Doing Well While Doing Good: How the Hybrid Business Model

DoingWellWhileDoingGood:HowtheHybridBusinessModelPromotesSustainabilityintheFashionIndustry

AnnammaJoy,CamiloPena,andLindaArmano Abstract

Purpose:Toexaminethemechanics—social,geographical,andlogistical—ofproducingsustainablefashionapparelasahybridcompany(acompanythatispart-commercialandpart-altruistic;i.e.,pursuestwogoals:profitabilityandenvironmental/socialsustainability),beholdenequallytoemployees,theworker-ownedcooperativeswithwhichthecompanypartners,andenvironmentalandethicalbestpractices;andtoinvestigatethecomplexinterplayofaltruismandentrepreneurshipendemictohybridorganizations.

Keywords

Sustainability,hybridorganizations,organiccotton,ethicallaborpractices,worker-ownedcooperatives

Page 1 of 26 JBA 9(2): 381-406 Fall 2020 © The Author(s) 2020 ISSN 2245-4217

DOI10.22439/jba.v9i2.6131

JournalofBusinessAnthropology,9(2),Fall2020

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Methodology

Usingacasestudyapproach,wefocusonasmallrepresentativeapparelandaccessoriescompany,Maggie’sOrganics.Weconductedextendedinterviewsin2016and2017withthecompany’sfounder,BenaBurda,andexaminedthecompany’swebsite,annualreports,mediacoverage,andonlinereviews,usinganiterative,hermeneuticapproachtoanalyzeourresultingdata.

Findings

Thisresearchpaperpresentsacasethatevidenceshowhybridorganizationscanwork,bothingeneratingprofitandinimprovingcommunities,includingthelivesofworkerswhoselaboriskeytotheorganization’ssuccess.

Introduction

Interestinsustainablefashionhassurgedinrecentyears,asbothindustrystakeholdersandconsumersincreasinglyrecognizethevalueofapparelmadefromorganicfibersandincorporatingethicalmanufacturingpractices(Fletcher2014;FletcherandTham2015;Henningeretal.2016;Henningeretal.2017;MoreandLittler2011).Lastyear,GlobalFashionAgenda,aCopenhagen-basednonprofitdevotedtopromotingsustainabilityinthefashionindustry,producedcorporateactionplansforsustainability.TheirCEOAgenda2018definescoresustainabilitypriorities:transparencythroughsupplychaintraceability,whichwillencouragecollaborationandstakeholderengagement;theefficientuseofwater,energy,andchemicals(ifused)forallfibersandothermaterials;andsafe,secureworkenvironmentsthathonoruniversalhumanrights.TheAgendafurtherliststransformationalchanges:theuseofsustainablematerials,includinglow-impacttextilessuchasorganiccotton,andinvestmentinnewsustainablematerials;aclosed-loopfashionsystem,inwhichconsumerspurchaseproductsthat,overtime,canbedisassembledandrecycledratherthanenteringthelandfill;livingwages;andembracingwhattheAgendatermstheFourthIndustrialRevolution—recognizingtheriseofadvancedtechnologyinfashionandpreparingforitsinevitableimpactontheworkforce,particularlyonthosewholiveandworkinthedevelopingworld(O’Connor,2018).

Thisblueprintforcommitmenttosustainabilityisparticularlynotablebecausethefashionworld,fromfastfashiontoluxurybrands,hadbeenlargelysilentonthispressingissue.Thatapproachappearstobechanging.Typically,staidmass-marketcataloggiantssuchasU.S.-basedL.L.Beannowfeatureahandfuloforganicproducts;thecompany’smarketingcopytouts“environmentallyresponsiblemanufacturing”(L.L.Bean,n.d.).TheminimalistAmericanfashiondesignerEileenFisher

Dr. Annamma Joy, Camile Pena, and Linda Armano / Doing Well While Doing Good

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espousesaphilosophydevotedtosustainabilityandsocialresponsibility,withproductlinesincludingorganiccottonandlinenseparates(eileenfisher.com,n.d.).Fast-fashiongiantZaradebutedorganicclothingin2015andintroducedasustainableclothinglinein2016,theJoinLifeinitiative,whichspecificallyembracesacorporategoalofreducingthecompany'senvironmentalimpact(Mackenzie,2016).Notingthat"sustainabilitygoeswaybeyondorganiccottontees,"H&Mstatesonitswebsitethatsustainability"spans…ourentirevaluechain"andthereforeincludessocialaswellasenvironmentalobligations.Notably,thelanguageemployedinfast-fashioncommunicationsfocusesovertlyonsustainabilityforacollectivebetterfuture;theH&Mslogan"Weareallpartofit,"emphasizesconsumersaspartofagreaterwhole(H&MGroup,n.d).Notablytoo,someoftheseinitiativesmaybeironicinlightoftheinherentwastefulnessoffastfashion(Brooks,2015)andthepotentiallydevastatingeffectsofsendingsecond-handclothestodevelopingnationswhoseowntextileindustriesmaybeunabletocompete(Belk,2015;Bloemer,2001).

