Sustaining Inter-Organizational Relationships across Institutional Logics and Power Asymmetries: the Case of Fair Trade

In Fair Trade (FT), as well as in other ‘mixed-form’ fields (Becchetti & Huybrechts 2008; Marwell & McInerney 2005), non-profit organizations and social enterprises have been partnering with large corporations over long time periods despite the presence of conditions that might be expected to destabilize such relationships. These conditions include striking differences in size, economic power, and organizational goals or ‘logics’. Given these asymmetries, the collaborations are typically seen as problematic and temporary because the stronger party (the corporation) will impose its (market) logics upon the weaker one (the social enterprise), leading to either instrumentalizing and corrupting the latter or to the breakdown of the collaboration. Whilst some of the literature on FT and other market-oriented social movements has tended to depict corporate participation as a threat to the original goals of the social movement and to the integrity of partnering social enterprises (e.g. Fridell et al. 2008; Reed 2009), there is evidence of a set of social enterprise-corporate relationships that persist over time and cannot be simply summarized as dominated by the sole corporate, market logic. These examples illustrate the emergence of new working relationships across the conventional divides between distinct sectors – the public, private, and civil society – that offer new approaches to managing power asymmetries and apparently conflicting logics – typically, in FT and more generally in social entrepreneurship, market and social justice/welfare logics (Battilana & Lee 2014; Defourny & Nyssens 2006; Huybrechts & Nicholls 2012; Smith et al. forthcoming). This leads to the following research question:

Under what conditions can inter-organizational relationships emerge and be sustained despite power asymmetries and the presence of distinct, potentially conflicting, institutional logics?

The analysis in this paper aims to extend theory by providing an alternative to more deterministic analyses of inter-organizational relationships that suggest that the more powerful actor will always impose its logics upon the less powerful organization thus undermining the persistence of the relationship over time. In the process, this research adds a new construct to existing theory around the resolution of conflict in institutional logics by suggesting that dynamic persistence is also evident in contrast to examples of conflict resolution through dominance, compromise, hybridization, synthesis, or relationship breakdown. Based on the analysis of the relationships between commercial buyers and FTOs, initially embodying market and social justice logics respectively, this paper proposes a set of key conditions under which dynamic persistence can be observed even in the presence of power asymmetries.