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What Is a “Fair” Price? Ethics as SensemakingJuliane Reinecke, Shaz Ansari

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What Is a “Fair” Price? Ethics as Sensemaking

Juliane ReineckeWarwick Business School, University of Warwick, Coventry CV4 7AL, United Kingdom, juliane.reinecke@wbs.ac.uk

Shaz AnsariJudge Business School, University of Cambridge, Cambridge CB2 1AG, United Kingdom, s.ansari@jbs.cam.ac.uk

Whereas the deliberative democracy approach to ethics seeks to bridge universalist reason and contextual judgment toexplain the emergence of intersubjective agreements, it remains unclear how these two are reconciled in practice.

We argue that a sensemaking approach is useful for examining how ethical truces emerge in equivocal situations. Tounderstand how actors navigate through ethical complexity, we conducted an ethnographic inquiry into the multistakeholderpractices of setting Fairtrade Minimum Prices. We offer three contributions. First, we develop a process model of ethicsas sensemaking that explains how actors come to collectively agree on what is ethical in complex situations, even if nocomplete consensus arises. Second, our findings suggest that moral intuition and affect also motivate ethical judgmentalongside moral reasoning. Third, an ethical sensemaking perspective explains some of the pitfalls actors confront in copingwith ethical complexities in practice and how they attend to the challenges arising from stark inequalities in extremecontexts.

Keywords : sensemaking; fair trade; Habermas; communicative rationality; discourse ethics; political corporate socialresponsibility; price; multistakeholder dialogue

History : Published online in Articles in Advance.

IntroductionWith rooibos, all the information is available [data on thecost of sustainable production]. But then when you putthis all together, you have to make something meaningfulout of a mess! —Fairtrade International pricing officer

After protracted multistakeholder deliberations thatcontinued for almost three years, Fairtrade International,the organization behind the Fairtrade label, announcedthe Fairtrade Minimum Price for rooibos tea from SouthAfrica, describing it as a “milestone in the developmentof Fairtrade Standards” (Fairtrade International 2007).Whereas alternative trade organizations (ATOs) usedto directly negotiate “fair” prices with black and poorsmallholder farmers struggling under colonial legacies inpost-apartheid South Africa, rapid market growth pres-sured Fairtrade into establishing a standard minimumfair price. But despite the organization’s pledge to setfair prices, this price appeared to disadvantage small-holder farmers with higher costs of production comparedwith large-scale plantations. We question how participa-tory multistakeholder deliberation could result in a min-imum price below the cost of production of smallholderfarmers for whom Fairtrade had initially been founded.Is this a “fair” outcome? How do stakeholders makesense of what is fair in ethically complex situations?

A fundamental challenge for organizations seekingsocial justice is coping with ethical complexity—makingsomething ethically “meaningful out of a mess,” as ourrespondent above put it. Contexts of moral decision

making are often ambiguous and conflictual where notranscendental golden rules or universal guiding prin-ciples can readily be applied to consensually resolvedisagreements. This highlights the “excruciating diffi-culty of being moral” (Bauman 1993, p. 248). Althoughmoral philosophies can guide organizational decisionmaking (e.g., Scherer and Palazzo 2007), they identifydifferent bases for making ethical decisions (Robertsonand Crittenden 2003)—from adhering to principles(e.g., Kant 1788) to learning what is ethical in con-text (e.g., MacIntyre 1984). On the one hand, no pre-determined metarule can be applied to resolve a moraldilemma, because it is the idiosyncrasies in practice thatcreate the dilemma (Clegg et al. 2007). On the otherhand, the “normative chaos of contextualism” withoutrecourse to any valid norm beyond a single case doesnot provide a sound ethical foundation in a diverse soci-ety (Habermas 1992, pp. 140–141). If ethics cannot bedefined by universal principles outside the concrete con-text of action, yet making moral claims needs an objec-tive reference point, how do actors decide what is ethicalin complex and equivocal situations?

To address this issue, proponents of discourse ethicshave argued for a constructionist framework thatavoids the pitfalls of both objectivism and subjectivism(Benhabib 1992, Habermas 1996a, Outhwaite 2009).In particular, they have emphasized the role of deliber-ative dialogue as a collective, intersubjective, and inter-pretive process for establishing shared meaning and

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reconciling multiple ethical viewpoints. Deliberative dia-logue involves a process of making arguments acceptableand legitimate by fulfilling “the validity conditions ofmoral judgments and norms” (Habermas 2003, p. 248).Local justifications can transcend the “provinciality oftheir spatiotemporal contexts” (Habermas 1996a, p. 323)and claim intersubjective validity for an emergent norm.

Although the deliberative approach provides a nor-mative foundation for what constitutes a morally validconsensus, it remains unclear how universal reasoningand contextual judgments are reconciled in practice toreach an intersubjective agreement. This may partic-ularly hold in situations laced with moral ambiguity,where clashing norms and principles demand contradic-tory things of a person. We thus need to understandhow participants balance contextual ethical exigencieswith broader moral norms to establish an intersubjec-tive moral position. Given the distance between norma-tive theory and the complex, messy, and often emotion-ally charged world of practice, a sensemaking approachholds promise for understanding how deliberating par-ties construct “plausible accounts of equivocal situa-tions” (Weick 2012, p. 145) and make “intersubjectivesense of shared meanings” (Gephart et al. 2010, p. 284)about what is fair. Whereas sensemaking has often beenregarded as a cognitive process, others see it as a pro-cess of social construction—“an issue of language, talk,and communication” (Weick et al. 2005, p. 409; see alsoGephart 1992)—through which communicative selvescan “get transformed during interaction such that a jointor merged subjectivity develops” (Weick 1993, p. 642).For ethically contentious issues, sensemaking involves anormative dimension to construct shared moral interpre-tations in line with institutionalized expectations (Weberand Glynn 2006). Examining the processes of ethi-cal sensemaking in equivocal situations (Tenbrunsel andSmith-Crowe 2008) can reveal how actors interpret con-textual cues and intersubjectively construct meaning tomove from ethical complexity to ethical truces.

To understand how actors navigate through ethicalcomplexity, we conducted an ethnographic inquiry intothe multistakeholder ethical decision-making practices atFairtrade International. We examined critical momentsof multiparty dialogue for setting a “Fairtrade MinimumPrice” in three cases: tea, cotton, and coffee producedin developing countries. Participants struggled to makemeaning “out of a mess” and reconcile conflicting viewson what is fair. Our analysis of stakeholder negotia-tions suggests that actors coped with ethical complexitythrough sensemaking mechanisms, which enabled themto tame ethical heterogeneity and construct an accept-able norm. However, these mechanisms also unraveledfurther ethical complexities, leading to ongoing cyclesof ethical sensemaking and “sensebreaking” (Pratt 2000)to reach an ethical truce.

We offer three contributions to scholarship in orga-nizational ethics and sensemaking. First, we develop a

process model to explain how actors make sense of ethi-cal dilemmas to reach ethical truces. Sensemaking schol-arship has explained how people “produce, negotiate,and sustain a shared sense of meaning” (Gephart et al.2010, p. 285; see also Maitlis and Christianson 2014),but less attention has been paid to the normative dimen-sion of how parties make sense of the ethical complex-ity in practice and establish shared meaning. Whereasscholars have explained the role of time (Kaplan andOrlikowski 2013), power (Clark and Geppert 2011),emotion (Maitlis et al. 2013), and materiality (White-man and Cooper 2011), we bring ethics into the realm ofsensemaking to explain how actors make sense of ethicaldilemmas, and we show how ethics is a process of sense-making and meaning construction regarding moral ques-tions. Although this resonates with Habermas’s (1984)notion of communicative rationality, we explain howparties may not achieve a broadly consensual positionyet still reach provisional ethical truces (cf. Rao andKenney 2008) based on a minimal level of agreement(Ansari et al. 2013, Donnellon et al. 1986). Ethicalprocesses may thus involve intersubjective sensemakingto achieve plausible truces rather than consensual out-comes. Second, our findings suggest that moral intuitionand affect also motivate ethical judgment (Haidt 2001,Zajonc 1980) alongside moral reasoning. As actors carrymoral predispositions and sentiments (Margolis 2004),their determinations of what is or is not ethical are notonly based on rational and deliberative reasoning butmay also be influenced by the “passional” (Nussbaum1986) and by whether something “feels” wrong or right(Sonenshein 2007, Welsh and Ordóñez 2014). Third,although political corporate social responsibility (CSR)scholars have emphasized deliberative dialogue as thenormative foundation for multistakeholder governance(Gilbert and Rasche 2007, Scherer and Palazzo 2007),our study involving extreme contexts revealed some ofthe challenges to using a deliberative approach. The pri-mary goal of social development initiatives in contextsmarked by extreme disparities is to reallocate resourcesto marginalized groups that may require “redistributivedirect democracy” rather than “Northern inspired” delib-erative democracy (Gibson 2012, p. 412). The very exer-cise of seeking a rational consensus risks reducing valuepluralism valorized by deliberative democracy (Fraser1997). Whereas a Habermasian approach is part of crit-ical theory that aims to empower the unprivileged (Rehg2001), an ethics as sensemaking lens may reveal howdeliberating actors cope with ethical complexities inattending to challenges arising from exploitation andinequalities (Outhwaite 2009).

Next, we describe our theoretical motivations andmethod, report in-depth findings on the rooibos case thathighlights the challenges of ethical deliberation, developa model of ethics as sensemaking by drawing on all threecases (rooibos, coffee, and cotton), and offer implica-tions for theory.

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Theoretical Motivations: Coping withEthical ComplexityCoping with ethical complexity is often an inevitableand, at times, unwelcome task confronting organizations(Bersoff and Koeppl 1993, Treviño and Weaver 2003).Ethical complexity describes situations where disagree-ments occur over which norms and values are at stake orshould be given priority (Gehman et al. 2013). Becauseof indeterminacy and equivocality, no predefined univer-sally accepted principle or metanorm can resolve ethicalcomplexity (Clegg et al. 2007).

Various moral philosophies provide different andsometimes conflicting bases for what is considered eth-ical. In the tradition of Kant’s (1788) categorical imper-ative, proponents of a universalistic perspective empha-size the unity of an ethical foundation of reason thatdetermines universalizable duties and ethically soundcourses of action. Contextualist and particularistic per-spectives, advanced by practice ethics scholars in theAristotelian tradition, link morality to the “socially localand particular” (MacIntyre 1984, p. 126; see also Young1990). A distinction can thus be made between principle-based approaches (emphasizing the use of rational,objective, universal, and impartial principles in ethicalanalysis) and practice-based approaches (emphasizinghistorical virtues or a set of ideals to which actors aspireand develop through learning and practice). Aristotle’s(350 BC) notion of pragmatic wisdom explains why prac-tical choices cannot be “captured in a system of univer-sal rules” (Nussbaum 1986, pp. 303–304): the particularsof any given situation are mutable, indeterminate, andnonrepeatable. Hence, a concern for situated judgmentssupplants any “simple belief in the unproblematic appli-cation of universal norms or imperatives” (Nussbaum1986, pp. 294–295). However, without any higher-ordervalues, rules, and principles, moral judgments may be toorelativistic, arbitrary, or parochial. If ethics cannot bedefined by universal principles outside the concrete con-text of action, yet making moral judgments needs some“reference point,” then how do actors decide what is eth-ical, fair, or responsible in complex situations?

