Organization: a case study on Max Havelaar
By Julie Goussard
(1407163)
Msc BA Thesis
Strategy and Innovation
Faculty of Management and Organization University of Groningen
Supervisor
Dr. G. Gemser
Second reader
C. H. M. Lutz
Mars - August 2005
Acknowledgements
I would like to thank my supervisor Gerda Gemser for helping in writing my final thesis.
I also thank the informants who participated in this study: Mr. Harmsen, Ms. Attali, Madam Dekker and Mr. Massia. The interpretations of what they have said and the conclusions, however, are mine and do not necessarily represent those of the mentioned informants.
Finally, many thanks to the ones that supported and encouraged me during the last five months:
Dennis, Jean-Jacques, Maria and friends.
Julie
TABLE OF CONTENTS
ACKNOWLEDGEMENTS ... 2
1. INTRODUCTION ... 5
1.1 Non governmental organizations and Fair Trade ... 5
1.2. Max Havelaar introduction ... 6
1.3. Max Havelaar Netherlands: a benchmark for Max Havelaar France ... 9
1.4. Research objectives ... 10
2. THEORETICAL BACKGROUND ... 11
2.1. Fair Trade ... 12
2.2. Management of Non Governmental Organizations ... 14
2.3. Cultural differences across countries and reflection in management ... 18
2.4. Media ... 19
3. METHODOLOGY ... 21
3.1. Qualitative vs. Quantitative study ... 22
3.2. Nature of the Research: Inductive vs. Deductive ... 22
3.3. Propositions and Hypotheses... 22
3.4. Case study research ... 23
3.5. Sampling ... 24
3.6. Data collection... 25
3.7. Quality of the study design ... 27
3.8. Analytic Strategies... 28
3.9. Overview: study design ... 29
4. RESULTS ... 29
4.1. Max Havelaar France and Max Havelaar Netherlands: comparison ... 30
4.2. Results regarding the retailer’s network ... 32
4.3. Results regarding the management style... 36
4.4. Results regarding the use and choice of Media ... 40
5. CONCLUSION ... 42
5.1. Retailer’s network ... 43
5.2. Management style... 43
5.3. Choice and use of Media ... 44
5.4. Recommendations... 45
5.4.1. Managerial recommendations ... 45
5.4.2. Scientific recommendations ... 47
5.4.3. Limitations ... 48
REFERENCES ... 50
APPENDIX 1: QUESTIONNAIRE MAX HAVELAAR ... 55
APPENDIX 2: QUESTIONNAIRE MANUFACTURERS LICENSEES (SEGAFREDO AND MALONGO)... 56
APPENDIX 3: RESULTS OF THE INTERVIEWS ... 57
1. Introduction
1.1 Non governmental organizations and Fair Trade
Europe is currently experiencing a wider awareness of development issues, which include children labor, difficulties for workers to access market information (especially market prices) and environmental degradation among others. Development issues are also defined through inequalities existing in Trade relationships between developed1 and developing2 countries. In the last decade, some nongovernmental organizations (NGOs) have emerged in the international economic landscape in part because of the disappointment with the effectiveness of government and international agencies as engines of development (Brown 1992). NGOs are non-seeking profit groups organized around shared values and visions for a better world3. NGOs exist for different purposes. As non-profit-seeking organizations, they are therefore subject to other goals and/or pressure than regular organizations such as Governmental institutions (which goal is the overall administration of a country including economics, politics, education policies, war…) or private entities (for which the goal is maximizing profit). To give some examples of NGOs and their goals: WWF makes campaigns to stop the accelerating degradation of Earth's natural environment, Unicef promotes and invests in health, education, equality and protection for children, Amnesty provides assistance to people for rights respect and justice, the Red Cross prepares communities for emergencies and helps in keeping people safe and Max Havelaar provides Fair trade labeling certification. Most of those organizations emerged in response of growing recognition of inequalities existing between the developed and the developing part of the World and a desire of making it better.
The focus of this paper is on the management of a NGO, in the context of Fair Trade. “Fair Trade is a trading ideology that seeks among others things to source products and offer prices that give producers a greater rate of return, to research and identify sources that do not exploit people or the environment”(Burns 1995). Fair trade products are produced by adult people working in a healthy and safe environment, who are being paid a living wage for their work, and whose work
1A developed country is a country that is technologically advanced, highly urbanized, and wealthy, and has generally evolved through both economic and demographic transitions. Source: www.doe.nv.gov
2 A developing country refers mainly to countries with relatively low level of industrial capability, technological sophistication, and economic productivity, which induces low social development (education, healthcare, etc.). Source: www.oecd.org
3 Source: www.jsi.com
is not causing harm to the environment or community in which they live4. Many Fair Trade products help to encourage or sustain traditional regional crafts and skills, and use available local resources that can be brought to the market in support of a sustainable local economy5. A sustainable local economy is the management of environmental and resource systems so that their ability to support future generations is not diminished. NGOs as Max Havelaar promote Fair Trade products in European countries. As a consequence of the emergence of Fair Trade organizations, as well as their work, the demand for socially responsible goods has grown in Europe during the last decade6.
1.2. Max Havelaar introduction
In 1988, three fair trade labels (Max Havelaar, Fairtrade and Transfair) were introduced in Europe and later in the U.S., Canada and Japan (Raynolds, Murray & Leigh Taylor 2004). The Max Havelaar Fair Trade label has been introduced in 1988 in the Netherlands, and in other countries such as in Belgium in 1990 and in France in 1992. Since 1997, the fairly traded labels have been harmonized under the umbrella of the NGO Fairtrade Labelling Organization International (FLO), in order to set standards and create a single Fair Trade market. FLO has established common Fair Trade principles, procedures and specific certification requirements for coffee and tea, fruit and other commodities. FLO is represented now in nineteen countries under
“national initiatives” (Transafair in USA, Fairtrade in the UK and Max Havelaar for the rest of Europe) and provides certification guidelines for different products. Fair trade labelled products were introduced in Europe, but performances of the label (in terms of sales of Fair Trade labelled products) show some differences across the countries: for example, Dutch people spent in average 14 times more in Fair Trade labelled products than the French did in 2003 (see table 1).
However, in 2004, Dutch people kept spending the same amount, while in France the consumption of Max Havelaar labelled products per inhabitant almost doubled from 2003 to 2004. It may be because Max Havelaar in the Netherlands is established for a long time, it has reached its highest performances in terms of sales and that the sales evolution is little over years, while in France, though it performs so far less good than in the Netherlands, sales are still growing larger.
