Mission Accomplished? Balancing Market Growth and Moral Legitimation in the Fair Trade Moral Market

Moral markets are markets articulated around a distinctive moral mission that contrasts with, and is perceived by audiences as morally superior to, the norms of conventional markets (Balsiger, 2021; McInerney, 2014). For example, in contrast to conventional international trading practices, fair trade was created with the aim of supporting small-scale producer groups in developing countries through payments of minimum prices and social premiums for community development, prefinancing, long-term trading contracts, and advocacy in favour of global ‘trade justice’ (Moore, 2004; Raynolds and Greenfield, 2015). As such, the moral mission encapsulates the distinctive values and purposes that are collectively articulated by pioneer organizations, i.e., organizations that contribute to founding the moral market through supplying the first morally distinctive products (Hedberg and Lounsbury, 2021; Lee et al., 2018b). As the market grows, its participants become more diversified, and the moral mission tends to be codified into norms and standards meant to facilitate recognition by external audiences and integration of new market participants (Reinecke et al., 2012; Weber et al., 2008). This work is typically performed by ‘market mediators’ such as certification initiatives and federative structures, which regulate the conditions of market participation while often also working to scale the moral market beyond the niche of pioneer organizations (Haack and Rasche, 2021; Lee et al., 2017; Nicholls, 2010). However, market growth may require adapting the moral mission and softening its most constraining dimensions to allow more flexibility in market participation modes (Haack and Rasche, 2021; Hedberg and Lounsbury, 2021; Lee et al., 2017; Lee et al., 2018b). For example, as the microfinance market grew, its founding principle to lift the poorest out of poverty through targeted microcredits was relaxed to enable the participation of commercial banks and allow them to charge higher interest rates (Hudon and Sandberg, 2013; Wry and Zhao, 2018). As a result, market growth led to either the exclusion or excessive indebtedness of the poorest groups that had initially been targeted, prompting criticism from pioneers such as the Grameen Bank that the moral foundations of the market had been violated (Yunus, 2011) and sparking an ‘ethical crisis’ in the moral market (Hudon and Sandberg, 2013). Therefore, there is a trade-off in moral market growth (Kim and Schifeling, 2022; Lee et al., 2017): while it enhances the breadth of moral mission achievement, it is likely to jeopardize the mission's ‘moral purity’, triggering opposition from pioneer organizations (Child, 2015; McCaffrey and Kurland, 2014). Such opposition may initiate a negative judgement cascade and threaten the market's moral legitimation, i.e., the continued efforts to persuade audiences that the moral market is offering a morally superior alternative to mainstream markets (Balsiger, 2021; Haack and Rasche, 2021; White et al., 2012). Therefore, we ask: How can market growth be legitimized in moral markets when such growth challenges the market's founding mission? To respond to this question, we adopt a ‘legitimacy-as-process’ perspective (Glozer et al., 2019; Suddaby et al., 2017) and illuminate the ongoing work that market mediators deploy to balance market growth with moral legitimation. While prior research on moral market growth has predominantly examined how new participants are attracted into a moral market (Durand and Georgallis, 2018; Georgallis and Lee, 2020; Hedberg and Lounsbury, 2021), less attention has been devoted to how pioneer organization support can be maintained despite the growth-oriented changes in the moral mission. Such support is particularly critical in moral markets in which pioneer organizations remain a cohesive group that guards the moral mission (Kim and Schifeling, 2022; McCaffrey and Kurland, 2014). In this article, we suggest that ‘mission work’, i.e., building perceptions of consistency between the founding mission and subsequent actions so as to maintain pioneer organization support and avoid ‘mission drift’ accusations (Battilana and Lee, 2014; Grimes et al., 2019; Smith and Besharov, 2019), is a critical capability enabling market mediators to balance market growth and moral legitimation. To do so, we investigate how the global fair trade certification actor, Fairtrade International (FTI), grew the fair trade market from a niche of pioneer organizations to a large market of certified products traded by a variety of organizations including multinational corporations (MNCs). Specifically, we examine how FTI achieved market growth while convincing pioneer organizations that such growth was not incompatible with the founding mission of fair trade as ‘a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade’ (Moore, 2004, p. 331). Drawing from