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© 2006 Wi ley Per iodicals , Inc .Publ ished onl ine in Wi ley InterScience (www.interscience.wi ley.com)Global Business and Organizat ional Excel lence • DOI : 10.1002/ joe .20124 • November/December 2006

Currents:Book Review—Consuming Ethically: The Role of Fair Trade G I L L I A N R I C E

Nicholls, Alex and Opal, Charlotte. Fair Trade:Market-Driven Ethical Consumption. SagePublications, Ltd., 2005, 288 pp.ISBN 1-4129-0104-9 (hardback) $129.00. ISBN 1-4129-0105-7 (paperback) $42.95.

Harrison, Rob, Newholm, Terry and Shaw,Dierdre, editors. The Ethical Consumer. SagePublications, Ltd., 2005, 280 pp. ISBN 1-4129-0352-1 (hardback) $108.00. ISBN 1-4129-0353-X (paperback) $41.95.

Eckhardt, Giana, Devinney, Timothy and Belk,Russell. Why Don’t Consumers Behave Ethically?The Social Construction of Consumption. AustralianGraduate School of Management, DVD (26 min-utes), 2006.AUD $35.00 (Australia and New Zealand), AUD$45.00 (Rest of World).

While vacationing in the southwest of England acouple of years ago, I happened upon a shop calledBishopston Trading Company. Attracted to itsclothing designs, I was curious about the shop’sdescription as a Fair Trade Workers Cooperative. Iknew of the concept of Fair Trade and had heard ofFair Trade coffee, for example, but as revealed inboth Fair Trade: Market-Driven Ethical Consumptionand The Ethical Consumer, I was typical of manyEuropean consumers: I had heard of Fair Trade butwas not sure of its clear meaning.

As Nicholls and Opal point out, Fair Trade is bothan activist and a consumerist movement. October2006 is the third annual Fair Trade Month in theUnited States, a coordinated effort to educate,

organize, and build the movement and market forFair Trade. According to Fairtrade LabellingOrganizations International (FLO), global sales ofFair Trade Certified products increased by 37 per-cent between 2004 and 2005. Fair Trade productsonly gained a foothold in the United States in thelate 1990s. Nicholls and Opal suggest that if U.S.market development follows the pattern ofEuropean markets—and there is evidence to believeit may be moving even faster—global sales of FairTrade will increase ten- to fifteen-fold in the nextfew years.

Fair Trade provides an international trading modelthat deserves attention in discussions of today’scomplex and changing international business envi-ronment. Consumer distrust of multinational cor-porations is at an all-time high in developed nations.Businesses have responded to negative publicity andconsumer-led campaigns with various CorporateSocial Responsibility (CSR) initiatives. In TheEthical Consumer, Harrison et al. include a chapteron corporate disclosure and auditing that evaluatescompany codes of conduct and reporting mecha-nisms. In another chapter, Andrew Crane discussesways in which firms can orient themselves towardthe ethical market. He reminds the reader that manyfirms used as exemplars of social responsibility have“followed the instincts and drives of their leaders indetermining their ethical stance, rather than takinga customer-led approach”—Tom’s of Maine andThe Body Shop, for instance. Among the CSR ini-tiatives that can be argued to be more “reactive” hasbeen the entry of some large retailers, such as Tescoand Sainsbury in the U.K. and Starbucks in manycountries, and more recently manufacturers, into

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Fair Trade or similar models. Nicholls and Opalobserve that Tesco’s involvement has grown theU.K. market for Fair Trade significantly and theydetail Tesco’s approach in a case study. In October2005, Nestle became the first of the four dominantglobal coffee companies to launch a product with aFair Trade label. Questions arise concerning theimpact of the entry of multinationals into a FairTrade system that has been dominated by smallerenterprises, nonprofit organizations, peace activists,antiglobals, and liberation theologists. Nicholls andOpal provide, without doubt, the most thoroughtreatment of Fair Trade available in the literature.Their work addresses the field from multiple per-spectives: historical, economic, strategic, supplychain, marketing, and the impact of Fair Trade andits likely future. The chapter included on “FinancingFair Trade” is written by Whitni Thomas.

Research and theoretical contributions about FairTrade have been very limited in the business litera-ture. Both Fair Trade and The Ethical Consumer pro-vide global coverage of their topics. For example,the latter includes chapters from authors who reportresearch conducted in the United States, the UnitedKingdom, and Australia. Details on ethical informa-tion sources for consumers are compared across 10countries, including Germany, Italy, France, and theNetherlands. The film, Why Don’t ConsumersBehave Ethically? adds coverage from emerging-market consumers by including interviews with theaverage person on the streets in China, Turkey, andIndia, as well as in Australia, Germany, Spain,Sweden, and the United States.

