Social enterprises & collaboration
Social enterprises, such as Fairphone and Tony’s Chocolonely in the Netherlands, face serious challenges in scaling up their size and impact, due to the lack of resources and opportunities. Partnering with other types of organizations has been proposed as a viable strategy for social enterprises to overcome these barriers to have a larger impact.
In reality, however, there have been quite limited successful collaborations between social enterprises and other types of organizations, due to divergent interests, organizational structures, incompatible guiding logics, and other barriers. In this project, we studied Dutch social enterprises operating in the food and agri-food sectors in order to explore how they engaged in their commercial suppliers and customers contribute to societal resilience.
To study upstream partnerships between social enterprises and their suppliers, we conducted a multiple case study of 15 Dutch social enterprises. Our findings show that supplier selection plays an important role in achieving Fairtrade social enterprises’ goals on societal resilience.
Compared to typical commercial firms, social enterprises use four main criteria for supplier selection, including value alignment, relationship commitment, resource complementarity, and lastly cost. When these four criteria are consistently applied in supplier selection, social enterprises have a good chance of initiating and sustaining long-term, effective collaboration with suppliers located in African and Asian countries.
To study downstream partnerships, we looked at 30 social enterprises in the coffee sector and unpacked the nature and characteristics of several educating and mobilizing practices which are essential to creating resilience in the supply and demand market. Educating practices include informing consumers about farmers issues and training customers to appreciate farmers efforts; while mobilizing practices revolve around generating resources, partners and stakeholders in the Netherlands in order to channel them toward farmers and support environmental and social upgrading of farming communities.
Taken together, our research findings provide valuable insights into collaboration between social enterprises and commercial organizations in improving societal resilience.
Cross-sector collaboration toward resilient supply chains
Collaboration between social enterprises and other types of organizations holds great potential for addressing salient social and environmental issues in supply chains. However, such collaboration is often impeded by divergent interests, different organizational structures, incompatible guiding logics. In this research, we investigated partnerships between social enterprises and commercial organizations in the agri-food sector in the Netherlands and how they can lead to societal resilience.
The focus was on two types of partners: upstream commercial suppliers and downstream commercial customers. The study unpacks effective approaches to overcoming the barriers and tensions, in the creation of resilience in the supply and demand market, which jointly can lead to the creation of societal resilience. In this short article, we are going to share two examples of social enterprises that manage to overcome such barriers to achieve their goals on societal resilience.
Partnerships with upstream suppliers: SEA reached deep in the cocoa supply chain through bringing onboard middlemen (co-op managers)
Supply chains for many commodity products such as cocoa, tea, cotton and sugar are highly fragmented, with a large number of smallholder farmers operating in economically less well developed countries. In the case of cocoa, for example, most of which comes from West Africa, the raw product is produced by more than two million farmers, who supply a complex network of middlemen. Rampant social issues (including child labor, forced labor, and extreme poverty) and environmental issues (excessive use of chemical pesticides and land degradation) are seriously threatening the livelihoods of local communities and also the long-term viability of the whole cocoa supply chain.
Improving visibility and resilience through collaborating with co-op managers
SEA is a Dutch social enterprise that is committed to tackling these issues, in order to develop a slavery-free cocoa supply chain. When SEA was founded in early 2000, it was faced with a supply chain that had a very low level of visibility: it could not reach out to the farmers, to which SEA was willing to pay a purchase price higher than the market price, as part of its mission to create sustainable and resilient supply chains in Western African countries.
Without connections between players that provide each other with an overview of the value created by the system, SEA’s goal toward resilient supply chains remained elusive. Soon, SEA realized that co-op managers were a key link between itself and the upstream supply chain: one co-op manager is typically linked to more than 100 smallholder farmers.
Collaborating with co-op managers was proposed by SEA as a key step in developing a visible, transparent, and thus resilient supply chain. SEA started including co-op managers in jointly developing annual production and purchasing volumes. SEA even gave co-op managers access to a shared digital information platform to track cocoa shipments and deliveries.
When SEA had successfully convinced a sufficient number of co-op managers to disclose the location information of upstream suppliers, SEA reached out directly to those smallholder farmers, applying its five sourcing principles:
1) Traceable beans
2) Paying a higher price
3) Strong farmers
4) Long-term commitment
5) Improved quality and productivity
It took SEA almost ten years to systematically apply these sourcing principles to develop a sustainable and resilient supply chain, through which smallholder farmers can earn a decent income and the long-term supply of quality cocoa beans is adequately secured.