interviews, archival data, and insider field notes, our analysis explains how three types of mission work enabled FTI to address this challenge. First, in mission editing, the moral mission was gradually trimmed to attenuate the political dimension of the founding mission and foreground the narrower mission of improving producers' livelihoods, enabling wider market participation through more flexible certification standards. Second, in mission moralizing, FTI mobilized an increasing set of moral claims to frame mission editing as consistent with, and necessary, to achieve the edited mission. Third, in mission stabilizing, FTI (re)assured pioneer organizations of mission continuity and emphasized their common fate as the moral market grew. These findings contribute to the literatures on moral markets, moral legitimation, and mission work. First, our findings extend previous work on moral market growth beyond the strategies to attract new participants into the moral market (Durand and Georgallis, 2018; Georgallis and Lee, 2020; Hedberg and Lounsbury, 2021). Through shifting the focus to the relationship between a market mediator and pioneer organizations acting as the guardians of the market's morality, we demonstrate how market mediators exploit two features of moral markets to balance market growth and moral legitimation: the multidimensionality of the moral mission (Balsiger, 2021; Becchetti and Huybrechts, 2008) and the feeling of ‘shared fate’ among market participants (Hiatt and Park, 2022; Lee et al., 2018a). Second, we extend the understanding of moral legitimation as a continuous, recursive process (Suddaby et al., 2017) through illuminating how market mediators orchestrate moral legitimation on behalf of market participants throughout episodes of conflict and temporary truces (Glozer et al., 2019; Reinecke and Ansari, 2015). To do so, our longitudinal data highlight the capability of a market mediator to articulate an increasingly diverse set of moral claims as the market grows, thereby adding a temporal dimension to the understanding of moral claim plurality and extending it beyond the setting of multiple stakeholder dialogue (Reinecke et al., 2017; Scherer et al., 2013). Finally, by exploring mission work at the market level, we extend this notion beyond the well-documented organizational level (Battilana and Lee, 2014; Smith and Besharov, 2019) and support recent work that has emphasized mission accomplishment as a matter of audience perceptions (Grimes et al., 2019). Emerging from social movement advocacy against the perceived shortcomings of established markets (McInerney, 2014; Weber et al., 2008), moral markets are founded by pioneer organizations ‘motivated by moral or normative considerations rather than only by the pursuit of economic interest’ (Georgallis and Lee, 2020, p. 51). These pioneer organizations instantiate a mission that often comprises a bundle of moral dimensions (Balsiger, 2021; Becchetti and Huybrechts, 2008). Such moral mission stands in contrast with the norms of conventional markets (Arjaliès and Durand, 2019; Hedberg and Lounsbury, 2021) and enables moral market participants to offer products or services ‘considered to be normatively superior’ (Georgallis and Lee, 2020, p. 50). Examples of moral markets include ethical investment (Arjaliès and Durand, 2019; Child, 2015), organic production (DuPuis and Gillon, 2009; Lee et al., 2017), local food (Hedberg and Lounsbury, 2021; McCaffrey and Kurland, 2014), and community-based renewable energy (Huybrechts and Haugh, 2018; Mitzinneck and Besharov, 2019). While instantiating their distinctive moral mission, moral market participants seek also to increase their impact and reach critical mass (Balsiger, 2021; Munir et al., 2021; Sine and Lee, 2009). According to Lee et al. (2017), the growth of a moral market beyond the niche of pioneer organizations is the main driver of its legitimation, i.e., the work to create ‘a sense of positive, beneficial, ethical, understandable, necessary or otherwise acceptable action in a specific setting’ (Vaara and Tienar, 2008, p. 986). Adopting this perspective, prior research on moral markets has mainly focused on pragmatic and cognitive legitimation, examining how new participants are attracted to the moral market to enable market growth and visibility (Durand and Georgallis, 2018; Georgallis and Lee, 2020; Hedberg and Lounsbury, 2021). However, the survival of a moral market also depends on sustained moral legitimation, i.e., the work to maintain audience perceptions that a focal actor continuously pursues ‘the right thing to do’ (Suchman, 1995, p. 579). Moral legitimation differs from pragmatic and cognitive legitimation in its focus on morality and social appropriateness as opposed to, respectively, advancing self-interest and comprehensibility (Haack et al., 2021; Haack and Rasche, 2021; Suchman, 1995; Suddaby et al., 2017). Following Suchman (1995), morality may be conveyed through personal