Withtheclimatechangeemergencyincreasinglyimpossibletodismissasaproblemforfuturegenerations,consumerinterestinsustainabilityhasrisen(e.g.,ChernevandBlair,2015;Princen,Maniates,andConca,2002;Mather,2015;SyseandMueller,2015).Moreover,mediahascovereddeadlyworkingconditionsinemergingeconomies,oceansandshorelineschokedwithplasticdetritus,andotherindicationsthatdisposableconsumptionendangerstheenvironmentandultimatelyourselves.Thiscoveragehasheightenedconsumersensitivitytoethicalissuesinapparelproduction.The2013deathsof1,134BangladeshiapparelworkersinthecollapseofRanaPlaza,themulti-storybuildinginwhichtheyworked,elicitedglobaloutrage,inanechooftheTriangleShirtwaistFactoryFire102yearsearlier,whichhadprecipitatednewstandardsforworkplacesafety(Cole,2007).White(2017)reportsthatdespiteworldwidedemandsforchange,safetyregulationsingarmentfactoriesremainalltoooftenunenforced.Whiletoday’sconsumerscaremorethaneveraboutsafeworkingconditionsandfairpayforapparelmanufacturers(Henningeretal.,2017),headlinesfadeandattentionsstray.Theimmediacyoftheonlineworldcancountersuchcomplacency,however,collapsingdistancesbetweencultures,andbringingtovividlightenvironmentaldegradation,animals’abuse,andtheinjusticesofsweatshoplaboranditsconcomitanthorror,childlabor.Whileyoung-adultconsumersoftheearly2000sperceivedthemselvesasecologicallyawaresimplybecausetheyengagedinrecycling(Joyetal.,2012),evenastheyeagerlyembracedfastfashion(whichepitomizesunsustainability),somemillennialsmaygraduallybesettingtheirsightshigher(Bucic,Harris,andArli,2012).

What’stheMatterwithCotton?


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Whileafinancialpowerhouse,cottonisbyitsnatureadirtyindustry;contrarytocotton’swidespreadimageaswholesomeandpure,theproductionofcottonisoneofthemostdestructivepracticesinfashion(EnvironmentalJusticeFoundation,2007).Growingcotton(aherbaceousplantwhoseseedsareembeddedinthewhitefluffymaterialweknowascotton)requiresintensiveirrigation.Theamountsofwaterwithdrawnfromvarioussourcescanbesosubstantialastodiminishriverflows.India,whichhasthehighestnumberofcottongrowersintheworld,usesgroundwaterfortwo-thirdsofitscottonproduction(Beaudry,2018).TheWorldWildlifeFundGlobalreportsthatproducingonlyonekilogramofcotton(enoughforonet-shirt)canusemorethan20,000litersofwater.(WWF,2017).Organiccottonproductionmethods,ontheotherhand,requirefarlesswater—bysomeestimates,asmuchasseventy-onepercentless(Boyle,2014)(seealsoAboutorganiccotton.org,2016andGOTS,2018).

AccordingtotheOrganicTradeAssociation(2017),theenvironmentalimpactofcottonproductionismassive,intermsofinsecticides,herbicides,fungicides,andgrowthregulators,includingdefoliantsandsyntheticfertilizers;allcontributetothepollutionofsurfaceandgroundwater(seeFinch,Geiger,andHarkness,2016).Incontrast,farmersproducingorganiccottoncouldreducetheiruseoffreshwaterbymorethan90percent,andwouldreduceenergyusebysixtypercent(Boyle,2014).Moreover,manufactureofcottonfibersintoitemsofapparelrequirestheuseofpotentiallycarcinogenicmaterialssuchasflame-retardants,polyvinylchloride,heavymetals,andformaldehyde,whichcanresultintoxicwasteenteringsuppliesofdrinkingwater.Consumersaregenerallyunawareoftheharminvolvedingrowingcotton(Whitfordetal.,2006).

Inthispaper,weexaminethemechanics(social,geographical,andlogistical)ofhybridapparelcompanies(organizationsthatarepart-commercialandpart-altruistic)throughthelensofasmallapparelandaccessoriescompany,Maggie’sOrganics,winnerofcountlessawards,includingtheOTA(OrganicTradeAssociation)’s‘SpecialPioneer’Awardin2002forfounderandCEOBenaBurda’sdedicationtosustainability,andspecificallyforhavingdevelopedorganicfiberproductsandorganicfiberindustrystandards(OrganicTradeAssociation,2002).WearguethatbecauseofMaggie’sOrganics’hybridcomposition,smallsize,andyearsofaccumulatedexpertise,itawell-positionedethnographiccasestudyofattemptstomitigateenvironmentalissuesassociatedwiththeuseofcottoninapparelmanufacture,and,further,topromoteethicallaborpracticesthroughitspartnershipwithworker-ownedcooperatives.

Maggie’sOrganics


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BasedinDexter,Michigan,Maggie’sOrganicswasfoundedin1992,andistheoldestorganicapparelmanufacturingcompanyintheU.S.;thecompanysellsorganiccottonandwoolapparel,includingleggings,t-shirts,dresses,andsocksavailableinsuchswirlingpsychedeliccolorpalettesastie-dye,alongwithmoresobershades.Itemsaresoldviathecompany’swebsite,http://maggiesorganics.com,andarealsoavailableinnaturalfoodsstoresandlocalchaingrocerystoreswithintheU.S.Maggie'sOrganicshasbeenfinanciallysuccessful;whileyearlysalesfiguresarenotpubliclyavailable,theyare,Burdastates,growingattentotwentypercentperyear—anastonishingfigureforarelativelysmallcompany.

Allthecompany’sofferingsrelyonorganicfibersproducedinpartnershipwithworker-ownedco-operativesandfamily-ownedand–operatedbusinessesinCentralandSouthAmerica,India,andtheU.S.AsMaggie’sOrganics’websitestates,thecompanycreatesitsproducts“FromFarmtoFinish.”Forabusinesstobothcommittoandsustainenvironmentallysoundpracticesisnosmallfeat;asBurdanotes,"Sustainability…isamajorshiftinsocietyandinvolvesaconcurrentshiftinthemanagementandstrategicframeworksbywhichbusinessisconducted."

LessonslearnedfromBurda’sgroundbreakingworkcreatingfair-tradepoliciesfortheproductionoforganicfibersandmanufactureofsustainableclothingcanbeappliedtotheapparelindustryatlarge,asconsumersincreasinglyseekoutcompaniesthatembodysustainabilityandethicallaborpractices(ConnollyandProthero,2008).

