Fairphone: Ethical Smartphone Production - A Case Study Analysis

This case study examines Fairphone, a Netherlands-based smartphone company, and its commitment to ethical manufacturing and social entrepreneurship. The analysis explores Fairphone's unique approach to the mobile phone industry, focusing on its efforts to create a fair supply chain, particularly concerning the sourcing of raw materials from the Democratic Republic of Congo (DRC). The study delves into Fairphone's traits, characteristics, and the challenges it faces, such as funding, mission maintenance, and communication of its value proposition. The assignment highlights Fairphone's commitment to eco-friendly devices, user-friendly designs, and fair working conditions, contrasting its practices with those of traditional smartphone manufacturers. The conclusion emphasizes the importance of people over profit in entrepreneurship and the impact of Fairphone's ethical model.

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SOCIAL ENTREPRENEURSHIP
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Executive summary
Entrepreneurship is the process of how to design, launch and operate an enterprise. The smart
phone companies manufacture their products with the aim of making money. This aspect has led
to many of them to engage in exploitative activities which are against human rights. Most of the
raw materials used in the manufacture of smart phones are mined in DRC some of which the
companies use children. The country has remained unstable for a long period of time since it’s
referred to as a “mineral conflict zone” where each and every entrepreneur and company
maneuvers its own ways of getting the raw materials without caring about the social welfare of
the Congolese. The products manufactured too are exploitative in nature since the company fixes
the devices with features that only the manufacturer can handle in case of damage. The
Fairphone Company considers social entrepreneurship as the sole purpose to operate in the
technology industry.
Introduction
For the success of any enterprise, a well laid down strategy has to be made with an aim of
winning in the competitive market. This has made so many companies to overlook and violate
human rights in a bid to secure a stable ground in the entrepreneurship world. From materials
acquisition to working conditions, human rights are not adhered to. The products manufactured
are designed that even at a slight damage, the company that manufactured it benefits either
directly or indirectly. Fairphone consideration is on the social entrepreneurship first before it
aims at making profit.

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Traits and characteristics
Fairphone company like any other smart phone manufacturing company is aimed at making
profit. Contrary to its counterparts, Fairphone does it on the principle of fairness. Phones
manufacturing raw materials such as titanium and gold are mined in DRC an unstable country in
central Africa which due to its minerals has always remained a conflict zone (Biedenkopf, Van
Eynde & Bachus 2019 p. 49). Many smart phone manufacturing companies acquire their raw
materials from here through fraud and violation of human rights as it is evident in some
companies using children to mine titanium. Fairphone also acquires some materials from here
but fairly through small mining firms. The company does this with the aim of putting human
interest first other than profits.
Based on the company’s purpose to ensure eco-friendly devices, the company manufactures
user-friendly phones which are easy to repair in case of damage. The company’s aim is to make
it possible for the phone owner to be able to make repairs instead of relying on the professionals
who may be unreliable (Haucke 2018 p. 1723). The company also sells spare parts and
upgrading dices to enable customers upgrade with technological advancements instead of having
to buy an upgraded device all over again. This is evident is the recent cancellation of the
fairphone 3 roll out in a bid to upgrade fairphone 2. This implies that the company is more
concerned with the social entrepreneurship that is concerned with putting people first other than
just acquiring their money.
Fairphone though aimed at profit making, has got good working conditions for its employees.
Contrary to most of the smart phone manufacturing companies where employees work up to 60
hours in a week, the company has manageable working hours for its employees. The company

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provides beverages and lunch for its employees without any discrimination. The employees are
still provided with free bus pass thus making the environment conducive to work in (Akemu,
Whiteman & Kennedy 2016 p. 863). Everyone’s effort is considered important and the company
CEO Bas van Abel has inculcated the sense that the entire society is an ecosystem therefore
everyone thinks and acts differently and ought to be appreciated.
Acting in line with its purpose, has stabilized the base and the motive of the company
(Montgomery 2015 p. 16). The company though aimed at making tremendous growth and
profits, it has constantly denied walking down the aisle in that direction as its counterparts. It’s
clearly stated in the company that fairness can inform the production and sale of the company
products. This has helped the company to stay away from competing to win in the global market
and has allowed its purpose to market it (Wyne and Philishia 2017 p. 7). The company CEO has
won several awards due to the motives that the company is committed to ensure it making long-
lasting phones reduce the aggressiveness of minerals sourcing at the expense of human beings
and reduce amount of electronic waste which impacts negatively on human health.
Challenges facing social entrepreneurship
Funding is among the top challenges facing social entrepreneurship. Most social enterprises lack
a solid economic base to run its activities since it is usually attached to the social value hence
non-profit. It takes long periods of time to get a financier who would carry on the idea
(Assenova, Best, Cagney, Ellenoff, Karas, Moon, Sorenson 2016 p. 131). Donors and well
wishers too may or not show up at the promised time of intervention an aspect that paralyses all
the activities and leads failure. Approaching sponsors too is tedious since the bearer has to

