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Market Performance and Food Safety Compliance for Small Food Businesses: The Case of Fifth Town Artisan Cheese a

Dr Sylvain Charlebois PhD a

University of Guelph, Department of Marketing and Consumer Studies, 50 Stone Road, Guelph, Ontario, Canada Accepted author version posted online: 01 Apr 2015.

Click for updates To cite this article: Dr Sylvain Charlebois PhD (2015): Market Performance and Food Safety Compliance for Small Food Businesses: The Case of Fifth Town Artisan Cheese, Critical Reviews in Food Science and Nutrition, DOI: 10.1080/10408398.2013.848423 To link to this article: http://dx.doi.org/10.1080/10408398.2013.848423

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ACCEPTED MANUSCRIPT Market performance and food safety compliance for small food businesses: The case of Fifth Town Artisan Cheese Dr Sylvain Charlebois PhD (Corresponding Author) Email: [email protected] University of Guelph, Department of Marketing and Consumer Studies, 50 Stone Road, Downloaded by [University of Guelph] at 05:03 27 June 2015

Guelph, Ontario, Canada Abstract Few studies have investigated how small businesses in the food sector cope with federally mandated recalls. The available literature is also unclear as to how small businesses, particularly those in food production with limited resources, manage with newly approved regulations, while working to achieve commercial success. The aim of this paper is to address this information gap through the exploration of how one firm coped with a situation that threatened its existence. This study will explore links between small firms, supply-chain resources for small food businesses and food safety regimes. This study is based on a recall experienced by an artisan cheese maker in Prince Edward County in Ontario, Canada, called Fifth Town Cheese (FTC). A conceptual framework was developed and results are presented. Finally, the paper concludes with theoretical and managerial implications, and presents avenues for future research.

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ACCEPTED MANUSCRIPT Introduction Small to medium-sized enterprises (SMEs) in the food sector make substantial contributions to national economies, and are estimated to account for the lion’s share of job growth in rural communities. Throughout the industrialized world, consumer interest in local and regional food products is increasing, to the benefit of SMEs. Many types of food have occupied fragmented

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markets for decades, allowing some companies to capitalize on this momentum. Artisan and farmstead cheeses, in particular, continue to drive the growth of small-scale cheese making operations. There is some evidence in the literature that suggests that niche-marketing strategy is a popular alternative for SMEs, particularly in food marketing (Dalgic and Leeuw, 1994). This strategy seems to be beneficial for some firms, since such markets have proven to be more profitable. For example, many consumers are committed to sustainable methods of living, and expect firms to adhere to a similar set of principles. Over the past few years growing environmental awareness, coupled with concerns about individual health and quality of diet, have led many people to question modern agricultural practices (Latacz-Lohmann and Foster, 1997). As a result, many SMEs in food production have demonstrated their capacity to capitalize on the increasing diversity in consumer tastes and habits, as well as the changing needs of business and organisational markets, which seem to favour smaller, nimbler firms that can better tailor their offerings to an increasingly fragmented market (Toften and Hammervoll, 2009). Specialization or niche marketing requires SMEs greater access to resources to support their strategies, and may

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ACCEPTED MANUSCRIPT even increase managerial risks (Yapp and Fairman, 2005). These risks can be related to food safety. Some have made the case for SMEs to be considered separately from larger enterprises in terms of their food safety practices, approaches and how they manage systemic risks (Kelepouris, Pramatari and Doukidis, 2007; Withers and Ebrahimpour, 2013). In fact, the category of SME is


too broad and heterogeneous to be examined without further differentiation. In Canada, the definition of SME is an enterprise of fewer than 500 employees and less than $50 million CAD in gross revenue. Within this category, "small business" is defined as an enterprise of fewer than 100 employees (for goods-producing firm) or 50 employees (service-producing firm). This study focused deliberately on this latter category of the “small business”, as they are often more strapped for cash and other resources than large organizations (Fenwick, 2010). Few studies have investigated how small businesses in the food sector cope with federally mandated recalls. The available literature is also unclear as to how small businesses, particularly those in food production with limited resources, manage with newly approved regulations while working to achieve commercial success. The aim of this paper is to address this information gap through the exploration of how one firm coped with a situation that threatened its existence. In this study, we first draw from past studies on small businesses in the food sector. The paper will also review what is known about the link between small firms, food safety, and supply-chain support and how food recalls may influence the destiny of a small business. The methods and results are related to a unique case study about an artisan cheese maker called Fifth Town Cheese (FTC), a company which employed 16 people that was affected by a food recall in February