relationships, rigorous procedures, desirable outcomes, or structural characteristics of market participants. In moral markets, moral legitimation is paramount to the engagement of morally sensitive audiences such as customers and funders, who ground their support in the judgement that the market offers an alternative to mainstream markets and benefits particular groups (beneficiaries) or society as a whole (Dubuisson-Quellier, 2013; Lee et al., 2018b; White et al., 2012). Yet, market growth may imply lowering the barriers to entry to attract ‘conventional’ businesses and trigger pragmatic and cognitive legitimation (Balsiger, 2021; Pozner et al., 2014). Such market growth enables commercial success and, to a certain extent, quantitative achievement of the moral mission (typically, the number of beneficiaries benefitting from the moral market) (Buchanan et al., 2022; Lee et al., 2017). However, it is likely to alienate the support of pioneer organizations if they perceive that market growth is achieved at the expense of the purity of the core moral values articulated at founding (DuPuis and Gillon, 2009; Hudon and Sandberg, 2013; Kim and Schifeling, 2022). For example, McCaffrey and Kurland (2014) document how the pioneers of the ‘local food’ movement in the USA resisted the harmonization of standards and actively sought to de-legitimize corporate ‘local food’ initiatives, even if such efforts could ultimately limit the growth of the moral market. Prior research has suggested that the concerns of pioneer organizations may not be an issue when, due to market growth, these organizations become a minority that can be ignored, or when some of them become ‘co-opted’ and champion market growth (Hedberg and Lounsbury, 2021; Lee et al., 2017; Munir et al., 2021). If, however, pioneer organizations form a cohesive and homogeneous group that guards the market's moral mission (McCaffrey and Kurland, 2014), their support is critical to sustain moral legitimation and influence other audiences' moral legitimacy judgements (Pozner et al., 2014; Weber et al., 2008; White et al., 2012). In this context, in order to encourage, or at least tolerate, market growth, pioneer organizations need to be convinced that this growth maintains some affinity to the founding moral mission (Kim and Schifeling, 2022; Lee et al., 2018b). Following a ‘legitimacy-as-process’ perspective (Suddaby et al., 2017), sustaining pioneer organizations' support is likely to require enduring moral legitimation work (Reinecke et al., 2017) that not only builds consensus but also addresses conflict (Luyckx and Janssens, 2016; Suddaby and Greenwood, 2005). This challenge explains why moral market legitimation is typically channelled through market mediators, i.e., organizations that receive a mandate from market participants to both regulate and scale the moral market (Dubuisson-Quellier, 2013; Michel, 2020). Such organizations, for example certification initiatives (Bartley, 2007; Reinecke et al., 2012) or federative networks (Audebrand and Barros, 2018; Huybrechts and Haugh, 2018), endorse a collective mandate to pursue market-level legitimation on behalf of market participants (Haack and Rasche, 2021; Lee et al., 2017). Indeed, because of their collective commitment to advancing a moral cause (McInerney, 2014), moral market participants rely on market-level moral legitimation for their own organizational legitimation, since they would all be affected by moral market de-legitimation (Balsiger, 2021; Siltaoja et al., 2020). This resonates with the concept of ‘shared fate’, suggesting that organizations in the same market category are ‘bound together by a sense of belongingness and equally experience similar consequences’, such that ‘damage of collective reputation can affect all firms in an industry’ (Hiatt and Park, 2022, p. 1; see also Lee et al., 2018a; Sine and Lee, 2009; Weber et al., 2008). However, how market mediators can maintain a feeling of shared fate with pioneer organizations when attracting new participants requires adapting the founding moral mission is an intriguing question that has remained unanswered so far. We suggest that ‘mission work’ is a critical capability that may enable market mediators to resolve this puzzle. Despite the importance of moral mission as a collective endeavour in moral markets, mission has mainly been theorized as an organizational construct. An organization's mission encompasses the core, recurring patterns of actions that reflect its values and purposes (Selznick, 1957), serving as ‘a socio-cognitive bridge between [the organization's] identity and its actions by specifying why the organization should exist and how it should act’ (Grimes et al., 2019, p. 819). Because organizational mission is made explicit and communicated to audiences, typically through a mission statement, it also ‘establish[es] audiences’ expectations regarding what types of actions are appropriate […] to undertake’ (Grimes et al., 2019, p. 820). When