Week 41 Feedback to: Paulina Gual

Original post: 4rd Assignment

Dear Paulina,

Reading your blog is a truly intellectually stimulating experience. The arguments you presented are well rounded and showed high clarity. In your arguments, you tied the theories we learned in the course to the examples in the documentary observations, which made the legitimacy analysis convincing. I especially appreciate the short summary of the three types of isomorphism before you brought them in the analysis.

-----Part 1-----

I completely agree that coercive isomorphism best describes Nokia and its supplier’s efforts to legitimize themselves. The external pressure from another organization provided both organizations driving force to change. However, I am not sure if I agree with you on the supplier’s effort to gain legitimacy being more evident. I feel that the supplier is deeper down the supply chain and its sustainability performance does not affect the overall image of Nokia product easily. After all, the components it produces is not very visible on a cellphone among thousands of other components. Therefore it’s easier for the supplier to get by without coping with the newly introduced policy.

In this case Nokia did not react strongly or provide any pressure for improvement. If the supplier’s business is truly at stake, we would probably see the management level doing a better cover up job in the factory rather than admitting hiring labors without a contract or paying lower than minimum wage. My guess is that this supplier might hold a critical technology for certain components and it has few competitors on the market. That’s why it did not seem to be afraid of its behaviour triggering negative results.

-----Part 2-----

I can’t agree with you more regarding the needs for more government intervention in ensure the sustainability standards can be met. To be in compliance would be a minimum requirement for a business to exist and therefore the basic code of conduct it subscribes to. If the supplier cannot even satisfy legal requirements, NOKIA also bears the responsibility of poor oversight. It came shocking to me that the NOKIA consultants has such limited knowledge of the local regulations. It’s either that NOKIA expects its supplier to be fully in compliance without a doubt or it does not care for the legal status more than low cost cellphone components.

If we come back to this case for the interactions between the organizations, maybe addressing possible actions that can be taken from NOKIA’s side to enhance implementation of sustainability standards at the Chinese supplier’s factory could be another direction to pursue. Since sustainability goes beyond the company and deeper into the supply chain, ultimately the goal is to mobilize a self-organization mechanism. Doing so, besides fulling the legal requirements, NOKIA and its business partners could have more capacity to make themselves more competitive in a market that values sustainability.

Thank you for the inspiring article. It really helps me understand the concepts of the reading assignments. I like the neutral tone you use in the article. It certainly makes the criticism more convincing. Great job!

Cheers,
Sho

Week 41 Feedback to: Zev Starmans

Original post: Nokia; implementing sustainability values along the supply chain?

-----Part 1-----
Zev,
The arguments you made in your blog articles show good clarity. I can understand the points and examples you deliver very well. Your analysis is very different from mine while we shared more or less the same views so it was interesting to read your blog.

For the first question, it’s great that you didn’t fall for the details right away. Instead you provided a big direction of sustainability improvement leading Nokia’s way to legitimacy. It would be interesting to know your evaluation of how hard Nokia has tried to demonstrate their efforts for legitimacy just as an observation. It was very well noted in your argument that the supplier is striving for legitimacy at its lowest accepted value. Also I think you pointed out an important role in the motivation for legitimacy, the government. There is for sure a discrepancy in the operation standards between Nokia and its supplier. I feel that since Nokia is introducing these new standards, it has the responsibility to convince the supplier to bridge the gap and elevate the suppliers’ labor benefits and industrial safety practices.

However, I am not sure if I agree with you on the opinion of Nokia not caring about the local value (I suppose it includes the local regulations). I think for a Nokia would be very cautious about the fact that their supplier does not meet the legal standards. The reason is that Nokia is extending its sustainability standards onto its supply chain members. If the supplier is not even in compliance, Nokia will also get in trouble and fail its sustainability performance assessment. My view is that it’s not that Nokia does not care, they simply do not know about the local regulations.

-----Part 2-----

I agree with the good guy theory you provided here. In this way Nokia is not really responsible for the compliance failure of the supplier. Furthermore, maybe it intentionally wants to make the supplier look bad to show that Nokia has high standards of sustainability. The supplier is also probably too deep down in the supply chain to be seen on the market as a brand. So even if consumers who make purchasing decisions by the brand’s reputation, the information about sustainability is probably not readily accessible for the consumers. I definitely agree with your opinion about Nokia’s lack of sincerity when conducting an audit. Even if it’s not an official audit I would disagree with their approach since Nokia wasn’t really checking the working condition of the component product line that goes to Nokia.

