Cover of Poverty Alleviation through Sustainable Strategic Business Models

Poverty Alleviation through Sustainable Strategic Business Models

Essays on Poverty Alleviation as a Business Strategy

By Martin H. Klein

Price: €21.00

ISBN: 978-90-5892-168-0
Binding: Paperback
Publication Date: October 2008
Pages: 295 

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About the Book

How can the private sector serve the unmet needs of the world’s poor while, at the same time, attracting new business opportunities and advancing the standard of living of those living in poverty? One approach to this, known as the bottom or base-of the-pyramid, is for the private sector to develop towards including the poor as both producers and consumers.

Those living in poverty present great business opportunities for the private sector. The size, unique characteristics, and underdeveloped economic activity of the poor can offer the private sector opportunities for growth, innovation, and profit. Consequently, the private sector can improve the standard of living of the poor by generating employment opportunities, creating access to products and services, and by creating access to markets. It is thus through the development of profitable, inclusive businesses that the private sector can make a potentially important contribution to poverty alleviation.

This creates a potential win-win situation; where doing good socially and environmentally within low-income communities, firms can do well financially. In fact, because of the private sector’s profit motive, profitable business initiatives stimulate new investments, replication, and innovation. They motivate the private sector to deploy its problem-solving capacity to make markets work more effectively and efficiently in favor of the poor as it is in their best interest to do so.

However, conditions in the low-income context differ from those in high-income markets. These include differences in cultures, institutions, cognitions, dependence on the informal economy, economic development, living conditions, and motivation. The characteristics of the poor and the challenging circumstances in which these firms operate necessitate business model innovation to enable firms to operate successfully in low-income markets. This includes disruptive innovation in distribution, price-performance ratios, value chain management, workflows, organization, payment schemes, customer education, and human resource management. Hence, success at the BoP requires simultaneous disruptive innovation of multiple aspects of the ways in which firms do business.

This book examines the conditions within low-income communities and the business challenges these conditions generate for firms. Subsequently, the consequences of these conditions for firms' strategies and business models are examined. In so doing, this book develops an understanding of the business models through which firms can include those living in poverty (as producers as well as consumers) in a profitable manner.

Among the key features covered in the book are:

  • The first rigorous survey of pro-poor for-profit businesses. In cooperation with NGOs, development organizations and micro finance institutions, I collected a unique dataset of 143 firms operating in base-of-the-pyramid markets in a total of 105 countries. Their focal group of customers, employees, suppliers, and/or distributors have an average daily purchasing power of $2 or less.

  • Building upon this dataset, I develop a classification of the business challenges pro-poor for-profit firms face and investigate how these challenges change as firms develop and as the investment climate changes.

  • An examination and testing of the central postulate that embedding social and environmental value in a firm's business model drives a firm's financial performance at the base-of-the-pyramid. I find evidence that firms' profit motive motivates firms to do well by doing good socially, and that addressing social issues is not adjacent but central to strategy at the base-of-the-pyramid.

  • A conceptual explanation of the concept of "business models" from a strategic management perspective.

  • Building upon case studies of pro-poor businesses, the book creates an understanding of why some businesses are successful at the base-of-the-pyramid whilst others fail.

  • A management support model for developing profitable pro-poor business models. I present business model qualities divided over five dimensions around which firms focused at the base-of-the-pyramid should build their business model.

Table of Contents

1 Introduction and outline
               This chapter available in PDF format for free download     Click here to download
1.1 Research context: Base-of-the-pyramid
1.2 Base-of-the-pyramid businesses: A strategy of “doing well by doing good”
1.3 The BoP approach as form of poverty alleviation
1.4 Business arguments to develop a business strategy around the BoP
1.5 Objectives and outline

2 Discerning the organizational problems and opportunities at the base-of-the-pyramid: A classification and an investigation of contextual relationships
               The abstract available in PDF format for free download     Click here to download
2.1 Introduction
2.2 Theory and hypotheses
2.3 Methods
2.4 Analyses and results
2.5 Discussion

3 The business model concept: A strategic management approach
3.1 Introduction
3.2 Literature review
3.3 Defining the strategic business model
3.4 Multiscale analysis and components versus linkages
3.5 Conceptual framework
3.6 Propositions: Assessment of internal fitness
3.7 Discussion

4 Can private businesses really build profitable and sustainable business models at the base-of-the-pyramid?
               The abstract available in PDF format for free download     Click here to download
4.1 Introduction
4.2 Theory and hypotheses development
4.3 Data and methods
4.4 Analyses and results
4.5 Discussion

5 A management support model for developing profitable pro-poor business models at the base-of-the-pyramid: On how to analyze base-of-the-pyramid case studies
               The abstract available in PDF format for free download     Click here to download
5.1 Introduction
5.2 A management support model for developing profitable pro-poor business models at the BoP
5.3 BoP business model qualities
5.4 Analysis of validity: Case reviews
5.5 Discussion

6 Conclusion
6.1 Introduction
6.2 Conclusions and implications
6.3 Directions for future research

About the Author

Martin H. Klein is Founder and CEO of Business For Development. He wrote the book Poverty Alleviation through Sustainable Strategic Business Models: Essays on Poverty Alleviation as a Business Strategy as his doctoral thesis, for which he was awarded a PhD in Strategy from Erasmus University Rotterdam. He conducted research and taught classes both at the Rotterdam School of Management and the Erasmus School of Economics. Martin was an invited speaker at the UNCTAD / Empretec Directors' Meeting and has spoken on the topic of inclusive businesses at major international professional and academic conferences. He has consulted for large corporate firms and small businesses.

About Business For Development

Business For Development is a business development company dedicated to improve the lives of the world's poor. Our focus is on founding and developing sustainable pro-poor for-profit businesses by replicating proven business models in partnership with NGOs, private sector, and non-traditional partners. To this end, we aspire:

- to be the premier expert on business development within the context of the base-of-the-pyramid, and 
- to be the preferred partner in developing sustainable pro-poor businesses.

Price: €21.00

ISBN: 978-90-5892-168-0
Binding: Paperback
Publication Date: October 2008
Pages: 295 

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