Value chain integration of base of the pyramid consumers

An empirical study of drivers and performance outcomes

Eugenia Rosca, Bendul Julia

Research output: Contribution to journalArticleScientificpeer-review

Abstract

The seminal works on Base of the Pyramid (BOP) markets encourage companies to explore untapped low-income markets and to alleviate poverty by providing affordable products and services. The transition to second generation BOP strategies has centred on the integration of local consumers across value chain activities. This integration presents challenges both for firms and for low-income consumers due to the nature of informal BOP markets, severe institutional voids and lack of local knowledge of firms. In this context, little is known about the motivational drivers of firms to integrate BOP consumers in value creation activities and the impact on different performance dimensions, namely economic, social and ecological. This study adopts the perspective of micro-, small- and medium-sized enterprises (MSMEs) and investigates drivers and performance outcomes of BOP consumer integration. For this purpose, we develop a theoretical framework and test it empirically by employing a unique dataset of 142 enterprises which provide basic products and services to low-income markets. Our findings provide empirical support for the claim that BOP consumer integration enhances economic, social and ecological performance. MSMEs in our sample engage consumers mainly due to a strong intrinsic motivation to drive social impact rather than a pragmatic motivation to overcome information asymmetries. While studies of multinationals entering BOP markets almost exclusively report the need for cross-sector partner collaboration, our findings suggest that this may not be the case for MSMEs.
Original languageEnglish
Pages (from-to)162-176
JournalInternational Business Review
Volume28
Issue number1
DOIs
Publication statusPublished - Feb 2019

Fingerprint

Empirical study
Base of the pyramid
Value chain
Low income
Small and medium-sized enterprises
Ecological economics
Theoretical framework
Intrinsic motivation
Information asymmetry
Poverty
Consumer value
Value creation
Multinationals
Local knowledge

Keywords

  • base of the pyramid
  • BOP consumer integration
  • normative orientation
  • cross-sector collaboration
  • sustainable performance

Cite this

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title = "Value chain integration of base of the pyramid consumers: An empirical study of drivers and performance outcomes",
abstract = "The seminal works on Base of the Pyramid (BOP) markets encourage companies to explore untapped low-income markets and to alleviate poverty by providing affordable products and services. The transition to second generation BOP strategies has centred on the integration of local consumers across value chain activities. This integration presents challenges both for firms and for low-income consumers due to the nature of informal BOP markets, severe institutional voids and lack of local knowledge of firms. In this context, little is known about the motivational drivers of firms to integrate BOP consumers in value creation activities and the impact on different performance dimensions, namely economic, social and ecological. This study adopts the perspective of micro-, small- and medium-sized enterprises (MSMEs) and investigates drivers and performance outcomes of BOP consumer integration. For this purpose, we develop a theoretical framework and test it empirically by employing a unique dataset of 142 enterprises which provide basic products and services to low-income markets. Our findings provide empirical support for the claim that BOP consumer integration enhances economic, social and ecological performance. MSMEs in our sample engage consumers mainly due to a strong intrinsic motivation to drive social impact rather than a pragmatic motivation to overcome information asymmetries. While studies of multinationals entering BOP markets almost exclusively report the need for cross-sector partner collaboration, our findings suggest that this may not be the case for MSMEs.",
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Value chain integration of base of the pyramid consumers : An empirical study of drivers and performance outcomes. / Rosca, Eugenia; Julia, Bendul.

In: International Business Review, Vol. 28, No. 1, 02.2019, p. 162-176.

Research output: Contribution to journalArticleScientificpeer-review

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