HybridOrganizations

Hybridorganizationscanchangehowbusinessesoperateinthetextileandapparelmarketbybeingresponsiblenotonlytoshareholdersandinvestors,butalsotoemployeesandthecommunitiesinwhichtheyoperate.Companiesdefinedashybridorganizationstypicallyincorporatesustainableandethicalpracticesintotheirbusinessmodel,inanefforttocontributetopositivesocialandenvironmentalchange(CohenandMunoz,2017;EckhardtandDobscha,2018).Whetherwhollyfor-profit,non-profit,oracombinationofthetwo,hybridbusinessesincorporatetheassumptionthatconductingbusinessethically(Landrum,2017)canbebothcommerciallysustainableandsuccessful(HaighandHoffman2012;Hockerts,2015).Further,theyembodyaninherentassumptionthatbusinessasusual(i.e.,non-hybrid),isinagreatersenseantitheticaltolong-termsuccess.Inanefforttomeshbothsomeofthemoral/ethicalstrandsofhumanitarianismwiththerevenueseekingofcommerce,hybridshaveevolvedintandemwithconsumerswhoplaceahighvalueonwellbeing,socialjustice,andecologicalsustainability(HoltandLittlewood,2015;StubbsandCocklin,2008).


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Hybridorganizationsareseenasapotentialsolutiontothelackofreallarge-scalechangethatthetraditionalnonprofitvsfor-profitdichotomyorganizationhasevidencedsofar(Boydetal.,2017).Thedevelopmentofhybridorganizationsfollowstherecognitionofsocialandenvironmentalresponsibilitybyvarioustraditionalbusinessthatunderstandhowthisisofbenefitfortheirbottomline(Beheiryetal.2006;HillmanandKeim,2001).Ourcasestudywillhelpbetterunderstandhowhybridorganizationscontributetoboththeirprofitobjectiveswhileprovidingsocial/environmentalsolutionstothecommunitiestheyworkin/with.UsingthecasestudyofMaggie'sOrganicsasemblematicoftheissuesapparelcompaniesfaceinusingcertifiedorganicfibers(andthushelpingtopreventfutureharmcausedbyconventionalcottonproduction);inrelyingonfairtradecertifiedproductionanddistributionchannels,andinworkingethicallywithworker-ownedcooperatives,weexaminethoseissuesbelowindetail.

ThePoliticsofFairTrade

EqualExchange,asocialchangeorganization,definesfairtradeasensuringanon-exploitativeworkenvironment,withtheabilitytoraiseandstabilizetheincomesofsmallerstakeholders,byequitablydistributingeconomicgains;providingsupportforworker-ownedand–operatedcooperatives;promotingsustainablefarming;andincreasingconsumerawarenessofethicalpractices(EqualExchange,n.d.).TheideaofFairTradeoriginatedpost-WWIIinattemptstosellhandicraftsmadebyrefugeesfromEasternEuropeinwhichthecreatorsofthecraftsreceivedfaircompensationfortheirlabor.Fromthe1960sonward,fairtradeevolvedasameansofreducingtheexploitationofworkersindevelopingcountriescreatingmaterialsandgoodsforexport.FairTradeasweknowittoday(whetheras‘fairtrade,'‘fairtrade,'or‘FairTrade')is"aninternationalsocialmovement"(DeveltereandPollet,2005).Farmercooperativessawtheirorganizationsasliterallya“meansofsurvival”(Robinson,2012).EssentialtoourcurrentunderstandingoftheFairTrademovementisthatcooperativesarepartnersratherthansubordinates,andthatprofitisonlyonestrandofcooperatives'raisond'être—otherequallyimportantstrandsarecommunityimprovement,anddefiningandsustainingthepowerofthegroupinpursuitofthecommongood.

Worker-OwnedCooperatives

FollowingtheIndustrialRevolutionintheearly-tomid-1880s,worker-ownedcooperativesemergedasabulwarkagainstunfetteredcapitalismandworkerinsecurities.WhilerareintheU.S.,suchcooperativesexistthroughmuchofthedevelopedworld(e.g.,LeedsBreadCo-opintheUK,MotionTwininFrance,OrganicPlanetWorkerCo-opinCanada).


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Comparedtoconventionalbusinesseswithtop-downmanagement,worker-ownedcooperativesaretypicallylarger,sustainaswellorbetterfinanciallyovertime,offermorestableemployment,andaremoreproductive,providingalowerpaydifferentialamongworkers,andallowingworkerstokeepamoresignificantshareofcompanyrevenue(Ben-NerandJones,1995;Pérotin,2010:p.2).Agroupofcooperatives,eachfocusingonaspecificprocess,canresultinstreamliningproduction,afeatureparticularlyrelevanttothemulti-processstepsrequiredtoturnrawcottonintoclothing.

Cooperativescanincludeopenadmission(typicallyafteratrialperiod),ademocraticorganizationthatmaycompriseoneworker/onevote,oralternatively,worker-electedrepresentatives,thesubordinationofcapitaltocommunitywell-being,andacommunalgoalofimprovedlivingconditions,upwardmobility,andaccessibleandaffordableeducation(Cheney,Cruz,Peredo,andNazareno,2014:p.593).

Methodology

Weconductedtwoextendedinterviews(insummer,2016andsummer,2017)withthecompany’sfounder,BenaBurda,andexaminedthecompany’swebsite,annualreports,mediacoverage,andonlinereviewsofMaggie’sOrganicsapparel,primarilyonAmazon.com,followingKozinets’(2016)directivetoconsiderinherentbiasamongsuchreviewers.Interviewsweretwohourseachandweretranscribedandanalyzed.Weusedaniterative,hermeneuticapproachtoidentifyemergentthemes(Thompson,Locander,andPollio,1989;Spiggle,1994).Ourtwo-stageanalysisfeaturedIntra-textanalysis,inwhicheachtextwasreadandcomparedtoothers(inter-text)togetasenseofthewhole,andfurtherreadingshelpedrevealthemeaningsconveyedbyeachtext.Wethenfocusedonintertextualanalysis,searchingfordifferencesandpatternsacrossdifferentsetsofdata(Thompson,1997).

