Abstract
The literature on Base of the Pyramid (BoP) strategies emphasizes that creating social value requires collaborative, multi-stakeholder business approaches. However, there is limited understanding of how businesses can successfully coordinate such value creation processes in the developing economies that face significant institutional voids. This study adopts a business model perspective for analyzing social value creation processes that span organizational boundaries. We introduce a novel, theoretically grounded business model framework that helps conceptualize social value by locating the various loci of value creation, and the stakeholders that partake in creating and capturing this value. We subsequently analyze the mechanisms of social value creation in M-Pesa, a renowned boundary-spanning mobile money system that has advanced financial inclusion among tens of millions of users in Kenya. The results show that information and communications technology can help advance social value creation by reducing the cost of coordinating boundary-spanning business models that integrate diverse societal stakeholders. The results further point to uneven distributional outcomes in self-governing social value creation strategies where the focal firm plays a coordinating role.
Highlights
The literature on Base of the Pyramid (BoP) strategies emphasizes that creating social value requires collaborative, multi-stakeholder business approaches
The objective of this research is to provide a coherent conceptualization of social value creation that can improve our understanding of multi-stakeholder social value creation processes
We introduce an integrative framework that is suited for analyzing the processes and outcomes of social value creation by building on the activity system perspective of business models (Amit & Zott, 2001; Zott & Amit, 2010)
Summary
The literature on Base of the Pyramid (BoP) strategies emphasizes that creating social value requires collaborative, multi-stakeholder business approaches. Multi-stakeholder value creation strategies, tend to be complex, and require intricate governance mechanisms to coordinate activities across stakeholders (Seitanidi & Crane, 2013) These strategies are costly and risky in emerging economies that are characterized by “institutional voids,” which refers to the weakness and, in some cases, complete absence of formal institutions that are needed for devising and enforcing contracts (Mair & Marti, 2009). If institutional voids have severe adverse effect on traditional businesses (Peng et al, 2005), their effect is likely to be even more pronounced in complex, multi-stakeholder social value creation strategies This could be a major factor behind the low success rate of BoP firms in creating social value (Dembek et al, 2019). The objective of this research is to provide a coherent conceptualization of social value creation that can improve our understanding of multi-stakeholder (boundary-spanning) social value creation processes
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