A Third Way? Discourse Ethics andDeliberative ApproachesDiscourse ethics, and its more pragmatic variant ofdeliberative democracy, has sought to bridge universalis-tic and particularistic perspectives (e.g., Habermas 1992,Scherer and Patzer 2011). This approach has been influ-ential in organizational scholarship to theorize the roleof corporations in processes of public will formationand multistakeholder dialogue to produce moral normsof global governance (Gilbert and Rasche 2007, Schererand Palazzo 2007). Jürgen Habermas, a leading propo-nent of discourse ethics, has taken an explicit commu-nications turn to provide a new normative foundationfor moral agreements in situations of ethical pluralism,

where no norm or principle can, a priori, be regarded asmorally superior. In his theory of communicative ratio-nality, Habermas retains a Kantian emphasis on reasonand moral validity, yet he adds a more Aristotelian con-cern with the practical and the contextual. This aimsat achieving a synthesis of Kant’s “universalist modelof moral conversation” and Aristotle’s “contextual judg-ment” that situates decisions in the space between thegenerality of a rule and the singularity of the uniquesituation (Benhabib 1992, p. 54).

The deliberative approach to ethics emphasizes debateover contentious ethical issues whereby ethical mean-ing is established intersubjectively through rationallyachieved consensus (e.g., Habermas 1992). Achievingintersubjective agreements involves the “nonleveling andnonappropriating inclusion of the other in his otherness”(Habermas 1998, p. 4; emphasis in original). For peo-ple to be willing to argue, they must assume the pos-sibility of an “ideal speech situation” as “unavoidablepresuppositions of argumentation” that include freedomof access, participation with equal rights, truthfulnessof the participants, and “absence of coercion” (Haber-mas 1993, p. 56). These conditions are a counterfac-tual idealization, but they are nevertheless necessarypresuppositions for even participating in argumentation(Benhabib 1992). Deliberation cannot make incompati-ble perspectives compatible but may enable consent byallowing participants to recognize the moral merit inothers’ claims.

Despite the promise of the deliberative dialogue toproduce collective decisions by bridging universality andparticularity (Carpini et al. 2004), it remains unclear howintersubjective positions emerge in practice. Specifically,the emphasis on rational acceptability has been ques-tioned on at least three fronts. First, in fragmented anddynamic situations, where radically disparate concep-tions of morals, norms, and orientations clash, a unan-imous agreement may be neither possible nor desirable(Mouffe 2005). Habermas may have moved away from aconsensus theory of truth toward a more pragmatic con-cern for establishing intersubjective validity and moralrightness (Outhwaite 2009)—an epistemic notion forrevising our moral and ethical interpretation in lightof our interactions with one another (Habermas 2003).Nevertheless, Habermas’ conceptualization of the qual-ity of rational argumentation may inhibit recognizingradically different parties as equal interaction partners(Scherer and Patzer 2011). Privileging consensus amongthese parties as a normative ideal may lead to homoge-nizing politics “played out in the moral register” and a“conflictual consensus,” where people neither transcendtheir narrow stances nor constructively adapt their posi-tions but rather simply concede to a political compro-mise (Mouffe 2005, p. 75; see also McCarthy 1996).Second, feminist scholars in particular have criticized theideal of impartiality in deliberations that “abstracts from

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the particularities of situation” and neglects the role ofpersonal relationships (Young 1990, p. 97). People areshaped by their relationships of responsibility and care,which are inescapably woven into the language of delib-eration (Robinson 2011). Moral claims are constitutedby people’s relations with others, including power rela-tions. Weaker parties may be unable to articulate injus-tice and systemic neglect in rational deliberations (Held2006, Robinson 2011), particularly in contexts pervadedby structural relations of dependency and dominance.Third, communicative rationality privileges deliberativereasoning over intuitive reactions for making ethicaljudgments. Whereas rational acceptability can constitutea moral point of view, individuals may also use a “gut”reaction to intuitively judge a particular situation (Haidt2001, Sonenshein 2007). As a result, individuals’ deter-minations of what is just or fair are not necessarily basedon rational cognitive process of deliberation but, rather,are influenced by a “how do I feel about it?” heuristicof a situation.

The three critiques highlight how deliberants strugglebetween the moral and political, impartial and partial, andrational and intuitive—to make ethical judgments. Delib-erative democracy is a normative theory that proposesconditions under which morally legitimate consensus canemerge (Scherer and Patzer 2011). Whereas empiricalevidence from political science suggests that actual com-munication does not usually satisfy ideal speech condi-tions (e.g., Carpini et al. 2004, Ryfe 2005), scholars haveargued that the aim of empirical research is to engagewith deliberative theory not as a testable hypothesis butas a critical phenomenon (Thompson 2008). It is thusworth examining how parties immersed in specific ethi-cal dilemmas deal with situational contingencies and pro-duce shared meaning of what is ethical.

Ethics as SensemakingCoping with the question of ethics in deliberative pro-cesses may confront actors with unintelligible situa-tions where “there is no obvious way to engage theworld” (Weick et al. 2005, p. 409). The sensemak-ing literature (e.g., Maitlis and Christianson 2014) canenable us to move toward an understanding of ethicalmeaning as situated and emergent as parties cope withethical complexities in practice. Driven by approxima-tion rather than precision (Weick 1995), sensemakingexplains how actors create plausible and institutionallysensible accounts in equivocal and ambiguous situations.Sensemaking and deliberative approaches are conceptu-ally compatible as “communication is a central compo-nent of sensemaking” (Weick et al. 2005, p. 413). Infact, “the conditions of valid communication discussedby Habermas (1979) presuppose at every point the oper-ation of sensemaking practices,” which make speech actscomprehensible (Gephart 1992, p. 118). In particular,the constructionist approach to sensemaking with roots

in the symbolic interactionist literature regards sense-making as “a fundamentally social process” in which“organization members interpret their environment inand through interactions with each other, constructingaccounts that allow them to comprehend the world”(Maitlis 2005, p. 21). From this perspective, “sense-making occurs and can be studied in the discoursesof social members—the intersubjective social world—rather than simply occurring in their minds” (Gephart1992, p. 1470) and is concerned with the “conversationaland social practices (methods) through which the mem-bers of a society socially construct a sense of sharedmeanings” (Gephart 1992, p. 1469). The exercise ofmoral judgments and morality itself—that which needsto be understood and reflected upon—is something peo-ple construct in a specific situation.

Although sensemaking is a promising approach to un-derstanding processes of ethical meaning-making, somegaps remain. In the realm of ethics, “surprisingly, re-searchers know little empirically about these processesof sensemaking” (Sonenshein 2007, p. 1035) and howparties make sense of the ethical complexity theyencounter and establish a shared sense of ethical mean-ing. In particular, it remains unclear how validity con-struction is reconciled with situational contingencies. Wethus ask, how do actors cope with ethical complexity andintersubjectively establish an account of what is ethical?

MethodsResearch DesignOur research was based on an open-ended and induc-tive design that was informed by a broad interest inunderstanding the micropractices of ethical deliberationin organizations. A sensemaking lens sensitized us tohow establishing intersubjective meaning is a continuousprocess, rather than an episodic event. Situated inter-actions and everyday discourse becomes as much theobject of analysis as formal deliberative events. Thisrequires deep engagement with field practitioners overa period of time. We thus conducted an organizationalethnography in the secretariat of Fairtrade International.We chose this research site for two reasons. First, thestandards setting body is an emblematic example of therole of multistakeholder dialogue in developing norms.Standards setting was designed around deliberative cri-teria such as broad and equal participation, stakeholderconsultation, democratic representation, and consensualdecision making, allowing us to study ethical delib-eration in vivo. Second, studying Fairtrade MinimumPrice setting for certified products—the core task of theorganization—could reveal how organizational partici-pants engaged with the complex notion of what is fair.This allowed us to closely observe the sensemaking pro-cess through which deliberants worked to establish themeaning of fairness and convert it to a concrete number,amid overwhelming complexity.

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Empirical Setting: Fairtrade Labeling and SettingFairtrade Minimum Prices. Fairtrade International, anonprofit, multistakeholder umbrella association, wasestablished in 1997 by national labeling initiatives toset “global standards of fairness” (Fairtrade Interna-tional 2008). The first Fairtrade product label for cof-fee, Max Havelaar, grew out of a partnership betweenindigenous Mexican coffee growers and a Dutch non-governmental organization (NGO) in 1988. The aim wasto scale up the impact of fair trade by developing a cer-tification mark that could ensure consumer trust in ethi-cally sourced products. By the early 2000s, Fairtrade hadexpanded to include tea, cocoa, cotton, and fruit, and itpenetrated mainstream markets in many consumer coun-tries. After years of double-digit growth, global Fairtradesales reached 4.8 billion in 2012, involving 1.3 millionproducers and workers in over 70 countries.

The cornerstone of Fairtrade’s ethical premise was toguarantee a Fairtrade Minimum Price (FTMP) and Fair-trade Premium, which aimed to address the “injusticeof low prices by guaranteeing that producers receivefair terms of trade and fair prices however unfair theconventional market is” (Fairtrade International 2008,Reinecke 2010). The FTMP was set by Fairtrade’s Stan-dards Committee (SC). The multistakeholder body metseveral times a year at Fairtrade’s secretariat in Bonn,Germany to set “fair prices,” drafted by Fairtrade’s Stan-dards Unit. We chose the Standards Unit as our unitof observation, as its key task was to coordinate multi-stakeholder decision-making processes. Participating inthis unit’s daily life allowed one author to observe andinteract with permanent staff and parties engaged indialogue and to gain an insider’s “feel” for the com-plexities involved in ethical decision making. Fairtrade’sstandard operating procedure defined the FTMP as theprice that covers the average costs of sustainable pro-duction (CoSP). A price-setting project began with theprocess of “price researches.” The Standard Unit col-lected CoSP data from producers through questionnairesand field studies. Based on these data, price proposalswere drafted and sent through stakeholder consultationrounds to give affected parties the opportunity to com-ment. Stakeholder representatives in the SC then delib-erated to adjudicate among competing claims and yield“fair” decisions on prices. Together, the Standards Unitand SC saw their role as a neutral arbiter balancingdifferent stakeholders’ concerns by relying on “factual”CoSP data as the basis for making decisions. Ideally,pricing decisions were achieved through reasoned delib-eration and consensus. Finally, the process was retro-spectively evaluated. If the process of decision makingas a whole was to be legitimate for internal participantsand external observers, all these steps had to be seen asbeing as fair as possible and include the representationof multiple voices.

When the ethnographer expressed her interest instudying price setting, she was informed that it was ahighly “technical” process. In practice, however, settingfair prices involved ethical dilemmas that could not besimply calculated away. It was not always clear how tointerpret CoSP, given geographical differences betweenproduction sites, producer capabilities, wage levels, cur-rency fluctuations, and the climate affecting commodityyields. Parties had to continually cope with these chal-lenges in making decisions about a fair minimum price.These required repeated cycles of price research, con-sultation rounds, and deliberations to reach a decisionthat was often based on an acceptable compromise ratherthan full consensus, often under pressure to make anydecision rather than none.