Wefocusedtheanalysisonmultiplestrategicandoperationaldecisionsofasinglefirm,followinganembeddeddesigninwhichtherearemultiplelevelsofanalysiswithinasinglecasestudy(Yin,1984;Esisenhardt,1989).

Maggie’sOrganics:BuildingSustainabilityFromtheGroundUp

Historically,asBurdanotedintheinterview,apparelindustryproductionemployeeshavefeltdisenfranchised,isolated,andunenthusiasticabouttheirwork,holdingamicroviewoftheirroleinthecreationoffinishedproducts,whichunsurprisinglyledtolower-qualitygarments(anoutcomeundoubtedlyfurtherinfluencedbythemiseryofsweatshoplabor).Byformingpartnershipswithworked-ownedand–operatedcooperatives,Burdahasdeliberatelyconnectedworkerstotheirrolesin


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producingfinishedproductsbyprovidingasenseofownershipoftheprocessofproduction.

ThegenesisofMaggie’sOrganicswasBurda’sstintworkinginanorganicfoodcompany;intheprocessofgrowingorganiccorn,afarmerwithwhomBurdawasworkingintroducedorganiccottonintohiscroprotationinhopesofimprovingproductquality.Facedwiththeresultingorganiccotton,Burdagrappledwiththequestionofhowtouseit,andanapparelcompanywasborn.Initiallyunawareofthebenefitsoforganiccotton(“WhenfarmerJimfirstcalledtotellmehehadanorganiccottoncrop”saidBurda,“Ilaughedandsaid‘whocares’?”),butBurdaresearchedtherangeofpesticidesusedingrowingconventionalcotton,andquicklybegantocareagreatdeal.

ForMaggie’sOrganics,sustainabilityinformsnotonlyhowthecottonthecompanyusesisgrown,butalsoeveryprocessingstagethereafter.Snyder(2008)notes,that,

asinglefootofcottonthreadmightcontainfibresfromfarmsin Texas,Azerbaijan,India,TurkeyandPakistan”(p,46)…a spinningplantinItalybalesofcottonfromcountriesacross, Africa,America,Asia,andtheformerSovietUnioncanallbespun together(p.117).

Afterbecomingacutelyawareoftheenvironmentalpitfallsofcottonproduction,Burdawasdeterminedtotakeadifferentroute.Sherecalls,

Itwasonethingtogrowtheorganicfiberaccordingto…food standardsthatarecredibleandmeasurable.Butwhataboutthe processingthatoccursbetweentherawfiberstothefinished product,asinthecaseofcotton?There'sginning[theprocessof separatingcottonflufffromcottonseeds],spinning,knitting, weaving,dyeing,sewing,andcutting,[and]ateachofthese stages…chemicals…areadded.SoIworkedintheU.S.to spearheadtheefforttowriteastandardfortheOrganicTrade Association[amembership-basedtradeorganizationofU.S. organicbusinesses]thatdidnotjusttalkaboutpesticideuseon thefarm.[Weproduced]…voluntarystandardswithinour organization.

Inaddition,BurdaandothersworkedwithEuropeangroupsinclarifyingthesestandardsandeventuallyhelpedconvertthestandardsintowhatisnowknownastheGlobalOrganicTextileStandard(GOTS),whichremainsavoluntarystandard;sincecompaniesclaimaproductisorganicwithoutfollowingthatstandard(GOTS,2017).TheGOTSwebsitecitesthecontributionofMaggie’sOrganicsforthelaunchofthisprogram(Ibid.).Burdaseesbeingcertifiedorganicasonlyoneelementintheprocessofbecomingsustainable,whilenotingthatthereisnothird-partyevaluationofsustainability,onlyoftheorganicproductionoffibers.


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Burda’sdrivingforceisondoingbusinesswhiledoinggood,withtheclearunderstandingthateachcanfueltheother.Tobesustainableovertime,bothintermsoftheenvironmentandmaintainingahealthybusiness,callsforaleveloftransparencythatisperhapsunusualinconventionalbusinesses,andgoesfarbeyondoutliningsustainabilityendeavorsinannualreports(HaighandHoffman,2014).

Burdapioneeredthegoalofacontinuouslyimprovedsustainabilityprogram,withoutahardandfastlinebetween“good”and“bad”companiesasstakeholdersstruggletoincorporatesustainabilitystandardsintotheirbusinesspractices,includingmonitoringandimprovingtheirsupplychains.Overall,businesseshavetwomainreasonstobecertifiedasmeetingFairtradeStandards:first,becausedoingsoappealstothemmorally;and,moreprosaically,sotheycanreaptheprofitsgeneratedbythehigherpricescommandedbyethicalproduction,manufacture,anddistributionprocesseswhilehavingaportionofagrowingmarketniche(e.g.,globalsalesofFairtradeproductsgrew8%in2017(FairtradeAmerica,2018).

EnablingWorker-OwnedCooperatives

Maggie’swasinvolvedfromthestart(1992)inthedevelopmentofseveralworker-ownedcooperatives,witheachhandlingdifferenttasks,allwithintheAmericas.Ginningisdoneusingworker-ownedequipmentinNicaragua.Next,thefiberisshippedtobespuninafamily-ownedand-operatedmillinPeruthatprovidestechnicalandfinancialsupporttothecooperativefarmers.Thespunyarnthentravelstoanindependentfamily-ownedknittingfacilityinNorthCarolinathatmanufacturessocksandsmallapparelitemsandalsohandlesdyeingandfinishing.WhileworkersinNorthCarolinamaynotknowwhattranspiresatotherpointsonthesupplychain,Maggie'sOrganics’representativestrackprogressandsearchforproblemsateverystage,andmaintainrelationshipswithallworkersratherthanlimitingtheircontactstothoseatthetop,adeliberatedecisiononBurda’spart.Thecompanyworkswitharound2,000farmersinNicaraguaandabout250farmersinPeruandhasfocusedonkeepingitsentiresupplychainincompliancewithfairtradestandards,fromtheorganicmaterialsusedtotheconditionsinwhichemployeeswork(Frank,2017).