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struggle to put the idea in the persons mind. Those who accept the plea sometimes support the
enterprise with too little money that cannot make it possible for the objectives to be achieved.
Mission maintenance is difficult because social enterprises are always attached a social value.
This means that the enterprise is purely non-profit and any time the focus is shifted to profit
making, well-wishers, sponsors and donors withdraw. This therefore means the enterprise will
not only lose trust but also will end up paralyzed (Bacq and Eddleston 2018 p. 603). Anytime one
wishes to start a social enterprise, ability to stay on Corse and the purpose of the enterprise
should be re-evaluated to ensure frustrations are avoided at all cost. Strategies of the enterprise
can be changed for the benefit of the organization but the mission should remain intact because
when it is change, a wave of confusion sets in and disorganizes everything.
Inability to communicate value objectivity makes it difficult for a social enterprise to operate.
Due to the fact that it is impossible to measure the social value, then communicating the bottom
line to financiers, investors, donors and the general community becomes difficult (Pan, Gruber,
& Binder 2019 p. 213). To remain convincing, one has to be precisely objective and have facts to
show so as to capture the attention of all the stakeholders and keep the enterprise on the move.
Clear updates on income and expenditure have to be kept streaming to the desks of those who
fund the enterprise otherwise support will be terminated.
Conclusion
Entrepreneurship being a process of establishing and operating a business strategy has more to
do with people rather than just on making profit. Fairphone Company is aimed at catering for the
social needs first then allows the fairness to market its manufactured phones. The company

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operates on the principle of fairness thus provides a good working environment for employees
and manufactures eco-friendly devices that pose minimal risk to human health. Among the
challenges that face social entrepreneurship are funding which results from lack of an economic
base, mission maintenance and inability to communicate objectivity to all the stakeholders.

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References
Akemu, O., Whiteman, G. and Kennedy, S. (2016) ‘Social Enterprise Emergence from Social
Movement Activism: The Fairphone Case’, Journal of Management Studies, 53(5), pp. 846–877.
doi: 10.1111/joms.12208.
Assenova, V., Best, J., Cagney, M., Ellenoff, D., Karas, K., Moon, J., … Assenova, V. (2016)
‘The Present and Future of Crowdfunding’, California Management Review, 58(2), pp. 125–135.
doi: 10.1525/cmr.2016.58.2.125.
Bacq, S. and Eddleston, K. A. (2018) ‘A Resource-Based View of Social Entrepreneurship: How
Stewardship Culture Benefits Scale of Social Impact’, Journal of Business Ethics, 152(3), pp.
589–611. doi: 10.1007/s10551-016-3317-1.
Biedenkopf, K., Van Eynde, S. and Bachus, K. (2019) ‘Environmental, climate and social
leadership of small enterprises: Fairphone’s step-by-step approach’, Environmental Politics,
28(1), pp. 43–63. doi: 10.1080/09644016.2019.1521927.
Haucke, F. V. (2018) ‘Smartphone-enabled social change: Evidence from the Fairphone case?’,
Journal of Cleaner Production, 197, pp. 1719–1730. doi: 10.1016/j.jclepro.2017.07.014.
Montgomery, A. (2015) ‘Designing the Fairphone 2 - “the world’s most ethical smartphone”’,
Design Week (Online Edition), p. 6. Available at: http://search.ebscohost.com/login.aspx?
direct=true&db=buh&AN=103356818&site=ehost-live (Accessed: 4 April 2019).

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Pan, N. D., Gruber, M. and Binder, J. (2019) ‘Painting with All the Colors: The Value of Social
Identity Theory for Understanding Social Entrepreneurship’, Academy of Management Review,
44(1), pp. 213–215. doi: 10.5465/amr.2017.0504.
Robert Wyne and Philishia (2017) ‘Fairphone focuses on material supply’ Metal Bulletin, p. 59.
Available at: http://search.ebscohost.com/login.aspx?
direct=true&db=buh&AN=121982319&site=ehost-live (Accessed: 4 April 2019).