Risk and social value creation in volatile BOP markets

Abstract

The current chapter addresses the operations of an emerging market (EM) origin firm in a Base of the Pyramid (BOP) market. We focus on the under-researched empirical context of Somalia using a single case study of a Turkish construction firm operating there to analyse these aspects. Our study reveals that risk of volatility does not deter foreign firms from entering and operating in such markets, especially when the home country image is positive, and there are historical and religious linkages between home and host countries. We further discovered that the case firm dealt with institutional voids by earning legitimacy from powerful local networks and using a positive country-of-origin image to run the business successfully in an uncertain context. Finally, the case firm created social value for BOP consumers not only by developing affordable quality houses, but also indirectly by dealing fairly with local partners and engaging in skills development for both own employees as well as of partner firms.