4 Source: www.marketradefair.com
5 Source: www.npg.org
6 Source: European report 1998: Social labels: tools for ethical trade
Consumption of Max Havelaar labelled products per inhabitant in 2003 in euros Switzerland 14
Netherlands 2.88 (the same in 2004) Austria 1.46
Germany 0.63
France 0.60 (and 1,13 euros in 2004) Belgium 0.20
Table 1: Consumption of Max Havelaar labelled products per inhabitant in 2003 – source:
www.maxhavelaarfrance.org
Max Havelaar is a non-governmental organization (NGO) that works for the promotion and integration of the Fair Trade Label the FLO provides. Max Havelaar works as an independent organization that manages a Fair trade label in the European geographic area. Max Havelaar does not buy or sell any products. Instead, it offers an external control on products by monitoring whether all market parties adhere to contractually agreed conditions, it therefore gives the customers the guarantee that products labelled with Max Havelaar respect international standards of Fair Trade defined by the FLO International. Parties are farmers of the developing countries, FLO’s Internal Product’s Management Team7 for import/export of products, manufacturer processing the commodities provided by the farmers – later in the paper, only “manufacturer”
will be used- and retail points. Max Havelaar also organizes the overall advertising for the certification mark (social label). By means of advertising campaigns, they raise the awareness of the general public with regard to what they consume and how it is being produced. In contrast with other NGOs cited earlier, Max Havelaar has a different approach in getting people involved in their project (namely to make the public active in Fair Trade). Usually, NGOs use advertisements to educate the public, and if the public wants to, it can help by means of volunteer work or financial donation. Max Havelaar has reduced the concept of “participation” to a minimum effort, which means that the public do not need to offer any volunteer work or financial donation, but can participate to Fair Trade just buy switching his/her purchasing-habits8.
7 FLO International’s Product Management team is in contact with Farmers’ organisations certified by FLO and manufacturers from the developed countries, registered to purchase and sell Fairtrade labelled products, in order to match supply and demand. Source: www.fairtrade.net
8 Source: www.maxhavelaarfrance.org
Max Havelaar interacts with many other players on the fair trade market: figures 1 and 2 below show how they are connected:
D eveloped countries
M anufacturers processing the com modities provided by the farmers
Retail outlets
M ax H avelaar
- Checking standards - Advertisem ent Developing countries
Farmers of com m odities:
- Coffee - T ea - Rice - Cacao - Juices - Sugar - H oney - W ine - O thers
FLO ’s B usiness Facilitation
International’s Product M anagement
T eam
Figure 1: Fair Trade participants in developing countries, developed countries, the FLO International, Max Havelaar and retailers.
M a x H a v e l a a r
M a n u f a c t u r e r
R e t a i l e r s
E n d c o n s u m e r
Figure 2: Interaction and influence between Max Havelaar, manufacturers, retailers and end consumers.
In figure 2, going from the top to the bottom, Max Havelaar licenses the Fair Trade label to a third party: a manufacturer such as Segafredo or Douwe Egberts (it becomes then a licensee of the Max Havelaar label9). The manufacturer, with its own commercial network of retailers, is in charge of making the Max Havelaar labelled products to penetrate the market by selling them to
9 LICENSEE: a manufacturer to which a license is granted. In the Max Havelaar case, the licensee is a company manufacturing products that have the legal right to carry the Max Havelaar Fair trade label to indicate fair trade certification.
retailers10. Then, in retail outlet, end consumers may buy fair trade labelled products. The long arrow represents Max Havelaar promoting actively its products to end consumers, to the benefit of the retailer and the manufacturer, which should not have to invest in communication for Max Havelaar products. Going from the bottom to the top, Max Havelaar does not try to convince a manufacturer to become a licensee. Manufacturers become licensees because of the demand: end consumers push the local retailers to enlarge their offer with Fair Trade labelled products. The retailers, pushed by the end consumers will ask to their manufacturer, which in turn, will ask to max Havelaar to become a licensee of the label. The dashed arrow corresponds to a Max Havelaar’s future project: Max Havelaar is considering turning retailers in licensees, which implies “removing” the manufacturers from the network. It would mean fewer intermediaries in the process from the Max Havelaar to the end consumers, and more direct influence on the retailers’ network.
1.3. Max Havelaar Netherlands: a benchmark for Max Havelaar France
Max Havelaar, active in the Netherlands since 1988, has been able to establish a relatively strong ground for managing the Fair Trade Max Havelaar label within the Netherlands. As shown in table 1, Dutch consumers spend on average 14 times more on fair trade labelled products than French consumers do. Further, Max Havelaar Netherlands made positive profit in 2003 and 200411, by opposition to Max Havelaar France, which made negative profit in 200312. Max Havelaar Netherlands has also established stable partnerships with its financial stakeholders, so that it benefits from a stable income. In 2003, about 5977 tonnes13 of Max Havelaar labelled products altogether were sold in the Netherlands (3930 tonnes14 in France).
Showing relatively positive results, Max Havelaar Netherlands may offer a good benchmark to give recommendations to Max Havelaar France, a younger organization established in 1992, which does not yet achieve as good results as Max Havelaar Netherlands does. In order to analyse and compare both organizations, there should be a basis of specific organization’s choices or management features to guide the study. Following the characteristics of Max
10 RETAILER: a single merchant or a chain of stores selling goods at retail. In the Max Havelaar case, the main retailers are the Fair Trade shops and the supermarkets. This study focuses on the supermarkets as a retail channel.
11 Source: Financial statement of Max Havelaar Netherlands.
12 Source: Finacial statement of Max Havelaar France.
13 Source: www.maxhavelaar.nl
14 Source: www.maxhavelaarfrance.org
Havelaar, three areas of study were chosen. In the case of Max Havelaar, the only way to make the labelled products penetrate the markets is by means of the manufacturers and ultimately the retailer’s network. Further, the internal management style of Max Havelaar, just as any NGO, is important because it may determine the allocation or creation of resources (especially financial resources through the establishment of financial partnerships). Finally, by definition, Max Havelaar is dedicated to the promotion of the Max Havelaar fair trade label, so the choice and use of the Media may also influence the Max Havelaar labelled products’ commercial performance. For those reasons, Max Havelaar France and Max Havelaar Netherlands will be examined on the basis of three criteria: influence/choice on the retailers’ network, management style and Media choice/use.
I expect to find that Max Havelaar France privileges smaller-sized shops to retail Max Havelaar labelled products rather than bigger-scale shops, such as supermarkets, while in the Netherlands, it would be the contrary. This is because I myself noticed that Max Havelaar products are retailed, in the Netherlands, in each supermarket while it is not the case yet in France (few supermarket retail Max Havelaar products and only 6 supermarket chains retail more than two Max Havelaar products15). Furthermore, I expect Max Havelaar France to ignore the potential luxurious image that Max Havelaar products might have in France. Regarding the management style, Max Havelaar France is expected to be more hierarchical than Max Havelaar Netherlands, because of cultural differences and this may have effect on the managerial outcomes such as financial partnerships. For the Media section, Max Havelaar France is expected to advertise more than Max Havelaar Netherlands because Max Havelaar in France undertakes larger-scale advertising events, while they do not seem to do so in the Netherlands.