Fair Trade challenges orthodoxy in business prac-tice, not by campaigning, but by actually conduct-ing business using a different model. The Fair Trademodel detailed by Nicholls and Opal is a workingmodel of international trade that makes a differenceto the producers and consumers that engage in it. Itintroduces social and political considerations intoeconomic transactions. For example, principles out-lined by Nicholls and Opal include: direct trade

with producers providing small farmers or entrepre-neurs with market access; long-term trading rela-tionships to smooth income and correct informationfailures; a floor price that includes the cost of pro-duction, the cost of a decent standard of living andthe cost of complying with Fair Trade standards;and a social premium paid by Fair Trade importersthat must be spent on social development programsin the grower or producer community.

As an economic model that is based on fair laborcompensation and mutual respect between produc-ers and consumers, it has been challenged onnumerous grounds, however. For example, econo-mists raise questions such as: “What is a fair pricefor exports from developing countries?” and “Willthis model lead to over-supply or to dependency?”Others concerned with the moral issues ask whethermorality and profitable trade can coexist. ChapterOne of The Ethical Consumer provides a thoughtfulreview of philosophy and ethical consumption andhighlights the notion of psychological value: “Is eth-ical consumption simply about aggregate out-comes—reduced pollution, less exploitative workconditions, etc.—or is it also about changing thesense of self held by ordinary people?” Nicholls andOpal also emphasize the psychological benefit thataccrues to consumers when they participate in anethical supply chain. Thus, according to The EthicalConsumer, Fair Trade is a form of ethical con-sumerism reflecting the increasingly important phi-losophy of virtue ethics, “which redefine theoverarching question of ethical theory away from‘what ought I to do?’ to ‘what sort of person oughtI strive to be?’”

Despite the recent rapid growth in Fair Trade inNorth America and Europe, obstacles remain to themainstreaming of this trading model. Challenges lieat all points in the supply chain, such as producercapacity, retail presentation, brand positioning, andconsumer choice. Case studies are valuable methodsof illustrating these challenges and are well used byNicholls and Opal. In Fair Trade: Market-Driven

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Ethical Consumption, they include case studies of theFair Trade structures and strategies relating to thetwo most important Fair Trade products, coffee andbananas. Also integrated in the text are studies oforganizations such as Traidcraft and The DayChocolate Company. Day’s main consumer brand,Divine chocolate, was successfully launched in theUnited Kingdom mass market in 1998 and was delib-erately positioned as a mainstream chocolate bar tocompete against well-known brands like Cadburyand Nestle, rather than as a gourmet or organicchocolate to be sold only in specialty and health foodshops. The Day experience shows how branded FairTrade products can be mainstreamed, as Divine isavailable in 5,000 shops in the United Kingdom.

An important challenge to Fair Trade sector activistsis the co-existence within the sector of large multina-tionals and small Alternative Trading Organizations(ATOs). Nicholls and Opal quote Rob Everts, Co-Director of Equal Exchange, USA: “the desire to dis-tinguish ourselves from mainstream companiesdoing small amounts of Fair Trade” is a challengefacing the company as an ATO. ATOs were the pio-neers in developing Fair Trade and were often found-ed by charities or religious groups. Examples areGepa in Germany, Traidcraft in the United Kingdom,and SERRV and Ten Thousand Villages in theUnited States. ATOs are wary of large corporationsthat sell a tiny portion of their goods labeled as FairTrade, but then may benefit from a “halo effect” asconsumers’ positive perceptions of the companiesimprove—a phenomenon known as “fair-washing.”Although there is a certification process for FairTrade products, primarily achieved under theumbrella of Fairtrade Labelling OrganizationsInternational (FLO), it is tinged with controversyover the strictness of certification and audit process-es and whether consumers will be confused over themeanings of numerous (perhaps competing) labels.For example, there is concern as to whether con-sumers understand that it is individual products thatare certified and not companies. In the United States,report Nicholls and Opal, the environmental not-for-

profit Rainforest Alliance has been successful work-ing with multinationals to certify producers andbranded products, but it focuses primarily on envi-ronmental stewardship and has no minimum pricerequirement for growers.

Nicholls and Opal and Harrison et al. take prag-matic and broad perspectives in their texts. Theslant of The Ethical Consumer is the amalgamationof a set of chapters that are diverse, but written byauthors with particular experience in an aspect ofethical consumption. A noteworthy feature of thebook is its inclusion of research studies using quitedifferent methodologies. For example, one chapterreports on focus groups conducted by theCooperative Bank in the United Kingdom, whileanother documents the MORI surveys of ethicaland environmental attitudes in the United Kingdom.Marsha Dickson employs conjoint analysis to pro-file “No Sweat” apparel label users. Deirdre Shaw’schapter includes a modification of the well-knowntheory of planned behavior by incorporating mea-sures of ethical obligation and self-identity. Sheemphasizes how it is apparent that as an ethicalissue becomes important to individuals it becomespart of their self-identity, and they form a desire tobehave accordingly. The chapter by Helene Cherrieruses existential-phenomenological interviewing toexplore meanings of consumption. In particular, shenotes that the ethics of consumption are contextual;the rightness or wrongness of consumption isdependent upon the time and place in which onelives. Another chapter, by Terry Newholm, reportson a study using a case study approach to analyze16 “ethical consumers” and summarizes these con-sumers’ “life projects.” This innovative perspectivein the field appeals to academic researchers seekingapproaches other than surveys to investigate ethicalconsumers and also might suggest the kinds of con-sumers that might be targeted by Fair Trade organ-izations. Newholm writes how he has “sought toreverse the concept of a words/deeds inconsistency.Rather than asking why people who report strongbeliefs concerning the environment, animal welfare,

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corporate responsibility, and other moral issues actinconsistently as consumers, [he has] considered,given all the difficulty of meaningful action, howthey act at all.”

