Exploring the Role of Private Sector in Development – Multinational Corporations and Product Innovations for the Bottom of the Pyramid Consumers

Abstract

The increasing emphasis of the private sector in development often depends on the role of Multinational Corporations (MNCs) in creating inclusive growth through product innovations which meet needs of Bottom of Pyramid (BOP) consumers. However, MNCs’ focus on short-term profits often direct efforts towards marketing products to the BOP that may not be innovative. Considerably less is known about appropriate innovative MNC products and what needs they can meet compared to the influence of brands marketing. This research focused on MNCs approach to inclusive innovation for BOP through a contextual understanding of consumers’ basic needs. The research adopts a practice theory lens and constructs a conceptual framework using concepts of innovation, basic needs, and theory of adoption of innovation. The framework is used to analyse MNCs’ marketing strategy leading to the adoption of incremental innovations by BOP consumers. The research provides an explorative account supported by empirical evidence from an ethnographic field study of BOP consumers in India. Additional data were also collected from Fast Moving Consumer Good (FMCG) MNC executives to explore the innovativeness of BOP products. The argument this research puts forward is that MNCs’ role in meeting basic needs of BOP consumers is constrained by the lack of in-depth contextual understanding of their lives, social relations and values and how it influences their basic needs. As a result, the MNCs’ marketing practices obscure the real needs of BOP consumers through marketing products which are neither innovative nor essential for them. This study contributes to the theoretical understanding of basic needs and informs discussion on inclusive innovation. The analysis also contributes to practice by providing empirical evidence to suggest that despite being different disciplines, inclusive innovation and consumer behaviour approaches can be brought together to bridge the knowledge gap on marketing for the BOP.