Impact at the ‘Bottom of the Pyramid’: The Role of Social Capital in Capability Development and Community Empowerment

Abstract

Rooted in the notion of inclusive capitalism, the Bottom-of-the-Pyramid (BoP) approach argues for the simultaneous pursuit of profit and social welfare by creating markets for the poor. This idea has been both celebrated and criticized in the literature. We do neither in this paper. Instead, by leveraging insights from Amartya Sen's work on capability development and the literature on social capital, we offer a more socially embedded and community-centric BoP approach. By redefining poverty not just as a lack of income, but also as a lack of 'capabilities' in Sen's sense that can be developed through leveraging social capital, we offer a systemic framework for understanding the societal impact of business-driven ventures in the BoP and empowering BoP communities through these ventures. Specifically, we argue that any business initiative in the BoP ought to be evaluated on the basis of whether it advances capability transfer and retention by (a) enhancing the social capital between a particular community and other more resource rich networks, and (b) preserving the existing social capital in the community.

Framing resource-constrained innovation at the ‘bottom of the pyramid’: Insights from an ethnographic case study in rural Bangladesh

“…Poverty rather involves, on one hand, the inability to have access to the basic benefits of a market economy (De Soto, 2003) and on the other the lack of essential capabilities that enable freedom to access better opportunities (Sen, 1999). Thus, it is not surprising that such innovation is empathetic (Gupta, 2010) or pursues objectives other than consumption, profitability or ever increasing incomes (Ansari et al, 2012). Grassroots narratives acknowledge technology and innovation are neither socially or politically neutral (Winner, 1980) nor sufficient to overcome the problems of poverty, social exclusion (Burnett, Senker, & Walker, 2010) and global justice (Papaioannou, 2011).…”

Frugal Innovation and Development: Aides or Adversaries?

“…Frugal innovation can involve low-income producers in the design, production and marketing process, yet it might equally be that multinationals design, produce and market frugal innovations that end up jeopardizing local entrepreneurs (Ansari et al, 2012). Despite the aim of frugal innovation to provide 'total product solutions' that better fit the environment and tastes of low-income consumers, this does not always succeed (Mendoza and Thelen, 2008, p. 451).…”

“…Multinationals might well crowd out local resources, transfer inappropriate technologies or practices and enhance dependency (Hansen and SchaumburgMüller, 2010). The unequal power relations between multinationals and poor consumers thus have to be acknowledged (Karnani, 2007;Ansari et al, 2012). More so than multinationals, the informal economy might be suited to enable responsiveness to shifting demand, skills development and participation in global value chains, to facilitate the role of intermediary organizations and to provide knowledge of the societal and political context (Cozzens and Sutz, 2014).…”

University-driven inclusive innovations in the Western Cape of South Africa: Towards a research framework of innovation regimes

“…The involvement of the end-user in innovation processes has been put forward as an important part of successful innovation (Ansari, Munir, and Gregg 2012;McGahan, Rezaie, and Cole 2014;Soman, Stein, and Wong 2014). Members of under-resourced (local) communities have been acknowledged as innovators in their own right (Prahalad 2012;Cheng and Bradley 2014;Soman, Stein, and Wong 2014), and as key contributors to innovation through the insights they provide into end-user needs and contextual nuances (Ansari, Munir, and Gregg 2012; McGahan, Rezaie, and Cole 2014).…”