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Business model innovation in base of the pyramid markets
Business Innovation Group, Environment Social Science Department, Eawag, Switzerland.
Environmental Social Sciences Department, Business Innovation Group, Swiss Federal Institute for Aquatic Research (Eawag), Switzerland.
Environmental Social Sciences Department, Business Innovation Group, Swiss Federal Institute for Aquatic Research (Eawag), Switzerland.
2017 (English)In: Journal of Business Strategy, ISSN 0275-6668, E-ISSN 2052-1197, Vol. 38, no 4, p. 38-46Article in journal (Refereed) Published
Abstract [en]

Purpose

This paper aims to highlight how initial business models can be converted into a larger-scale solution for tapping into the emerging base-of-the-pyramid markets.

Design/methodology/approach

This study uses a qualitative, multi-case research design with 20 organizations tapping into the water market at the base-of-the-pyramid.

Findings

This paper explores three business models innovations: fostering value-in-context, allowing for modifiability and embracing organizational ambidexterity.

Research limitations/implications

Due to our qualitative research approach, generalizability of our findings is limited.

Practical implications

The description of the three business model innovations offers guidance for executives to make their business models financially more sustainable in base-of-the-pyramid markets.

Social implications

The water sector represents one especially interesting sector to examine business model innovations. For, among social goods, safe water remains a huge challenge to date where 700 million people remain without access to an improved water source.

Originality/value

Previous business model discussion in base-of-the-pyramid markets focuses on commercial goods. The authors focus on water as a social good. They demonstrate that the existing recommendations that business models in base-of-the-pyramid markets should be inclusive, complex, collaborative and scalable are mandatory, but not sufficient. In addition, business models should foster value-in-context, allow for modifiability and embrace organizational ambidexterity.

Place, publisher, year, edition, pages
Emerald , 2017. Vol. 38, no 4, p. 38-46
Keywords [en]
Value-in-use, Business model innovation, Emerging market, Business models, Organizational ambidexterity, Base of the pyramid
National Category
Business Administration
Identifiers
URN: urn:nbn:se:liu:diva-157028DOI: 10.1108/JBS-05-2016-0051OAI: oai:DiVA.org:liu-157028DiVA, id: diva2:1317554
Conference
2019/05/23
Available from: 2019-05-23 Created: 2019-05-23 Last updated: 2019-05-23
In thesis
1. Business Model Design for Social Goods and Services in Developing Economies
Open this publication in new window or tab >>Business Model Design for Social Goods and Services in Developing Economies
2019 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Over the past decade there have been increasing calls for alternative ways of tackling poverty problems in developing economies. Rather than aid or charity approaches that have traditionally dominated this area, an alternative line of discussion around base-of-the-pyramid approaches has emerged which emphasizes the role of innovation and pro-poor entrepreneurship. These developments are consequently reshaping our current views on organizational sectors, vulnerable communities, and sources of value creation.

Social businesses trailblazing these approaches however may find it difficult to provide customers at the very base of the economic pyramid with products and services in financially sustainable ways. Markets in remote rural areas are characterized by severe resource scarcity and pervasive institutional voids which make the pursuit of designing adequate value creation and appropriation mechanisms a challenging undertaking. Additionally, the commercialization of social goods further compounds these challenges, because hybrid missions demand the simultaneous generation of social and commercial value.

In this dissertation, I aim to shed light on these issues and examine how successful social businesses have emerged in the context of the unfolding pro-poor informal water market. This setting lent itself especially well to such study because the lack of safe and affordable water access prominently affects severely poor and secluded geographies to which sustainable solutions in profit, non-profit or governmental form have not yet emerged; yet successful solutions by social businesses have.

Building on the emergent research on social businesses, I suggest that these organizations established viable business ventures by designing a type of business model that caters to the needs of socially constrained base-of-the-pyramid communities despite the afore-mentioned managerial challenges. With a focus on theory development, I employ a multi-qualitative approach consisting of multiple case studies to develop a conceptual framework of these social business models and various propositions as to what may underpin their successful development.

The empirical foundation for these elaborations consists of five studies. These highlight distinct value creation and appropriation mechanisms as well as capabilities that social businesses employ to circumnavigate resource scarcity and institutional voids. Consequently, focusing on the design of value creation and appropriation mechanisms, we gain deeper insights as to why some social businesses may outperform other organizations. The thesis concludes with implications for base-of-the-pyramid, social entrepreneurship and business model literature, as well as avenues for future research. 

Abstract [sv]

Under det senaste decenniet har det blivit ökande uppmaningar till alternativa sätt att hantera fattigdomsproblem i utvecklingsekonomier. I stället för hjälp eller välgörenhetsmetoder som traditionellt dominerat detta område har en alternativ diskussionslinje kring “base-of-the-pyramid“ tillvägagångssätt uppstått som betonar rollen som innovation och fattig entreprenörskap. Denna utveckling förändrar följaktligen våranuvarande syn på organisationssektorer, utsatta samhällen och källor av värdeskapandet.

Sociala företag som leder till dessa tillvägagångssätt kan dock ha svårt att tillhandahålla kunder på grunden av ekonomins pyramid med varor och tjänster på ekonomiskt hållbara sätt. Marknader i avlägsna landsbygdsområden kännetecknas av svår bristande resursbrist och genomgripande institutionella tomrum som gör strävan att utforma adekvata värdeskapande och värdefångande mekanismer ett utmanande gåtagande. Dessutom förvärrar kommersialiseringen av sociala varor dessa utmaningar, eftersom hybriduppdrag kräver samtidig generering av socialt och kommersiellt värde.

I den här avhandlingen undersöker jag hur framgångsrika sociala företag har uppstått i samband med den outvecklade pro-fattiga vattenmarknaden. Jag föreslår att dessa sociala företag etablerat lönsamma affärsverksamheter genom att utforma en typ av affärsmodell som tillgodoser behoven hos socialt begränsade base-of-the-pyramid samhällen trots de ovan nämnda ledarskapsutmaningarna.

Med fokus på teoriutveckling använder jag en mångsidig kvalitativ forskningsansats som består av flera fallstudier för att utveckla ett konceptuellt ramverk för dessa sociala affärsmodeller och olika förslag till vad som kan stödja deras framgångsrika utveckling.

Den empiriska grunden för dessa utarbetningar består av fem studier. Dessa lyfter fram tydliga värdeskapande och värdefångande mekanismer samt kompetenser som sociala företag använder för att kringgå resursbrist och institutionella tomrum. Därför får vi djupare insikter om att vissa sociala företag kan överträffa andra organisationer, med fokus på utformningen av värdeskapande och värdefångande mekanismer.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2019. p. 114
Series
Linköping Studies in Arts and Sciences, ISSN 0282-9800 ; 772
National Category
Business Administration
Identifiers
urn:nbn:se:liu:diva-157018 (URN)10.3384/diss.diva-157018 (DOI)9789176850329 (ISBN)
Public defence
2019-06-10, ACAS, A-huset, Campus Valla, Linköping, 10:15 (English)
Opponent
Supervisors
Available from: 2019-05-23 Created: 2019-05-23 Last updated: 2019-06-04Bibliographically approved

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