Research background

Global corporate scandals such as Enron and Worldcom have led to an assessment of business ethics and corporate social responsibility (Kline, 2006). These events have also caused the interest of academic and business organizations to enhance marketing ethics.

Early marketing ethics theories focused on ethical practices within the areas of marketing research, marketing management, sales, advertising and social marketing (Ferrell and Gresham, 1985; Hunt and Vitell, 2006). However, there was a lack of attention on the buyer side ethics, i.e., consumer ethics, a representative of both within business and marketing ethics (Bateman et al., 2002; Vitell et al., 2001).

Consumer ethics has been defined as the ―rightness as opposed to the wrongness of certain actions on the part of the buyer or potential buyer in consumer situations‖ (Dodge et al., 1996). Examples of unethical behaviors include credit misuse and abuse, purchase of illegal products, misuse of products, fraudulent merchandise returns or requests for warranty service, purchase of counterfeit products, and shoplifting (Fullerton and Punj, 1993). On the other hand, buying environmentally friendly and fairly traded products are two of the most typical examples of ethical buying behaviors (Shaw et al., 2005; Shaw and Newholm, 2002; Shaw and Shiu, 2002).

In essence, Fair Trade (FT) means buying products from producers in developing countries with ―fair price‖ (Bird and Hughes, 1997). The term ―fair price‖ means a price that is higher than would be the case in a free-market situation. It contains a social premium

middlemen who obtain most of the mark-up between producer and consumer. Therefore, Fair Trade can provide better trading conditions for producers and raise awareness among consumers to exercise their purchasing power by means of ethical consumption. In this way, Fair Trade ensures product trade under co-operative rather than competitive trading principles, promising a fair price and fair working conditions for producers (Bird and Hughes, 1997; Shaw and Shiu, 2003). The major goals of Fair Trade are as follows (Redfern and Snedker, 2002):

1. To improve the livelihoods and well-being of producers by improving market access, strengthening producer organizations, paying a better price and providing continuity in the trading relationship.

2. To promote development opportunities for disadvantaged producers, especially women and indigenous people, and to protect children from exploitation in the production process.

3. To raise awareness among consumers of the negative effects on producers of international trade so that they exercise their purchasing power positively.

4. To set an example of partnership in trade through dialogue, transparency and respect.

5. To campaign for changes in the rules and practice of conventional international trade.

6. To protect human rights by promoting social justice, sound environmental practices and economic security.

Global Fair Trade sales have soared over the past decade. It is the Fair Trade‘s new global strategy to emphasize the aim of empowering producers to improve their own lives.

Therefore, marginalized farming communities throughout the world benefit from Fair Trade

conditions. According to the 2008-09 annual report of Fairtrade Labelling Organizations International (FLO)¹, there were 746 certified Fair Trade producers worldwide and over 6,000 Fair Trade certified products available to consumers by the end of 2008. For example, sales of bananas grew by 28% to almost 300,000 metric tons, sales of tea doubled, and sales of cotton almost doubled. More detailed items and figures are listed in Table 1.1. The sales grew at least 20% in many countries, seven of them outgrowing by 50% or more:

Australia/New Zealand, Finland, Canada, Denmark, Norway, Sweden, and Germany (as seen in Table 1.2).

1 The Fairtrade Labelling Organizations International (FLO), created in 1997, is an association of three producer networks and twenty national labeling initiatives that promote and market the Fair Trade Certification Mark in their countries. The FLO labeling system is the largest and most widely recognized standard-setting and certification body for labeled

Table 1.1 Sales in volume and retail value by product

Product UNIT Conventional Organic Total 2008 Growth Rate

BANANA MT 209,400 89,805 299,205 28%

COCA beans MT 5,336 4,962 10,299 N/A^*

COFFEE roasted MT 34,135 31,673 65,808 14%

COTTON 1000 items 25,280 2,292 27,573 94%

FLOWERS and plants 1000 items 311,685 311,685 31%

FRESH FRUIT MT 25,288 1,136 26,424 1%

FRUIT JUICE MT 27,626 593 28,219 11%

HONEY MT 1,727 328 2,055 22%

RICE MT 2,615 2,070 4,685 11%

SPORTS BALLS 1000 ^items 141 141 2%

SUGAR ^{cane sugar} MT 49,673 7,317 56,990 N/A^*

TEA MT 9,515 1,952 11.467 112%

WINE 1000 ^items 5,831 3,151 8,982 57%

Source: http://www.fairtrade.net/annual_reports.html

* N/A due to new calculations methods for 2008 not allowing to compare data from previous years.

Table 1.2 Sales in volume and retail value by nation

LI 2007 2008 Growth Rate

AUS/NZ 10,800,000 18,567,280 72%^*

AUSTRIA 52,794,306 65,200,000 23%

BELGIUM 35,000,000 45,780,141 31%

CANADA 79,628,241 128,545,666 67%^*

DENMARK 39,559,534 51,220,106 40%

FINLAND 34,643,000 54,445,645 57%

LFO EV _ 127,297 127,297%^**

FRANCE 210,000,000 255,570,000 22%

GERMANY 141,686,350 212,798,451 50%

IRELAND 23,335,678 30,131,421 29%

ITALY 39,000,000 41,180,027 6%

JAPAN 6,200,000 9,567,132 44%^*

LUXEMBURG 3,200,000 4,249,301 33%

NETHERLANDS 47,500,000 60,913,968 28%

NORWAY 18,069,198 30,961,160 73%^*

SPAIN 3,928,213 5,483,106 40%

SWEDEN 42,546,039 72,830,302 75%^*

SWITZERLAND 158,101,911 168,766,526 7%

UK 704,314,576 880,620,304 43%^*

USA 730,820,000 757,753,382 10%^*

GLOBAL TOTAL 2,318,127,046 2,894,711,217 22%

Source: http://www.fairtrade.net/annual_reports.html Unit: EUR

* These growth rates are based on the percentage increase as reported in the local currency, not on the value converted into Euros.

** Whole-sale value of all other countries.

As to Fair Trade in Taiwan, consumers are just awakening to this trend. Although there

phenomenon suggests a great potential for the development of FT movement in Taiwan.

ökogreen (Eco-Green), the first shop licensed by FLO among the Chinese region in 2007, launched a website and blog to promote its core value (―Must Be Fair‖) and provide information regarding Fair Trade. Thus, by consulting the website, consumers can easily access information that might otherwise remain unknown to them.

Despite the substantial growth of the Fair Trade movement and of consumption around the world, there have been few studies on how consumers process their purchasing decisions regarding Fair Trade products. In Taiwan, neither are there many consumers aware of Fair Trade, nor are their purchase intentions toward Fair Trade commodities understood. It is the interest of this study to explore the influential factors of purchasing regarding FT. Also, the Internet has proven an effective communication mechanism on the transmission and reproduction of information. Therefore, the role of the Internet on information transmission is also investigated together with consumers‘ trust of the information source (i.e. website).

In sum, the aim of this study is to present a framework for purchase intention toward Fair Trade products in Taiwan. Implications for academic research and related industries in practice are also offered.