Theoretical Perspectives and Literature Review

Abstract

The body of research on MNCs entering low-income economies and adopting a market-based approach is relatively young and hence limited. Integrating this stream of research into existing literature highlights the relation between this new research subject and established research topics. Roughly, two fields of literature can be identified with which the BOP approach can be associated. Adopting a social perspective, the BOP approach can be related to the literature examining the relation between business and society. As entering low-income markets can be considered a response to the public demand of social liability of corporations, and as it is additionally intended to have a strong effect on society, it is in accord with the baselines of literature on business and society. Thus, the basic assumptions of this line of research are also underlying constructs of the BOP approach. Therefore, I review the main aspects of the literature on the integration of social issues in business activities and emphasise the fundamental suppositions. From a different angle, the BOP approach can also be linked to the line of literature on business strategy in developing countries. This research applies established theories developed in the literature on strategy to the specific environment of developing countries. The BOP approach also fits this stream of literature and thus allows the application of these theories as it focuses on strategy in developing countries, albeit with a specific focal point of low-income markets. Figure 2 gives an overview of the main contributions in each stream of literature.