1.4. Research objectives
If a product is labelled Max Havelaar, it means it is a fair-traded-product. This point seems established so far by Max Havelaar’s efforts. However, the concept of Fair trade labelling, is still unknown or little known by many people, and it may raise some issues such as the lack of knowledge of the labelling process (namely, who is doing it? where? what does the label imply exactly?), a lack of trust, or can make it difficult for an organization to be credible (Covello 1994). Social labels present a fashionable and potentially profitable alternative to regular trade as noted by Lewis (1998). It is however not clear yet how they are managed by NGOs, such as Max
15 Source: www.maxhavelaarfrance.org
Havelaar. So far, issues raised in the framework of social labels within Fair Trade are well identified, but solutions are not. It would be then interesting to analyze differences between two different Max Havelaar (which are NGOs) located in two different countries, to be able to provide recommendations for improving the management of a social label within the context of a NGO. To do so, Max Havelaar Netherlands was chosen as a benchmark to give recommendations to Max Havelaar France.
My research question is:
“How does an NGO manage the sustainability of a Fair Trade label?”
By sustainability, it is meant the ability of remaining on the market and/or to grow a market share on that market.
By comparing two national NGOs independent from each other, Max Havelaar France and Max Havelaar Netherlands, but working under the same standards requirements (set by the Fairtrade Labelling Organization International), I will investigate whether they present differences in the management of sustainability of a social label, what differences and why. The aim of this research is that, based on the analysis and results of Max Havelaar Netherlands, recommendations will be given to Max Havelaar France regarding the three criteria (retailer’s network, management style and media) to improve Max Havelaar France’s management effectiveness. On the basis of those recommendations, propositions will be formulated to provide a ground for further scientific research in management effectiveness of a NGO.
In this paper I first introduce the relevant literature concerning Fair Trade, the management of NGOs, cultural differences and its reflection on management style and some elements on Media use and their roles in NGOs. Later, I explain the methodology applied to this case study as well as the study design. Then, I describe and discuss the results obtained, and finally conclude this paper by formulating managerial recommendations and propositions for further research.
2. Theoretical background
In this section, I review literature on the relevant topics. First, I introduce more precisely the concept of Fair Trade since my case study will be on Max Havelaar, a NGO promoting Fair
Trade. Then I elaborate on the management of a NGO, which is the central issue of this paper.
Then, Hofstede’s theory about national differences and their reflection in management is explained, as the case study relies on two NGOs operating in two different countries, France and the Netherlands. Finally, some literature on media and their effects in the context of a NGO is summarized. In this section, I also integrate theory relative to the three criteria on which I will base my study: retailer’s network, management styles and media, in the context of NGOs.
2.1. Fair Trade
Issues are raised regarding alternative trade, such as market conditions and internal organizational conditions. Raynolds, Murray and Leigh Taylor (2004), describe how Fair Trade started with labelled coffee in 1988-1989, soon after the collapse of world coffee due to state cutbacks. So, the market conditions at the time pushed coffee growers to work together to create more favourable export connections, which led some of them to become part of the solidarity cooperatives working now with Fair Trade organizations. Further, the integration of a social label in the case of Fair Trade necessitates a good management of the farmers’ cooperatives16 commitments and the organizational requirements of the world market certification, which include the FLO international’s certification criteria. In the case of Fair Trade labels, Raynolds, Murray and Leigh Taylor (2004) also point out the case of local producers dealing directly with European supermarkets, which would threat the sustainability of the Fair Trade social labels organizations.
According to Raynolds, Murray and Leigh Taylor (2004), the biggest challenge in implementing social labels in the framework of Fair Trade Labelling is the management of contradiction between social equity and economic efficiency. Indeed, economic efficiency is said when a given quantity of output could not be produced with less input. It is said inefficient when there exists another feasible process for which any given output uses less input. In the case of Fair Trade, there is absolutely economic inefficiency: a given amount of Fair Trade products could be produced with fewer inputs. The economic inefficiency is justified by the social equity. Which means that, for example, it may be possible to achieve economic efficiency by reducing wages of
16 A farmer cooperative is a legal entity owned and democratically controlled by its members, with no passive shareholders. Unlike a union, a cooperative may assign different numbers of votes to different members; typically a cooperative is governed proportionally according to each member's level of economic interest in the cooperative- Source: www.ncfc.org
the farmers from the developing countries (it is possible since developing countries are isolated and cannot access market prices), however, there would not be any social equity anymore. Social equity, which is translated here by paying a higher wage to farmers in developing countries, allows them to enjoy minimum living standards established by the FLO International. This point falls into a larger debate concerning economics.
Economically speaking, fair trade is seen as an alternative way of doing business, which provokes distortions in classical trade. In the literature, Fair Trade is often an issue put in opposition to free trade (Gould and Gruben 1997; Phillips 1992; Yellen 1998). Authors argue that Fair trade may be a form of protectionism17 and that it would therefore block Free trade.
Most literature presents a debate about whether Free trade is better than Fair Trade or not. Free trade is an economic concept referring to the selling of products between countries without tariffs or other trade barriers, as well as the free movement of labour across borders. The main argument promoting free trade says that it increases the standard of living through the theory of comparative advantage18 and economies of scale. In opposition to Free Trade, it is argued that developed nations would exploit developing nations and destroy local industry; in addition, social and labour standards would be circumvented. Arguments in favour of free trade are only theoretical while critics of free trade seemed to have been proven (for example, the existence of child labour), that is why fair trade may be a useful alternative of doing business to keep local industries and guarantee fairer social and labour standards, though it runs up against the problem of economic efficiency.
According to a European report on social labels19, social labels would be more effective (in terms of products sold) when associated to products bought and consumed by a large public, products identifiable (in other words with brand name), products strongly linked to social identity (like clothes), products for which purchase is not only a matter of price (like food) and products for which traceability is easily feasible (meaning that it should be easy to access and understand all information about the steps in the process-making chain. In food products, it is even more
17 Protectionism is the economic policy of promoting favored domestic industries through the use of high tariffs and other regulations to discourage imports - Source: www.icons.umd.edu
18 The theory of comparative advantage explains why it can be beneficial for two countries to trade, even though one of them may be able to produce every kind of item more cheaply than the other: what matters is not the absolute cost of production, but rather the ratio between how easily the two countries can produce different kinds of things. - Source: http://iang.org
19 Zadek, Simon (1998) Social labels: tools for ethical trade: executive summary: Employment and social affairs.
important since it partly allows for food safety). In the same report, it is stated that labels are more efficiently influencing customers’ choices when linked to governmental and public actions.