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ACCEPTED MANUSCRIPT 2012. Fifth Town Cheese’s mission and vision and commitment to sustainable methods of production were challenged when the company was asked to comply with these new regulations. The study proposes an exploratory journey into an artisan cheese maker’s unpredictable encounter with its country’s food safety regime. In this paper, answers to the following questions are suggested: (a) why do small businesses in the food sector demonstrate starkly unique market


positioning to bring safe products to market? (b) How do the design of their supply chain and know-how affect their ability to cope with a food safety regulatory regime? Last, (c) how do small businesses in the food sector perform in the market place when asked to comply with regulations which may not be compatible to their mission and vision? This case describes the incident and the aftermath by interpreting theories concerning areas of small businesses, food safety crises and regulation compliance. For this study, a conceptual framework on small food businesses, supply-chains, food safety and recalls was developed based on completing interviews with key members of FTC. The aim was to identify the stages involved in the food recall that appeared to be particularly problematic for the company. The paper concludes with theoretical and managerial implications, and presents avenues for future research. Small Food Businesses, Networks, Food Safety and Recalls Small food businesses, networks and artisanship Contemporary consumer trends have made small businesses more relevant to the market, as they increasingly support alternatives to the food products found on supermarket shelves, which are

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ACCEPTED MANUSCRIPT mass-produced, denatured and chemically preserved (Workman, 2002; Simmons et al., 2007). On a much smaller scale, the artisanship of food production is also becoming increasingly mainstream. The artisan process admits a range of variations, reflecting changes in ingredients, temperature, and handling (Barling, Sharpe and Lang, 2009). In the growing body of literature on marketing, strategy in small businesses, numerous studies


have challenged the idea that strategic activities of small firms may be valued if such firms make active use of the business networks in which they are embedded (Lamprinopoulou and Tregear, 2011). Supply-chain relationships in food processing have acquired significant importance as it influences the patterning of firms in their ability to adapt more quickly to the needs of consumers, especially of those related to health and safety. It also helps small businesses achieve compliance faster with a number of technology, packaging and environmental laws, with an increased integration between enterprises within production networks (Harrison, 1994). Through supply-chain networks, food processing industries have sought to radically reduce costs and inventory through the development of closer supply relationships, real-time information transfers and the movement towards a market–focused distribution system (Andotra and Pooja, 2009). A firm’s network can also be supported by personal connections and know-how. The necessity to differentiate as a small business does not eliminate the need for validation with individuals involved in similar industries. Some research examined how small firm owner-managers overcome obstacles or challenging situations to achieve their objectives through building strategic links with other firms, or through their personal networks (Gilmore, Carlson and Rocks, 2006; Lamprinopoulou and Tregear, 2011). The artisanship in food making excuses the

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ACCEPTED MANUSCRIPT existence of a community of knowledge, which brings to bear a sense of connectedness within small businesses involved in food production (Dahlberg, 2001). Food safety regime Much of the research on small businesses related to food safety has been focused on the compliance of smaller food processors in developing countries without any market specialization


(Kenny, 2007; Zulfilfly et al. 2010). A significant void exists in the literature around food safety and small businesses that are committed to artisanship and sustainable production practices. Factors such as the intensification of primary and localized food production, increased consumption of counter-ready meals in food service and in the home, along with climate change suggest that further food safety outbreaks are inevitable (Knowles, Moody and McEachern. 2007). Coupled with this movement, global society is experiencing a progressive awakening of food consciousness particularly of its quality and safety (Zulfilfly et al., 2010). But these smaller firms are subject to the same food safety regime as larger companies. Ample case studies have been conducted on food recalls and on its implications on organizations and society alike (Charlebois and Horan, 2010; Charlebois, 2011), but not on artisan-esque production facilities. Besides the costs involved with food safety recalls and outbreaks, these occurrences can potentially do significant harm to the image of the food industry (Verbeke, 2001). More generally, food recalls affect the perceived efficiency of food safety policies and consumer loyalty in civic governance (Frewer and Salter, 2002). Where direct links are shown to occur between a food-borne disease outbreak and small businesses, the results can be financially crippling and can even lead to insolvency (Clayton and Griffith, 2004; Telesca, 2011).