Settingupcooperativesinvolvedsignificanttimeanddedication,frombothBurdaandcooperativemembers.

We…startedwithcuttingandsewingandsettingupa cooperativeinNicaragua,andthenwefoundoutthatfarmers fromtheircommunitycouldactuallygrowthecotton.Theyhad chemicallydestroyedthelandinthepastbecausecottonwasthe largestexportinthe‘80sand[thereforetheycould]…[nolonger] grow…anycotton.So,wehadtodecidehowtoaskthesefarmers


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tostartgrowingorganiccotton…thattookfourtofiveyears. Thenweputinacooperativeginsoatleast[now]thefarmers ownandoperatetheginandworkershavestockinthegin.Then wetriedtoputaworker-ownedcooperativeinaspinning company...but[doingso]wasveryexpensiveandnevergotoff theground….Wetriedtocontroltheentirechainbyhaving workers[haveownership]allthewaythrough…thatstillisin mydream...ofacompletelyverticalsupplychainwhereworker ownershipiswhat’shappening[resultingin]…trulydemocratic cooperatives.

Farfromsimplyhandlingtheproductionandmanufactureofapparel,company/workercooperativepartnershipscandirectlychangetheunderlyingeconomicstructure,andinsodoingaffecttheunderlyingpowerstructure.Insteadofbeingsimplyworkers,disengagedfromthefinishedproductsoftheirlabor,workersbecomeowners,withanemotionalandfinancialstakeinthecorporateoutcome.Inresponse,commonsensedictatesthatthequality,ofworkers’livesaswellasofcompanyproducts,willmarkedlyimprove.

Burdaherselfhaswitnessedsuchimprovementsovertime.Shenotes:

[Workerownership]takestheworkoffmebecauseifthereare issues,presumablytheworkersaregoingtosolvetheseissues, because[they]…havethepowertodothat.

However,atthemoment,usuallyappareltravelsfromcountryto country,ifnotcontinenttocontinent,initsprocessofbeingmade, andweworkwithsomeoneinthecountrywho'sontheground; usually,anNGOrepresentative[NGOsarenon-governmental organizations,typicallynonprofitandactiveinhumanitarian causes]whovisits[facilities][and]handlescontracts....Wetryto beastransparentaspossiblebytakingtheInternationalLabor RightsForum[representatives][theILRFisaU.S.-based nonprofitadvocacyorganizationdedicatedtoglobalhumanrights forworkers]downoursupplychainandaskingthemtoassess… problems....

Burdaaimstobethorough:

WhenIgotoPeru,forinstance,Idonotjustseethefarmersorsee thecotton,we…seeeverystepofthe[productionprocess].So doesthatreallymeanweareawareofeverythingthathappensat thefactoryonadailybasis?Absolutelynot,butatleastwetryto beinvolvedwithmorethanjusttheowners/managersandbeout ontheproductionfloorandspendtime…tryingtofigureout what’sgoingon.


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SupplyChainProcesses:TheAuditingandCertificationofFairLaborPractices

Anauditingsystemisanongoingverificationsystemthatensurescredibilityandhelpsintheprocessofimprovingwagesandworkingconditions.Inadditiontoplannedvisits,anindependentauditorserving‘ontheground’betweenplannedvisitsprovideschecksandbalancesinthesystem.Onceacompanyacceptsabidfromacertifier,auditorsvisiteachsupplierintheproductionchain,spendingatleastadayonceayearreviewingeveryelement,fromsafetyregulationstowashrooms,ineachfacility,andtheninterviewingrandomlyselectedworkerstoconfirmobservations.Theirreportsinformcertificationcompaniesofanyareasrequiringimprovement;oncetheyhavebeenmade,certificationisgranted,asealofapprovalkeytocompanypublicrelationsandmarketingefforts.

Maggie’sparticipatedinaFairLaborcertificationpilotprojectrunbytheU.S.subsidiaryofaninternationalNGOin2010,andinthatsameyearwasthefirstapparelchainintheworldtobeFairLaborCertified,witheverystageofproductionincluded,fromcottongrowingtoapparelmanufacturing.ThiscertificationwasanimportantstepforMaggie'sbecauseitcoveredallaspectsoflabor,employment,andworkplaceconditions.Thecompanywascertifiedagainthefollowingyear.TheFairLaborPracticescertificationandCommunityBenefitsScientificCertificationSystems(n.d.)confirmedthatMaggie’ssupplychainused100%fairlaborpracticesineveryaspectofemployment,includingworkeraccesstohealthcareandtransportation(GreenAmerica,2012).

OrganicCertification

Burda’scustomerswantassurancethatwhentheypurchaseorganicproducts,thoseproductsarepreciselywhatthelabelssaytheyare.AccordingtoBurda,consumerswant:

aquickfixbutasimplesystem.Certificationisoneway.However, itisonlyasgoodastheinspectorwho'sthere…inthefactory. Theycomeinandcheckofftheirlist.I[endorse]amodelthatgoes beyondcertification.Wewouldlikeatransferofknowledgefrom onefactorytoanother,onegroupoffarmerstoanother...

Certificationoforganiccottonisamassiveundertaking,onethatmostsmallcompaniesontheirowncannotreasonablytakeon.Instead,organiccottoncertificationislimitedtothefrontandbackends:thefarmerswhogrowthecropsandthesewerswhomaketheapparel.Noteveryactionthatoccursinbetweenismonitored.Whilemanyconsumersmayconsidercertificationoverallasthelaststepintheapparel


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manufacturingprocess,Burdaseesitasacontinuingverificationofasupplychain’sadherencetoethicalstandards.

