Leveraging the Vertical: The Contested Dynamics of Sustainability Standards and Labour in Global Production Networks

Publication Date01 March 2018
Date01 March 2018
AuthorMaja Tampe
British Journal of Industrial Relations doi: 10.1111/bjir.12204
56:1 March 2018 0007–1080 pp. 43–74
Leveraging the Vertical: The Contested
Dynamics of Sustainability Standards
and Labour in Global Production
Maja Tampe
Sustainability standards for tropical agriculture promise better trade and fairer
labour conditions for smallholders. Recent research on labour suggests that,
besides such standards, configurations of buyer–supplier relationships crucially
shape economic and labour conditions. However, a static configurational
approach overlooks the role of supplier and labour agency over time. Using
a matched case comparison of two certified rural enterprises in Ecuador,
this article shows that suppliers can leverage standards to create value from
vertical relationships with buyers. However, standards do not, by themselves,
directly contribute to better conditions. They do so indirectly only if suppliers
manage to become competitive in an elite market, augmenting rather than
dampening unequal trade conditions. This study contributes to recent theory
seeking to explain unevenlabour outcomes with sustainability standards in global
production networks.
1. Introduction
Improving labour conditions has been a major challenge, especially for small
farmers. Agriculture is what the International Labor Organization calls ‘one
of the most hazardous of all economic sectors’ (2010: 5). Approximately
one billion people worldwide work in agriculture, the majority of them in
developing countries. Subject to injury risks, the vagaries of weather and
markets, rarely organized or protected by developing country governments,
this workforce often lives exposed to persistent poverty and exploitation. In
response, activists and global buyershave promoted sustainability standards,1
Maja Tampe is atESADE-Ramon Llull University, Barcelona
2016 John Wiley& Sons Ltd.
44 British Journal of Industrial Relations
such as Fairtrade certification, that increasingly seize consumers’ attention
and market shares (Potts et al. 2014). Yet labouroutcomes have been variable
when producers, certified to such standards, enter global markets (Becchetti
et al. 2015; Blackman and Rivera 2010). I focus here on the experience of
cocoa smallholders organized in two Ecuadorian certified rural enterprises
that sought access to global markets under similar conditions but with widely
diverging results.
Sustainability standards are designed to improve farmers’ livelihoods
but can fail to do so (Melo and Hollander 2013; Smith 2007). Uneven
outcomes have been explained with agency or structures. For agency-
centred explanations, scholars have unpacked suppliers’ choices, positing
local learning as the main mechanism of change (Coslovsky 2014; Perez-
Aleman 2013). Yet this approach struggles to explain divergent outcomes,
besides heterogeneous actors. For structural perspectives, grounded in a
literature on global production networks and global value chains (hereafter
GPNs),2scholars have theorized industry structure (Lee et al. 2012) and
governance relations between buyers and suppliers (Gere et al. 2005) as
determinants. In placing such a central focus on either local agency or
market structures, there are few predictions for the conditions under which
similar certification initiatives might succeed or fail. Recent ‘configurational
approaches’ bridge existing literatures on supplier agency, GPNs and labour,
analysing employment outcomes as the result of configurations between
buyers and suppliers (Lakhani et al. 2013; Tapia et al. 2015). In explaining
standard outcomes, this approach adopts the GPN perspective that labour
standards are more likely to be followed when ‘lead firms have more
control and leverage over suppliers’ (Lakhani et al. 2013: 23). However, that
perspective assumes co-ordinated buyer ties to be developmental per se and
pays little attention to supplier or labour agency.
Under what conditions and through what mechanisms might we expect
to see the success or failure of sustainability standard initiatives within the
same industry? I explore this question based on a matched case comparison
of two certified farmer groups,operationalizing outcomes at two levels. At the
organizational level of the farmer enterprise, I look at organizational survival
and economic benefits of sustainability standards (certified volume, exports
and premium), which are a prerequisite for better producer outcomes. At the
individual level, I analyse labouroutcomes (price obtained and other services,
such as training).3
This study makes two key contributions. First, it shows that improved
labour outcomes are doubly contingent on, first, favourable organizational
outcomes that depend on diversified, learning-oriented buyer ties, and,
second, on an organization’s willingness to pass on these benefits to member
farmers. A condition for organizational outcomes is that suppliers leverage
learning from redundant ties to buyers. Diversified ties are useful because,
even when buyer relations are close and learning-oriented, they are also
contested and unstable.Thus, this research adds to the project of correcting an
overly optimistic view of ‘the lead firm’s guiding hand’ (Pipkin 2011: 2120) in
2016 John Wiley& SonsLtd.
Leveraging the Vertical 45
GPN and configurational frameworks. Second, in tracing out mechanisms,
this research demonstrates that sustainability standards lead to uneven
labour outcomes because they do not provide the dominant mechanism for
improving labour conditions. Instead, the key mechanism is that suppliers
recursively appropriate knowledge from multiple sources, particularly on
quality production, logistics and marketingprocesses. Put dierently,the path
to better labour outcomes leads primarily through upgrading, which goes
above and beyond compliance with standards.
A central finding of this study is that suppliers’ competitiveness drives the
success of sustainability standard initiatives and not vice versa. The ensuing
dynamic is well known as the ‘Matthew eect’ (Merton 1968) where success
begets success. This belies the purpose of standards — to contribute to better
livelihoods because of the adoption of standards. In practice, standards can
provide these benefits if farmer groups dierentiate themselves in elite niche
markets. Certified farmer groups that learn the right practices, partly by
connecting to the right buyers, are in a good position to reap benefits from
sustainability standards. Those with a more lacklustre performance are likely
to be left out of lucrative niche markets and to experience standards as a
burden (Klooster 2006; Mutersbaugh 2005). This inclusion–exclusion pattern
is intensified in persistently oversupplied certified markets where producers
struggle to sell their production as certified and where buyers can demand
higher quality (de Janvry et al. 2015; Potts et al. 2014). As a result, existing
inequalities are heightened rather than levelled.
I first review the literature on private standards and labour in GPNs,
focusing on underlying mechanisms and configurational approaches. I
then provide background on sustainability standards and their posited
mechanisms. Next, I introduce the methods adopted and the context for the
two cases studied here,Fortaleza del Valle(FDV) and Aroma Amaz´
onico (AA).
Building on data from their 10-year long organizational history, I develop a
dynamic process model for sustainability standards to explain economic and
labour conditions following standard implementation. Further described in
the discussion, this process model incorporates the role of buyers as well as
supplier and labour agency. In concluding, I reflect on the role of private
standards in global agriculture. I argue that better grasping the mechanisms
of sustainability standards elucidates pathways towards improving labour
outcomes, but it also demonstrates the limits of standards as a solution for
all producers.
2. Private standards and labour: Towards configurational approaches
Despite a burgeoning literature on private standards, mechanisms are still
under-theorized: ‘Scholars have often glossed over or conflated the variety
of processes through which certification might shape the conditions of
production’ (Bartley 2011: 448). The breadth of the phenomenon compounds
the theoretical challenge: Private governance, said to have emerged due to
2016 John Wiley& Sons Ltd.

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