Living the African Dream: How Subsistence Entrepreneurs Move to Middle-Class Consumer Markets in Developing and Emerging Countries

Abstract

The subsistence marketplaces literature has generated many insights on how the marketplaces of the poor function. One important issue that has remained understudied is how microentrepreneurs who start their career in poverty manage to break the status quo of subsistence marketplaces and obtain a stable position in the middle classes of developing and emerging countries. This article therefore investigates the business trajectories of entrepreneurs who have entered middle-class markets. The study shows that business development from lower-income to middle-class consumer markets is a stepwise process. Microentrepreneurs begin by serving relatives and acquaintances from their homes, then serve customers that they meet out on the street, and then upgrade their value propositions to target middle-class customers. Some of them further increase their businesses by entering business markets. From a strategic marketing perspective, the authors analyze the changes in resources and stakeholders that underlie the upgrades of the value propositions. The results provide implications for policy makers to create new jobs, generate tax revenues by formalizing businesses, and foster social mobility in emerging markets.