So, social labels may be more legitimized when associated to actions, such as demonstrations, or explanative campaigns. For example, if a government subsidizes companies distributing fair trade products, such as supermarkets, we can expect a growth of fair trade labelled products sales. Because the quantity of fair trade-labelled products retail points would increase, there would be more opportunities for the producers to be sold to end consumers.
To ensure a great market penetration of social labelled products, all consumers should have access to the alternatively traded products to allow fair trade labelled products to develop like
“regular trade”(Fair Trade 1997: 1), implying that social labelled products should also be found in regular shopping places, such as supermarkets to have a chance to develop and sustain. Jones, Comfort & Hillier (2003) support the previous claim, but highlight the problems that can be generated by Fair Trade labelled products in retail/supermarket stores. The authors (2003: 807) mention that information about the label may be lacking (for example, the staff does not know about labelled products sold in the store), and suggest the distribution of informative leaflets within the shop to mitigate this situation. Further, Jones, Comfort & Hillier (2003: 809) stress that labelled products in the case of fair Trade are sold at a premium price and that it may pose a problem for the retailer’s marketing mix and positioning. Nichols (2002: 15) suggests a solution for Fair Trade labelled products to get “onto the shelves”, which is for supermarkets/retailers to develop in partnerships with Fair Trade labelling organization their own social label. However, fair trade labelled products only can be seen as a problem in the retailer’s marketing mix if they are seen as luxurious products, and they are not supposed to be. Then, the non-governmental organization in charge of promoting the label should clarify the fair trade product positioning (as a non luxurious product) in the consumer’s eyes. And that may be a paradox because the way to show to consumers that fair trade labelled product are not luxurious products would be to retail them in any regular shop (implying for the retailer that fair trade labelled products’ price are not opposed to the shop’s marketing mix policy).
2.2. Management of Non Governmental Organizations
NGOs are often called the “third sector” or nonprofits in the literature (McPeak 1999; McPeak 2001; Lewis 1998; Herman, Renz 1998). NGOs operate through networks, relationships and trust, and shared visions and norms (King 2004). Through these external networks, they develop
relationships and build trust and their driving force is a shared vision and common mission.
Without these components, NGO cannot be effective in achieving their missions (King 2004).
In the case of social labelling NGOs, Strong (1997: 36) raises an important managerial point, which is how an organization introduces the degree of commitment within the non-profit seeking organization itself. The degree of commitment of the staff within the organization may be more important than the degree of commitment in any other entity. Indeed, in NGOs, because they are non-profit seeking organizations, and most people working for that type of organization are not doing so for financial returns but for personal convictions; we can draw the conclusion that if people are not committed enough and financial returns are small, they will not have any incentive to work within the NGO. Also Carrigan, Szmigin & Wright (2004) point out the importance of commitments to ethical trade from both the consumer’s point of view and the managerial point of view.
To study change in an organization, one can use two different levels: first, the internal development of an organization (history of the organization, its adaptation and its replication) and the relationships between the numerous entities existing. According to Van de Ven and Scott Poole (1995), there exists a set of requirements and constraints to attain the goal and the activities and development transitions undertaken by the entity should contribute to meeting these requirements and constraints (1995: 525). Those requirements and constraints may exist on the internal level (internal development of the organization) and on its external level, which are the relationships with the other organizations. The examination of the goals of an entity and its constraints may explain the change and development an organization and its replicated entities go through. For example, a given country’s features/constraints may explain the course of an organization’s development and why it is different to the development of a same entity in another country.
There has been written about classification of an NGO growth. McPeak (1999) summarizes the main attempts of classifying NGO growth. Uvin and Miller (1996) outline a framework for examining the scaling up of an NGO and describe four generic modes of NGO growth: the quantitative growth, for example by increasing budgets or expanding geographically; the functional growth, expanding the range of activities undertaken and broadening interventions; the political growth, moving beyond project implementation to address structural issues of problems,
for example; and the organizational growth, which is strengthening internal capabilities and improving effectiveness and efficiency. Another perspective on NGO growth, according to McPeak (1999), is that NGOs can grow by building their institutions and replicate them by working with and through other organizations and by diffusing their experience. For example, Max Havelaar started with one entity in the Netherlands and went over time replicating its organization in European countries. Although interesting research has been made to define and classify the different stages of NGO growth, there has been very little done to be of a practical use.
The growth of a NGO is often subjected to the organization’s circumstances, internal politics, and pressure from governmental development agencies, other external stakeholders and market conditions (McPeak 1999). For example, a rapid expansion may create a larger scale of trading than expected, which may lead to production and supply problems because the high levels of trade are unrealistic to achieve in the long-run and could not be fulfilled (Lewis: 1998). Also the attention from the Media and the ability of an individual manager to speak persuasively in public will influence the possible expansion of an NGO (McPeak: 1999). When a NGO faces a change or development with an uncertain outcome, its leaderships tend strongly to seek organizational order and standards to maintain organizational integration (McPeak 2001). According to Lewis (1998), organizations may experience problems due to ambiguity. Indeed, he describes the NGO sector as having “an ambiguous zone between the bureaucratic and associational worlds”. The associational world refers to the arena in which citizens come together to advance the interests they hold in common20. This definition includes all organizations and associations, with the exception of businesses. In the associational world, there is a lack of “commonly accepted analytical tools for targeting additional resources consistent with their organization’s aims”
(McPeak: 1999). He stresses the lack of capacity of an organization to develop a methodology to direct the main organization’s decisions. Similarly, Billis and MacKeith (1992) entitle for the development of theoretical tools to help managers to face the challenges of growing NGOs.
As tools for management, in the private sector, there are many financial tools such as return on investment or net present value, but these tools are non directly applicable to the nonprofit sector. McPeak (1999) wrote that, though, NGOs could derive some approximate ratio for NGO management from businesses such as “pseudo return on investment” (1999: 190) in order to
20 Source: www.developments.org
improve its management. But he recognizes the application of these tools to be somewhat controversial (for, example, the calculation of cost-benefit ratio in an children-care NGO, or the benefit of a child prolonged life, or a decrease of infant mortality could lead to assign monetary value to a child life, which is unrepresentative and controversial). But McPeak (1999) indicated that some points might help to design a growth plan. The organization should use data that are available, regularly updated and generally accepted (maximum of objectiveness), and with quantitative techniques to render data as objective as possible. However, a methodology based exclusively on technical data may miss much of value found in experience, intuition and judgement.