organizational mission and subsequent actions are perceived to be inconsistent, such discontinuity is labelled ‘mission drift’ – a process that has been observed in social enterprises when they deviate from their founding social mission to pursue commercial strategies (Battilana and Lee, 2014; Ometto et al., 2019) and more recently extended to describe discontinuity between founding mission and subsequent actions in any type of organization (Grimes et al., 2019). While previous work has mainly examined mission drift at the organizational level, we suggest that this construct can be usefully extended to the market level, specifically in a moral market. To do so, we embrace a legitimation perspective whereby mission evolution is not an objective reality but rather a matter of audience perceptions (Grimes et al., 2019; Wry and Zhao, 2018) – in our case, the perception by pioneer organizations that moral market growth remains sufficiently aligned with the moral mission articulated at founding. Audience evaluations, nevertheless, can be influenced by how such alignment is communicated (Palazzo and Scherer, 2006; Scherer et al., 2013), as revealed in previous studies on the roles of discourse (Glozer et al., 2019; Luyckx and Janssens, 2016; Vaara and Tienar, 2008) and rhetoric (Harmon et al., 2015; Suddaby and Greenwood, 2005). Grimes et al. (2019) theorized the construct of ‘mission work’ to describe the ‘symbolic and material efforts to manage impressions regarding divergence between organizational image and organizational action’ (Grimes et al., 2019, p. 822). Mission work addresses audience concerns about such divergence ‘by claiming strategic intent and offering arguments’ to justify the consistency of actions that appear to deviate from the founding mission (Grimes et al., 2019, p. 823). Despite the relevance of mission work to moral markets, we know little regarding how such work could be deployed by a market mediator as a moral legitimation capability enabling it to maintain the support of pioneer organizations while pursuing market growth. The analysis of how FTI managed fair trade market growth offers a promising setting to explore this process. The research design is a historical case study constructed from rich empirical data (Eisenhardt and Graebner, 2007). The fair trade moral market was chosen as a particularly insightful case because of the tensions resulting from market growth–oriented decisions and the apparent success of FTI in handling these tensions, increasing sales of fair trade products without losing the support of pioneer organizations (Becchetti and Huybrechts, 2008; Gendron et al., 2009). To foreground our analysis, we trace the history of fair trade market growth from the launch of product certification in 1988 to the achievement of widespread presence in the mainstream by 2020. From the early 1950s to the late 1980s, fair trade pioneer organizations and activists advocated a political ambition to achieve ‘trade justice’, namely for world trade to be based on fairer exchanges providing fair revenues, decent working conditions, and stronger bargaining power for small-scale producers (Child, 2015; Raynolds and Greenfield, 2015). Under the umbrella of the World Fair Trade Organization (WFTO, formerly known as the International Federation for Alternative Trade), pioneer organizations such as Equal Exchange and Divine Chocolate bought, imported, and sold products exclusively from small-scale producers in developing countries and under conditions reflecting their ambition to achieve greater trade justice (Anderson, 2015; Davies and Doherty, 2019). However, lacking internationally harmonized standards and selling through niche retail outlets such as church and world shops, fair trade remained a niche market (Becchetti and Huybrechts, 2008; Moore, 2004; Raynolds and Greenfield, 2015). Fair trade market growth commenced when pioneer organizations and partner nongovernmental organizations launched country-specific certification standards designed to ensure that any product marketed as ‘fair trade’ actually complied with a set of principles, including minimum fair prices, payment of social premiums for community development, prefinancing, and long-term trading contracts (Gendron et al., 2009; Moore, 2004; Raynolds and Greenfield, 2015). Instead of relying on the credibility of each pioneer organization to infer compliance with moral claims, product certification enabled any type of business to participate in fair trade, even if for only a small proportion of its products (Becchetti and Huybrechts, 2008). The world's first fair trade certified product category was coffee, launched in 1989 by Max Havelaar (MH) in the Netherlands. After 1989, country-specific fair trade labelling initiatives were established for an increasingly broad range of food and non-food products. After several years of continued market growth as a result of product certification, in 1997, 19 country-specific labelling initiatives, later