Ethical Complexity Across Three Pricing ProjectsWe focus on three FTMP-setting projects: coffee, cot-ton, and rooibos. These represent major price-settingprojects during the ethnography. Their study allowed usto closely observe how the final decision was negoti-ated by the Standards Committee. Over time, it becameapparent that each project involved novel challenges thatwere not readily resolvable through predefined price-setting frameworks. Projects varied highly in their startdate, length, number of affected parties, and work inten-sity. What they all shared was high complexity and con-flict between parties with competing interpretations ofthe situation. Table 1 details the dimensions and out-comes of the three price-setting projects. See the onlineappendix (available as supplemental material at http://dx.doi.org/10.1287/orsc.2015.0968) for the particularitiesand emergent contingencies in the three price-settingprojects.

The coffee price project, dealing with Fairtrade’s flag-ship product and affecting an estimated 700,000 smallcoffee farmers, was the most resource-intensive project,lasting over a year. It revealed the political dynamicsinvolved in what was ostensibly a technical process ofcalculating fair prices. The outcome was a small butcontroversial increase by five U.S. cents that remainedsignificantly below an inflation-adjusted value of theoriginal FTMP set in 1988–1989. Nevertheless, the deci-sion to increase the price created a rift in Fairtradeand contributed to Fair Trade USA (formerly Trans-Fair USA) later leaving the association. The cottonprice project was revelatory because it involved a breachof shared norms of decision making, and it revealedthe role of intuitive moral judgment. An “emergency”price decision, reached within less than one month,was deemed “illegitimate” because it failed to followthe due, if lengthy, processes of price research andpublic consultation. Finally, the rooibos price projectinvolved few producers in South Africa but lasted almostthree years as a result of the parties being unable toreach an agreement. Challenges included dealing withhistorical legacies from South Africa’s apartheid past

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Table 1 Three Price-Setting Projects in Comparison

Product Coffee Cotton Rooibos

Purpose FTMP review (regular) FTMP review (emergency) New FTMPDuration > 13 months < 1 month > 35 monthsProducers

involved> 250 small farmer organizations

(700,000 small coffee farmers)> 51000 contract producers Two small farmer organizations and five

hired labor plantationsInitial FTMP USD 1.2/lb. (Arabica)/USD 1.05

(Robusta)+USD 0.05/lb. premiumUSD 0.487/kg for India;

EUR 0.36/kg for WestAfrica+EUR 0.05/kg

No FTMP+ZAR 5/kg premium

Conflicting asks Producers demand an FTMP ofUSD 1.41/lb. vs. no change in theFTMP

SC members demand a “quickfix” to increase the FTMP inlocal currency to INR 22.34(USD 0.56) for India only vs.proper process

ATOs demand excluding hired labor oran FTMP of ZAR 45/kg (CoSP ofsmall farmers) vs. an FTMP ofZAR 22.5/kg (CoSP of hired labor)

Outcome Increase in the FTMP and FairtradePremium by USD 0.05/lb.:USD 1.25/lb. (Arabica)/USD 1.05(Robusta)+USD 0.1/lb. premium

“Quick fix” setting a higher FTMPin local currency: INR 22.34(USD 0.56) for India

Special pricing formula—Small farmers:ZAR 25/kg+ZAR 5/kg premium;hired labor: ZAR 18/kg+ZAR 12/kgpremium

and arbitrating between producers with radically differ-ent resources, needs, and capabilities. All three casesinvolved ethical dilemmas where no metarule could bereadily applied. They revealed how parties constructedthe meaning of fairness against contradictory demandsand conflicting criteria.

Data CollectionData were collected from three primary sources: (1) asix-month ethnographic study of organizational life atFairtrade; (2) 39 open-ended, in-depth interviews withFairtrade staff members and external stakeholders; and(3) archival documentation.

Ethnographic Observation. Following Becker andGeer’s (1957, p. 322) suggestion to participate in the“daily life of people” and learn “the native language”of the social setting, one author gained access to the“backstage” world of negotiations on fair prices. She con-ducted 1,100 hours of ethnographic observation at Fair-trade’s Standards Unit between July and December 2007.Observations covered the everyday work of a standardsofficer, including desk work, office talk, and informalconversations in hallways and during coffee and lunchbreaks. She assisted staff members with ongoing price-setting projects—specifically, the rooibos, coffee, andcotton projects. She helped in CoSP data analysis, stake-holder consultation, and the drafting of price proposals.She also participated in numerous team meetings and allthree two-day Standards Committee meetings where theFTMPs for rooibos, coffee, and cotton were negotiatedand set. Participation in these discussions allowed herto experience the ethical complexity involved in pricesetting. She recorded detailed observations in a fielddiary that amounted to 400 pages, and she wrote analyticmemos to reflect on emerging themes.

Interviews. While short, sporadic interviews were con-ducted alongside daily observations, formal interviews

were conducted to follow up on and refine emergingthemes. At the end of the ethnographic observation,26 interviews were conducted. For each of the threepricing projects, the lead project manager was inter-viewed. As staff typically worked across projects, allStandards Unit staff, Producer Liaison staff, StandardsCommittee members, three staff members from ATOs,and an external consultant were interviewed to reflect oneach project. The open-ended interviews lasted between30 and 120 minutes and focused on the aims of theFTMP, the organizational process of price setting, andthe challenges encountered. We conducted nine follow-up interviews with Fairtrade staff, ATOs, and sustain-ability standards experts. All interviews were recordedand transcribed.

Documentary Sources. We collected documents foreach pricing project. Such documents included emails,presentations, briefing papers, price proposals, stake-holder consultations, minutes of meetings, and pressreleases. We had access to proprietary documents suchas extended minutes, internal letters, and draft stan-dards documents that allowed validating observation andinterview-based impressions.

Data AnalysisOur analytical approach was open-ended and inductive(Corbin and Strauss 2008). As is common in ethno-graphic research, our analysis started when observationbegan. The ethnographer wrote weekly analytical memosabout emergent issues and themes. Although ethnog-raphers need to balance an ethnographic self with ananalytical standpoint, the shift from being an outsiderto an insider immersed into the setting was vital toappreciating the “excruciating difficulty” (Bauman 1993,p. 248) of being fair and witnessing firsthand how orga-nizational members wrestled with this task. Two issuesstood out. First, she observed overwhelming complex-ity in deciding on a fair price. Second, she noted that

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being “fair” meant following certain principles of argu-mentation, rather than subjective judgments. The tensionbetween formalized procedures to guarantee impartialand disinterested decisions and the situational messinessthat required moral and political judgments was reflectedin memo headings such as “impartial versus political”and “rational versus irrational.”

In the first stage of analysis, we imported all data intoan integrated database and used qualitative analysis soft-ware, NVivo, to develop, refine, and organize emergingcodes. To balance intimacy and distancing with the localsetting, both authors (one less familiar with the setting)independently coded the data and compared emergingthemes. We began by creating chronological case his-tories (Van de Ven and Poole 2002) for the three priceprojects: rooibos, coffee, and cotton. Figure 1 illustratesthe different timelines for each project, indicating formaloccasions for stakeholder deliberation as “SC dialogue.”In parallel, we developed tables of observed events andemerging themes.

The development of chronologies revealed the ongo-ing struggles of participants as they attempted to makecollective sense of ethical complexity and establish

Figure 1 (Color online) Comparative Timelines for Three Price-Setting Projects (Cotton, Coffee, and Rooibos)

SHation

SHation

s

s

F rue

price

Note. CLAC, Coordinadora Latinoamericana y del Caribe de Comercio Justo; SA, South Africa; SH, stakeholder; WS, workshop.

a common position. We noted that stakeholder pro-cesses were organized around certain judgment crite-ria that deliberants followed to render their argumentsfair and valid. In an iterative process, we sought the-oretical approaches to structure our analysis. Delibera-tive democracy (Habermas 1996a) was particularly valu-able in conceptualizing specific principles constitutingthe “rules of the discourse.” We also identified breachesof rules that triggered debate and prompted actors toarticulate their implicit assumptions. Breaches can helpdiscover social order through its disruption becauseunexpected violations reveal the “background expectan-cies” governing social interactions (Goffman 1971). Forinstance, when minor breaches occurred in StandardsCommittee meetings, participants would reprimand dis-sidents to return to a “rational,” rather than “irrational”or “emotional,” mode of discussion. The cotton projectrevealed a major breach, and the final price decision wascriticized as illegitimate for having violated acceptednorms of the deliberative process. We created a list ofrules and breaching instances and coded them.

Our coding generated eight preliminary mechanismsthrough which deliberants established a joint position

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on prices. We termed them sensemaking mechanismsbecause they helped “people organize to make senseof equivocal inputs and enact this sense back into theworld to make that world more orderly” (Weick et al.2005, p. 410). Mechanisms reside at a level of anal-ysis above description and below universal laws andserve as theoretical explanations for observed phenom-ena (Davis and Marquis 2005, Gross 2009, Weber 2006).Iterating between data and theory, we identified com-monalities and collapsed them into five more genericmechanisms. We identified three of these mechanisms asrelated to principles used in the dialogue: decentering formaking impartial decisions (impartiality), formatting forestablishing objective facts (factuality), and procedural-izing for achieving replicable processes (replicability).To illustrate, we identified deliberants’ concern aboutbeing fair to everyone as decentering, in line with Haber-mas’ notion of impartiality as a necessary conditionfor universalizing arguments. The analysis of breachesrevealed that these mechanisms were often thwarted bysituational contingencies that required accommodatingidiosyncratic challenges. We tracked how different con-tingencies were articulated and whether and how theywere addressed in each case.

Figure 2 Data Structure

AggregateFirst-order categories Second-order theme theoretical dimensions

Using the CoSP formula as a schema of action and judgment deviceCreating a common reference point for making valid argumentsCollecting factual data to establish objective evidence

Following standard operating procedures to allow for replicability and transparencyClassifying stakeholders into representative categoriesBeing systematic and fair to everyone

Fairness as being neutral and impartial to all stakeholdersTaking averages to treat everyone equally/counting each voice equallyTaking a “we” perspective to reason from the standpoint of the collective interest

Formatting

Proceduralizing

Decentering

Establishing validity byfollowing “rules of thediscourse” (universality)

Stakeholders “flag up” issues of concern that require special attentionEncountering unusual situations that cannot be solved through “technical analysis”

Ambiguity of average CoSP regarding average sustainable labor costs, etc.Incompleteness of data and uncertainties (e.g., yield, weather, currency fluctuation)Limits of calculating prices/calculation may yield “random figures”

Need to make quick fixes to attend to emergenciesEngaging with particularities of the situation (e.g., historical contingencies)“Not forgetting that it’s about people”

Emotive attachment as a result of long-term relationships with producersMoral intuitions resulting from face-to-face meetings and local experiencesAttending to producers’ different needs

Flagging up concerns

Definitional ambiguities

Emergent exigencies andlocal circumstances thatcall for responsiveness

Social attachments

Particularities that resistuniversalization (particularity)

Identifying certain intractable issues as “more fundamental” and requiring a“more structural” solution if an exception would affect other cases

Temporarily suspending “fundamental” issues and earmarking them for aseparate project (e.g., meaning of “living wage,” meaning of “sustainable”versus “inefficient”)

Identifying certain intractable issues as unique and case specificJustifying an exception to established procedures and practicesAdjusting judgments and decisions

Acceptability and plausibility of decisionsMajority vote if no consensus can be reached

Suspending particularities

Exceptionalizingparticularities

Temporary resting points

Ethical truce

Finally, our second-order themes suggested an ongo-ing tension between universalizable reason and contex-tual judgments in coping with emergent contingencies.By comparing projects, we sought patterns in how actorscoped with the tension and reached closure on ethicalissues. Over recurrent cycles of deliberation, actors dealtwith contingencies by categorizing them as either fun-damental or context specific. We labeled the two mech-anisms dealing with these contingencies as suspendingintractables and exceptionalizing. We noted that theseoutcomes of ethical sensemaking processes represented“temporary resting points” (Weick 2012, p. 150), whichenabled reaching an ethical truce even if some suspendedissues led to renewed deliberations. See Figure 2 for ourfinal data structure. Finally, we linked the mechanismsthat emerged from our analysis into an overall theoreti-cal model.

