Table of Contents

Handbook of Research on International Strategic Management

Handbook of Research on International Strategic Management

Elgar original reference

Edited by Alain Verbeke and Hemant Merchant

The Handbook provides an impressive state-of-the-art overview of the international strategic management field as an area of scholarly inquiry. The great strength of the work is the thoughtfulness of the messages conveyed by the expert team of authors.

Chapter 22: Bottom-of-the-pyramid strategies and networks

Miguel Rivera-Santos and Carlos Rufín

Subjects: business and management, international business, strategic management

Extract

A large percentage of people on the planet live in poverty, meaning that they do not have sufficient income to cover basic needs, such as food, health, and shelter (World Bank, 2000). Although recent trends suggest that some parts of the world, especially Asia, are experiencing a rapid decrease in the number of people living under national poverty lines, other parts of the world, such as sub-Saharan Africa, are seeing both the number of poor stagnate or even increase (Chen and Ravaillon, 2008). Complementing the traditional debate between aid and local market development as the best approach to eradicating poverty that is prevalent in the economic development literature (Collins et al., 2009), Prahalad (Prahalad and Hart, 1999) introduced, about a decade ago, the controversial bottom-(or base-) of-the-pyramid (BOP) approach, which has since then sparked considerable interest in the business community and among development agencies (Karnani, 2009; Rivera-Santos and Rufín, 2010). The basic premise of the BOP approach is that multinational enterprises (MNEs) have an important role to play in global poverty alleviation. By targeting the poor as a new market worldwide, MNEs can incorporate the poor into global markets from which they are currently isolated and give them new entrepreneurial opportunities, helping them escape poverty. Prahalad’s counter-intuitive claim is thus that MNEs can pursue new revenue and profit opportunities in the context of quickly saturating developed markets and fast-growing markets in emerging countries, while helping eradicate poverty at the same time.

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