To improve the efficiency to introduce higher sustainability standards, you made a good point of bringing third party certification organizations to do the job. To the outsiders, I agree it would be much more convincing to be endorsed by an independent certifying organization. With that being said, I think it’s still critical to conduct internal audits to ensure the performance of the factory. In the class we learned about isomorphism that makes organizations more and more similar, in your opinion, would this type of certification be driven by coercive pressure, mimicry, or normative pressure? How about for the benchmarking?

Week 41 - A decent factory?

NOKIA seeks to extend its sustainability strategy into its supply chain à Chinese suppliers have to fit with criteria established by NOKIA. How are the two key organizations in this case (Nokia and the supplier) striving for legitimacy?

In the movie “A Decent Factory”, Nokia sent its consultant and researcher to visit its supplier in Shenzen, China to investigate the company’s sustainability performance. The following paragraphs explain that both Nokia and its supplier took actions to gain legitimacy for recognition.

A Decent Factory is a documentary film 

directed by Thomas Balmès (2004). The film 

examines the ethics and profits of a multinational 

cellphone company through a visit to 

its supplier in China.

First, let's talk about Nokia.

The initiative that Nokia took to account for the sustainability performance of its supply chain member which provide components that contribute to its finished product could be seen as an effort to legitimize itself. Although not directly responsible for its supplier’s factory operation and compliance, Nokia worked it way to ensure that it is aware of the supply chain member’s operation practices as the first step. This gathered information could be further analyzed against current sustainability criteria and suggestions for improvements could be made for the stakeholders to decide if the company is striving to eliminate the risks of unsafe or unsustainable practices.

During the plant visit, the two consultants made suggestions and informed the factory management of their concerns. At the end of the visit, the consultants sat down with the high level managers to go over their observations and provided basic suggestions to ensure that the supplier is also aware of the potential use of information. Nokia tried to enhance the communication transparency with its supplier so there will be no surprises or misunderstanding, which is likely to happen in a different cultural environment. This transparency between the companies also strengthens the both company’s credibility and trust between two companies.

Not only does legitimacy matter externally, it also secures stability of cooperation relation within the supply chain. Both Nokia and its supplier could benefit from setting a sustainability goal that they can both expect to meet, as long as both sides know the criteria. In that way, both companies could rely on each other in the supply chain through this self-organization.

How about the factory?

Given that Nokia’s supplier failed to prove that it is a decent factory, it did demonstrate its sincerity for legitimacy by accepting the request of its downstream client for a plant visit. (ok, you can come!) The supplier gave Nokia access to see the dormitory, the restaurant, and the plant while many workers are performing their daily tasks. (ok, you can see!) During the plant visit, when the Nokia consultant expressed her concern because the water cups and chemicals are too close to each other. The manager immediately ordered workers to move the chemicals somewhere else. (ok, we can change!)

Finally, both Nokia and the supplier are showing their commitment for sustainability improvements by agreeing to let this documentary go public. This could be seen as their endeavour for legitimacy.

Is the approach taken by Nokia an effective way of diffusing sustainability criteria?
No, Nokia's approach to diffuse sustainability does not seem to be effective. Nokia attempted to harmonize its supplier's practice with Nokia's sustainability criteria. The effort of exerting pressure onto its supplier as a client could be seen as promoting an organizational change. This could be seen as coercive isomorphism by business ties between the two organizations. However, Nokia's actions to implement sustainability standards within the supply chain seem to be missing some elements. Here are some examples of why Nokia's approach might not be most effective in practice.

What? New rules? Never heard of them.

First, Nokia did not inform its supplier of the new policy of introducing the sustainability criteria into the supply chain. The consultants went to the factory without letting the management know what they intend to see. During the visit, the consultants had a checklist that they were making records of. However, it did not seem like the management of the plant have a copy of the checklist. One plant manager also reminded Nokia to let the supplier know what Nokia wants to see so it can better prepare. (Although Nokia made itself clear at the meeting at the end of the visit.) If a business is trying to promote a sustainable practice within an organization, it is probably a good idea to make sure the standards of sustainability are known by the individuals in the organization. It is unfair for the supplier to be ambushed because it does not know possible consequences of this investigation. Maybe Nokia would stop purchasing phone components from this supplier because it fails to meet one criteria that was not mentioned when putting the order. Maybe this is also why the supplier allow Nokia to see many units in the factory. It could be out of fear of losing business.

Could you tell me if you're illegal?

Second, it doesn't seem that Nokia has knowledge of the local regulations. Nokia consultants asked about the local minimum wage and the marital status of the factory employees as well as other questions during the visit. The fact that the consultants have no capability to verify if the supplier is in compliance weakens the legitimacy push. Most people would agree that normally the basic requirements for business to survive is to at least meet the regulations. However, in many cases Nokia consultant had to rely on the supplier's judgement to tell that the factory is not in compliance. It is reasonable for one to hesitate to believe Nokia's attempt to enhance sustainability since Nokia does not even know if it's relying on a supplier that violates multiple regulations intentionally.

