BoP and MNCs: Where is the Market and Where the Source of Innovation?

Abstract

In 2004 Prahalad made managers aware of the great economic opportunity that the population at the BoP (Base of the Pyramid) could represent for business in the form of new potential consumers. However, MNCs (Multi-National Corporations) have continued to fail in penetrating low income markets, arguably because applied strategies are often the same adopted at the top of the pyramid. Even in those few cases where products get re-envisioned, their introduction in contexts of extreme poverty only induces new needs and develops new dependencies. At best, the rearrangement of business models by MNCs has meant the realization of CSR (Corporate Social Responsibility) schemes that have validity from a marketing perspective, but still lack the crucial element of social embeddedness (London & Hart, 2004). Today the challenge is to reach the lowest population tier with reinvented business models based on principles of value co-creation. Starting from a view of the potential consumer at the BoP as a ring of continuity in the value chain process ? a resource that can itself produce value – this paper concludes proposing an alternative innovative approach to operate in developing markets that overturns the roles of MNCs and the BoP. The proposed perspective of ‘reversed’ source of innovation and primary target market builds on two fundamental tenets: traditional knowledge is rich and greatly unexploited, and markets at the top of the pyramid are saturated with unnecessary products / practices that have lost contact with the natural environment.