For Lewis (1998), it is clear that the fair trade concept in an NGO requires the management of different levels of both businesses and developmental activities. He stresses that the increasing involvement of NGOs in areas where commercial entities usually prevail (micro-credit, for example), lead to NGOs to need the kind of expertise and knowledge found in the private sector.
And Lewis (1998) adds that, for that purpose, businesses can teach NGOs about clearer roles and accounting practices and also about marketing and sales. Billis (1993) points out the need for NGOs to diversify their funding base among a large range of sources and funding types (donors, businesses…). According to Herman and Renz (1998), effectiveness of an organization only can be measured when compared to another similar organization, and is seen differently accordingly to the different stakeholders. They however come to the conclusion that various management practices such as needs assessments, strategic planning, seeking new revenue sources and cutting costs, used in private businesses, are likely to enhance NGO effectiveness.
So far, social accounting has been based on a critique of the limitations of financial accounting.
In their book, Richmond, Mook and Quarter (2003) present a model to assess nonprofit impact, which they call the “community social return on investment model” and three social accounting statements. The community social return on investment model is built with two different columns representing the inflows and outflows of resources of a given period. This model provides feedback to the organization about its productivity ratio. Further, the three social accounting statements are very useful to NGOs as they provide a socioeconomic impact statement (which is the equivalent of a income statement), a socioeconomic resource statement (which is an adaptation of the balance sheet) and an expanded value-added statement (which is an adaptation of a value- added statement). The model is not discussed in details but seem to provide a good
ground for NGOs financial analysis to be easily checked out by profit (eventually stakeholders) and nonprofit organizations, though it deals with data to which it is sometimes hard to assign a monetary value. In this model, Richmond, Mook and Quarter (2003) also explain how to turn some qualitative data into “figures”; for example they mention that Volunteer activities should be included in financial statement after having been assigned a comparative market value.
2.3. Cultural differences across countries and reflection in management
Hofstede (1993) has done extensive work on cultural differences across countries and their reflection in management theories. He developed a model categorizing cultures according to four dimensions, supposed to help understanding differences found in management. The four dimensions are “power distance”(degree of inequality among people which the population of a country considers as normal), “uncertainty avoidance”(degree to which people in a country prefer structured over unstructured situations), “individualism”(extent to which people in a country prefer to act as individuals rather than as members of a group), and finally
“Masculinity”(degree to which values like assertiveness, performance, success prevail over values like the quality of life, maintaining warm personal relationships, service, solidarity and care for the weak). Hofstede (1993) compares different national management practices of many countries. It is interesting to look at the results for France and the Netherlands (see table 2), as this study focuses on these two countries. He finds that in France, the main principle is the honour of each class in a society, which always has been and still remains stratified. In opposition to the Dutch management books, French books on organization stress the exercise of power and protection of the individual being crushed by the upper hierarchy. In Hoftstede’s table showing culture dimension scores, we see major differences in power distance. The French consider it more normal that a large power distance exists within individuals of the same organization than the Dutch do. The Netherlands and France show both a high degree of individualism. An obvious difference (in table 2, France scores 43 while the Dutch scores 14) is that Dutch people seem to care more for service solidarity, protection of the weak and warm relationships than the French do. Further the score of uncertainty avoidance in French management appears to be really high, in contrast with the Netherlands, which means that French prefer structured situations rather than unstructured ones to the Dutch people.
Power distance Individualism Masculinity Uncertainty Avoidance
France 68 71 43 86
Netherlands 38 80 14 53
Table 2: Cultures dimensions scores – (0 is low and 100 is very high) – Source: Hofstede 1993
Lewis (2002) criticizes Hofstede’s work as he argues that Hofstede places too much emphasis within cross-cultural management on cultural issues instead of on management tasks, performance and processes. In other words, Lewis (2002) recommend researchers to also pay attention to non-cultural elements such as legal structures and the state of the economy to explain differences in management. According to Lewis (2002), an organization is only a smaller representation of its environment, and it usually tends to reproduce internally ideological conflicts that are characteristics of the wider society in which the organization develops. So, in a protest-like society, such as the French society, it is more likely that organizations operating in this kind of environment will experience more internal conflicts than in consensual-like societies, such as the Netherlands21.
2.4. Media
A point in the European report on social labels22 is whether people can trust or not what the label says, which means that even if people support the social label concept, they do not know to which extent they could trust one company in respecting the substance behind the label. Covello (1993) found that trust and credibility are the most important elements to influence the public’s perception of the information and the fact that an independent organization guarantees the label’s veracity increases its credibility in the customers’ eyes (Covello 1994: 512). Wootliff and Deri (2001: 159) also support this claim and say that NGOs have a high level of trust in European countries, because they are “effective at using the power of images, particularly in broadcast and on the Internet. They speak directly to consumers, appealing to emotions through simple and concise themes” (2001: 159). Another way of increasing credibility is to work in collaboration with a third party (a NGO, for example) support that the public already trusts (Covello 1994:
502). Nevertheless, it can be asked whether people really trust NGOs, or if NGOs do not only use marketing tools efficiently.
21 Source: Cultures et Conflits: sociologie politique de l’international – Sofia, sept. 2003 – www.conflits.org
22 Zadek, Simon (1998) Social labels: tools for ethical trade: executive summary; Employment and social affairs.
Strong (1996: 9) stresses the role of the media and pressure groups support in increasing ethical consumerism. The author explains that both media and group supports are linked to each other.
Media are needed to spread information and the only way to get media involved is through the group support, which may be a non-governmental organization. Strong (1997: 8) describes the role of people in the achievement of fair trade within sustainable development. She states that there are many “stakeholders” (see table 3) demanding higher ethical standards, and that it is necessary to identify and separate those by interest (see table 3) in order to communicate better to each of them, and to increase the chances of sustainability of the label promoted by one organization.
Stakeholders who are currently demanding higher ethical standards and fair trading purchasing policies
Stakeholders Needs Trading partners
(importers, exporters)
Fairer prices; fairer credit terms; long-term trading commitments
Farmers in developing
countries
Fairer prices; fairer credit terms; sustainable development; stable trading relationships on the basis of continuity and mutual support; producer co- operatives; Minimum wages; adequate housing where appropriate;
minimum health, safety and environmental standards
Customers in developed
countries
High quality ethical/fair trade alternatives; reasonable prices; policies of trade and not aid
Media Open discussion and interchange of information Pressure groups
(NGOs such as Max Havelaar)
Social responsibility; fairer trading practices; freedom of information;
equality in international trading
Table 3: Illustrations of stakeholder demands for fair trading purchasing – Source: Strong 1997
Carrigan, Szmigin & Wright (2004) mention media remain the most efficient source of information in the case of Fair Trade labelling, and that the organization promoting the label (the
non-governmental organization) should provide media reliable and credible information about the organization and labelling process and meanings.