Findings: Making Sense of What Is EthicalConsensual Decision Making UnderEthical ComplexityThe ethical complexity in Fairtrade Minimum Price proj-ects problematized what “fair” meant in a given situation.

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Although there was a shared definition of a fair priceas covering producers’ costs of sustainable production,what fair itself meant was less obvious. A producer con-sultant acknowledged,

What is fair? To begin with, “fair” is a subjective concept;it is dependent on a subjective perspective. Everybodyperceives “fairness” differently, on an individual level.Therefore it is about understanding what “fair” means.We always say that the FTMP should cover the so-calledcost of sustainable production. But what are productioncosts? Ultimately, production costs, if you want to deter-mine them for a specific group of producers, are justapproximations!

This quote describes the tension between individ-ual perceptions of fairness and the general principle ofCoSP. When trying to define a fair price, actors oftenconfronted novel challenges. While “you can try to cap-ture it [the notion of fairness in price setting] with afew basic principles,” as a standards manager explained,“when you get to the detail, the whole thing is muchmore complicated.”

Stakeholder deliberation did not resolve ethical com-plexity. Rather, as a pricing officer acknowledged,“Making the compromise between all the different stake-holders is a difficult job, because everyone has a differ-ent set of priorities.” Yet Fairtrade needed to bring thesecomplexities to a provisional closure. Fairtrade’s organi-zational legitimacy depended on its ability to facilitatestakeholder consensus on a fair pricing decision to yieldFairtrade Minimum Prices. Yet for Fairtrade to be seenas fair, the process of decision making had to be consid-ered legitimate by participants. According to the stan-dards director, the challenge was to move from people’ssubjective viewpoints to an intersubjective position thatwould allow a fair and balanced outcome:

The challenge is how to bring these different—let me callit perception and values—perspectives of different peo-ple, or more pragmatically, their various interested pointsof views into a reasonable consensus, and that is highlydifficult because so many people join the conversation. Itis a huge challenge to get to a balanced outcome.

Given these challenges, a standards officer describedher work as one of coping with dilemmas:

You are constantly confronted with some dilemma, all thetime! Mostly it is a real dilemma and the right solutionjust doesn’t exist. Rooibos is such a classical dilemma!

Direct participation in price negotiations revealed thesituated ethical dilemmas that appear in action contextsand how they challenged actors to, as a pricing offi-cer put it, “make something meaningful out of a mess!”Parties struggled to reconcile the need to make validarguments that transcended situational particularities andaccommodate emergent contingencies.

Ethical Dilemmas in Setting a Fairtrade MinimumPrice for RooibosFor reasons of space, we use the illustrative example ofrooibos to convey ethical complexity involved in pricesetting. Although such complexity was present in allthree cases, the rooibos case was particularly suitablefor observing the intractable nature of situational contin-gencies. It shows not only conflicting values and inter-ests but also how historical injustices in post-apartheidSouth Africa led to stark differences in producer groups.Poor, black smallholder farmers who grow wild rooiboson infertile land competed with affluent, white planta-tion owners with privileged access to fertile land. Amidsharp disagreements, the rooibos project lasted almostthree years. The outcome was a price about 1/3 belowthe CoSP of Fairtrade’s key constituency: marginal-ized smallholder farmers lacking access to conventionalmarkets. This contrasted with Fairtrade’s official pressrelease announcing the new FTMP for rooibos tea:

FLO [Fairtrade Labelling Organizations] International isconfident that this initiative coincides with the core val-ues of the Fairtrade Labelling System to guarantee pro-ducers a fair and stable price that cover[s] their cost ofsustainable production. (Fairtrade International 2007)

For some, the price was still too low; for others, it wasseen to subsidize small farmer inefficiencies. Below, weexplore how multistakeholder deliberations led to thisoutcome.

David vs. Goliath2 Fairtrade-certified rooibos has beencelebrated as a role model for black community empow-erment in post-apartheid South Africa. In the late 1990s,Wupperthal and Heiveld, two smallholder cooperativesproducing organic rooibos—an indigenous herb—werefounded with the assistance of government, local NGOs,and Western alternative trading organizations (ATOs)such as Equal Exchange. The aim was to empowermarginalized communities in remote semiarid mountainplateaus in the Western and Northern Cape.1 ATO trad-ing partnerships and Fairtrade certifications establishedin 2003 (Wupperthal) and 2005 (Heiveld) enabled farm-ers to penetrate Northern markets and achieve prices forrooibos that were well above conventional market prices.

Initially, there was no need for an FTMP. The Fair-trade market for rooibos consisted of ATO buyersdirectly negotiating fair prices with the two cooperatives.From 2005 onwards, increasing demand for Fairtrade-certified products in consumer markets attracted com-mercial traders, who sourced conventionally grownrooibos from Fairtrade-certified plantations at “competi-tive” prices below the cost-covering base of smallholderfarmers. When the market price for rooibos declinedsharply as a result of record harvests and oversup-ply, ATOs sought Fairtrade’s intervention in setting fairprices for small farmers, fearing that they would other-wise be “priced out” of the Fairtrade market.

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Price-setting process—Making meaning out of a mess2The price-setting process included two rounds of priceresearches, three stakeholder consultations, and a work-shop in South Africa with representatives from bothsmall farmers’ organizations and plantations employing“hired labor.” Although the average CoSP was meantto provide a fair and “simple way of calculating” theFTMP, as a pricing officer explained, the notions ofaverage and sustainable offered a significant degreeof interpretative flexibility. Price research “flagged up,”as respondents put it, significant differences in CoSPbetween types of producers. This problematized takingthe average as a reference point. The CoSP reported bylarge plantations was less than half the CoSP reported bysmall producer cooperatives. The average CoSP wouldnot cover the costs of smallholder farmers, although itwould exceed the cost of large plantations. The notionof “average” was based on the moral mandate that allcertified parties should be treated equally without privi-leging any region or type of producer. However, it alsomeant that the varying needs of different people hadto be translated into a generalized representation of theaverage producer. What did “average” mean in the caseof radical inequalities, such as when historically disad-vantaged black smallholders in remote, unfertile areascompeted with white-owned mechanized plantations inpost-apartheid South Africa?

Consultation rounds revealed sharp differences amongstakeholders. Eager to grow their Fairtrade market share,plantation owners and their buyers strongly resisted anyproposal to set an FTMP that exceeded their costs. How-ever, their arguments were couched in technical terms.They said that small farmers were simply inefficient, andFairtrade should not subsidize inefficiencies and “lockfamers into unsustainable ways of production.” ATOs,the main buyers of small farmers’ rooibos, by con-trast, passionately defended the case of their suppliers,with whom they had developed strong ties over time.They opposed the idea that Fairtrade had to be neu-tral toward all types of producers. To defend their posi-tion, they invoked the foundational ethos of Fairtradeas a trading partnership with smallholder cooperatives.Moreover, supporting plantations was seen to perpetuateapartheid legacies. An ATO representative in a stake-holder consultation noted,

This reason is not justified to let enter in the system themain enemy of the blacks and colored2 people that havesuffered from the whites during apartheid. Fair trade hasto bring down previously unfair situations!

ATOs thus demanded that plantations be excludedfrom Fairtrade markets. At the minimum, they demandedthat the Fairtrade Minimum Price should be set at thelevel of small farmers’ CoSP.

In adjudicating these claims, the Standards Unit,which saw itself as “the guardian of the whole pro-cess” (according to one Standards Unit officer), sought

to ensure that pricing decisions were impartially derivedthrough proper procedures. For example, a StandardsUnit officer criticized ATO comments in rooibos priceconsultation, noting that “they got really emotional,you know.” ATO’s “passionate support” for smallholderfarmers was seen as “behind-the-scenes lobbying,”which could “distort recommendations” and disrupt“objective” processes, which required detachment toachieve fair prices. “We try to keep this [‘lobby politics’]out of the processes as far as possible,” the StandardsUnit manager emphasized. Nevertheless, Fairtrade mem-bers had to make sense of the difference in CoSP. A keydebate in SC meetings was whether small farmers weresimply inefficient or whether low costs indicated low payand exploitative labor conditions, as this exchange aboutCoSP data shows:

SC member [independent expert]: The researcher doesn’tunderstand the system [questioning research that reportslow CoSP for plantations]. Are the low costs based onlow labor costs? Are they [plantations] more efficient, orare they not paying their workers? If they are exploita-tive then [Fairtrade] prices should go up to ensure theypay their workers decently. But if small farmers aren’tefficient, then we have to think about what is the long-term perspective for the small farmers. If they have nohope to compete with hired labor, there is no rationale forwhere we go. This isn’t an adequate piece of research.I’m unhappy to make a decision. It’s poor analysis.

Standards officer: It’s apparent that there’s a heavy bias,but it’s not possible to eliminate it as far as we see.We commented on the first questionnaire. Questions wereframed in a certain way. The problem with small farmersis that they don’t diversify crops; efficiency is the keyfactor. Labor conditions are being checked. Our recom-mendation is to look at the issue of efficiency.

This exchange illustrates the ambiguity involved indefining CoSP based on “sound analysis” and “objec-tive facts.” Moreover, even if plantations were moreefficient, questions were raised as to whether this wasmerely the result of historical injustices. Some arguedthat the racially segregated rooibos production reflectedthe apartheid legacies of South Africa. Plantations weretypically owned by “rich white” farmers with accessto the most fertile land. This allowed them to culti-vate rooibos “on the side” in crop rotation cycles andcross-subsidize it by producing more lucrative prod-ucts, such as citrus fruits and wine grapes. “Poor black”small farmers, by contrast, struggled to make a livingon arid, mountainous land. Under colonial and apartheidregimes, they were relocated to the outer reaches of theprovinces and lacked access to fertile land. They reliedon wild rooibos and could not diversify beyond thisresilient crop that can survive the toughest conditions.

The issue of land use also put in doubt what sustain-able meant in environmental terms; with an increase inextreme weather and drought threatening South African

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agriculture, this issue became critical. In consulta-tions, ATOs argued that wild-harvested rooibos farmingwas costlier but reflected natural resource managementthat kept biodiversity intact and minimized water use.Cheaper monocultures used by large plantations riskedsoil damage and loss of biodiversity. A buyer fromFrench ATO Les Jardins de Gaia, which had supportedthe Heiveld cooperative since early 2000s, noted,

I really fight to sell the small farmers’ products. The bigenterprises destroy both the soil and the small farmingactivities. We buyers really have to lead in showing thedifference between the products of big organized busi-nesses and the small farmers who care about biodiversity.

(Arlette Rohmer, quoted in Majavu 2010)

Given the ambiguity surrounding the “true” costs ofsustainable production, it was a huge challenge to agreeon one fair price for smallholder farmers and largeplantations.