Uncertainty

Third, it is uncertain if this sustainability criteria is mandatory. For the supplier to decide if it should accept the organizational change and implement the new rules, the decision makers would have to know if it's worth to invest on improvements. In order to make this decision, the CEO needs to know if this investment would help in securing relations with the client and facilitate future transactions. However, not only was the rules not provided. It does not seem like the rules are going to be enforced for sure. This casts uncertainty for the chances to achieve sustainability improvements. If Nokia were to honor its sustainability commitments, minimizing this uncertainty could increase the efficiency of policy dissemination.

Cultural differences

My country Taiwan shares a big part of cultural background with China so it was interesting to see it as an outsiders view and maybe understand the supplier's struggles a little more. I feel that the Nokia consultants experienced a lot of shocking moments during the visit. But they did not take a further step to address how things work in their headquarter Finland. They did express their concerns but it was never mentioned that the reason why they are concerned is because (a made-up example) in Finland, it would've violated the law by restricting the personal freedom of the employees in the dorm. If the supplier understands where all these strict rules are coming from, then there could be less resistance to accept the organizational change due to respect of the market and the value that the consumer's market promotes.

How could another coordination mechanism improve on this?

Overall, the coordination mechanism can be facilitated with communication before the visit to eliminate uncertainties and avoid unexpected surprises. This would include the supplier in the decision making early in the process to enhance the smoothness of cooperation. 

To improve the efficiency of the new sustainability criteria extension, Nokia's consultants can familiarize themselves with local regulation and request the supplier to proof that it is in compliance with all the labor and environmental regulations. This baseline of compliance could give the evaluation of the consultants a more solid reference when assessing the sustainability. On the other hand, Nokia can start with providing the sustainability criteria and suggest an expected timeline for full implementation to its suppliers. The suppliers needs to reply to Nokia regarding the feasibility of the timeline and possible challenges. The supplier will evaluate its current condition and decide if the suggested timeline is feasible. If not, then the supplier could propose another timeline for implementation. By doing this, both companies would have a clear idea of what to expect of each other. Once the implementation is in place or kicked off, Nokia can arrange a visit to go over the list of items that it expects to see. The supplier by then would be more prepared to explain to the consultants about what challenges it's facing and its plans to resolve the issues. Nokia could also provide trainings or workshops to explain to the supplier regarding the new policy and the background of the policy to gain mutual understanding.

Week 40 Feedback to: Milan Veselinov

Feedback to Milan Veselinov
Original post: Assignment 3 – The SES of the internet

Dear Milan,

First of all, I would like to let you know that the article is very well structured. The paragraphs and themes as well as the graphs, links, and the sub-titles are very well organized and they do a tremendous job leading readers through a topic that they have never seen. I also like the story-telling tone of this blog. It gives a personal touch and brings the readers closer to the topic. It reminds me of a friend who wrote books about adventurous stories also uses this similar tone throughout his books. (http://goo.gl/nrfzms)

Your choice of social-ecological system is indeed unique, considering that internet isn’t commonly characterized as a natural resource in a ecological system. Furthermore, the concept of internet does not exist in a physical way, making it more challenging topic. However, you are able to specify your scope and explain how internet requires to be driven by power and therefore consumes natural resources. In addition to that, you also explained how internet also has direct impact when performing its normal function by producing carbon dioxide. I find the system definition convincing. Also I agree with you that the human made system is not very different from natural resource system in this case since internet can be seen as a derived resource.

The subsystems of the SES are well presented in your article. I like the way you explained the internet suppliers as the ones who put data in order because it reflects reality. However, when it comes to the resource items, I am wondering if other elements that could possibly limit the internet speed, accessibility, development, etc. can be further explored. The reason why I asked this is that this summer my country (Taiwan) just introduced 4G internet for smartphones so it’s relatively slow compared with neighbouring countries Japan and Korean market. As far as I know the facilities were just not fully equipped to be upgrading the service to consumers and therefore the delay. As limiting factors that could contribute to different outcomes I wonder if they are something on the same level as resource item that can be discussed here. Also, I am interested to know if different types of users also have different interactions with other subsystems such as the resource units and the governance system. If so, how would you characterize them?

You did a fantastic job adding the challenge of SES in the article. I think this information shines a light on the main issue you would like to address and brings focus to this resources. Otherwise internet is a broad topic and it’s less interesting if there is no real-life issue awaiting to be solved. With that being said, I do want to confirm if my understanding is correct. Do you mean the challenge is to provide well-covered service in order to achieve internet of things?

