Profit and Social Value: An Analysis of Strategies and Sustainability at the Base of the Pyramid

Abstract

The last decade has seen a growing interest in market-based approaches to poverty reduction. Since the publication of Prahalad’s Fortune at the Bottom of the Pyramid in 2004, businesses, entrepreneurs, and researchers have investigated ways to tap into this fortune. Many researchers have suggested that companies could both do well financially and contribute to social good by serving the bottom two-thirds of the global economic pyramid and effectively raising members of this rapidly growing base of this pyramid (BOP) out of poverty (Agnihotri, 2013; Hammond et al., 2007; London, 2007; Prahalad & Hart, 1999). Although there have been many debates concerning the efficacy of BOP ventures in alleviating poverty (Arora & Romijn, 2012; Karnani, 2007; Warnholz, 2007), companies, entrepreneurs, and practitioners have found ways to profitably navigate the challenging market of the world’s poor and ultra-poor while simultaneously providing products and services that address their unique and localized social and economic needs. However, previously, no theoretical constructs guided the research or practice of market-based approaches to poverty. In 2008, the United Nations Development Program published a database of 50 case studies of ventures that demonstrated positive social impacts at the BOP and developed a conceptual framework of using BOP-centric strategies to overcome common constraints. Three years later, additional cases were published. This paper conducted a systematic review of 61 case studies to test this model, resulting in a holistic model synthesizing the various approaches. A comparative analysis provided insight into the importance of each component depending on various factors.. The research suggested that role of the poor, the industry, BOP-appropriate business models and the partnerships influence the development and the success of the BOP businesses.