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ACCEPTED MANUSCRIPT As a commodity, cheese has always been subject to food safety scares. In fact, one of the first major microbiological-related incidences reported in Europe to have an adverse effect on consumer perceptions and behaviour throughout Europe was the foodborne pathogen of Salmonella in eggs and cheese in 1988 (Tansey and Worsley, 1999). The food borne transmission of listeriosis possesses a high fatality rate, and was identified as one of the leading causes of fatalities from foodborne disease in many parts of Europe for several years (CEE,


2005). Before Canada, many European countries and the Unites States were experienced major fatal Listeria monocytogenes outbreaks. The seminal work of Beck (1992) contends that distrust is related to uncertainty, risk and fear. Increasing public suspicion and reduced consumer confidence in food safety may have unwanted longitudinal economic effects on the food industry as a whole, which may reach beyond national borders (de Jonge, J. et al.2004). As a result of seeking to nurture a culture of trust with the general public, food safety regimes have become more efficient, as well as imposing. For smaller businesses, larger food safety regimes have become a challenge due their lack of recourse. Enforcement officers or inspectors view compliance as strict conformity for all organizations, regardless of scalability. It has been recognised that the actual process to compliance may include a more socially constructed approach – for example, in the process of negotiation and bargaining between inspectors and the regulated companies (Yapp and Fairman, 2005). Food safety regulations are known to generate more processes and documentation. Regulators expect that the intensive documentation required by food companies would be particularly challenging for artisan food makers. Sweet et al. (2010) have argued that the effect of documentation requirements is exponential in a small business context.

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ACCEPTED MANUSCRIPT Market performance and food safety compliance In the Western world, small businesses are often requested to comply with similar regulations to larger firms operating in the food sector. Larger organizations, which are often more resourceful, tend to fare better when new regulations in the area of food safety are implemented by governments, at times going above and beyond new established regulations (Gunningham,


Kagan and Thornton 2004). Over time, there have been numerous food safety scandals and scares that have created an extensive regulatory regime. As such, regulations that arose out of events provided the food industry with a means of demonstrating safety, facilitating large-scale trade, legitimizing conventional production, and limiting interference into its practices. At the same time, these measures have created systemic fragility and hindered the development of an alternative, small-scale sector (Worosz, Knight and Harris, 2008). In many countries, food safety regulations are implemented by several levels of government, making food safety governance more complex. Hence, it can be argued that small businesses rely on networks and clever market positioning to sustain the impact of food crises generated by unplanned food recalls (see Figure 1). Fifth Town Cheese (FTC) Unique business model Established in 2008, FTC is in many ways a unique small artisan cheese making enterprise. Founded by Petra Kassun-Mutch, the company is a $1.3 million enterprise, producing handmade goat, sheep and cow milk cheeses in a 4,800 square foot facility on the eastern ridge of Prince Edward County in Ontario, Canada. When it was decided that FTC was to be launched,

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ACCEPTED MANUSCRIPT Kasun-Mutch was neither a farmer nor a cheese maker. The need to establish an environmentally and socially responsible artisan-scale dairy in a small town was a priority for her. The goal was for the dairy to leverage and serve local communities, provide economic opportunities for local dairy farms and promote state-of-the-art sustainable strategies in food. Its vision, “to enhance the wellness and quality of life in the community”, establishes a strong rapport between the social


enterprise and the community. FTC became Canada’s eighth B Corporation, equally dedicated to its social priorities. Companies who join the B Cop movement voluntarily meet higher standards of transparency, accountability, and performance. Still recognized as a marginal movement, Certified B Corporations believe that this commitment distinguishes them in a cluttered marketplace by offering a positive vision of an alternative way to conduct business. The region is known for its wine, but not for cheese. FTC was one of few cheese makers in the region, and wanted to build complimentary synergies with the community. FTC was designed as a social purpose business with an environmental consciousness embedded into its mission and vision. It was the first dairy in the world and the only industrial project in Canada to qualify for LEED’s (Leadership in Energy and Environmental Design) top platinum standard (Riedl, 2008; William, 2009; Lapointe, 2010). FTC has won numerous awards for its cheeses and sustainability initiatives, such as using Local Food Plus (LFP) certified milk, which is produced in accordance with humane animal management practices. The dairy is equally conscientious about packaging its products with

