SOURCING FOR THE BOP: AID-FOCUSED & CONSUMER-FOCUSED SUPPLY CHAINS IN SUBSISTENCE MARKETS

Abstract

Subsistence markets are recognized as full of potential due to their considerable size, estimated at over four billion people living at the base of the pyramid. Although there has been substantial work describing how products and distribution systems must be uniquely adapted for these markets, less is known about how supply chains are created and managed to support these efforts and satisfy subsistence market customers. We identify two prototypical types of supply chains (aid-based and consumer-based) by which firms outside of subsistence markets can access these markets. In contrast to traditional supply chains, we propose that subsistence market supply chains combine elements of both efficiency and responsiveness; engage with more diverse partners; and rely primarily on relational governance mechanisms. Furthermore, we suggest that aid-focused chains will emphasize responsiveness more than efficiency, will have more homogenous partners, and will use relatively more formal means of managing suppliers. By...