Is rooibos a tea or herb? Suspending the politicalquestion2 The question whether smallholder coopera-tives deserved preferential access to Fairtrade marketswas underpinned by the highly contentious debate onthe role of plantations in the Fairtrade model. In coffee,this dispute led TransFair USA to split from FairtradeInternational in 2011. At the SC meeting in Novem-ber 2007, the ATO and the African producer represen-tative advocated excluding large-scale plantations fromthe Fairtrade market in favor of small farmers. The tworepresentatives from labeling initiatives objected. Limit-ing supply to smallholders would stifle Fairtrade marketopportunities and eliminate benefits for farm workersemployed by plantations. They framed their argumentsin terms of “general interest”—Fairtrade certificationwould improve labor conditions. Small farmers at leastowned a plot of land and were better off than poor, land-less workers. An ATO member rejected this reasoningas being motivated by “volume growth rather than theunderlying needs of the farmers” and being “a commer-cial choice to get growth at any cost.” As discussions didnot yield an agreement, deliberants shifted the debateto the technical categorization of rooibos as either teaor herb. The African producer representative argued thatrooibos should be moved into the “herb” category, whichwas limited to small farmers only, rather than the “tea”category, which was also open to plantations:3

SC member 6producer from Africa]: I read that rooibos isnot a tea plant; it says it is a herbal infusion. It belongsto spices and herbs, perhaps. It’s in the wrong standard.

SC member 6from an ATO]: I’d like to recommend thatit be transferred to the herbs and spices standard.

SC member 6producer from Latin America]: I would sup-port [the ATO]’s comments that the [discussion] paper isnot convincing about [the] need to open to more hiredlabor situations. If the question is the scope we shouldlook at the possibility to close it to hired labor.

Rather than risk invoking loyalties or emotions byquestioning who deserves or needs preferential treat-ment, this exchange shows how deliberants invoked whatwas considered objective reasoning. Parties were acutelyaware that a judgment based on emotions would notbe seen as legitimate reasoning. They sought to resolvethe debate through the seemingly neutral and “technical”exercise of classifying rooibos into the correct productcategory. According to a discussion paper that was cir-culated, the botanical definition placed rooibos in thefamily Leguminosae, classifying it as an herbal infu-sion such as hibiscus, chamomile, and mint. By contrast,tea belonged to the botanical family Theaceae. How-ever, Fairtrade had categorized all herbal infusions bytheir use as “tea” in the Fairtrade Tea Standard. Wasan exception for rooibos justifiable? To bring the debateto a closure, the committee chair suggested, “We don’thave consensus so we should vote.” Committee mem-bers decided by majority vote that rooibos should remainin the tea category, thus enabling the inclusion of largeplantations.

Making an exception2 A special pricing formula2During price setting, parties agreed that the histori-cal and structural differences between the two types ofproducers—small farmers and large plantations—couldnot simply be “calculated away.” An average price wouldnot cover smallholders’ CoSP but would exceed plan-tations’ CoSP. The excess value was likely to benefit(rich white) plantation owners who, as an ATO tradernoted, would “meet with you in their expensive luxurycars” more so than it would benefit (poor black) work-ers. A pricing officer described the situation as an “eth-ical dilemma because it is about balancing the rights ofdifferent actors.” Parties recognized the methodologicallimits of determining prices objectively: “You need torecognize that you have huge latitude with regards to thenumber that comes out at the end,” the standards directorstated. He added,

So we need to be responsible and say, “So these are thenumbers, and what does common sense tell us? What doother people tell us? What about nonquantifiable impactsthat we know they exist? And what do we do with thedata?” That is part of the game.

To accommodate particularities, the Standards Unitdeveloped a “special pricing formula” that reflected dif-ferences in CoSP. After debating various options, thefinal proposal was to let small farmers and large plan-tations “trade on the same price” (35 South Africanrand (ZAR)/kg) but differentiate on price components.Small farmers would be guaranteed a higher mini-mum price but lower premium (30+ 5 ZAR/kg). Plan-tations would receive a lower price but higher premium(23+ 12 ZAR/kg) earmarked for workers and the localcommunity. However, the total price was still belowtheir CoSP.

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When the Standards Unit presented the pricing modelat the SC meeting in November 2007, they describedit as a “middle ground between CoSPs of hired laborand small farmers. We decided to make a compromise.”Discussions revealed enduring disunity among stake-holders. Whereas the ATO representative disputed theproposed price as being too low, other committee mem-bers regarded it as too high: “We are now looking at aminimum that is less than what small farmers are gettingand double what the hired labor [large plantations] claimthey need. Why is that a good solution?” the commit-tee chair asked provocatively. Even though the rooiboscase was acknowledged to be “emotionally and politi-cally charged” (SC member), deliberants reminded eachother that the role of the committee was to make rationaldecisions based on facts. A committee member asked,“Do we make decisions based on an emotional and polit-ical factors or a systematic process?” Urging other mem-bers to return to being impartial, the standards directoremphasized the importance of creating a “level playingfield.” He also invoked urgency to encourage a decision,arguing that “the season starts now in rooibos. If wedon’t want to miss the whole harvest [then] we cannotdelay this too much.”

Despite a lengthy deliberative process, parties couldnot unanimously agree. They acknowledged that “we arenot going to satisfy everybody’s definition of fair price,”a standards officer observed. A labeling initiative repre-sentative made a conciliatory move when commentingon the price proposal:

I am happy with the reasoning. I think it is creative andsolves the basic problems. The reasoning of some tradersto say that prices should be set to maximize sales—thatis not Fairtrade! But I am not convinced either that weshould take the costs of small producers as the reference.I have a feeling that the outcome is one that I couldsupport.

Other SC members agreed, though they were hesi-tant: “I don’t see another option,” and “in the contextI think it is the best solution.” The pricing formulapassed not by consensus but by narrow majority vote.An SC member later rationalized the outcome as a truce,where “in the end no one is happy,” but “you met in themiddle.” In the official press release (Fairtrade Interna-tional 2007), the truce was celebrated as an achievementbecause it balanced conflicting viewpoints and “ensuredthat small farmers and plantations have the same mar-ket access opportunities for their rooibos tea.” Althoughsome still doubted the fairness of the decision, they nev-ertheless compromised to achieve an agreement afterprotracted deliberations.

A Model of Ethics as SensemakingHow did Fairtrade actors make judgments amid consid-erable ethical ambiguity? How was an acceptable pric-ing decision reached that all participants saw as fair?

By analyzing our data across the three price projects,we sought an explanation of how actors made sense ofwhat is ethical and reached a provisional truce. This iscaptured by a model, which we develop in two parts.First, we explain mechanisms through which participantsmake sense of ethical complexity. Second, we explainhow deliberants reach temporary resting points. Cyclingthrough rounds of sensemaking enables participants toreach an ethical truce.

Part 1: Making Sense of the Tension BetweenUniversality and Particularity in Setting Fair PricesOur fieldwork in three Fairtrade Minimum Price projectsrevealed formidable challenges in setting “global stan-dards of fairness” (Fairtrade International 2008). Ouranalysis indicates that reaching consensus on contentiousethical issues involved a twofold challenge. On theone hand, the decision-making process had to be seenas objective, replicable, and impartial so that Fair-trade could claim being fair across various price-settingprojects. During deliberations, interlocutors had to makemorally “valid” arguments that could lay claim to univer-salizable reason as opposed to reflecting parochial opin-ions. In negotiations over prices, the “rationale” behind aparticular argument had to both be accepted by parties inthe dialogue (internal validity) and be justifiable to exter-nal parties (external validity) such as buyers of Fairtrade-certified products. SC members would accuse each otheras being “irrational” or “emotional” when someone’smoral claims were put forward as a mere “opinion”and lacked grounding in sound, objective, and defensi-ble reasoning. Similarly, an SC member frequently notedhow “irrational decisions” put “our credibility and rep-utation at risk.” The standards director explained theconcern about justifying pricing decisions to externalaudiences: “Because of our accountability, we have tomake sure that we put our decisions on solid ground-ing.” On the other hand, being fair also challenged Fair-trade staff to consider and, at times, accommodate theparticularities of concrete situations not amenable to uni-versalizable standards of fairness. Each situation wasunique and revealed new, ambiguous, unsettled, or unre-solved ethical questions. A pricing officer described herexperience: “When I wasn’t in Fairtrade yet, I thoughtthe minimum price was a good idea, and that it wassimple 0 0 0but then 0 0 0 there are so many different things,which you cannot know in advance.” Judgments oftenhad to be made under considerable ambiguity, uncer-tainty, and conflict, with multiple parties competing overdifferent interpretations and courses of action.

Emergent contingencies required deliberants to exer-cise contextual judgments within the general frame-work for decision making. We refer to ongoing iterationbetween universalizable reason and contextual judg-ment as ethics as sensemaking. Excessive universal-izing risked bureaucratization, depersonalization, and

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Figure 3 (Color online) Sensemaking Mechanisms to Cope with the Tensions Between Universalizable Reason (Aimed atUniversality) and Contextual Judgment (Attending to Particularity)

ing

disregard of the particular. Excessive particularizingrisked partisanship, arbitrariness, and ad hocism thatcould compromise the deliberative process. To reacha shared position, Fairtrade continually balanced uni-versalizable reason and contextual judgment. Figure 3depicts this ongoing tension. In the three pricingprojects, we identified three distinct yet interrelatedsensemaking mechanisms through which participants inthe dialogue established valid arguments and abstractedfrom ethical complexity: formatting� proceduralizing,and decentering. These were geared toward the uni-versal principles of factuality, replicability, and impar-tiality. Through these processes, deliberants sought totranscend the particularities of individual cases whilecontinually challenged by definitional ambiguities, localexigencies, and social attachments that required contex-tual judgments.

Formatting� Across all three price projects, we ob-served that participants tried to ground their reasoningin more generalizable formats and schemas that werepotentially applicable across individual cases. Format-ting involves converting idiosyncratic aspects of a com-plex ethical issue into a common metric, and it wasachieved through the use of a technical methodology ofcalculating the average CoSP, as defined in Fairtrade’sstandard operating procedure. CoSP methodology had adual purpose. On the one hand, it provided parties witha common “official” language that all could understandand served as a sensemaking device to guide delibera-tions. CoSP provided, at least in theory, a “simple way ofcalculating” the FTMP. Grounding disparate qualitativeinformation about individual producers in recognizable,objective formats could reduce complexity and enablewhat appeared to be a more rational dialogue. A stan-dards officer emphasized this:

We need to collect as many facts as we can � � � � Okay,we will never have a perfect price, even if we have thou-sands of observations, but still, having there the informa-tion helps people to make a decision at another level, atthe SC, to make informed decisions, and that is backed

up by all the charts that we provide � � � � We are try-ing very hard � � � to be based on facts and information,and facts � � �mean numbers, and information means fac-tual information, such as the impact of a certain price onmarket demand.

On the other hand, formatting through CoSP allowedparties to increase the moral validity of their reason-ing by providing an objective justification. This explainsFairtrade’s concern to show that an FTMP was not apolitically motivated outcome (even though respondentsnoted that “there is plenty of politics in the StandardsCommittee”) but rather a function of technical CoSP cal-culations. A standards officer explained the importanceof factual evidence to justify price decisions:

The best decision, or the right decision, when you actunder uncertainty, � � �means having done really goodresearch to back up the decision you make, and it’s alsothe difference between a high-quality, well-researcheddecision that is based on facts, research, knowledge ver-sus a political decision based on kinds of passion andconcerns of strong concerns of different actors.