Partnerships with downstream customers: Educating consumers and mobilizing resources for impact in the coffee sector
Customers are crucial stakeholders for social enterprises since their commercial viability largely depends on them. In the agri-food sector, many Dutch social enterprises we studied act as importers, exporters or processors of agricultural products (e.g., roasters for coffee) and they sell their products to cafes, restaurants, large chains and other organizations. These customers can also be social enterprises, but the majority are simply commercial firms with a sustainability mission.
The social enterprises engage with farmers in developing economies, tend to visit them periodically (i.e., once a year) and try to maintain direct and continuous contact with farmers although not at the intensity of those with a physical presence in Origin. These direct farmer relationships, the visibility and transparency gained in the upstream part of the supply chain serves as a unique selling point for the social enterprises. The social enterprises and their customers develop close relationships centered around:
1) Educating consumers in order to create conscious consumption in the demand market
2) Mobilizing resources to be channeled upstream and support various farmer-based initiatives
Educating and Mobilizing practices
Educating preferences refer to educating consumers regarding issues such as greenwashing, farmer’s challenges and the impact of climate change on coffee farming. Social enterprises connect consumers with the challenges and hardships of farming: by bringing the farmers’ stories closer they are aiming to increase demand for quality coffee and consumers’ willingness to pay for better practices. Often in joint efforts with their customers, social enterprises engage in educational programs to improve coffee brewing and drinking techniques to ensure that high quality coffee is appreciated and that farmers’ efforts are recognized by coffee drinkers in the Netherlands. By leveraging their educational practices, social enterprises aim to drive bottom-up change in the industry.
Mobilizing practices relate to mobilizing resources in the Netherlands to implement more comprehensive projects for improving farmers’ livelihoods. We identified several forms of mobilization: multi-stakeholder networks, partnerships with NGOs or competitors, global technical knowledge, and finance. Social enterprises often engage in multi-stakeholder networks aimed at mobilizing other coffee companies, NGOs and civic actors to join forces and pool resources toward the common goal of improving farmers’ livelihoods.
For example, most of the Dutch social enterprises in our sample are part of the MVO Future Proof Coffee Collective which coordinates various initiatives in the Netherlands and across several coffee sourcing places. Its members often engage in joint proposals for funding or collaborations for social projects. These social enterprises actively seek support from various sources and channel it to farmers via financing opportunities, grants and subsidies, technical expertise for coffee farming and processing, and support for social projects.
The resources raised through mobilizing practices in the Netherlands are essential to support farmers in upgrading their quality and regenerative agricultural practices through projects such as reforestation, buying seedlings or use of organic fertilizers. With these dedicated programs, social enterprises proactively address two major challenges faced by farmers: climate change and threats to community resilience.
Commercial partnerships of social and enterprises and societal resilience: Key insights
We summarize our insights in the figure below: through engagement in partnerships with commercial organizations, social enterprises can create resilience in the supply and demand market.
In the supply market, social enterprises can improve farmers’ livelihoods in numerous ways: by supporting farmers they can create sustainable farming communities and thereby ensure resilience in the supply market in the face of climate change. In the demand market, social enterprises actively work to stimulate conscious consumption, create direct connections between consumers and farmers and mobilize collective action with the goal of creating sustainable farming communities upstream.
These partnership complementarities between social enterprises and their commercial suppliers and customers facilitate the alignment of activities across the entire supply chain toward the common goal of improving farmers’ livelihoods and ensuring the creation of societal resilience in the agri-food supply chains.
Discussion
1) The case of SEA shows that visibility into upstream suppliers has laid the foundation for developing sustainable and resilient supply chains in the cocoa industry. Please identify a couple of extra enablers for developing sustainable supply chains in this industry.
2) Collaboration between social enterprises and other types of organizations entails overcoming substantial differences in goals, culture, structure, and logics. What could be potentially effective approaches to overcoming these differences in cross-sectional collaboration for achieving resilient societies?
3) The unique selling point of many social enterprises in the agri-food sector relates to their direct farmer relationships: through this, customers have access to the farmers and are able to develop a close relationship with the farmers. Thus, customers buy agri-food products with this extra layer of value added. Please reflect on the strengths and weaknesses of creating such a direct relationship between farmers and customers, via the social enterprise.
4) Mobilizing resources and partnerships in the Netherlands and channeling them toward developing countries is an important mechanism through which social enterprises aim to create societal resilience. Please critically reflect on the potential challenges and limitations of this approach.