Supporting product innovativeness and customer value at the bottom of the pyramid through context-specific capabilities and social ties

Abstract

Local firms operating in bottom of the pyramid (BoP) markets face significant challenges in managing their innovation practices and creating value for customers. Operating in resource-constrained environments, local BoP firms need to behave as bricoleurs, deploy capabilities that help creatively combine and leverage their limited available resources to innovate and create value for customers. Employing the capability-based view (CBV) of the firm and social capital theory (SCT), we develop a research model to explain the extent that local BoP manufacturers use bricolage to develop innovative products that create value for BoP customers. Analysis of data obtained from 150 local BoP manufacturing firms (three managers in each firm) and two of their major customer firms shows that the relationship between bricolage and product innovativeness is more complex than previously understood. Results show that the curvilinear relationship is attenuated differently by social ties with government versus ties with civil society organizations. Furthermore, findings also support the contingency role of BoP firms' marketing capabilities in translating product innovativeness into customer value in BoP markets. These findings present specific implications for scholars and practitioners interested in BoP markets.