Political confrontations were often tamed by a refer-ence to CoSP as an objective arbiter of ethics that leftparticipants with little choice but to agree with a “tech-nically correct” figure. Formatting transforms qualitativedifferences into a comparable common metric or gener-alizable representation (Espeland and Stevens 1998). Ittakes advantage of the “naturalizing power of numbersand calculative procedures” to mask normative choicesand subjective judgments with the “putative objectivityof computations” (Meyer and Höllerer 2010, p. 1258)and to develop factual “truth” through a reliance onnumbers and rigorous methodologies (Porter 1996). Thefigures, numbers, and methodologies do not representfactual truths, but formatting serves as a tool to constructan intersubjective sense of factuality and facilitate theemergence of a consensus.

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Proceduralizing2 Valid reasoning involves systematicprocedures that ensure consistency and replicability indecision making. In our case, proceduralizing was meantto structure decision processes and ensure access todemocratic participation, transparent decision making,and consistency among pricing projects. A pricing offi-cer explained that “this is our obligation towards pro-ducers, participants in the trade, and members of ourown organization to maintain transparent processes andpractice democratic decision making.” Standard operat-ing procedures were instituted across all steps of pricesetting; problem recognition and research; and consul-tation, deliberation, and decision evaluation. These pro-cedures regulated decision making by imposing a checkon subjectivity and discretionary adjustments to reducethe effect of personal biases or preferences. As a pro-cess, deciding on what was fair became, in the wordsof a producer consultant, “manageable, calculable, andpredictable.”

Proceduralizing involves being systematic to ensureconsistent treatment. In the cotton price project, theimportance of procedures was highlighted by a breachin accepted procedures. Fairtrade staff were outragedwhen a Standards Committee member managed to pushthrough an “ad hoc” rise of the FTMP following a fieldvisit to India. A staff member expressed this outrage:“FLO has to be consistent and cannot say ‘yes’ to someand ‘no’ to others when the cases are equal.” Follow-ing procedures systematically ensured that every stake-holder was treated equally and that their concerns weregiven equal weight. A producer consultant responsiblefor India condemned the “quick fix” because she hadwitnessed many urgent cases in her everyday activities:“What 0 0 0 these guys saw once is what we see every day!And it’s all urgent to us!” She argued,

The way we deal with it is that we have to becomesystematic! 0 0 0 So we have to become rational, or we justbecome ad hoc and absolutely useless to the producerbecause we are supposed to be business consultants. Sowe have to put our business consulting hat on. We stillfeel very passionate and want everything to be done 0 0 0 0But we also have to face the producers and we have tobe fair to everyone, and we have to rationalize out wherewe can help them and where we know we have to feedinto a larger process. Prioritize what is urgent [and] whatis not urgent.

Being systematic was seen as being fair to every-one because it regulated decision making by imposing acheck on subjectivity and arbitrary adjustments. Proce-duralization is a technique to design, regulate, and gov-ern ethical complexity through creating “fair bargainingprocesses” (Habermas 1996b, p. 24) to contain the chaosof fragmentation. For example, producers were aggre-gated into a generalized representation of the “average”producer. Representing individual stakeholders in termsof abstract categories such as “producers” or “traders”

facilitated systematic comparisons and enabled agree-ments. Proceduralizing can thus filter relevant informa-tion from the messy contextual knowledge and create aproceduralized context that can orient deliberants towardshared understandings.

Decentering2 In addition to the participants’ pressuresto be “fair to everyone,” we observed that the validity ofarguments was also based on participants’ ability to tran-scend their subjective positions and detach themselvesfrom personal attachments to reach intersubjective mean-ing. For instance, the Standards Committee saw its roleas one seeking common ground amid diverse perspec-tives and making neutral decisions. A committee mem-ber explained that all participants had individual interestsbut were expected to transcend their parochial intereststhrough deliberations and take a generalized viewpoint:

We come there as individuals from different stakeholdergroups 0 0 0 0 But I’m certainly not representing the LI’s[labeling initiative’s] viewpoint 0 0 0 0 We have some kindof middleman position where we need to understand andrecognize everybody’s concerns.

To make their arguments valid, deliberants needed toshow dispassionate reasoning and impartiality weighing“a comment from stakeholder 1 as much as a commentfrom stakeholder 2,” as a standards officer stressed. Fail-ure to decenter and transcend individual or group interestcould be seen as “being irrational,” “politically moti-vated,” or “acting emotionally.” Another standards offi-cer noted the need for neutrality:

It is important as an individual not to become too close toany particular stakeholder in the system. I can certainlysee [that] everyone at Fairtrade needs to appear quiteneutral and not allow himself to become overly involvedwith the needs of certain stakeholders. Maintaining thatbalance is key.

As evident in the discussion on whether rooibos wastea or herb, deliberants couched their arguments in“technical” and “neutral” terms in order to demonstratetheir impartiality and that they acted in the general inter-est, not in their narrow individual or group interest.Similarly, allowing emotions to come into play wouldimpede actors’ ability to see the situation in a “detached”way. Criticizing the “ad hoc” adjustment of the cottonprice, an interviewee argued that impartial moral judg-ments required detachment from social relationships andemotional attachments to particular producers:

I have 100 producer groups [from Fairtrade Asia]; be-tween my colleagues in Africa and Latin America, we’vegot 600! So we cover nearly 600 producers, who wemeet, who we have personal relationships with. I havepeople in producer groups calling my liaison officerswhen they have cancer or when they have grief or what-ever, because of the kind of relationships you are build-ing, you build friendships 0 0 0 0 But in the end, we have tobe neutral!

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Decentering was important for judging the legitimacyof a pricing decision during retrospective evaluation ofthe process. The standards director noted that the lack ofsatisfaction from any particular stakeholder group wasevidence that the outcome represented a “fair” middleground:

It would be a poor decision if we got applause from oneside but got boos from the other side. Because then it’slikely that the balance of stakeholder interests would notbe guaranteed 0 0 0 0 If nobody was satisfied but all say,“Hmm, okay,” then it probably was a good decision.

Learning to view arguments from the others’ stanceinvolves transcending the myopia of individual view-points to achieve an “expanded” perspective (Habermas1996a). Participants “decenter” their partisan perspec-tives to enable the emergence of shared meaning on dis-puted matters.

Bracketing situational contingencies2 Formatting,proceduralizing, and decentering were meant to makesense of ethical complexity and enable intersubjectiveagreement. Paradoxically, however, substantive ques-tions did not disappear but resurfaced in conflictsaround, over, and within these abstraction processes.This led to sensebreaking, or the “breaking down ofmeaning” (Pratt 2000, p. 464). Instead of reducing com-plexity, efforts to format, proceduralize, and decenteropened up more questions that became events for fur-ther sensemaking. Respondents used the term “flag up”to refer to marking issues for closer attention. As Weicket al. (2005) put it, they “bracketed” cues about inter-rupted situations, such as “flagging up the issue of cottonprices in India” (standards officer).

First, although a universal standard of reference wasmeant to be an objective judgment device that enabledtransforming idiosyncratic issues into a generalizableformat, in practice, formatting involved contextual moraljudgments and political decisions. CoSP methodol-ogy had to be interpreted in specific contexts, whichrevealed definitional ambiguities. A standards officernoted its limits:

It’s not like you can just simply apply the [CoSP]methodology; it always depends on how you evaluatethe specific situation. I mean, which criteria do we use?When do we have the feeling that we have enough infor-mation to [make] a decision? And how can we be sureat all that this is the right decision? It’s a really diffi-cult decision-making process and you cannot capture thatwith any methodology. It’s about how do you deal withthe information. What is good CoSP data?

What counted as “facts” was itself the outcome ofpolitical contestation, such as the meaning of sustain-able and average, which could each significantly inflateor deflate CoSP. The case of rooibos showed how CoSPvaried among different types of farmers even within thesame country. In coffee, parties struggled to accurately

compare the CoSP across more than 700,000 farmersand families in over 27 countries and make sense ofhow to calculate the cost of “family labor” in rural farm-ing or to deal with currency fluctuations. External influ-ences such as weather events could also radically affectthe calculation of costs and yields. A standards managerexplained the limits of formatting:

We try to get the CoSP, but in the end there will belimits to the facts because you know that numbers don’treflect reality. We can’t collect complete data. And youcan debate endlessly how a certain issue should be mea-sured, what costs should be counted, and so on. There arehuge areas of definitional questions. So eventually youshouldn’t exaggerate the role of data and the scientificbasis 0 0 0 0 As to what concerns reality, that can deviateto a relatively large extent. So we need to say, “So theseare the numbers, and what does common sense tell us?What do other people tell us? What about nonquantifi-able impacts that we know they exist?” That is part ofthe game.

Thus, despite the technically sophisticated approachto determining fair prices, respondents were well awarethat CoSP measurements could provide “really randomfigures.” A producer consultant dealing with coffee farm-ers explained that “in the end we’re talking about real-ity; we’re not making a book on the minimum wageplus inflation correlated with PPP [purchasing powerparity].” Respondents realized that formatting was anapproximation at best. In coffee, if Fairtrade had useda purely “technical” inflation-adjusted calculation of theoriginal FTMP set in 1989 (USD 1.26/lb.), the increasein FTMP would have exceeded one U.S. dollar ratherthan just five U.S. cents, as agreed in the coffee pricereview. Instead, the FTMP reflected the political con-cerns of mainstream coffee roasters who were opposedto any price increase. This illustrates how political con-siderations could become camouflaged under argumentsaround, over, and within the format.

Second, although procedures were meant to facil-itate fair and democratic processes, they also riskedbecoming bureaucratic and ignoring local circumstances.A standards committee member justified the quick fixfor cotton prices: “A too formal approach satisfies noone’s sense of justice.” A regional manager in the cof-fee project noted that as a procedure, the delibera-tive process “has become such a big monster that it’simpossible 0 0 0 to talk to all of them [producers] and takeinto account all their needs.” He added, “You go toomuch into the process and you forget the people” thatrisked “concealing important differences” by aggregat-ing producers under abstract categories. In some cases,the idiosyncrasies of a particular context could not becaptured in a system of rules and procedures.

Third, the demand to detach oneself from the nexusof relationships often conflicted with parties’ “strong

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attachment, loyalty, and commitment” toward particu-lar producer, as a respondent noted. A relational modelwas anchored in the foundational ethos of Fairtrade asa trading partnership to reembed anonymous exchangeswithin relations of care and solidarity. In the rooiboscase, ATOs refused to detach themselves from the rela-tionships they had cultivated over time. As evident inthe cotton price review, the emotive urgency nourishedby face-to-face encounters made participants view thesame situation in a different light. A field visit to Indialeft one SC member deeply disturbed by witnessing theplight of small cotton farmers. Advocating a quick fix tothe FTMP, a flow of emails marked “urgent” explainedhow “these very poor farmers risk losing out” on “awhole year’s harvest.” The standards director explainedin an email how a single field visit could change one’sreasoning:

Here we see the impacts of a visit on-site! Once youyourself observe reality [up] close you tend to arguedifferently 0 0 0 and with more emphasis on immediate“help” 0 0 0 0

This quote indicates the difficulty of detaching moraljudgment from embodied feelings that were triggered bypersonal experiences. Despite efforts to decenter delib-erants from narrow subject positions, interests wouldalso creep back into deliberative processes. For instance,the negotiations of coffee price were marked by polit-ical wrangling, as small producers rallied for a priceincrease that was resisted by many labelling initiatives.Thus, although the pursuit of impartiality is neces-sary for avoiding partisanship, in practice, people mayjudge through their “gut” feelings and narrow subjectivestances, even if couching their arguments under the veilof objective reasoning.

