Changing Big Business

Changing Big Business

The Globalisation of the Fair Trade Movement

Anna Hutchens

Drawing on candid accounts from practitioners, producers and industry representatives, this informative and proactive volume investigates the challenges facing today’s fair trade movement and provides unique insights into the workings of social and economic power in world markets.

Chapter 7: Governance as ‘Creative Destruction’

Anna Hutchens

Subjects: business and management, entrepreneurship, development studies, development studies, economics and finance, international economics


While Chapter 4 documented the unique networked growth of the fair trade, Chapter 5 illuminated that in less than two decades MNCs have found their way into the Fairtrade certification system and, via the LIs, are moulding it to their own market interests. These insights demonstrate how using markets to design new institutions for development is subject to quite rapid evolutionary shifts. It highlights the tenacity and power of MNCs to pacify threats to the existing market structure and shape those threats according to the (dominant) institutional rules of the game. In this chapter we explore how the movement’s pioneers (the ‘game-players’) and the broader movement are addressing the growing influence of MNCs and commercial prerogatives in the Fairtrade system. This helps elucidate the institutional means by which game-players overcome market absorption. According to Schumpeter (1934), entrepreneurs are economic revolutionaries. Their innovations stimulate ‘gales of creative destruction’ which render existing ideas, technologies and skills obsolete and replace them with new market institutions and structures. These gales punctuate the history of economic progress.1 Evolutionary economists liken the innovation process to Darwinian genetic variation to view the market as a mechanism for selecting the ‘fittest’ among competing species (see especially Nelson and Winter, 1982). As in nature, selection mechanisms ‘favour one variety over another, from which one species is eliminated and the other prevails based on its adaptability’. Innovation (genetic variation) is a source of selection pressure, in response to which weaker species adopt the comparatively superior traits of the...

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