Creating value for multiple stakeholders: Sustainable business models at the Base of the Pyramid

Abstract

Addressing poverty at the Base of the Pyramid (BoP) using market-based approaches has proven very challenging. Studies built around traditional profit and customer focused business models adapted to the BoP context have yielded limited insight into how business models that address poverty work to create value for their various stakeholders. The lens of sustainable business models has been recently turned on the BoP with promising results. This study continues this approach and extends our understanding of how business models work in the BoP context. Based on primary and secondary data from 55 organizations addressing poverty in Indonesia and the Philippines, this study shows nine distinct business models addressing poverty. We classify the models by their activities and structure to create a BoP business model matrix and explain how these nine models use different activities, value approaches, value creation logics, value sources and capturing mechanisms to benefit different stakeholders. We find that one group of models, which aims to reorganize how BoP communities and the systems around them operate, has especially large value creation potential because it combines three distinct value creation logics to provide comprehensive solutions to complex problems. We explain limitations and provide guidance for future research and practice.