Young (2003) stresses that the third-sector finds different niches in different countries, depending on their economic, political, and legal environments. For example, in countries with a more service-orientated welfare systems, nonprofit concentrate more on niche strategies such as alternative lifestyle communities.
To sum up, social labels’ penetration into the market is influenced by the kind of product labelled, the kind of organization promoting its market penetration - some empirical research has found that NGOs are better trusted than regular corporations (Wootliff and Deri 2001), its propensity at being retailed in regular shopping places (such as supermarkets). The media also influence the success of a social label’s market penetration in the sense that they enable a broader communication to consumers than the NGO alone. Finally, the degree of commitment expressed by the participants within the non-governmental organization seems to be important to enable such organizations as Max Havelaar to simply exist and therefore to enable social labels to be created and brought onto the market. Further, an analysis of the goals pursued, constraints determining internal organizational requirements, the establishment of known accounting indicators for measurement as well as relationship-like conditions and the culture may be helpful elements to look at to explain differences in development of similar organizations, and give recommendations to improve management effectiveness.
3. Methodology
I first summarize the techniques existing to conduct Case studies in general. By exploring those techniques, I find the appropriate techniques to use for my own case, and therefore justify my choices. I describe what a qualitative study is, and elaborate on the differences of propositions vs. hypotheses. Further, I explain why my case is a case study research and how I did choose the sample to investigate. The next part describes the sources available for data collection. Finally, I end with elements to ensure the quality of the research, the analytic strategies for data treatment, and the study design, which summarizes the features of my case study research. .
3.1. Qualitative vs. Quantitative study
Although qualitative and case studies are often used interchangeably (Eisenhardt 1989), they are not the same. A case study may involve qualitative data, quantitative data, or both (Yin 1984).
Miles wrote “qualitative data are attractive for many reasons: they are rich, full, earthy, holistic, real”(1979:590). Qualitative data can be defined as information that is difficult to measure, count, or express in numerical terms (for example, the nature of relationships among various groups in a community). This type of data is used in research involving detailed, verbal descriptions of characteristics, cases, and settings23. My research involves qualitative data, such as the nature of the relationships within an organization, which is impossible to quantify. For that reason, my research is a qualitative study.
3.2. Nature of the Research: Inductive vs. Deductive
There are two approaches existing for researching. Qualitative methods are particularly well suited to exploration, discovery and inductive logic (Patton 2002). Deductive reasoning leads to hypothesis testing, moving from expectation of a general pattern to the specific observation and confirmatory data analysis. Deductive reasoning is a process of reaching a conclusion, if the evidence provided is true and the reasoning used to reach the conclusion is correct. Such a method of reasoning is a step-by-step process of drawing conclusions based on previously known truths24. In my study, I collected data and detected some patterns and regularities, which lead to draw conclusions and formulate some propositions for further research and testing. I apply then a deductive logic in my research.
3.3. Propositions and Hypotheses
There is a difference between propositions and hypotheses. A proposition can be formulated to suggest a conceptual relationship that may be true or not, and when those are stated for empirical testing, they are hypotheses (Cooper & Schindler, 2003). Basically propositions only imply conceptual relationships, while hypotheses imply measured relationships (Pandit, 1996). In my study, I collected the necessary data and/or observations in France and in the Netherlands, and tried to identify patterns. Though hypotheses provide a good framework and therefore help organising the conclusions and results (Cooper & Schindler, 2003), I limit myself to formulate propositions (my results indicate only conceptual and not measured relationships), in this way,
23 Source: http://wind.uwyo.edu
24 Source: http://www.socialresearchmethods.net
directions are provided for further research. In figure 3, I explain how I linked data and the future propositions. The treatment of the data collected should allow for giving recommendations to Max Havelaar France on the basis of the observations made when comparing Max Havelaar in France and in the Netherlands.
Finding 1 Finding 2 Finding 3 Finding 4 Finding 5 Finding 6 Finding 7
Recommendation 1
Recommendation 2
Recommendation 3
PROPOSITION 1
Figure 3: Linking Findings to final propositions - freely adapted from Yin 2004.
3.4. Case study research
A case study tries to enlighten a decision or a set of decisions: why they were taken, how they were implemented, and with what result (Schramm 1971). Yin (1994) defines the case study as an empirical inquiry that investigates a phenomenon in a natural setting when the boundaries between the phenomenon and its context are not clear, using multiple sources of evidence. The case study has a “unique strength: its ability to deal with a full variety of evidence – documents, artefacts, interviews and observations”(Yin 1994).
The “how” and “why” questions are more explanatory and likely to lead to case studies and histories as a research strategy, because such questions deal with links needed to be traced over time rather than with frequencies or incidences (Yin 1994). Histories are preferred as a research strategy when there is no access or control that is when it deals with the “dead past”, implying that there is no person to report. In contrast, when the study examines a contemporary event, the case study is preferred. My research question, which is “How does an NGO manage the sustainability of a Fair Trade label?” poses a “how” question and examines a contemporary event
which is the integration of a fair trade label in the market. My research is then a case study research.
3.5. Sampling
The sampling methods may be divided in two main categories: the non-probability and probability sampling. Non-probability sampling does not involve random selection and probability sampling does (Weisberg et al, 1996), which does not necessary mean that non- probability samples are not representative of the population. But it does mean that non- probability samples cannot depend upon the rationale of probability theory. Probability samples might be preferred for their statistic accuracy, however, in some cases, it is not feasible, practical or theoretically relevant to do so25, that is why I chose to do a non-probability sampling.
The sample I chose includes two separated entities of the same NGO: Max Havelaar in France and in the Netherlands. The sample also includes senior managers in supermarkets and senior managers in manufacturing companies that are licensees of the Max Havelaar Fair Trade label in France and in the Netherlands. The reason why I chose Max Havelaar is because this organization focuses on promotion of a fair trade label. Further, Max Havelaar Netherlands was a good candidate to be the basis of the benchmark, as it was the first Max Havelaar unit and it shows better results than Max Havelaar France. Max Havelaar France was chosen because they seem to perform less good than Max Havelaar Netherlands, and because of practical reasons (being French, I understand the culture and am able to read documents related to Max Havelaar France). Altogether, Max Havelaar, the senior managers in supermarkets and in manufacturing companies seem to be relevant sources of information since they are active participants to manage the market penetration and sustainability of the fair trade labelled products, so they possess the relevant information about my research topic. In the case of my study, the sampling method is said purposive, purposely chosen for to their knowledge about the topics being researched (Weisberg et al, 1996), in the non-probability sampling methods. That is why I chose to interview informants in Max Havelaar, manufacturers licensees of the label and managers of supermarkets: these parties have the sought knowledge because they participate in the Fair trade network of Max Havelaar, and, further, cross-checking information given by those parties may be useful and interesting.
