The Role of Information and Communication Technology in Managing Supply Chains in Base-of-the-Pyramid Markets

Abstract

The rapid development of information and communication technology (ICT) has created opportunities for supply chain performance improvements to address challenges in base-of-the-pyramid (BoP) contexts. The article aims to analyze how ICTs that provide information, financial access, and transaction applications serve as enablers for transaction cost (TC) reductions and supply chain management (SCM) improvements in the agricultural sector. The objectives of the article are reached by deducting explanations from a framework of existing TC and SCM theories while analyzing six exemplary case studies in Sub-Saharan Africa and South Asia. ICT enables the BoP market to improve its SCM activities. Three different ICT models can be identified: Some ICTs impact 1) information flows only, while others influence 2) financial flows or 3) material flows. TC reductions in the form of screening and selection, measurement, communication, negotiation, and coordination costs serve as explanations and theoretical foundations for these models. Future empirical research should evaluate the application of ICTs in more detail and validate the proposed framework with the help of other methods. The current study will help BoP actors, such as farmers or agricultural dealers, capture more value and reduce poverty through TC reductions and improved SCM. The findings are also applicable to other small businesses considering their industrial contexts. The main contribution of the article is that it brings together theoretical arguments from TC theory, SCM, and practical ICT developments in BoP markets. The framework provides a foundation for developing more in-depth empirical research.