Part 2: Reaching Temporary Resting PointsDeliberants attempted to reach closures on issues thatgot bracketed, or flagged up. As the almost three-yearduration of the rooibos project indicates, there wasrisk of an eternal regress of more and more issuesbeing bracketed. As parties navigated between conflict-ing demands to both accommodate situational contingen-cies and follow general principles, they risked deadlocksarising from parties holding on to conflicting interpreta-tions about fairness. Yet as the saying “justice delayedis justice denied” suggests, fairness also required that adecision be made at some point, even if it did not satisfyall stakeholders. The standards director acknowledgedthe need to act in the cotton case:

So the dilemma is real, and a dilemma means that what-ever you do you need to be prepared being criticizedsince any decision or outcome to some extent will bewrong, including not acting at all. At the end somebodyneeds to take this responsibility.

We identified two mechanisms through which par-ties arrived at temporary resting points (Weick 2012)on contentious issues, often under pressure to reach adecision in time, such as before the next harvest. Sus-pending intractables involves putting issues off limits,as attending to them in one context could set precedentswith ramifications for other contexts. By contrast, whenactors were able to justify the exceptional nature of acase, which we label exceptionalizing, context-specificadjustments and allowances that deviated from acceptedprocedures and norms were deemed necessary.

Suspending intractables2 In some cases, a restingpoint was reached through the suspension of particulari-ties in action contexts. This required judging an issue as“too fundamental” to tackle. Intractable issues, such asthe meaning of “sustainable” costs of production, weretemporarily suspended for the sake of progress in therooibos case. Parties argued that “the SC cannot takeany decision within five minutes” on this issue. Sim-ilarly, members refused to take a categorical decisionon whether the Fairtrade market should be reserved forsmall farmers or not. A standards officer noted,

Many things that come up in the price-setting processhave a much more fundamental basis, such as who shouldbe our beneficiaries? These are separate questions thatrequire a different approach.

These questions were seen as “fundamental issues”beyond the scope of any particular pricing project. Inthe rooibos case, the politically charged question wasdeflected by categorizing rooibos as a tea (to allow forthe inclusion of large plantations), rather than favoringeither producer type in principle. Suspending involvedprovisionally “closing down” contentious debates and“parking” irresolvable issues till such time they wouldget renewed attention. For instance, in the coffee case,the question of how to include “family labor” in laborcosts was suspended but resulted in a project on the “liv-ing wage.” Through deliberation cycles, parties wouldmomentarily take certain issues out of the agenda whenthey agreed that resolving them would require delibera-tion on the contentious underlying principles.

Exceptionalizing2 In some cases, a resting point wasreached when a systematic application of general princi-ples that ignored “genuine” local concerns was deemed“unfair.” This involved reflexive acknowledgement ofcertain situations as unique and worthy of “makingexceptions” and discretionary judgments. When partiescould establish that a certain case was an exception,they could justifiably deviate from the valid princi-ple and agree on the need for contextual adjustment.In the rooibos case, the Standards Committee decidedthat apartheid legacies “could not be calculated away”and demanded a special pricing formula. The questionof exceptionalizing was also at the core of the cottoncase. Proponents of a quick fix ahead of the regular cot-ton review highlighted the urgency of the situation that

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they argued was “special” and warranted “exceptionalaction.” A standards officer argued, “I can understandyou [Standards Unit colleagues] don’t want to set prece-dents. On the other hand, sometimes exceptional actionis justified.” An SC member respondent noted the fol-lowing in an urgent email:

Could we account for the fact that we repair one currencycase immediately and not all others at the same time?The justification lies in the fact that on second glance notall cases are equal.

In this case, making an exception for the upcomingcotton harvest was justified on the basis of accountingfor arbitrage opportunities arising from the use of dif-ferent currencies in different regions. At the SC meet-ing, a member who had personally met those producersaffected passionately defended a quick fix without duestakeholder consultation: “What should you consult on?‘Do you agree that [the] dollar has lost [its] value?’ ”The committee agreed to adjust cotton prices. Label-ing a particular case as an exception allows deliberantsto justify contextual adjustments and reach temporaryresting points.

Summary of the “Ethics as Sensemaking” Model�Reaching an Ethical Truce. To cope with ethical com-plexity in establishing the meaning of fairness in par-ticular contexts, deliberants strive to balance the ten-sion between universalizing principles and situationalcontingencies using three sensemaking mechanisms: for-matting, proceduralizing, and decentering. However, the

Figure 4 (Color online) A Process Model of Collective Sensemaking on Ethics

complexity of what is fair does not allow the ten-sion to be completely resolved. Situational contingen-cies emerge that resist universalization and get bracketedas unformattable, nonproceduralizable, and nondecen-terable. Residual equivocality leads to sensebreaking andbecomes an occasion for renewed sensemaking. To reachclosure, deliberants then label situational contingenciesas either too fundamental or case specific. Suspendingintractables and exceptionalizing enable progress towardtemporary resting points. Our analysis suggests a recur-sive process. Deliberations engage in ongoing consul-tation and debate, iterating between several rounds ofsensemaking and sensebreaking. Cycling through theserounds, more and more of the bracketed issues are closedthrough resting points, even if temporarily so. Interpre-tations are redrafted and refined in each round of sense-making until an ethical truce emerges. This is not basedon unified consensus. Instead, the model explains howactors deal with conflict in situations where no consen-sual meaning emerges. Parties do not necessarily trans-form their positions radically but shift them sufficientlyto tip the scales toward an agreement. Ethical trucesmay arise not by “the force of the better argument”(Habermas 1996a) but by pragmatic concerns wherebyparties consent for their own different reasons, withoutfully transcending their narrow interests, values, or cul-tural conceptions. Figure 4 illustrates this process.

DiscussionWe sought to understand how organizations seeking toact ethically cope with ethical complexity and reach a

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shared agreement. This was motivated in part by anempirical puzzle: How can a fair price be below the costof sustainable production of small farmers? The answerlies in the definition of what is “fair.” By studying howorganizational participants and stakeholders of Fairtradedeliberated over the meaning of “fair prices,” we gainedinsights into how actors reach ethical truces on contestedissues in morally ambiguous and equivocal contexts. Tobe considered fair, a particular ethical issue has to betreated as a concrete instantiation of a more generaliz-able pattern and thus solved through reference to a gen-eral principle. At the same time, the particular can neverbe entirely subsumed under the general, and fairness alsorequires engaging with “the epistemic significance of theparticular” (Tsoukas 2009, p. 298). We argue that actorscope with ethical complexity through sensemaking—acommunicative process of establishing joint interpreta-tion of ethical issues. To make “something meaningfulout of a mess” and be seen as fair, deliberants wentthrough repeated cycles of sensemaking and sensebreak-ing (Pratt 2000). We explain the mechanisms that enableactors to cope with the “diversity of voices” in particu-lar contexts while maintaining “the unity of reason” thattranscends particular contexts (Habermas 1992, p. 115).Our findings reinforce the potential of adopting a Haber-masian lens infused with sensemaking to explain howactors cope with ethical challenges. Ethical meaningsare neither the outcome of the monological applicationof a universal principle nor explained only by relativis-tic intuition in attending to contextual particularities.Rather, notions of what is ethical or fair are producedthrough sensemaking—an iterative process of deliber-ants going back and forth between general principlesand contextual particularities to create an intersubjectivesense of ethical meaning.

Implications for Organizational EthicsOur analysis of fair price setting in Fairtrade offersinsights into organizational scholarship on ethics. Orga-nizational contexts are ripe with disputes around whatmoral values to invoke and what is fair and justifi-able (e.g., Gehman et al. 2013, Treviño and Weaver2003). Whereas Habermasian approaches (e.g., Schererand Palazzo 2007) explain the normative ideal and thetheoretical possibility of legitimate consensus amongdiverse stakeholders, we highlight how deliberants needto make normative judgments amid considerable ambi-guity and conflict to reach plausible agreements. Sense-making explains how contextual cues get flagged upor bracketed as issues of concern and then linked withabstract and more general categories (Weick et al. 2005).By integrating insights from sensemaking into a Haber-masian approach, we explain intersubjective meaningconstruction, showing how actors continually navigatebetween a universalistic mode of moral reasoning anda particularistic mode of contextual judgment as they

construct the meaning of what is ethical in practice(cf. Gehman et al. 2013). Three main implications fororganizational ethics emerge from our study.

First, although deliberative democracy is a normativetheory outlining the conditions for legitimate consen-sus, ethics as sensemaking offers an analytical approachexplaining how parties reach a shared position in a col-lective process of ethical meaning making. Deliberativetheory does not require consensus to be the inevitableoutcome of deliberation (Habermas 2003). But it isless clear how agreement on the acceptability of dis-puted claims comes about or how parties reach a negoti-ated compromise in the face of persistent disagreements(McCarthy 1996). A sensemaking perspective providesinsights into how deliberants come to handle their dif-ferences and reach ethical truces. Our study suggeststhat ethical sensemaking is a process of “progressiveapproximations,” where deliberants refine and redrafttheir emergent interpretation of the ethical issue “so thatit becomes more comprehensive, incorporates more ofthe observed data, and is more resilient in the face ofcriticism” (Weick et al. 2005, p. 415). We explain howparties may not achieve a substantive consensus yet stilllearn from one another to reach provisional ethical truces(cf. Rao and Kenney 2008) based on varying degreesof shared meaning (Ansari et al. 2013, Donnellon et al.1986). These truces are enabled by temporary restingpoints (Weick 2012) in the ongoing sensemaking pro-cess. Rather than resolving contentious ethical ques-tions, we found that issues that resisted universalizationwere “labeled in ways that predispose people to findcommon ground” (Weick et al. 2005, p. 411), such asbeing “too fundamental,” which allowed for suspendingintractables or justifying exceptions. Thus, intersubjec-tivity may not be strictly about moral validity, where theoutcome is morally right. Instead, the construction ofethical meaning through deliberation may be seen as aprocess that yields plausible ethical truces, which delib-erants can accept without fundamentally shifting theirethical stances, rather than consensual outcomes, wheredeliberants revise their moral positions to one of highermoral validity. Ethical truces are provisional and some-what pragmatic, if not arbitrary, stabilizations of unre-solved and possibly irresolvable ethical debates, whichcan be closed by suspending eternally contentious issues.Thus the meaning of what is ethical resides in the pro-cess rather than the outcome of sensemaking.