25 Source: http://www.socialresearchmethods.net
3.6. Data collection
The data collection was done from as many sources as possible. Data can be distinguished in two categories: primary data and secondary data. Primary data includes data collected by the researcher himself and secondary data refers to data collected by others to be "re-used" by the researcher26. In my research, secondary data was collected in all kind of documentation, such as written reports, articles appearing in the Media, Internet and any other relevant literature.
Primary data was collected within Max Havelaar itself, supermarkets and manufacturers licensees of the label Max Havelaar. I made interviews at Max Havelaar in France and Max Havelaar in the Netherlands, in supermarkets in France and in the Netherlands; and I collected data by the means of phoning the chosen manufacturers licensees of the Max Havelaar label.
The variety of the sources of data may strengthen triangulation. Jick (1979) has defined triangulation as a combination of methods used to study the same phenomenon. The idea is that the limits induced by one single method will be compensated when using a multi-method approach. Triangulation means that the researcher examines a phenomenon or relationship from different angles, and that from all angles the results is the same (Snow and Thomas 1994). To ensure triangulation strategy, I therefore combine three sources of evidence: documentation, interviews and direct observation.
Documentation is mostly important to enable and increase evidence from other sources, and to verify the correct spellings and titles or names of organizations (Yin 1994). The documents I used are mainly found on the web (Max Havelaar website and various downloadable reports on it). Also, the library of the RUG provides a large choice of documentation, which I used especially to find articles. However, Yin (1994) points out that one has to be careful in interpreting the documentation by keeping in mind the purpose and audience it has been written for: Bowman (1990) notes that often researchers work with database made for another purpose.
Yin wrote” interviews are also essential sources of case study information” (1994:83).
Interviewing involves asking questions of those who have information about a phenomenon that the researcher cannot observe directly (Snow and Thomas 1994). Questions in the interview were carefully prepared since they could determine the usefulness of the interview’s outcome (Foddy 1993). Case study interviews are open-ended by nature (Yin 1994). Another kind of interview is
26 Source: http://oassis.gcal.ac.uk/
the focused interview, where the interviews may still remain open-ended, but the interviewer is more likely to follow a certain set of questions derived from the study design. The major purpose of such interview is to confirm facts that the interviewer already thinks (Yin 1994). However, if one of the participants fails to comment on a question, the interviewer should mention in his/her results that the informant declined to comment (Yin 1994). If interviews provide a lot of information, the interviewer may face memory problems when making the transcription27 of the data. To avoid such problems, I used, in addition of written notes taken during the interview, a tape recorder. A tape recorder enables a better rendition of what has been said during the interview but not without a written plan (Yin 1994). I therefore prepared a script for the interview with a clear separation between the topics to render easier the transcription of the recordings. A general critic made on interviews, according to Snow and Thomas, is that interviewing is a method that “heavily relies on the opinions and perspectives of the informants and the researcher” (1994:461). I likely use open questions, as my objective is to explore managerial topics throughout the relevant informants’ insights into a matter.
Interview can be made to informants or respondents. There is a difference between respondents and informants: respondents are members of a group that will answer by explaining their personal feelings, opinions and behaviors (Kumar, Stern and Anderson 1993). Informants are assumed to have special and extended knowledge of the field being researched (Kumar, Stern and Anderson 1993). Several researchers advise to include as many informants as possible (Bagozzi, Yi & Phillips, 1991;Golden 1992; Phillips, 1981; Schwenk 1985) to increase the validity and the reliability of the study. However, multi informants may lead to two problems described by Kumar, Stern & Anderson (1993). First, the selection problem: key informants are usually chosen on the basis of their formal role within the organization, but they have to be knowledgeable enough to be interviewed. This might be a problem leading to interview fewer informants than initially scheduled. Second, the perceptual agreement problem can lead to disagreement because of differences in both knowledge and perceptions. Disagreement may come from the different degree of knowledge of an informant, but also from the fact that the informant may hold a different position within the organization (Kumar, Stern and Anderson 1993).
27 Transcription: something written, especially copied from one medium to another, as a typewritten version of dictation (http://www.wordreference.com/definition/transcription)
In my study, the relevant informants in the organization are the ones who have adequate knowledge of and information about the management in Max Havelaar. Interviews were scheduled in May, June and July. An overview of the interviewees is shown in table 4:
Type of informant France Netherlands
Max Havelaar informant
Informant: Eleonore Attali Function: Responsible of Information and Network Animation
Informant: Jos Harmsen Function: Coffee project leader
Licensee informant
Informant: Pierre Massia Company: Malongo
Function: Director assistant
Informant: Stella Dekker Company: Segafredo Function: Product manager
Supermarket informant
Informant: Mrs. Tassidit Company: Intermarché Function: Manager
Informant: Mr. Robbert Company: Albert Heijn Function: Manager Table 4: Interviewees: Type of informant, company of origin and Function.
Direct observation stands for a less formal way of collecting evidence. They may be made throughout a visit, such as when going for the interview. They can provide complement of information: for example the conditions of the workspaces may indicate about the climate of an organization (Yin 1994). In my study, direct observation is important since it is about management, and elements such as the degree of hierarchy cannot only be assessed in words, but may be observed (type of language used, knocking on a door before coming into a superior’s office or not); behavioural observations when other people would call or stop by during the interview could also be made and bring some further information or lead to further questions (Burgelman 1983).
3.7. Quality of the study design
Yin (1994) wrote that for the study to be of a good quality, the investigator must satisfy four aspects of the design. The four aspects are: the construct validity, the internal validity, the external validity and the reliability. The construct validity is achieved by establishing correct operational measures for the concepts being studied. That is, the interviewer has to identify the concepts to be studied and a subjective way of measuring it. In my study, construct validity refers
to what elements I want to compare and on what base should I compare them (Yin 1994). This can be done by the use of multiple source of evidence, establishing a chain of evidence and have key informants. The internal validity (only for explanatory and causal studies) consists in establishing a causal relationship, whereby certain conditions are shown to lead to other conditions. Internal validity concerns the ability to establish that event x lead to event y; if the investigator forgot that a third event z was partly the consequence of y, then he/she failed to deal with a good internal validity (Yin 1994). Tactics to ensure a good internal validity is to do pattern matching, explanation building, and do time series-analysis (see next section - Analytic strategies - for explanation of those). External validity deals with establishing the domain in which a study’s findings can be generalized. That is, for example, to know if my future findings about a certain NGO’s management are generalized to all NGO or not. The reliability test is demonstrating that the operations of a study – such as the data collection procedures- can be repeated with the same result.