For Friedman’s principle argument, I am not sure if I agree with you on the on-line hours not having the market value. As internet shopping becomes easier over time, commodities that are traded over internet represent the market demands. This information can be gathered and used for marketing and product promotion purposes that are designed to drive more consumption. In the USA, thanks to the membership system for chain retailers and online shopping that require log-in, retailers know about its consumers’ pregnancy before the consumers’ family do. Same thing can be observed include websites visited and keywords that one searches on google.com. These are all data that are able gathered and possibly sold for business purposes.

The last question you asked was as awakening as the speaker in the TEDex link you provided. If everything is recorded, monitored and controlled, no one would be able to enjoy the rights to privacy anymore. I believe there needs to be stringent rules and strong oversight of such business operation if google does have the majority of the market share so that it does not violate its consumers’ (users’) interest just because it does not have anything to lose due to the lack of competitors. With minimised government intervention and letting the market self-regulate, it is possible that the society which rely highly on the internet could be sharing the same fate of the internet company. That is to say, if google goes down, the system that involve all the things of the internet will lose its function and my heart rate monitor machine as mentioned in the video would not be able to notify the pharmaceutical company of my heart condition to send a “buy my medicine” ads to my phone while waiting for my ambulance. A big part of the industry would need to go back to the old-fashion way to carry out business. My conclusion is, huge risk is involved with this type of self-regulation and I do not have so much faith in the industry to uphold its value and social responsibility.

Great work! Your article made me think a lot!

Hsiu-Chuan (Sho)

Week 40 Feedback to: Francesco Donati

Feedback to Francesco Donati
Original post: Social Ecological Systems – Land snails in Ossi – Sardinia)

Dear Franco,

First of all, I enjoy reading this analysis thoroughly because the SES you chose was very close to everyday life and it grabs my attention to see the development of the management of this resource. The introduction was very well written because it provides important information for readers to understand how this resource was utilized for various purposes. This helps the later on analysis on the resource scarcity problem.

The theory about increasing food demand causing the snail population to drop was clear to me. I also like the fact that the impact beyond the snail population was addressed. Regarding the core subsystems of land snail SES, I also have a few questions about the elements of resource units as well as the users. The resource system chosen here is the dry grassland and the main subject studied in this case is land snail. Could the resources provided by the dry grassland system to snails as habitat and nutrient sources also be described as individual resource units that interact with snails?

Furthermore, could the users be broken down into more specific roles such as harvesters or consumers? These two roles were frequently mentioned in this article and both display a vital impact on the SES so maybe they can also be specified to distinguish their action and impacts, respectively.For the users, the information about the percentage of local consumption and the snails imported was both shocking and gives weight when assessing the severity of the local resources scarcity.

In addition, this might be something slightly outside of the discussion scope defined in the assignment but I am also very curious about the tipping point of the self-organization that was functioning well and keeping the snail population and food demand in balance. Why would the Sardinian population growth break the self-organization? More specifically, who were the decision makers that chose to not follow the traditional harvesting methods? Why did they choose to not follow the old-fashion practice?

Finally, I want to compliment you on the well-integrated analysis and the references. Links of resources embedded in the article with hyperlinks give weight and credibility of the information you provided in the analysis. As a reader, I feel that I don’t need to do extra research to verify the sources. This creates a smooth reading experience for readers. Well done!

Cheers,
Sho

week 39 - Feedback to: Jorinde Vernooij

Feedback to Jorinde Vernooij 

Part 1: (Original post: WHAT IS DECIDING OUR DECISIONS?)

First of all I would like to compliment on how the author structured the article. As a blog reader, I find it easy to follow the blog and the reasoning. The author cited the research papers of the theories and use that as a backbone throughout the article to explain how the position of the article has been developed. This gives the readers a clear picture of how the theories fit into the existing concept of bounded rationality and rational decision making.

The author clearly defined the goals of the topic as the economic growth and regulation compliance in the beginning. From the four reasons provided in the third paragraph, it seems that nuclear energy is qualified as an option in order to reach the goals because of its low CO2 emission, its low risk of accidents, and its high economic feasibility. The three reasons that the CDV used to back up its preference for nuclear energy seem reasonable from the first glance. However, many follow-up questions could also be asked in this case such as the source of the uranium fuel rods and the acceptable risks of nuclear power plant and nuclear waste. Can the Netherlands supply itself with uranium ore? Are the risks of final disposal and handling of nuclear waste considered lower than the risks of other energy options? I wonder how CDV could address these issues and justify its decision making as a rational decision making in this case.

In the end of this article the author pointed out the lack of knowledge of the local market and CDV’s limited research on other types of radioactive energy. The limited information that the CDV possesses to present the energy options are well addressed here and therefore it is convincing for a reader to agree with the characterisation of CDV as an organisation with bounded rationality.