Burdastruggleswiththelimitsofcertificationfororganiccotton.Isthegoaloflevelingtheplayingfieldpossiblebyaddressingonlygrowersandsewers(i.e.,thoseworkersinvolvedintheveryfirstandlastoperationsintheapparelmanufacturingprocess)?Asof2016,BurdastartedtheprocessofphasingoutFairTrade,andFairLaborcertifiedclothes,basedonfeedbackfrommembersoftheworker-ownedcooperativeswithwhomshepartners.WhenshefirstinformedworkersinCentralAmericaaboutthecertificationprocess,shewasstruckbytheirlackofinterest—theirconcerns,unsurprisingly,focusedonworkerbenefitssuchashealthcare:

Bothourfarmersandourworkersaskedwhywefoundit necessarytoputthemthroughthetime[requiredforcompleting certificationpaperwork]anddisruptions.Itdidnotgainthemany extraaccesstothemarket,wedidnotpaythemmorebecauseof it,andtothemitwasauselessexercise.Theyfurtherbalkedatthe ideaofcontinuingwiththecertificationprocessbecause restructuringtheircooperativestomeetcertification requirementswasonerous.

Voluntaryjustice,inwhichconsumerstakeprideandcomfortintheirmoralpurchases,haslittleconnectiontothelivesandwell-beingoftheworkersthemselves(Partridge,2011).Rather,thepeoplemostlikelytobenefitfromfairtradecertificationwouldbeMaggie’semployees,duetothepotentiallyincreasedrevenuesbasedontheappealofcertificationtocustomers.However,becausethefarmersalreadyreceiveapricefromMaggie’sthatishigherthantheestablishedfairtradepricefortheirorganiccotton,thebenefitsoftheFairTradecertificationprocessseemedunnecessary.Fortheirpart,customersappeartohavefoundsufficientconfirmationofMaggie’sethicalproductionmethodsonthedetailedcompanywebsiteandproductpackagingcopy.Basedonthesedilemmas,thecompanyelectedtodiscontinuecertification.

Consumers,Workers,andaFairPremium

Typically,organicproductscostmorethantheirnonorganiccounterparts;consumersshoulderthehighercostsasthepriceoftakingamoralstance.Thecompany’smarketingunderscoresthemoralvalueofethicallaborpractices.Thus,anewpairofMaggie’ssocksfeaturesarecyclabletaginformingthepurchaserthat,“TheUSworkerswhomakethesesocksareprovidedhealthinsurancefromtheiremployer.Thatshouldputa[sic]pepinyourstep!”Moreover,thetagstatesthatMaggie’sbuys“directfromnearly2,000organicfamilyfarmers.”Suchtriggersofmoralaffirmationattachedtoconsumptionraisethebarofwhatitmeanstobeethical(ThompsonandCoskuner-Balli,2007);now,ethicalconsumption


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meanscaringnotonlyabouttheenvironment,butalsoaboutworkers'lives.Itistheconsumerwhoisthelastlinkintheethicalproductsupplychainandoftenoneofthemostproblematic(Devinney,Auger,andEckhardt2010).

Maggie’susesspecificfinancingpracticesthatbenefitfarmers,providingpre-financingtocoverthecostsofseed,training,labor,andthelike,andforwardcontracting(offeringaguaranteedpriceandpurchase).Burdaemphasizesthattimelypaymentshelpfarmersmanagetheirrisk,andinreturnprovidehercompanywithamoreefficientandsecuresupplyoforganiccotton,whichinturnallowshertomeetthecompany’smanufacturingandsalesprojections.ForBurda,thisarrangement,whichcementsloyaltyfrommembersofhersupplychain,isdecisively‘tradeandnotaid;’thatisitisgoodbusinessaswellasdoinggood.Sheisinvestinginthefutureofthesefarmingcommunitiesalongwithsupportingtheenvironment.Forher,maintainingahealthyruraleconomyisasignificantinvestmentandisoftenreflectedinwhatiscalleda‘fairpremium':ontopofafairpricethatcoversthecostofproductionandareasonablepremiumforvalue-addedorganicproduction,farmersmayalsoreceiveafairtradepremium,paiddirectlytothefarmersorintoafundforcommunityprojects,whichwillbespentaccordingtodecisionsmadebythecooperativecommittee(Hughes,2012).Afairtradepremiumdoesnotnecessarilytranslateintohigherwagesforindividualsbutmayprovidesecuritybypayingfarmersaportionoftheirwagesupfront,althoughthesystemispotentiallyflawed,sinceacommitteemaynotrepresentallworkersequally.Doesitpromoteequalityorhierarchyifmembersofthecommitteehavemorepowerindecisionmakingthantheaverageworker?Doesthecommitteefeelpressuredtofollowinstructionsfrommanagementinhowtospendthemoney?Burdafindsthatworkersareoftenconfusedbythefairtradepremiumandwouldratherreceivehigherwages,whichcouldresultinahigherretentionrate.Burdasays,

Ifeelworkerscomeandgotoomuch.Itisanotherfeel-good situationfortheconsumerstobuywhattheythinkisfairandnot digtoodeep;forthebrandstosay,‘Ipaymyfair-tradepremium' althoughtheydonotevenknowwhothatcommunityis.Itisnota perfectsystembyanymeans.

Maggie'shasattemptedtoorganizeproductionsuchthatbothfarmersandthecompanyarefinanciallyprotected,atleasttosomedegree:

Geographicallyitisneversmarttoworkwithacommodityand isolateyourself—toputallyoureggsinonebasket.Howwehave gottenaroundthat…[isby]contractingwithfarmersin Nicaraguatogrowallthecottonforoursocks,thenwithPeruvian farmerstogrowthecottonforourapparel,andnowweare startingwithU.S.farmersagainbecausewecan’trelyon


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Nicaraguanfarmersbecausetheylosteightypercentoftheir harvestinthelasttwoyears[2014–2016]…fromtherainy season.So,wehavetoprotectourselvesinotherways,butIstill believethat[the]bestmodelIhaveseenisonceyouareina geographicregion,youworkinasmallareaofthatregionwitha community-basedgroup.Isitperfect?Idonotthinkso,butit seemsthemostlogicaltome.