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ACCEPTED MANUSCRIPT biodegradable and recyclable materials, printed with water-based ink on post-consumer paper (Lee, 2008). The choice to focus on sustainable methods of artisan cheese making was cost intensive. The LEED certified facility cost more than $400,000 more than a conventional dairy with identical specifications. The additional investment went towards eco-friendly materials and alternative


energy sources. The 9,000 square foot geo-thermal field and 12 tonne heat exchanger reduce heating costs, while wind and solar installations provide hydro. As a result of these investments, Fifth Town runs on approximately 69% less energy and uses 62% less water than a conventional facility (Jen, 2009). FTC had 11 people on staff, including the owner and cheese maker, and produced seven kinds of cheeses, all distributed across the country and sold to main Canadian food retailers (Bain, 2010). FTC products sold very well from the outset. The company attracted more than 5,000 people to its retail location weekly, and earned $1.5 million in its first 18 months. The business was devoted to a niche market composed of urbanites, or consumers with an acute interest in genuine food, looking for a different product and experience. Given that Picton is remotely located, numbers were supported by a strong community, good marketing, and a committed staff and a well executed strategy. At its peak, FTC grew to over 16 employees, had seven farm suppliers and generated over $1.4 million in annual revenues. The 2008 Maple Leaf recall Worth mentioning is the context in which the FTC food recall occurred. In food crises, context often has a great impact on risk perception and management (Grunert, 2005). In 2008, while FTC

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ACCEPTED MANUSCRIPT was starting its operations, Canada experienced its largest food recall in its history, and one of the most fatal ones as well. Maple Leaf, one of Canada’s largest food processor, issued a voluntary recall of more than 200 of its products due to a Listeria monocytogenes outbreak. As a result, 23 consumers died of foodborne contamination. Before this recall, Canada did not experience any significant Listeria outbreaks.


Following the Maple Leaf incident, an independent investigation was ordered by the Federal Government (CanadaNewsWire, 2009) and changes in international food safety guidance on Listeria monocytogenes instituted by the Codex Alimentarius in 2009 occurred at the same time. These events led to the implementation of the 2011 Health Canada Policy on Listeria monocytogenes in ready-to-eat foods, which was shared with the industry in a presentation at meetings held during March and April 2012 (Cribb, 2009). FTC’s facility, business plan and launch of operations all came into fruition before, during and in the wake of the Maple Leaf recall and subsequent implementation of new food safety regulations related to Listeria monocytogenes. The recall On January 27th, 2012, Ontario Ministry of Agriculture and Food (OMAF) officials visited FTC to gather samples of finished product. A total of 10 samples of FTC Chevre and five wedges (not wheels) of Bonnie & Floyd (Sheep milk washed rind) were taken for testing. On February 7th, at 12:46 pm, FTC received a call from OMAF informing the cheese maker that two of five wedges of Bonnie & Floyd tested positive for Listeria monocytogenes detection. Tests for 10 samples of Chevre were negative. A voluntary recall of Bonnie and Floyd was immediately called by FTC.

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ACCEPTED MANUSCRIPT Most recalls in Canada are voluntary, which means that the recalls are initiated and carried out by the responsible company. The Canadian Food Inspection Agency (CFIA) works with the company to ensure that the recall was effective at removing products from the market. As part of the food recall process in Canada, the CFIA works in collaboration with federal and provincial partners (OMAF). The CFIA was notified on February 8 th, and the investigation itself started the


following day. No illnesses were reported throughout the entire recall process. On February 9th, as per protocol, the CFIA conducted its own tests of 45 wheels of cheese (approximately 90 kilograms). Environmental Swabs were also conducted (approximately 20 of high risk areas). As a result of tests, another kind of cheese, the Rose Haus cheese, was added to the list of recalled products. On February 12th, the CFIA decided to categorize this recall as a Category II, despite limited scope of distribution, because the outbreak was caused by Listeria monocytogenes. Consequently, the story made national headlines. This is significant since it was the first national public recall caused by Listeria after the Maple Leaf outbreak in 2008, and the first to demonstrate the new regulations related to the bacteria. The first round CFIA environmental swabs came back negative. On February 10th, OMAF officials also visited FTC to conduct a review of the facility and made some recommendations. Pasteurization and make records of positive cheeses were reviewed with no abnormalities found. On February 13th, the CFIA was onsite to gather up 34 additional samples of cheese (additional types of cheese). In addition, 60 more environmental swabs were taken of the facility to identify the source of contamination. All results of the environmental swab tests were negative for Listeria monocytogenes. By that time, 15 Federal and Provincial inspectors were present on site.