Part 2: (Original post: THE DEVELOPMENT OF AN OPINION)

I really like how the title is given a new life in each post in this blog. It inspires me to think the same question. The author argues the definition of success and interests are different in Friedman’s article and the documentary. The author further argues that the costs of business operation have been shifted to the employees of lower-income countries to absorb. And this is the consequence of corporations trying to save money rather than investing in upgrading the social and environmental conditions. Through these actions, businesses are able to generate more profits while fulfilling all legal requirements.

In Taiwan, the country where I come from, many companies that strive to maximize their profits are not even able to keep up with their environmental standards with legal requirement. The problem then shifted to farmers downstream of the factory’s discharge pipe. Then finally the problems will be shifted to the consumers who buy the rice. Therefore I think Friedman’s proposition has too much confidence in corporations being able to do everything right according to the social expectation. And if keeping up with the legal standards is so difficult, why should greedy be seen as a driver for a system?

Week 40 (2/2) - Friedman's principles for constructive use in SES sustainable management

Argue how the principle advocated by Friedman might be put to constructive use in the sustainable management of this SES.

"There is one and only one social responsibility of business -- to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." -Milton Friedman, New York Times Magazine, September 1970

In the coffee industry SES analyzed in the previous blogpost, the sustainable management is needed at a local scale, national scale, as well as global scale. Friedman's principle could be applied in certain actions taken by the users the coffee SES for resource management. For example, Friedman discussed the competitively of private enterprise to force people to be responsible for their own actions and make it difficult for them to "exploit" other people. This could be applied onto the governance systems of coffee industry. If the labor department of the government is able to not only make, but actually enforce rules for working safety and wage limits, the coffee workers would be able to count on the implementation to the government regulations to safeguard their income as well as working conditions.

Also, due to the competitivity of coffee farms, farmers also would be monitoring and providing surveillance in order to make sure the competitors play by the rules. The local farmers could even go further into making their own rules for resource distribution such as water rights for irrigation. More efficient resource distribution could then better secure the regional production stability. I the long run, the coffee from the region could be more well-known and the market demands of products from this region could be increased.

Milton Friedman wrote in his article, "To illustrate, it may well be in the long-run interest of a corporation that is a major employer in a small community to devote resources to providing amenities to that community or to improving its government. That may make it easier to attract desirable employees, it may reduce the wage bill or lessen losses from pilferage and sabotage or have other worthwhile effects." This example demonstrated that Friedman's arguement boundary is not only for short term investment recovery. The example he gave is out of self-interest but was able to positively impact the target group at a greater level. This could be introduced into the coffee farm community which poverty continues to be an issue. It is reasonable to make the assumption that Friedman's principle also supports actions that will generate profit in the long-run, regardless of the action's capability of increasing the profit or not. Therefore improving coffee farming's working condition, investing in production knowledge sharing and training would benefit the farm's productivity as well as securing the coffee supply for the retailer. Eventually the social and ecological performances could be improved due to these decisions made by private firms.

Week 40 (1/2) Analyze SES use Ostrom's framework

1. Analyzing the SES system of coffee market under Ostrom's framework.

Coffee farmers hand-picking coffee beans (photo source)  

The SES chosen for this article is coffee industry. Following oil, coffee is the second largest commodity in the developing world. The industry employees 25 million people in the developing countries. Annual global retail value is about 50 billion USD and everyday global consumption of coffee is as high as 1.6 billion cups. In this system, my role is a consumer (user). In average I drink coffee twice a day and I purchase coffee on a regular basis. In the SES of coffee, private firms play an important role from upstream activities such as coffee beans production, bean processing, to the downstream activities such as packaging and marketing. According to the SES framework presented by Ostrom (2009), the first-level core-subsystems include (1) resource systems (2) resource units (3) governance systems (4) users. In the following paragraphs, the Social Ecological System of coffee market is analyzed using Ostrom's framework based on the core-subsystems mentioned above. Sustainability issues within this SES system has also been addressed based on the framework.

Due to the complex nature of the oversea operations of coffee industry and highly diversified functions of the supply chain actors, this article will only discuss the supply of coffee beans in order to better focus on the clarity of this analysis. Resources involved in downstream business activities such as energy use of retailers, water consumption of coffee shops, etc. will not be covered in this blog.

(1) Resource system: The resource system here refers to the coffee farms that produce the coffee beans. More specifically, the resource system of coffee farms include vegetation, irrigation systems, the soil, and wildlife. Agricultural area for coffee occupy over 10 million hectares globally. Therefore, coffee landscape plays a significant role in the natural environment in coffee-growing regions.