Second, we provide insights for addressing a criti-cal question in the ethics literature (Haidt 2001, Sonen-shein 2007, Welsh and Ordóñez 2014): Is moral rea-soning primarily a rational cognitive process based ondeliberation, or is it an emotional process based onmoral intuition and affect? Evidence from our studysuggests that moral reasoning entails both cognitiveand emotional modes of judgment to deal with situa-tional particularities. As Weick (1995, p. 69) suggests,

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a plausible account is one which “captures both feel-ing and thought.” Deliberation involves both the “intel-lectual and the passional” and “desiderative deliberationor deliberative desire” (Nussbaum 1986, pp. 307–308).Deliberants continually navigate the tension betweendispassionate rational arguments and whether something“feels” wrong or right. In real-life ethical dilemmas,individuals carry moral predispositions, including sym-pathy, cooperation, and mutual aid, which Margolis(2004, p. 43) describes as “moral sentiments.” As delib-erants engage with the particularities of a situation, theymay develop bonds and feelings about people potentiallyaffected by a decision. Rather than moral reasoning,their decisions may be shaped by affective judgments(Maitlis et al. 2013), moral intuitions, and immedi-ate reactions to situational contingencies (Zajonc 1980).Moral reasoning may then serve to justify, explain, andrationalize judgments post hoc rather than yielding thosejudgments (Haidt 2001). Individuals do not necessar-ily act like “judges” carefully weighing all availableevidence to adjudicate ethical issues. Rather, they mayact like “attorneys,” using arguments primarily as con-firmatory evidence to justify and rationalize intuitions(Baumeister and Newman 1994). In the cotton case, theStandards Committee member who witnessed producers’plight during a field visit invoked “arbitrage risks” tojustify her feelings and provide a rational basis for mak-ing an exception. The interplay between rational delib-eration and intuitive or affective judgments in ethicallycomplex situations offers an exciting research avenue.

Third, we suggest the need to revisit some of theideals of deliberative democracy elaborated in morerecent debates on political corporate responsibility (e.g.,Scherer and Palazzo 2007). In the Habermasian sense,the notion of “moral rightness” depends on rationalacceptability. But what is rationally acceptable is alsosocially constructed and likely to favor those with accessto “rational” arguments. Whereas democratic dialoguemay reduce the disproportionate influence of powerfulactors, an emphasis on reason giving may prevent themarginalized from articulating their voice, particularly incontexts marked by extreme social inequalities (Fraser1997, Gibson 2012). In the case of Fairtrade, the argu-ments required to maintain the “fairness” of the dia-logue and impartial reasoning were based on invoking“hard” facts and figures that themselves were sociallyconstructed. Other types of arguments were denouncedas irrational or emotional, and thus they were deval-ued. For instance, the debate about whether small farm-ers deserved preferential access to Fairtrade marketswas couched in technical terms over rooibos’s classi-fication as a tea or an herb rather than addressed asan ethical question about apartheid legacies that con-tinued to disadvantage black farmers. This limited thekinds of arguments that qualified as legitimate contribu-tions to the dialogue. Scholars, such as feminist ethicists

(e.g., Held 2006), have argued for preferential treat-ment of some “deserving” parties beyond rational reasongiving. Although this could also throw the deliberativeprocess into normative chaos (Habermas 1996a), in con-texts marked by inequalities, the middle ground betweendifferent positions may not be the most socially bene-ficial (Sunstein 2001), and “extremes” can be justifiedover the common ground (cf. Fraser 1997). Outcomessuch as a fair price need not be presented as substan-tive agreements guaranteeing fairness but as a negotiatedcompromise in need of ongoing debate. If deliberativeprocesses are at the core of how companies engage insetting norms of governance (Scherer and Palazzo 2007),scholars studying these processes need to scrutinize theextent to which the epistemic setup is geared toward notonly hearing the voice but also actively addressing theneeds of marginalized stakeholders.

Implications for SensemakingOur findings also have implications for sensemakingscholars studying how people “produce, negotiate, andsustain a shared sense of meaning” (Gephart et al. 2010,p. 285; see also Maitlis and Christianson 2014). First,although sensemaking is sometimes seen as a largelycognitive process, focused on appraisal and interpreta-tion to develop mental models (Elsbach et al. 2005),we adopt a communicative view in line with the notionof social sensemaking (Gephart 1993). But rather thanfocus on “sensegiving” as a way to persuade others (e.g.,Maitlis 2005), our study shows the collective process ofhow people make sense together under ambiguity andequivocality. “Giving” and “making” sense are simulta-neous processes, where communicating parties suggestand discuss plausible interpretations amid considerableambiguity, uncertainty, and conflict.

Second, scholars have infused the sensemaking liter-ature with time (“temporal sensemaking”; e.g., Kaplanand Orlikowski 2013), power (“political sensemaking”;e.g., Clark and Geppert 2011), materiality (“ecologi-cal sensemaking”; e.g., Whiteman and Cooper 2011),and (“emotions”; e.g., Maitlis et al. 2013). However, weknow little about sensemaking processes in the realm ofethics (Parmar 2014, Sonenshein 2007) and CSR (Basuand Palazzo 2008). Whereas the sensemaking literatureexplains how actors make sense of what to do amiddisorder, chaos, and novelty, our focus on “ethics assensemaking” engages the relatively unexplored dimen-sion of normativity—e.g., what is good or bad, or fairor unfair—in making sense. Normativity suggests thatsensemaking processes are influenced by institutional-ized expectations (Weber and Glynn 2006) of produc-ing accounts that are ethically justifiable. When actorsencounter ethical equivocality, they seek to not only clar-ify what is going on by extracting cues from their imme-diate environment (Weick 1995) but also collectively

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interpret these cues in light of broader ethical principlesto “make sense” of what is plausibly ethical.

This collective construction highlights the present-ori-ented “practical-evaluative” element of agency that isarguably “intrinsically communicative in nature” (Emir-bayer and Mische 1998, p. 995; see also Weick et al.2005). As Sandberg and Tsoukas (2014) note, the re-trospective character of sensemaking inherent in Weick’s(1995) account has come at the expense of studying othertemporal dimensions of sensemaking. Advocates of apost-Weickian approach to sensemaking (Gephart et al.2010, Stigliani and Ravasi 2012) have started to explorethe prospective and not just the retrospective dimen-sions of agency. In this study, we highlight the practical-evaluative element of agency—“the capacity of actors tomake practical and normative judgments 0 0 0 in responseto the emerging demands, dilemmas, and ambiguities ofpresently evolving situations”—which “has been strik-ingly undertheorized by sociological thinkers (Emirbayerand Mische 1998, p. 971). Present-oriented sensemak-ing involves the reflective and interpretive work of socialactors engaged in the iterative exercise of contextualizingjudgment and continually adjusting it to the exigencies oflived situations. In our case, despite set procedures, actorshad to continually deal with the residual equivocality ofethical questions through situated moral judgments in thepresent. Future work can provide a deeper understandingof the present-oriented dimension of sensemaking.

As a single exploratory case, our study raises ques-tions about how our insights apply to other organi-zations. Unlike some organizations, resolving ethicalcomplexity was Fairtrade’s core task. This renderedthe dynamics of theoretical interest more visible, as istypical for “extreme cases” (Pettigrew 1990). In attend-ing to these particularities, we provide “heuristic gen-eralizations” that help us refine the distinctions throughwhich we understand general processes while remain-ing sufficiently open to the particularities emerging inother cases (Tsoukas 2009, p. 287). For example, mostorganizations deal with ethical ambiguities, moral dilem-mas, and norm breaches that require actors to engagewith the meaning of what is ethical in particular con-texts. Codes of conduct have proliferated to prescribemorally sound behaviors (Treviño and Weaver 2003), butthe question remains of how companies balance genericrules with the contextual messiness of situations. Orga-nizational members need to follow general norms thatprescribe appropriate behaviors, yet case particularitiesrequire them to engage in sensemaking to interpret themeaning of what is ethical in a concrete context.

ConclusionCoping with ethical complexity is a key concern fororganizations. Moral philosophies posit different norma-tive bases for determining what is ethical. At one end,

principle-based approaches privilege universal rules. Atthe other end, practice-based approaches privilege situ-ated judgments. Deliberative approaches have sought tobridge this divide by locating ethical validity in inter-subjective positions established through deliberative dia-logue. However, although such approaches provide a newnormative fundament for ethics, they leave open the ques-tion of how the tension between ethical principles andpractice is resolved in concrete deliberative situations.We suggest that the notion of ethics as sensemaking canprovide one possible answer by explaining how deliber-ants iterate between a Kantian universalist mode of moralreasoning and an Aristotelian practical mode of situatedjudgment. Deliberative approaches and sensemaking thusfocus on different aspects of the process of establishingshared meaning. If deliberative approaches focus on thenormative conditions under which communicative ratio-nality can produce intersubjective agreements through“the force of the better argument,” sensemaking shifts thefocus to how plausible arguments emerge in practice.

Based on our ethnographic study of multistakeholdernegotiations about “fair” minimum prices, we found thatdeliberants socially constructed the meaning of whatis fair through a collective social sensemaking pro-cess. This involved five mechanisms. Deliberants madesense through formatting, proceduralizing, and decenter-ing and then dealt with particularities of the situationthrough suspending intractables and exceptionalizing.Rather than making claims to moral rightness, our anal-ysis highlights that agreements are based on approxi-mation and plausibility. When communicative theory isput to work in action contexts, a sensemaking lens canexplain how actors collectively construct a shared mean-ing of what is fair and ethical in practice.

Supplemental MaterialSupplemental material to this paper is available at http://dx.doi.org/10.1287/orsc.2015.0968.

AcknowledgmentsThe authors are grateful to senior editor Klaus Weber and tothree anonymous reviewers for their valuable comments andguidance. They also thank Joep Cornelissen, Thibault Daudi-geos, Tom Lawrence, Guido Palazzo, Nelson Phillips, DavideRavasi, Jorgen Sandberg, and Hari Tsoukas for their feedback.An earlier version of this paper won the Academy of Manage-ment (AOM) Best Environmental and Social Practices paperaward of the Organization and Management Theory division,and the authors thank reviewers for their comments. Partici-pants at the 2013 AOM meeting (Orlando), 2014 OrganisationTheory Research Group meeting (Cambridge, United King-dom), 2014 International Symposium on Process OrganizationStudies (Rhodes), and 2014 European Theory DevelopmentWorkshop (Amsterdam) also provided helpful comments.

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Endnotes1By 2007, the Wupperthal cooperative had grown to 220 mem-bers (each owning an average of 0.68 hectares) producing 120metric tons and the Heiveld cooperative to 49 members (eachowning an average of 5 hectares) producing 38 metric tons,much of which was directly exported into Fairtrade markets atpremium prices.2In the South African context, “colored” refers to mixed race.3In contrast to coffee, which exclusively reserved Fairtradecertification to small producers’ organizations, the tea cate-gory was accessible to hired labor plantations. This anomalycame about from Fairtrade’s involvement in India, where teaproduction was controlled by large plantations—a postcoloniallegacy.

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Juliane Reinecke is associate professor of organizationalbehaviour at Warwick Business School and member of theIndustrial Relations Research Unit at the University of War-wick. She is a research fellow at the Centre for Social Innova-tion, Judge Business School. She received her Ph.D. from theJudge Business School, University of Cambridge. Her researchinterests include sustainability standards; transnational gover-nance and social movements; and focusing on how organiza-tional and political processes shape notions of value, ethics,fairness, sustainability, and responsibility in markets.].

Shaz Ansari is a reader (associate professor) at Judge Busi-ness School, University of Cambridge and visiting faculty atthe Rotterdam School of Management, Erasmus University.He received his Ph.D. from the Judge Business School, Uni-versity of Cambridge. His research interests include institu-tional processes and diffusion of practices, social movements,social and environmental issues in management, technologi-cal and management innovations, value creation, new markets,reputation management, and bottom-of-the-pyramid strategies.

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