Explaining the success of a multinational company's innovation in the base of the pyramid: m-pesa in Kenya

Abstract

In the beginning of the twenty-first century, C. K. Prahalad launched a new business proposition named as “Base of the Pyramid” (BOP). In such type of business, Multinational Companies (MNCs) look for new opportunities of profits helping to meet the poor’s unmet needs in developing countries. However, MNCs significant involvement in BOP business has been losing momentum due to the challenges MNCs have been faced in developing BOP businesses. This study intended to recall Prahalad’s original BOP proposal explaining the success of a BOP innovation developed by an MNC in Kenya: M-PESA, a mobile money service. About 70% of Kenya’s adult population has M-PESA accounts and M-PESA’s monthly transactions account for 30% of Kenyan GDP. How did a multinational company develop the successful BOP innovation M-PESA in Kenya? Our study intends to explain how the British multinational Vodafone employed successful Base of the Pyramid principles of innovation in Kenyan M-PESA. Indeed, there is a gap of studies about the Prahalad’s principles of innovation for developing BOP products. Therefore, this research analyzed Prahalad’s BOP proposal, including his twelve principles of innovation to develop BOP products, by comparing such proposal with Karnani’s framework for fighting poverty. Karnani is regarded as the main critic against the Prahalad’s BOP proposal. Most of Prahalad’s BOP principles of innovation were identified in M-PESA in Kenya (eleven out of the twelve principles). However, Karnani’s framework explained better the factors that influenced successful BOP innovation in Kenyan M-PESA than Prahalad’s proposal. Furthermore, this study pointed out two key points that explained the success of M-PESA innovation in Kenya that they were not included neither in Prahalad’s nor in Karnani’s proposals: social intrapreneurship made by MNCs employees, and supportive role of government in developing BOP businesses. Therefore, such topics deserve more attention from the BOP literature in order to advance this field.