(2)Resource units: In the coffee farms, resource units can be categorised into biotic and abiotic components. Biotic resource units include coffee trees, coffee beans, bigger trees that cast shades to protect young coffee plants, fungus, earth worms, insects, birds, and microorganisms. Abiotic resource units also include soil, surface water, and groundwater flow. The predicted annual global coffee production in 2014/15 estimated by the United States Department of Agriculture is 147.8 million bags(60 kg/bag). Despite the demands for coffee is rising globally, the total amount of production drops mainly because of the prolonged draught and high temperature in Brazil. The development of beans was impacted by the weather conditions. Most of the coffee production areas either locate in or in conjunction with tropical forests or tropical savannah.

Globally over 5 billion pounds of pesticides is used for a variety of purposes, including coffee cultivation. The use of pesticides on coffee cultivation has impacted biodiversity, water and soil quality in the coffee production regions. To protect birds from being poisoned by pesticide use, some organisations have been promoting organic farming and shade-growing methods. While organic farming limits the toxics from entering animals and the soil, shade-growing methods preserves other vegetation as sanctuaries for habitats. The structure of shade coffee farms is simliar to forests, it provides habitat for a rich variety of migratory and resident birds, reptiles, insects, bats, vegetations and other organisms. Besides promoting eco-friendly coffee cultivation methods, some organisations designed the seal of "Bird Friendly®" coffee that specifically addressed the ecological impacts.

(3) Governance systems: The governance systems of coffee industry include government bodies and private organisations that manages the resources within the system. The system also includes that certification bodies that are responsible for drafting standards for coffee bean production and marketing such as fair trade, organic farming, and labor conditions. The local government of where the coffee farms locate oversee the land use of coffee farms and the processing plants, water use of irrigation system, labor condition of beans processing, the overall environmental qualities such as groundwater qualities, and the sanitary standards of the food product.

Fairtrade International (FLO) is an organization that coordinates Fairtrade labelling at an international level. FLO sets international Fairtrade standards, organize support for producers around the world, develop global Fairtrade strategy, and promote trade justice internationally

Besides government agencies, certification organisations are also a part of the governance system.

Fairtrade International (FLO) was founded in 2004 to promote more sustainable and ethical business practices. In order for coffee beans to be qualified as fairtrade products, coffee companies need to be in compliance with internationally-agreed standards set by the the FLO. The standards are set up to promote social development, maintain environmental qualities, and and ensures positive impact for the activities carried out along the production chain. For organic product certification, organisations include government agencies such as agricultural departments and certification bodies on international or local level usually provide the services.

Advertisement of take away coffee company
Coffee Inn

(4) Users: The users of coffee include the coffee farmers, processors, traders, distributors, and consumers. Coffee farmers maintain their farms to grow coffee beans. After harvesting, the farmers then hand the beans to processors for sorting, washing, drying, fermenting, and roasting, etc. The traders purchase processed coffee beans to provide coffee beans to market brands such as Coffee Inn, Illy, Trader Joe's, etc. At the end of the supply chain, consumers buy brewed coffee and coffee beans/powder to make their own coffee.

In order for the coffee industry to be sustainable, the people who provide service need to be able to sustain their livelihood in reasonable working conditions. However, various reports have disclosed exploitation of coffee workers. Common issues include child labor, poor working conditions (e.g. lack of protection equipment for pesticide spraying or for insects and snakes), low wages (coffee pickers in Nicaragua receive pay of $2-3 USD/day compared with minimum wage of $6 USD/day). Besides the coffee workers issues, it is also often heard that coffee farmers are being taken advantage of by the traders. Some even receive only 2.2% of the projected retail price in major multinational coffee companies.

Although the concept of fair trade sounds attractive, it has also drawn numerous criticisms. The most obvious issue for consumers like me is the extraordinary high prices of coffee. The high prices do not always guarantee the same high quality that are available in the non-fair trade market. Also, consumers might find it less attractive even if they do support the fair trade concept. Studies showed that fair trade brought some positive impacts but it was also criticised that the implementation of profit diversion to the coffee farmers to alleviate the poverty are also often questioned because of the lack of transparency in some cases. Another controversy that might have impact on a bigger scale is the limitation of the grower type qualify for certification. The system strongly favors democratically run cooperatives and small growers that do not rely on permanent hired labor. Therefore multinational companies that grow their own coffee cannot receive fair trade certification even if the working condition and be certified as Fair Trade coffee, even if they pay producers well, adopts sustainable practices, or helps with growers' community developments.

