Short Abstract:

The base of pyramid strategies focuses on poverty alleviation through business ventures while considering poverty as sole monetary value. In this study, we work on enhancing BoP theory by using the evaluative model of capability approach to address the poverty concept within the theory. As a result, we plan to develop guiding principles for BoP companies to implement ethical and just businesses.

Long Abstract:

Prahalad(2005) introduced the concept of Bottom/Base of Pyramid (BoP 1.0) identifying a vast untapped market of low-income consumers in the developing countries. The concept proposed that the companies could profitably serve the consumers at the bottom of pyramid by selling products and help them to step away from the poverty. The concept was rapidly internalised by the multi-national corporations. Since 2 decades, the concept evolved from BoP 1.0 to BoP 3.0(Cañeque & Hart, 2015), the core aspect of the concept remained as “service and good provision” for “income generation for the poor” while making profit. However, recent empirical studies contradict the perspective of the poor as resilient entrepreneurs and value-conscious consumers within the BoP concept. Karnani (2009a) has been discussed failures of the concept by suggesting that it is flawed due to its aspect of poverty and its perception of the poor. Nevertheless, there are several examples that helped the poor to tackle with the restraints of poverty in the communities. In addition to that, Hahn(2009) argues that there is still a recognised need for market-based interventions to address the poverty at the base of pyramid.

However, the literature predominantly measures well-being at the BoP solely in terms of monetary income while evaluating the success of the BoP interventions. That results with neglecting non-monetary aspects of poverty and well-being. Scholars (Ansari et al., 2012; Garrette & Karnani, 2010; Karnani, 2009b, 2011; Yurdakul et al., 2017) have argued that a more deepened approach towards poverty and socio-cultural dimension should be included in the BoP practices’ conceptualization. Due to this reason, we have proposed the usage of capability approach to evaluate the success and failure of the BoP interventions of MNCs as the usage of capability approach within BoP context and literature has been relatively limited.

However, BoP markets are challenging for a variety of reasons, from extreme socio-political contexts deriving from the communities’ nature and value orientations to the political climate of the BoP countries (Khandker, 2022). Moreover, BoP market relies more on informal structures than formal structures (Rivera-Santos & Rufín, 2010). Consequently, companies engaging with the poor in BoP countries must reconsider their strategies to avoid exacerbating existing inequalities and structures that perpetuate poverty. Adapting to the BoP environment requires an understanding of local customs, social restraints, and infrastructure deficiencies.

Collaboration with non-market actors can leverage existing knowledge to address these challenges(Chmielewski et al., 2020; Dembek et al., 2020; Kolk et al., 2014). However, the dynamics of stakeholder interaction within BoP's informal structure and their impact on power relations remain undefined in current literature. Understanding BoP as a social space where power dynamics shape relationships and practices is crucial. Yet, literature overlooks the power play aspect of capability expansion within BoP practices. Examining the impact of power dynamics on the quality of life of the poor can benefit from insights drawn from development ethics literature, extending the informational space of capability approach.

To address the gap, we plan to conduct a systematic review of literature in the BoP field by applying three criteria: its view on poverty, its view on socio-cultural paradigms from the perspective of forms of capital, and its application to group relations and stakeholder perceptions. This systematic review will give us an overview of the issues related to BoP, and how perceptions of poverty and socio-cultural restraints related to poverty are dealt with in BoP practices. Later, we will conduct a series of analyses by applying the capability approach to the BoP concept to refine the poverty aspect of BoP from individualized and group perspectives.

During this stage, the measurement criteria for poverty will be defined from capability approach. We will develop a measurement survey using criterion developed during the systematic review according to the Nussbaum’s list of central capabilities. Lorgelly et al. (2008) measurement survey used 14 different criteria derived from the Nussbaum’s list of central capabilities and we will develop such a list particular to communities by weighing in the different capability sets derived and developed during the literature review. Then, we will apply capital theory to understand the social and cultural restraints within the concept to extend the informational space of the capability approach. The capital theory will be used to evaluate the difference of the social characteristics and their impact on the capability expansion from the measurement model that is previously developed solely depending on the central capabilities and extended list of capabilities. The extended list of capabilities for BoP will be developed during this stage.

In the last stage, we will analyse the concept by implementing document analysis within the BoP cases. The cases will be identified during the systematic literature review, we will reach out to the beneficiaries and the company representatives who benefited from these practices and implement interviews. The interviews will be coded for thematic analysis to address the pre-defined success/failure criteria developed previously. The following success/failure criteria will be considered as a starting point to evaluate the cases in a deepened manner by applying the thematic analysis method to the data gathered from qualitative interviews :

- Capability expansion is occurred

- Sustainability measures have been taken for creating social change and enable intergenerational justice

- Generates profit for the company but at the same time enables the poor to take the matter into his/her hands

- Implements an ethical business practice

During this stage, we will implement a thematic analysis method with the data gathered to sort and analyse the texture of the data gathered from interviews regards to capability and capital areas and how the BoP practice affected the population as well as implementers and beneficiaries of the practice. That will help us to analyse and understand their successes and failures from the capability perspective and capital perspectives. We will discuss these findings within the theoretical framework to develop a set of recommendations for the BoP to help businesses implement sustainable and ethical business practices at BoP.