Cognitive Frames of Poverty and Tension Handling in Base-of-the-Pyramid Business Models

Abstract

Base-of-the-pyramid (BOP) business models aim to achieve profitability and poverty reduction by including poor people into corporate value chains. This goal duality creates tensions. Actors’ responses to these tensions are influenced by their cognitive frames of the phenomena building the tension. Applying a cognitive perspective, I investigate how corporate actors with different frames of poverty respond proactively or defensively to the poverty–profitability tension by adapting business model elements. I find that proactive and defensive responses differ for actors holding different cognitive frames of poverty. The responses have consequences for the poverty impact potential of BOP business models.