CharityandEconomicGoals

Burda’soutlookoncharitablegivingseessuchactivityasontheonehandamoralimperative,butontheothernotafoundingprincipleofhercompany’sethos,asopposedto,forexample,TOMS,afor-profitcompanyrenownedforitssimpleandaffordableshoes.ForTOMS,charityiscentraltothecompany’sidentity,throughitsOneForOnecampaign—purchaseapairofTOMSshoesoreyeglasses,andachildinneedwillreceiveagiftinkind.AsafarlargercorporationthanMaggie’s(in2014TOMSwasvaluedat$625million(AssociatedPress,2016)),thecompanyhastheinfrastructureanddeeppocketstoincorporateambitiousphilanthropicprogramsintoitscoremission.Inadeliberateattempttoencourageself-sufficiency(Buchanan,2016),TOMSworkswithmorethanninetynonprofitorganizations,or‘GivingPartners’inoverseventycountriesworldwidetoimplementprogramsrelatedtopromotingeyesight,accesstocleanwater,safebirths,shoedonations,andanti-bullyingcampaigns(TOMS,n.d.).Thatsaid,bothTOMSandMaggie’sseededicationtosocialresponsibilityasexplicitintheirbusinessmodels,withbothreliantontheircustomersbeingmoralindividuals.

Maggie’sOrganicsmakescharitabledonationsregularly,asdetailedonthecompanywebsite(e.g.,10%ofthesalesfromtheirBeeKeeperSocksaredonatedtoanon-profitorganizationdedicatedtotheprotectionofpollinatorsandtheirecosystems).In2017,forexample,thecompanydonatedtoGrowAhead,acrowd-fundingorganizationdedicatedtowhattheyterm‘climateresilience,'whoseworkhelpssmall-scalefarmerscombatclimatechange,aswellastoFriendsoftheEarth,inaprogramaimedatreducingdeclinesinbeepopulations.IncommonwithTOMS,Burdaguardsagainstencouragingdependencyandhasastrongcommitmenttotreatingtheworkerswithwhomshedoesbusinessascolleaguesratherthanas‘theneedy'insearchofhandouts.Assherecounts,

This[theexpectationofcharity]iswhathappenedinourfirst cooperative…Thesewomen[cooperativeworkers]expectedthat everytimesomethingwentwrong,…Iwouldgoinandbailthem out.OneofthebiggestargumentsIhadwiththemwaswhenthey took…excessmaterialandusedittomakeproducts[that]they soldonthelocalmarkettogetshoesfortheirkids,andtheydid


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notevenruntheproductsalesthroughtheircooperative.Then theydividedthemoneyupandendedupintroublewith[the] NGO[representatives]whoinsistedthattheyhadtopayallthat moneybacktothecooperative.

Burdarecallsthatshetoldthegroupofwomen:

'You…juststolemyfabricandyoutookittothemarket.Icould justgiveeachofyou$150sothatitcanbepaidbacktothe cooperativeandbailyouout.Butoncethatisdone,thereisno relationshipbetweenus.BecauseifIcan'ttrustyounottosteal myfabric,wedon'thaveabusinessrelationship.'Theywereupset withmeforawhile…but…theyrealizedthatit[ourworking relationship]wasnotaboutcharity.Thiswasnotaboutmebuying themshoesfortheirkids…itwas…abouttrust.So,Ithinkthere isabigdifference,thereshouldbeabigdifferencebetweenwhat andhowbrandsemployfairtradepracticesandsustainable practices.Also,abouthowandwhatcharityis.

Inaddition,Burdastates,thehardrealitiesofthemarketplacematter.

Ihavetoldthesewomen,youareonlyasgoodasyourlast order…ifyourlastorderisforty-percentirregular,thatisit… nobodycaresifyourkidsarehungry;mycustomersdon'tcare. They[consumers]justreallywantanicethingthatmakesthem looksexyorwhatever.

Workersinthisinstanceprioritizedfamilyoverworkandwerewillingtousetheresourcesofthecooperativeinordertosendtheirchildrentoschoolwithshoes.Tothem,thelogicofmoralityandethicsthatgovernsanindividual'sbehavioroutsidethemarketisalsoapplicablewithinthemarketplace.Burdadescribesthisactionasirrationalbehavior;theywerestealingfromher,whichwasamoveofshort-termbenefit,whereasshewantedthemtothinklong-term.Howcouldtheybreakthecycleofpoverty?Shewantsthemtounderstandthestructuralworkingsofthemarket,whichisgovernedbytheamorallogicofmoney(Habermas,2005).

DiscussionandConclusions:LessonsfromaHybridOrganization

TheprimarylessontobelearnedfromtheaccumulatedexperienceofMaggie’sOrganicsissimplythis:Hybridorganizationscanwork,bothinthesenseofgeneratingprofitandofimprovingcommunities,includingtheindividuallivesofthoseworkerswhoselaboriskeytotheorganization’soverallsuccess.AccordingtoHaighandHoffman(2012:p.129),hybridorganizationschallengefourfundamentalandtraditionalconceptsaboutbusiness:theideaofperpetualgrowthatallcosts;keepingsocialandenvironmentalissuesatarm’sdistance;treatingnatureaspurelyaresourcetobeplundered;andfinally,seeingthe


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companymissionassolelytocreateprofit.InthehistoryofMaggie’s,weseethateachofthesefourtruismsofsuccessfulbusinessoutcomesisnotinherentlynecessary(leavingasidethateachisdetrimentaltotheenvironmentandoverallsocialwellbeing).ForBurda,acceptingsomewhatlowerrevenueinexchangeforethicalandsustainablebusinesspracticesisareasonablecourseofaction,providedbusinessisstable,andthatthemarketwillsustainMaggie'seconomicviabilityintothefuture.

