Strategic Challenges for the Base of the Pyramid

Strategic Challenges for the Base of the Pyramid

Patrick A.M. Vermeulen and Edgar Hütte

Managers of multinational corporations are now looking towards low-income markets for their potential for generating large profits. Serving such markets and developing products for them requires a fundamentally different approach of doing business and offers firms a new and unique set of organizational challenges. The objective of this book is to address some of the key challenges when firms enter low-income markets and to develop empirically derived solutions for successful operation.

Chapter 7: Next steps in Base-of-the-Pyramid research and practice

Patrick A.M. Vermeulen and Edgar Hütte

Subjects: business and management, international business, strategic management, development studies, development economics


In this book we have studied several strategic challenges for firms active in the Base of the Pyramid (BoP). We started with looking at the challenges of cross-sector collaborations and subsequently explored some of the mechanisms for building trust with local communities, organizational capabilities to deal with different types of innovation and the challenges of scaling that firms can anticipate. In each chapter, we have pointed at limitations of our empirical studies and subsequent suggestions for future research. In this final chapter we conclude with some higher-order implications for both scholars and practitioners. For scholars we argue it is important to further strengthen the theoretical foundations of BoP-related research. While it is important to strengthen the conceptual clarity regarding the definition of the BoP, the initiators of BoP ventures, BoP business models and the outcomes of BoP initiatives (Kolk et al., forthcoming), we seek to provide a more explicit link with the existing strategy literature, in particular the resource-based view (RBV) and dynamic capabilities (DC) perspective (compare with George et al., 2012). Our studies clearly point at the importance of resources and relational capabilities. Firms are often in need of resources and in the BoP they face a variety of resource constraints that lead them to collaborate with non-traditional partners. As such, we propose to study BoP projects building on the RBV/DC approach. For practitioners, we provide a brief overview of key lessons aimed at overcoming some of the challenges discussed in this book.

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