-efta.aspx
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Further reading
Dees, J.G. (1998), ‘‘The meaning of social entrepreneurship’’, funded by Kauffman Foundation, original
draft – October 1998 and reformatted and revised: May 2001, available at: www.caseatduke.org/
documents/dees_sedef.pdf (accessed 16 March 2010).
Martin, R.L. and Osberg, S. (2007), ‘‘Social entrepreneurship: the case for definition’’, Stanford Social
Innovation Review.
Segran, G. (2008), ‘‘Social entrepreneurship emerging in India but needs are massive’’, available at:
http://knowledge.insead.edu/Indiasocialentrepreneurship081215.cfm (accessed 15 March 2010).
Segran, G. (2009), ‘‘Social entrepreneurship in India – going beyond the symptoms’’, available at: http://
knowledge.insead.edu/SocialentrepreneurshipinIndia090116.cfm (accessed 15 March 2010).
Singh, S.P. (2008), ‘‘Social entrepreneurship – a new look at the people and the potential in India’’, in SMS
India Special Conference held at ISB, Hyderabad from 12-14 December, 2008.
Srivastava, K.L. (2004), ‘‘Benefiting from social entrepreneurship and social businesses in India’’,
available at: www.SocialEdge.org (accessed 15 March 2010).
Corresponding author
Vivekanand B. Khanapuri can be contacted at: vbkhanapuri@gmail.com/ vbkhanapuri@
nitie.edu
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