As frequently mentioned in The Ethical Consumer,consumers say one thing in response to surveysabout ethical consumerism, but act differently whenthey are out shopping. This discrepancy or “ethicalgap” is a perpetual issue for researchers. Nichollsand Opal report that although over 80 percent ofU.K. consumers are willing to pay more for specifi-cally “ethical” products, and two thirds are pre-pared to pay more for Fair Trade products, thesegoods generally account for less than 1 percent oftheir purchases. How much do consumers reallycare? Why don’t consumers behave ethically? Theseare questions posed by Eckhardt et al. in thegroundbreaking short documentary, Why Don’tConsumers Behave Ethically? The SocialConstruction of Consumption, the purpose of whichis to understand whether or not the average “Joe orJane” in the street is willing to sacrifice during con-sumption behavior. In the film, consumers speakfrankly about what they really do and why. For asupporter of Fair Trade and ethical consumerism, itis not easy watching! The film concludes that peo-ple are “social radicals” in surveys but “economicconservatives” at the checkout. What seems to bethe most interesting contribution of the film, how-ever, is the observation that different culturesbehave similarly but rationalize their behavior indifferent ways. Three rationales put forth by theinterviewees are classified by the narrator as fol-lows: the economic rationalist argument—thesepeople focus on utility and on looking for a “gooddeal”; the governmental dependency argument—“ifan issue is important, I don’t have to worry about itbecause my government will deal with it”; and thedevelopmental realist argument—“I just go with theflow and this is life.” The film stops short ofexplaining which arguments are most common inwhich cultures, however. Close viewing suggeststhat Turkish, Swedish, and Spanish consumers

appear to agree that getting a good price and a qual-ity product are what counts. Indian and Chineseconsumers espouse the developmental realist per-spective more often. This film provides an excellentstarting point for discussion because it raises morequestions than it answers. It is attention-gettingbecause it unabashedly addresses the issue of whyconsumers don’t behave ethically instead of follow-ing the majority of researchers who spend most oftheir efforts attempting to identify the (usuallysmall) proportion of consumers that will behaveethically. It thus encourages a different point ofdeparture for future research studies and has cer-tainly informed my thinking on how to proceedwith my own investigations into ethical con-sumerism. This film deservedly won the “Best FilmAward” at the Association for Consumer ResearchAsia Pacific 2006 Conference. For a university-produced film, the quality is fairly good, althoughthe narration is a little difficult to follow; some pro-fessional coaching or assistance, perhaps throughthe university’s journalism or media departments,would have enhanced the viewer’s experience.

The books are excellent grounding introductions tothe field of ethical consumerism and its subfield, theFair Trade movement. They are well-referenced, thor-oughly researched, provide balanced perspectives andcase studies, and give abundant details of onlineresources and the corporate, nonprofit, and non-governmental organizations active in the area.Although the Harrison et al. book is an edited collec-tion of contributions, each chapter has an introduc-tion that cross-references its material with otherchapters, thus helping the reader to see the bigger pic-ture in a holistic fashion. For corporate executives,they provide overviews of the state of existing knowl-edge—both the structure of the Fair Trade sector andanalyses of consumer behavior and attitudes that caninform strategic development and the proactive inte-gration of ethical corporate behaviors into strategies.The Nicholls and Opal book is written in a muchmore accessible style, while the Harrison et al. bookhas a more academic, theoretical approach. For

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activists, these books present a realistic picture andimpart information that can help small Fair Tradeorganizations market their products to consumers.

ReferencesBeattie, A. “Nestle becomes first of coffee’s big four to launch‘fair trade’ label.” Financial Times, October 7, 2005, p 4.

FLO, Fairtrade Labelling Organizations International 2005Annual Report, 2006, accessed on September 15, 2006 athttp://www.fairtrade.net/fileadmin/user_upload/content/FLO_Annual_Report_05.pdf

Moore, G. The fair trade movement: Parameters, issuesand future research, Journal of Business Ethics, 53, 73–86,2004.

Gillian Rice teaches Marketing and Marketing Research atArizona State University. She was a Fulbright Senior Scholarat the University of Bahrain in 1996-1997 and is ProfessorEmeritus at Thunderbird, The Garvin School of InternationalManagement. She holds a Ph.D. from the University ofBradford. Dr. Rice’s research interests include environmental-ly related consumer behavior, the fair trade movement, andmodels of employee creativity and organizational innovation.She can be contacted at Gillian.Rice@asu.edu