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ACCEPTED MANUSCRIPT Production started a month after the recall was issued and FTC was in compliance with new regulations. Methodology This empirical study investigated the effects of different enforcement interventions on small business compliance as a result of a food recall. This research aims to obtain a broader


perspective on the impact of an artisan cheese maker’s market positioning while complying with food safety regulations. In view of the aims of the research, a qualitative methodology was selected, specifically the single case study method as described by Yin (1998). This method is useful for examining and reflecting upon the emerging nature of the "how" and "why" questions this paper proposed. Furthermore, this study aims to directly observe the several dimensions at different levels of the relationship the firm has with its environment during a recall. In the first stage, we prepared our data collection and created interview guidelines based on an underlying conceptual model. A semi-structured questionnaire was pre-tested to ensure consistency and reliability. The research instrument included several open format questions to allow the participants flexibility in their responses. The data collection method included face-toface interviews with the proprietor, cheese maker and 10 other employees. However, when necessary, telephone interviews with other employees were conducted to supplement the information gathered during the personal interviews.

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ACCEPTED MANUSCRIPT The interviews were conducted more than a year after the recall. The timing was not trivial: first, more than a year later, people involved got the chance to reflect on what happened and were able to put things into perspective. Second, being such a small firm, to conduct interviews soon after the recall was not realistic. All interviews lasted approximately two hours. To support our results, we have included additional documentation provided by the company such as meeting


records and project descriptions. Analysis Normally, recalls incur millions of dollars in costs to the affected companies (Dowding, 2007). Costs often go beyond financial losses, as it may impact reputation and brand equity (Charlebois, 2011). When the recall started, FTC was worried it would not maintain sales, as they were prerecall. FTC sales, in fact, increased 13%, so there is no financial evidence that the recall affected the business. Profit margins remained the same as before the recall. This outcome did not surprise FTC, but it did surprise investors and creditors, according to the company. Corporate sales remained robust, while over-the-counter sales and purchases by consumers increased as a result of the recall. The market seemed to have shown a great deal of loyalty towards FTC. But the date of the recall was clearly memorable for the Cheesemaster. “I will remember that day for the rest of my life. When Rich (Rich Bond from OMAF) called, he said “Houston, we have a problem”. I was just shocked.” -The Cheesemaster

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ACCEPTED MANUSCRIPT FTC’s macro-environment seemed to have played a major role during the recall, starting with regulators. As an artisan Cheesmaster, it needed to transact with both the provincial (OMAF) and federal (CFIA) regulators. At the time of the recall, FTC felt that its relationships with regulators were cordial and effective. With OMAF, regular visits allowed both regulators and FTC to learn from each other, given that FTC’s business model was considered to be unique. As for the CFIA, local officials were even part of the initial design process of the facility, which allowed FTC to


feel comfortable with its novel ideas and market views. During interviews, it became obvious that federal regulators were seen as problematic during the recall. FTC was challenged by the group who came directly from the CFIA in Ottawa. These individuals did not nurture personal relationships with FTC, and were not aware of the distinctive history behind the creation of the company. Actions that were approved by the regional office were put into question by authorities in Ottawa. Ottawa-based CFIA employees seem to disregard FTC’s history with local authorities, and assured FTC would follow new listeria regulations. Local officials who understood FTC’s vision differed to the Ottawa personnel for guidance during the investigation. By the end of the investigation, the relationship between the proprietor and Ottawa-based personnel was confrontational. While local authorities were supportive of FTC’s innovative methods of making cheeses, the CFIA in Ottawa made a deliberate effort to reduce risks and eliminate any possibilities of non-compliance by FTC. “Ottawa was just trying to prove themselves for some reason. They were highly educated but did not understand our business model. They were trying to understand either.” -The Proprietor

