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Value chain integration of base of the pyramid consumers: An empirical study of drivers and performance outcomes

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  • Rosca, Eugenia
  • Bendul, Julia C.

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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  • Rosca, Eugenia & Bendul, Julia C., 2019. "Value chain integration of base of the pyramid consumers: An empirical study of drivers and performance outcomes," International Business Review, Elsevier, vol. 28(1), pages 162-176.
    • Handle: RePEc:eee:iburev:v:28:y:2019:i:1:p:162-176
    DOI: 10.1016/j.ibusrev.2018.05.009
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    3. Gupta, Suraksha & Kanungo, Rama Prasad, 2022. "Financial inclusion through digitalisation: Economic viability for the bottom of the pyramid (BOP) segment," Journal of Business Research, Elsevier, vol. 148(C), pages 262-276.
    4. Bai, Xuan & Wang, Qingtao & Sheng, Shibin & Li, Julie Juan, 2021. "Cross-level interpersonal ties and IJV innovation: Evidence from China," Journal of Business Research, Elsevier, vol. 134(C), pages 618-630.
    5. Mariana Voros Fregolente & Marly M. Carvalho, 2023. "Exploring BoP Generations through Business Model Innovation Lens: A Review and Framing," Sustainability, MDPI, vol. 15(17), pages 1-37, August.
    6. Aman, Sadaf & Seuring, Stefan, 2022. "Interestingly it's innovation: Reviewing sustainability performance management in the base of the pyramid (BoP)," Technovation, Elsevier, vol. 112(C).
    7. Stephanie Knizkov & Julia C. Arlinghaus, 2019. "Is Co-Creation Always Sustainable? Empirical Exploration of Co-Creation Patterns, Practices, and Outcomes in Bottom of the Pyramid Markets," Sustainability, MDPI, vol. 11(21), pages 1-22, October.
    8. Ashish Dwivedi & Dindayal Agrawal & Ajay Jha & Massimo Gastaldi & Sanjoy Kumar Paul & Idiano D’Adamo, 2021. "Addressing the Challenges to Sustainable Initiatives in Value Chain Flexibility: Implications for Sustainable Development Goals," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 22(2), pages 179-197, December.

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