Will the users of a resource invest time and energy to avert "a tragedy of the commons"? If so, then when?
I usually try to buy fair-trade and organic coffee as much as I can after getting to know the concept of fair trade movement. As a farm produce consumer, I support organic farming practices because I believe each time the farmer chooses to not use pesticides in the crop he/she grows, maybe one more frog can be saved from being poisoned. Although I don't grow my own rice, with each bowl of organic rice I purchase, I am supporting the farmer's future decisions to not use pesticides and therefore achieve long-term sustainability goals. Purchasing rice is something I will do for a very long time so I can make some difference with every purchase decision.

However, after researching on resource systems and the governance systems, I am concerned that as a fair trade coffee consumer, currently fair trade might not be able to fulfil consumers expectations that the label carries. Research mentioned in (4) suggests that interactions between the users and the governance systems might not be fully functioning as it aimed to achieve. Even with the intervention of governance bodies and the certification rules designed to enhance the social and economic performances such as improving the life quality of coffee farmers, the resource system that supports the livelihood of coffee farmers/workers requires an evolving and adaptive utilisation mechanisms. As the fair trade market mature and more products qualify for the label, the protection mechanism of high premium will decrease and the products would face more competitors in the same category. In the long run, investments still need to be put into improving the productivity as well as efficiency in order for the coffee farmers to sustain their business while maintaining resource sustainability.

Week 39 (2/2) - Development of position on Friedman proposition

Write down how materials provided and collected have led you to develop your position on the Friedman-proposition

I did not find his proposition convincing, either before nor after reading his statement. Friedman seemed to had neglected various aspects as well as the potential impacts created both within and beyond business network. The negative impacts from down cost measures could easily outweigh the benefits of generating higher profits. It seemed to me that running businesses which focus solely on cutting down the cost on all sides in order to create wider profit margin is unethical and irresponsible because not everything can be tagged with a price label.

Upon reading Friedman's proposition, I immediately related to the 14 Foxconn employees who committed suicide because of ill-treatment at workplace. It is true that the business impact of apple products can be calculated by the change in stock value and the product orders. But can personal wellness be valued in monetary terms? If a business entity successfully achieves profit growth continuously but treats its employees poorly and ignores employees' mental wellness, can the business be crowned with social responsibility fulfillment?

The CEO of Foxconn, Terry Guo

According to Friedman, business is not a person, therefore it does not have responsibilities. I agree that business is not a person. However, it is exactly because the business does not behave like a person that the business friendly decisions the from corporate leaders make are not friendly to people. It is often heard that the corporate leaders structures the operation so it can extract as many hours out of the labors as possible. In Taiwan, nearly 50 workers' death were blamed on working more overtime than legal standards in 2011. If business behaves more like people and shows humanity and kindness in the daily practice, wouldn't that be also demonstrating its value and fulfilling its responsibilities of taking take of their employees?

Week 39 (1/2) Rational decision making in newsitem

1. News item about an event in which the actions of a firm or governmental agency play a crucial role.

In Costa Rica, the Environment Ministry put a temporary ban on the thermal processing of solid waste for energy. The temporary ban was well-received by a citizen group that is concerned about the risks to health and the environment. The decree bans the waste combustion electricity generation operation until the technical and scientific studies prove that the process does not harm human health and the environment. National Association of Municipalities (ANAI) filed a complaint to the court because it claims that the moratorium violates the freedom to energy trade.

Municipal authorities have a garbage
problem, and they hope gasification will be a solution.
Lindy Drew/The Tico Times

Source of news: Citizen group voices support for government moratorium on thermal conversion of solid waste to electricity: Tico Times, 01/10/2014

Why the action might be the result of rational decision making?
The moratorium might be resulted from rational because at this stage it is the most optimised option. There could have been three options in this decision making process. Besides a moratorium, granting or denying the operation of trash combustion are also options. When considering these three options, the decision maker needs to decide which option maximises the benefits.

According to the news, the Environment Ministry requires studies to demonstrate the certainty of no harm to health and environment before granting the thermal conversion approval. It can be interpreted as the information that the government possesses at this point was not sufficient to prove that the waste combustion could satisfy the criteria of health and the environment. Therefore the outcome of this option cannot be predicted with confidence yet.

On the other hand, to completely reject the option of waste combustion could also miss the opportunity of generating economic source and resolve the solid waste handling issues because of the the uncertainty of the operation satisfying the health and environmental criteria has not been proven yet.

Therefore, the current decision to temporarily ban the waste combustion for electricity might be the most optimised option for now because it allows more time for communication over the pros and cons between stakeholders. With more information being made available, the decisions might be changed again later.

Write an alternative, equally plausible account, showing how these actions might result from a boundedly rational organisation (à la Jones 2003).