called National Fairtrade Organizations (NFOs), collaborated to form Fairtrade International (FTI, previously ‘Fairtrade Labeling Organizations International’). The different country-level certification standards were harmonized, and the term ‘Fairtrade’ (in one word) was introduced by FTI as a trademark for its certified products, while ‘fair trade’ (in two words) continued to refer generically to the moral market – therefore the latter term is used in this article. As a market mediator, FTI does not sell any fair trade products but assumes responsibility for setting certification standards and promoting market growth. FTI revenue is derived from licence fees paid by market participants (pioneer organizations, MNCs and also producer organizations). In parallel, FTI created the sister organization FLO-Cert, a technical unit to be responsible for independent monitoring of certification standards (Raynolds and Greenfield, 2015; Reinecke and Ansari, 2015). By 2000, the range of Fairtrade certified products retailed in mainstream outlets had expanded to include a variety of food commodities, apparel, and linens. At that time, several major retail and food MNCs became interested in including fair trade products in their product ranges and own-branded products. During the 2000s, to respond to this interest, FTI took several decisions that gradually relaxed the founding principles and favoured a quantitative understanding of the social mission (i.e., increasing the volumes of sales and producer support) at the expense of the initial political project (i.e., working with the most marginalized producer groups to build an alternative to mainstream trading practices and advocate for trade justice). As a result of increased MNC participation, sales increased from 215 million euros (1999) to more than 11 billion euros (2019) (FTI annual report figures; see Figure 1). Although the relaxing of the certification standards was critiqued by pioneer organizations, their protests were mainly voiced within the fair trade movement, with little evidence of loss of public support for fair trade (Anderson, 2015; Gendron et al., 2009). For example, market studies have found that consumer recognition of and trust in FTI certification have continually increased over time, with trust exceeding 90 per cent for people who recognize the FTI mark (GlobeScan, 2019). According to MSI Integrity (2020), FTI certification has also been found to enjoy stronger societal support than any other ethical certification, attributed to the core moral principles such as minimum commodity prices and stakeholder participation. Finally, despite disagreements, FTI has maintained productive relationships with pioneer organizations, whose licence fees still represent a notable part of FTI revenue. We suggest that maintaining such collaborative relationships and dialogue has been critical for FTI to sustain pioneer organization support and thereby market-level moral legitimation. Three data gathering methods were employed (Table I). First, 53 in-depth interviews were conducted with informants from three types of actors: 18 founders and senior managers of FTI and its member NFOs in eight different countries; 25 pioneer organization managers, including the founders and directors of the WFTO; and 10 MNC managers responsible for sourcing, manufacturing, and retailing fair trade certified products in different countries and sectors. The interviews were conducted in two rounds: a first round in 2013–14 and a second round in 2018–19, each coinciding with FTI decisions enabling fair trade market growth. Seven key informants who held the same position from the first to the second round were interviewed twice. The interview questions addressed FTI's engagement with the fair trade mission and certification standards, the discourse concerning changes to certification standards, and the relationships between FTI and pioneer organizations. The interviews ranged from 45 to 120 minutes, and all were recorded and transcribed verbatim. In the three types of organizations, informants were selected based on their engagement with the fair trade market and its moral mission. Informants were recruited until theoretical saturation (Strauss and Corbin, 1990), in that interviews were failing to furnish any new insights. Second, in their capacity as both former commercial director of a fair trade pioneer organization and campaigner (since 1998), and trustee of the largest NFO (since 2017), one insider author attended fair trade meetings and events. These included NFO and NFO-FTI board meetings (15) (BOARD, month, year), WFTO biannual conferences (5), meetings with fair trade actors (13), and International Fairtrade Town conferences (6) (OBS #; see also Supplementary Table SI). After participation in these events, the insider author wrote notes and summaries of the discussions that took place about decisions to adapt the certification standards (194 pp. of single-spaced text). Third, to