3.8. Analytic Strategies.
One of the biggest problems in the use of qualitative data is that there is no well-formulated method of analysis (Miles 1979). Yin (1994) proposes two main general strategies, which are relying on theoretical propositions and developing a case description (a descriptive framework to organize the case study). I relied initially on the study of two organizations, taking one as a benchmark for the other. I stressed my analysis on three different points chosen according their relevance in the field of the NGO’s activity and the literature.
Benchmarking is another analytic strategy. It is defined, according to Spendolini (1992), as a process encouraging organizational improvement. It enables organizations to compare their existing performance and approach to others, and identify elements that can be adopted and adapted in their context. Although benchmarking is widely used, it not a precise science and there are many different approaches (ranging from models of quality measurement to basic comparison undertaken on a pragmatic basis). It is often necessary to tailor an approach that provides a sustainable method of benchmarking in view of the organizational goals and business needs28.
28 Source: www.ogc.gov.uk
There are three dominant analytical techniques: pattern matching, explanation building and time- series analysis (Yin 1994) though Miles & Huberman (1984) suggest using various techniques such as making matrices, creating data display or just putting information into different arrays.
Pattern matching compares an empirically based pattern with a predicted one: if the pattern coincides, then the internal validity is strengthened. In explanation building, the goal is to analyse the case study data by building an explanation about the case. Time-series analysis is, defined by Yin, “the match of a trend of data points compared to a theoretically significant trend specified before the onset of the investigation” (1994: 110). In my case, I compared empirically based patterns of two organizations. For that, I defined key-questions, with regards to my three core topics, aimed at the three categories of informants I have, and elaborated questionnaires. By means of tabulations, I reported the quotes directly linked to the question to investigate. Out of those tabulations, I described the results, discussed them and made recommendations.
3.9. Overview: study design
First, I raise a core research question based on the literature. The question is treated based on three points: the use of the Media, the management styles within both organizations and the access/choice of distribution channels. The research is a qualitative study, with a deductive logic based on a core research question. The unit of analysis is the organization Max Havelaar in the Netherlands and in France. As a base for benchmark, Max Havelaar Netherlands is used. The sample is purposive. Data collection was done from documentation, interviews and mailing in France and in the Netherlands with Max Havelaar, licensees of the Max Havelaar label and in supermarkets; and direct observation in the Max Havelaar’s headquarters. To analyse my data, I used benchmarking techniques and pattern-matching techniques.
4. Results
In this section, I present the results of my investigation. I first introduce and compare few elements of Max Havelaar France and Max Havelaar Netherlands. Then, I give the results based on a comparison of both organizations with regards to the retailer’s network, the management style and Media choice or use. These results are sustained by quotes form tne interviews that can be found in appendix 3 (p. 55).
4.1. Max Havelaar France and Max Havelaar Netherlands: comparison
Max Havelaar Netherlands was created in 1988. In 1988, Max Havelaar introduced coffee in the Dutch market. From 1993 onwards, other labelled products were introduced on the Dutch market.
There are now 12 Max Havelaar labelled products on the Dutch market, 62 licensees and about 8300 retail points (among them 50 supermarket channels and Fair Trade shops)29. Currently, 10 persons work on fixed-contract basis in Max Havelaar, and the director is new: he comes from Unilever, which is a long-experienced commercial company. Max Havelaar rarely works with volunteers or internships in their headquarters because there is a lack of room for those. The turnover of Max Havelaar Netherlands is 1,8 millions Euros in 2003. Altogether, subsidies count for almost 800 thousand Euros, while licensee fees account for a little more than 700 thousand Euros30.
Max Havelaar France was created in 1992. In 1998, the first Max Havelaar labelled product (coffee) appears in shops. In 1999, a strong campaign for Fair Trade products leads to new coffee manufacturers to become licensees of the label, and in few months, retailing points are multiplied by five. In 2000, there are about 3500 retailing points offering a Max Havelaar labelled products.
New products enter the market every year until 200531. This year, the first non-food product labelled Max Havelaar enters the French market: cotton32. Max Havelaar has recently changed the headquarters’ location because the structure keeps growing (five persons have been hired the last 6 months33). Currently, 25 people work on a fixed-contract basis, and volunteers as well as internships contribute to the task of Max Havelaar. There are 9 Max Havelaar labelled products on the French market, 51 licensees and about 10000 retail points. In 2003, Max Havelaar France’s financial statement shows a turnover of 1,5 millions of Euros; it further shows that licensee fees count for about 600 thousand Euros and subsidies for about 500 thousand Euros (in which the Ministry of Foreign Affairs’ grants count for 2/5)34.
29 Source: http://www.eftafairtrade.org/pdf/FT_f&f_1998.doc
30 Source: www.maxhavelaar.nl and financial statement of Max Havelaar Netherlands.
31 Source: www.maxhavelaarfrance.org
32 Source: interview with E. Attali – June 2005- www.maxhavelaarfrance.org
33 Information provided by E. Attali, during an interview in June 2005.
34 Source: financial statement Max Havelaar France for 2003.
Country NETHERLANDS FRANCE
Year of creation 1988 1992
Year of the first product on the
market 1993 1998
Licensee fees in 2003 (in thousand
Euros) 725 600
Subsidies in 2003 (in thousand
Euros) 798 500
Volume of products sold in 2003
(all together) in tonnes 5977 3930
Communication expenses (in
thousand Euros) 827 673
Turnover in 2003 1510 1500
Profit in 2003 (in thousands Euros) 305 - 350
Staff number in 2005 10 25
Number of products on the market in 2005
12 9
Number of licensed manufacturers in 2005
62 51
Number of retailing points per inhabitant in 2005
0.000518 0.000166
Table 5: Comparative summary of Max Havelaar France and Netherlands. Source:
www.maxhavelaarfrance.org - www.maxhavelaar.nl .
At first sight, differences in both Max Havelaar France and Netherlands are not obvious.
However, some elements must be taken into account for the figures to be representative. The license fees, the subsidies, the staff number, the number of products brought onto the market and the number of licensees are very similar in France and in the Netherlands. If the number of licensees is similar, then, naturally, the license fees are comparable because the license fees charged by Max Havelaar in France and in the Netherlands are the same (it is established by the standards of the FLO international35). The staff number and the number of products brought onto
35 Source: www.fairtrade.net