The reason why the moratorium might be resulted from a boundedly rational organisation are given as following. The four principles of bounded rationality that Jones reviewed in the 2003 paper can be reasonably linked to the decision made by the Environment Ministry. The goals are clearly defined as the proposed waste combustion are to handle the waste and generate electricity. However, the potential consequences of the combustion residue cause concerns on risks on human health and environment, which could arouse emotions for local residents. This non-logical thought could interfere with decision making process and bound the rationality of the organisation. This combination of goal-oriented thinking and the non-logical thought can be seen as the organisation's behaviour following the principle of intended rationality.

For principle of adaptation, Jones quoted Kulklinski and Quirk on how members of organisations shape their thoughts to adapt to the tasks. In this case, the government agency is allowing the data to shape interferences and therefore fits the description of the central processing organisation. The uncertainty of the consequences in the waste combustion project also reverberates through the debates. The potential harm of the waste combustion forms the main uncertainty in this case and impacts the decision made by the organisation.

Finally, the principle of trade-offs can be seen in this case. Jones' paper addresses the difficulty for human to make decisions when encountering multiple goals. In this case,  profits generated from selling the electricity generated by the electricity along with the waste handling solution are weighed against the potential harms from the waste combustion.

week 38 - Feedback to: Romée de Blois

Feedback to Romée de Blois (Original post: assignment 1. Tomatoes & Business)

Part 1: Ecology-inspired puzzle

I like the choice of topic because of its timing and local relevance with real-life situation. The author made a clear point to addresses the limitation of the choice of crops. I very much agree with the beginning of the first point about the variety gives consumers more options. The argument is convincing to me since price could be an important deciding factor (could even be the most important factor for the majority of consumers)for purchasing. However, there are also other deciding factors when consumers make their decisions to buy tomatoes. For this case, if would be helpful for readers to create a scenario in our head as a consumer if the author can address the relative importance of purchasing factors. If the author can provide the assumption that the most important factor is price, it also helps the readers to focus on the argument.

The second point about the limitation of shelf period and the stress to sell leads to price cut down is well addressed and convincing. The third point about one farmer’s action impacting the market is also well-established. I find the three points all have different aspects. The three theories are also well arranged in order because they are from local scale to a bigger scale of impact. However, I can’t seem to see the correlation between the conclusion in the last paragraph with the rest of the article. The three theories were well developed in the previous paragraphs. The last paragraph addressed the issue of volatility of tomatoes market value and overall impact for farmers. It was good information but I feel that it looks more like another observation that can be independently discussed.

Part 2: “the business of business is to increase its profits”
The way that the author uses biology as an analogy for business is interesting. Using the achievements in the nature to compare with profit is a brand new perspective to me. In this article what I like the most is the non-traditional definition of profit because it takes the long term (positive) impacts into consideration instead of the traditional definition that only involves the monetary value . In that sense the author works with a different basis than Friedman.

What Friedman considered as social responsibility might have been incorporated into the definition of profit in this article. Under the author’s definition, The externalisation of environmental cost would probably be considered as non-profitable based on the author’s position. Therefore achieving improved sustainability performance would perhaps be more common during the process of profit-making according to the author’s definitions.

week 38 - Feedback to: Vigil Yu

Feedback to: Vigil Yu (IE puzzle + business&profit)
Part 1: IE puzzle
The article is well structured and it helps the readers to follow the author’s opinions through all the main points. The link between the topic and industrial ecology is very clear. The three theories are all well presented. I find the theories convincing and easy to understand from a consumer’s point of view.

I especially like the last two paragraphs about the trend of sustainability performance with the business performance. It gives a personal touch to the theories the author developed and demonstrated the author’s interests in this topic.

There’s just one thing I am not so sure how to create the link to. I agree that the GDP information in the first theory could probably be seen a factor of purchasing power and influences the buying decisions ultimately. However, it might be able to be considered as a separate point because without the GDP information the theory still makes perfect sense.

Part 2: business&profit

I find the article interesting to read. It provides a lot of background information as well as an example that illustrates the challenges of fulfilling the business social responsibility. In the first paragraph, the way that the author broke down the business structure to pick a specific role within business is very clear and also eye-catching to me.

The example in this article made it easy to visualize a real-life situation. It shows a good point about the impact could reach beyond the single business operation. It also shows when decisions are made to gather more resources for the single profit generating process, resources for other business operations will be taken away, causing quality changes in other services. In this case, the conflicting interests between the pig farmer and the red worm compost owner are well demonstrated through the competition for the same resource in order to generate profit.

I feel that with this case, the author clearly demonstrated that Friedman’s theory could lead to greater negative social impact given that certain business benefits from a larger profit margin. Therefore, it is questionable if Friedman’s statement should be considered as beneficial for the society in the bigger picture. However, I was not able to identify a clear correlation between the conclusion and the example. It seems to me that the conclusion is more supportive of what Friedman stated rather than what the example demonstrated.