triangulate the data from interviews and field notes, we content analysed 180 documents from FTI, NFOs, the WFTO and its members, and MNCs (Supplementary Table SI). For FTI, 21 annual reports were analysed (1999–2020; FTIAR, year). To account for the years of fair trade product certification before the establishment of FTI (1997), we also analysed 31 annual reports of the founding NFO Max Havelaar Netherlands (1989 to 2020; MHAR, year). As space is limited and therefore every word is carefully chosen, the annual reports enabled us to examine how FTI adapted its mission and certification standards and justified these changes. In addition, we analysed 18 strategic documents containing mission-related information, for example, the FTI constitution, strategic plans, and position papers (FTIDOC #), as well as 14 webpages (FTIWEB #). For WFTO, we reviewed 31 consecutive WFTO annual reports (1989 to 2020; WFTOAR, year), 37 documents from WFTO and member pioneer organizations (WFTODOC #), and six webpages (WFTOWEB #). To triangulate the MNCs' perspectives on their engagement with fair trade, we examined their recent CSR reports (2012 to 2019; MNC, year). Finally, we analysed seven press articles that mentioned specific growth episodes and in which FTI or pioneer organization representatives were quoted (PRESSDOC #). Immediately after collection and interview transcription, all data were uploaded and stored in Nvivo. The data collection and analysis followed the principles of grounded theory and progressed in the following stages (Strauss and Corbin, 1990). To begin, we independently read and analysed the FTI annual reports and key documents from FTI and WFTO, and each author constructed a provisional timeline of events (Langley, 1999). Working collaboratively, we identified nine market growth–oriented decisions, of which four appeared particularly salient and controversial. Focusing on these key decisions, we traced how the founding mission was adapted over time and instantiated in new certification standards. In parallel, we independently read the interview transcripts and the insider-author field notes. This was followed by line-by-line scrutiny of the interview transcripts and field notes to identify excerpts in which FTI explained the changes in mission and certification standards and how pioneer organizations responded to these changes. Following an abductive approach (Kreiner, 2016; Sætre and Van de Ven, 2021), theoretical concepts related to moral legitimation were gradually used to enrich our analysis. The excerpts were independently open-coded by the authors, each of whom created a table of provisional first-order codes. These tables were added to as more data were collected. After discussing the individual analyses during regular meetings, we created 16 first-order codes that capture the empirical data. The first-order codes describe how FTI adapted its mission and certification standards to enable market growth, explained these decisions, and engaged with pioneer organizations. For example, Recalling historical roots describes how FTI emphasized the continuity of its actions with the founding principles of fair trade in order to downplay the extent of the implemented changes. Each code was then enriched by enfolding the perspectives of pioneer organizations and their federation (WFTO) to identify their inputs prior to, and feedback during and after, the four market growth–oriented decisions. The first-order codes were then grouped, and second-order codes developed to describe FTI's mission-related actions and discourse. Eight second-order codes were abstracted. For example, Mission trimming describes how FTI attenuated the founding political mission of the fair trade market and foregrounded the narrower social mission of increasing producers' revenues as a means to improve their livelihoods. Finally, by cycling between the moral legitimacy and mission work literatures, empirical data, and second-order codes, we theorized three aggregate conceptual codes to explain FTI's mission work: mission editing, mission moralizing, and mission stabilizing. The data structure is presented in Figure 2, and additional empirical quotes are provided in Table II. ‘Initially it wasn't about another tuppence for the farmers […], it was centrally about empowering, supporting producer ownership to change the structures of power in the economy.’ (Interview 2, NFO founder) ‘We focused on building a market that could grow to absorb the kind of volumes supplied by producers, which is the absolute priority […] and indeed we probably spent less efforts in, you know, building some kind of political movement to advocate for changes in the terms of trade.’ (Interview 5, FTI) ‘Creating higher benefits for more disadvantaged producers and workers is the aim of [FTI] and its member organizations. The main way to reach this goal is to sell more Fairtrade labelled products.’ (FTIAR, 2007, p. 3) ‘Increased Fairtrade sales are the biggest driver of