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ACCEPTED MANUSCRIPT Throughout the recall, according to respondents, the CFIA demonstrated little if any interest in FTC’s mission. One example of such misunderstandings was with the issue around underground cages. These are better known as Wisconsin cages, which enhance the process of aging and ripening of the cheeses to develop particular flavors and textural characteristics. Cages at FTC were powered with geo-thermal energy, making constant temperatures more difficult to maintain. This is a critical factor in food safety. In addition, underground cages were very


difficult to clean at the frequency the CFIA was requesting. The CFIA discounted FTC’s artisanship and know-how when evaluating risks. It expected FTC to comply to policies with prejudice. Also, FTC had a very small facility compare with the larger processors. They did not have the space to isolate the cheese which was deemed safe. “The CFIA seemed overzealous or at least regulations did not meet requirements for small businesses like ours. They expectations seemed to have been the same as if they were at Maple Leaf. At one point, the CFIA had 15 people in our facility, 15! And our parking lot was full. We only have 11 employees.” -The Proprietor The Cheesmaster concurred with this observation, and came to the conclusion that regulators had the same consistent approach with every single firm they encountered, which to them is not realistic. The CFIA was seen as an agency with the sole purpose of making FTC an example for other firms in the food business. “They were literally trying to kill a mosquito with a bazooka. I did not feel it was part of the CFIA’s mandate to help. They seemed to be panicking more than we were. It was a surreal

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ACCEPTED MANUSCRIPT experience. I was expecting things to be very different when dealing with a serious situation like a food recall.” -The Cheesmaster Chemicals also became an issue during the recall. Federal regulators were asking FTC to use very powerful synthetic chemicals to clean instruments and material in the facility. Food-


processing induced contamination of cheese was an issue FTC was not prepared to accept as a possible outcome, once the recall was lifted. In conventional plants, undesirable chemicals may be formed as a result of a food additive intentionally added to food and reacting with another compound in the food. This would compromise FTC’s value system. Strict protocols on chemical usage needed to be followed by FTC and ordered by the CFIA. Given FTC’s commitment to sustainability, these actions went against their operational system as a cheese maker. After further discussions, the CFIA showed a degree of openness and allowed FTC to use natural chemicals to insure that their mission and B Corporation certification were not compromised. Documentation was another factor in during, and after the recall. The documentation requested by FTC was overwhelming. Respondents from FTC seemed to appreciate that such amounts are necessary. However, FTC felt it was reasonably demanding before the recall. One observation made during interviews was that most regulators have no experience in cheese making. This became a significant factor during the recall, and FTC respondents felt more expertise would have benefited regulators in their understanding of how to manage risks in a cheese making environment. Consistency with rigor seemed to have been a problem during the recall.

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ACCEPTED MANUSCRIPT “It was hard to know what to expect. Inspectors were contradicting themselves, on several occasions. Some felt so far removed from our reality as cheese makers. Many were technically strong, had the book smarts. But some were clearly not qualified to deal with our situation.” -Employee in plant Overall, FTC seemed to have been pleased with the support received from the provincial


regulator. They were perceived as being helpful and engaged. They provided the information required at the right time and made things easier for FTC. This is in complete contrast to the comments received about the federal regulator. FTC felt OMAF understood and sympathised with the employees, their suppliers and customer-base. Both level levels of government were recognized as not having the same kind of approach to FTC’s situation. “OMAF was a different story all together. They understood that we are working with nature. Mitigating risks while working with natural elements is a tricky balancing act. We needed to respect that, and OMAF did.” -The Cheesemaster Suppliers adapted very well to FTC’s situation. Dealing with seven supplying farms, it was understood they needed to part of FTC’s traceability system to properly manage risks across the value chain. In the wake of demands made by regulators, suppliers complied with new regulations that they were asked to follow as a result of the recall. All suppliers were very cooperative with regulators and nothing of significance was really reported during interviews. All provided moral and financial support throughout the investigation, an example of which

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ACCEPTED MANUSCRIPT being the extended payment periods for receivables to allow FTC to deal with its internal challenges. The effectiveness of relationships with external businesses was complimented by individuals’ personal relationship in the region. The employees knew the community very well, which, FTC argues, made a difference. It became clear that FTC was not overly impressed with the food safety regime in which they


were compelled to operate, and that the company faced a number of confusing situations. It seems that the concept of sustainability in general and food sustainability, in particular, entails many aspects and interpretations by regulators. Interviews painted a broad picture of the many key issues in food safety regulation. Based on interviews, it seems that greater efficiencies within multi-level governance in food safety are necessary. Transparency was also identified by FTC as one of the main issues underlying good governance, which was not always present during the recall. Regulators continually asked FTC to take certain actions without precisely indicating the reasoning behind the request. Discussion and findings The purpose of this study was to better understand how one small business conjugated with a food safety regime without compromising its market positioning. It also attempted to understand how a small food business utilized its resources to strengthen its strategy to better food safety risks. The conceptual analysis for this study is presented in Table 1. In this study we postulated that market positioning, small business resources and food safety regime are the key factors to a small food business’s ability to manage food recall generated by a foodborne outbreak. All FTC interviewees agreed regarding the necessity of these three factors