Socialandenvironmentalconcernsareembeddedinthebusinessmodelratherthanbeingexternaltoit.Maggie’s,forexample,investsinsuppliercommunitiesbyspurringthecreationofworker-ownedcooperativesandgrapplingwiththecooperatives’laborandcommunityissueswithaproblem-solvingapproach.HybridssuchasMaggie’sbuildtheirbusinessmodelsonenvironmentalprotection;natureisnotviewedassimplyaresourcetobebleddry(JoyandPeña,2017).Burdafocusesonprovidingeconomicandsocialopportunitiesfortheworkerswithwhomshepartners;asanyonepersonimprovestheirworkinglives,soothersinthecommunityseeimprovementaswell,creatingarippleeffect.ShehasalsosharedherknowledgewithcompanieslikeOpportunityThreadstocreateworker-ownedcooperativesintheU.S.basedonsustainabilityprinciples.Insum,Burdaseeshercompany’smission,incommonwithotherhybridorganizations,ascreatinglastingsocietalandenvironmentalvalueintandemwithgeneratingrevenue.Thisstatementmayruncountertobasictenetsoflate-stagecapitalism;however,theexistentialproblemsofourage,fromincreasingextremeweatherpatterns,risingseas,economicinstability,andtheresultingmigration,demandgreaterresponsibilityfromoursystemsofcommerce.CompaniessuchasMaggie’spresentuswithablueprintofhowsuchasystemwould—andalreadydoes—work.

Whiletheissuesofsustainabilityinthefashionindustryarebothcomplexandchallengingtoresolve,therewardsarelegion,fromincreasedconsumerinterestinresponsiblyproducedarticlesofclothingtoacommitmenttoethicallaborasacriticalelementinconsumptionchoices.Thereal,long-termimpactofsustainabilityintheapparelindustrymaybeabreakingdownofmetaphoricalwallsbetweentheproducers(thefarmersandtextileworkers);themanufacturers(thecutters,dyers,andsewers);andtheindividualswhoultimatelypurchasetheclothing.Consumersareundergoingasea-changeindissolvingtheirsocialisolation,astheyevolvefromseeingthemselvesinavacuum,oblivioustowhoevermadetheclothingtheycovet,tobeingawareofother'sneedsandrightstohumanitarianbasicssuchassafeworkingconditionsandfairwages.Particularlygiventhedrasticdeclineinunionmembershipinindustrializednationsandtheracetooutsourceclothingmanufacturetolow-wagecountriesinrecentdecades,theneedforprincipledfiberproductionandapparelmanufacturehasneverbeengreater.Coupledwiththeriseinawarenessofenvironmentaldegradation


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andthenegativeimpactofpesticideuse,interestinorganicmaterialsispoisedtoincrease.Maggie'sstrategyofeconomizingonproductioncostsbykeepingdesignssimpleandbyenablingthecreationofworker-ownedcooperativesaidtheshiftinconsumerdemandforsustainabilityandethicallaborpractices.Therightthingtodocan,overtime,becometheonlythingtodo.

Futureareasofstudyontheimpactofhybridorganizationsonsustainabilityandethicallaborpracticesmightfocusontheprocessesbywhichconsumersadjusttheirtastes,astheymovefromdemandinglow-costclothingregardlessofthecosttounseenothers,toseekingoutproductlinesincorporatingsustainabilityandethicallaborpractices.Themarketingstrategiesdrivingthisshiftinpublicopinionaresimilarlyripeforfurtherresearch:Whichapproachesaremoreorlesseffective?Moreover,whatdoesthefutureholdforrelativelysmall,privatelyownedhybridorganizationssuchasMaggie's?Whathappensovertimeashybridorganizationsbecomemainstream?TOMS,forexample,in2014soldafifty-percentinterestinitscompanytotheprivateequity/alternativeinvestmentcompanyBainCapital;byanymeasure,TOMSistodayhardlyanagainst-the-currentupstart(AssociatedPress,2016).Whatistheimpactwhenbiggersociallyresponsiblecompanies,withdeeperpocketsthatallowforeasiernavigationof,forexample,certificationprocesses,enterthemarketplace(CohenandMunoz,2017)?Andlastly,howdothemembersofworker-ownedcooperativethemselvesfeelaboutthefutureeconomicandsocialviabilityofworkinginpartnershipwithcompaniesinothercountries?Surely,thetimeforworkerstodirectlyvoicetheirconcernsislongpastdue.

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Acknowledgement

TheauthorsgratefullyacknowledgereceiptofaSocialSciencesandHumanitiesResearchCouncilofCanadagrant:#435-2017-0958

Dr.AnnammaJoyisProfessorofMarketingatUBC.Herareasofresearchinterestandpublicationsareinhedonicconsumptionandmarketing–specifically,art,luxuryandFast.Fashion,andWine.ShehasadistinctiveportfolioofpublicationsincludingseveralpapersintheJournalofConsumerResearch,JournalofConsumerPsychology,JournalofConsumerCulture,InternationalJournalofResearchinMarketing,JournalofRetailing,theJournalofBusinessResearchetc.,andseveralchaptersinbooksonvariousaspectsoftheseindustries.

CamiloPenaisadoctoralcandidateworkingwithDr.AnnammaJoyatUBC.Hisareaofspecialresearchinterestissustainabilityinthewineindustry.Hehasseveralco-authoredchapters,researchpublicationsandconferencepresentationswithDr.Joy.HisdissertationisontheconsumptionandmarketingofnaturalwinesintheOkanaganValley.

LindaArmanoisananthropologistandMarieCuriePost-doctoralFellowcollaboratingwithDr.AnnammaJoyatUBC.SheisfromCaFoscariUniversityinVenice,Italy.SheisinCanadatostudyvariousaspectsofethicsandsustainabilityintheDiamondindustry.ThetwoofthemwillalsoexploreissuesrelatingtotheconsumptionofethicaldiamondsinCanadaaswellasinItaly.

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