Serving the Base of the Pyramid Through Innovative Business Models and Stakeholder Relationships

Abstract

The base of the pyramid (BoP) refers to the global poor, most of whom live in developing countries and face limited access to health care, education, and public services. Social entrepreneurship can be an effective approach to creating both economic and social value at the BoP, addressing the needs of this market segment through innovative business models and relationships with different local stakeholders. Scholars and practitioners alike have proposed that multinational corporations or philanthropic efforts would be effective in serving the needs of this market segment. However, social entrepreneurs, through their pursuit of social and economic goals that address the community’s needs and potentiates its capabilities, constitute a better alternative to these approaches. Thus, based on the study of three social enterprises in Latin America, we develop a set of propositions regarding the characteristics that effective social enterprises serving the rural BoP are likely to exhibit. These features include a) a local founder who understands the community needs and sociopolitical context, b) an innovative business model that fits the local context, c) the deployment of or investment in local capabilities, and d) diversified sources of income through multiple market segments or different product lines.