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ACCEPTED MANUSCRIPT within one integrated strategic framework. Evidence in this study supports the fact that FTC’s strong allegiance to its vision and mission, coupled with its market commitment to FTC’s modus operandi, allowed them to weather the storm of this particular recall. This provides an answer to the first research question. Through this study, we also learned that artisan cheese makers, or small food processors in


general, can be misunderstood by one or many layers of regulating governments. A small food processor like FTC requires the support of its supply-chain and customer-base to survive a wellpublicized food recall. For FTC, its networks are necessary to manage risks in times of uncertainty. This provides an answer to the second research question. Last, the third question concerned the issue of adaptability and dealing with a shifting, and arguably incompatible food safety regulatory environment. An artisan cheese maker’s capability to act quickly and carefully in the face of uncertainty created by a recall can be remarkably advanced through context-specific analysis and well-reasoned food safety surveillance tasks. These applied concepts could be designed to address unanticipated business scenarios. Respective approaches have to be adaptable themselves, which is something FTC seemed to have achieved. Both OMAF and the CFIA demonstrated that they can be flexible as well, but not on all fronts. Based on the financial data gathered during the study, FTC’s customer base demonstrated significant loyalty towards its products and brand following the aftermath. It can be argued that FTC’s vision and mission became a cornerstone of its crisis management strategy. While dealing with the recall, FTC was able to rely on a highly loyal customer-base. FTC’s marketing strategy

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ACCEPTED MANUSCRIPT seemed to have solidified the organisation's good name and reputation, particularly when all of it was at stake during the recall. FTC was committed to a niche market which, in turn, seemed to have been committed to FTC and its products. This commitment may have served FTC well. As the portfolio increases or the food enterprise diversifies into different market segments, the risk of a service or product failing becomes magnified with increasing scale and operational


complexity, particularly when dealing with a food crisis (Charlebois and Horan, 2010). The reputation of a small business is much more difficult to manage than the single product, since it is constructed by customers from multiple reference points that extend well beyond the products and their projected images (Decker, 2012). But perhaps, this could be a reflection that food safety in general is not a concern for FTC’s target market. Since FTC customer were not included in the scope of the present study, we can only speculate. That being said, Canadian consumers have the reputation of supporting an industry when challenged by a food safety scare (Charlebois and Labrecque, 2009). The key elements for FTC's reputation seemed to derive from its commitments, values, policies and risk management practices. “You can’t build FTC one your own; you need a community. You need a community to support your vision, your mission, in good and not so good times.” -The Proprietor One obvious managerial implication for similar recalls is to never create such an initiative on a purely analytical base. From a small business standpoint, firms should expect emotional and cultural influences between levels of government levels and personnel within the same government. There may be strong inhibitors or enablers that we did not identify in this study.

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ACCEPTED MANUSCRIPT Short and middle-term flexibility, as well as long-term adaptability, is related to a variety of likely influences, which can be observed as critical for food recall management success in the future. Limitations The literature review was done selectively, and could not be described to its full extent due to the


exploratory nature of this study. This study does recognize a significant gap in the literature related to small food businesses, food crises and food safety governance. As such, the case study results could be presented only in a compact manner. Further, the case study could not cover all possible aspects of small businesses. Thus, there is plenty of room for future research. This case study offers a very internal perspective of a food recall issued by an artisan cheese maker. No one outside the firm was interviewed. The intent was to focus on one seminal incident which affected the company’s ability to carry on with its business. This study wanted to capture all of the internal views of the recall rather than looking at consolidating internal perspectives with external point of views. Interviewing FTC customers and suppliers was not in scope of this study. Conclusion Despite extensive food regulatory systems, it is clear that many quality and safety problems can occur according to how unscalable food safety regulations can be (Lupien, 2005). As a small artisan cheese maker, FTC seemed to have been relatively successful in its effort to manage the food recall related to Listeria monocytogene. Many firms have failed to survive such a scare in the past, which makes FTC’s feat interesting. Success factors outlined in this study demonstrate

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ACCEPTED MANUSCRIPT that small food businesses, even artisan makers, can survive food safety-related incidences if the business model is appropriate. The context is always in flux, and thus both small food businesses and food safety regimes need to adapt to both realities synchronously. The Maple Leaf recall had a significant bearing on FTC’s experience. Any food recall is subject to unforeseen systemic risks. In food safety, these risks often stem from socio-political and/or economic apprehensions


shared by a few or many, and small food businesses are not immune to these predicaments. In order to apply this conceptual framework in future research, more empirical research needs to be carried out, which could consider food recalls issued by other small food businesses, but would include supply-chain partners, customers and even regulators. Such empirical research could validate some of the findings conveyed in this study. When the present article was written, FTC was still in operation, but under new management. The new administrators, however, believed that FTC would be more marketable to mainstream investors if it no longer supported its original brand message, position and mission. Thus it cancelled the company’s B Corporation status and removed all references to the sustainability commitment from the website. Sales dropped 30% despite a strategy to push its products to large-scale customers in food retailing. This created unsustainable losses that the founding investors could not absorb. FTC stopped its operations soon after and was sold to new investors. The company reopened its doors in May 2013, with a new vision but with the same name, FTC (MaRS, 2013).

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ACCEPTED MANUSCRIPT References Andotra, N., & Pooja. (2009). TOC supply chain management solution for food processing industries. Journal of Small Business and Entrepreneurship, 22(3), 239-251,377. Bain, J. (2010, Apr 28). A move toward borderless cheese FOOD artisanal cheesemakers want the freedom to sell across Canada. Toronto Star.


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ACCEPTED MANUSCRIPT Table 1 Market performance and food safety compliance for small food businesses Secondary Factors

Market positioning


FTC Success Factors

Small Food Business Resources

Observations

Supporting Citations

Vision and Mission

Outcomebased Variables Market Support

Sales increased by 13% first few months after recall

Vision and Mission

Regulators Relations

Niche Marketing

Market Support

Vision and Mission/Niche Marketing Vision and Mission/Niche Marketing

Supply-Chain Relations

Supply-Chain

Market performance and food safety compliance for small food businesses

OMAF understood nature of business, CFIA accepted use of natural chemicals Community-based marketing, committed values for specific market, focused on social enterprising and environmental stewardship Farm suppliers were supportive throughout recall episode As markets shift, systemic risks related to food safety risks, FTC developed different methods to cater to different market Synchronous relations with suppliers allowed FTC to rely on steady supplies of fresh inputs, effective food safety practices within small business networks, personal networks played a role for FTC, personal relationships supported company

Latacz-Lohmann and Foster, 1997; Gilmore, Carlson and Rocks, 2006; Lamprinopoulou and Tregear, 2011 Yapp and Fairman, 2005; Worosz, Knight and Harris, 2008 Dalgic and Leeuw, 1994; Dahlberg, 2001; Workman, 2002; Simmons et al., 2007; Toften and Hammervoll, 2009

Food Safety Regime

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Harrison, 1994; Andotra and Pooja, 2009 Knowles, Moody and McEachern. 2007; Zulfilfly et al., 2010

Gilmore, Carlson and Rocks, 2006; Kenny, 2007; Zulfilfly et al. 2010; Lamprinopoulou and Tregear, 2011;

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ConsumerBase


Artisan Know-How

Food Safety Regime

Market performance and food safety compliance for small food businesses Market performance and food safety compliance for small food businesses

Artisan Know-How

Food Safety Regime

Regulations and Governance

Market performance and food safety compliance for small food businesses

during recall Loyalty towards FTC and its products were evident

Specialized and unique offering to marketplace, community-oriented strategy which makes approach inclusive, documentation overwhelming for FTC, received moral and financial support for supply-chain partners during Inconsistent approaches between inspectors, local offices and National headquarters, multi-level governmental regulations not harmonious, inherent food safety risks in artisan cheese making Maple Leaf Listeria crisis led to changes which was fully appreciated by small food processors new in the industry, regulators not fully comfortable with new regulations, food safety systems need to adapt to systemic changes

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Frewer and Salter, 2002

Barling, Sharpe and Lang, 2009; Sweet et al. (2010); Fenwick, 2010

Kelepouris, Pramatari and Doukidis, 2007; Tansey and Worsley, 1999; Yapp and Fairman, 2005; Gunningham, Kagan and Thornton 2004; Withers and Ebrahimpour, 2013 Beck, 1992; Verbeke, 2001; Gunningham, Kagan and Thornton 2004; Charlebois and Horan, 2010, Charlebois, 2011

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