Skip to main content

Advertisement

SpringerLink
Log in

Dynamic Capabilities and Base of the Pyramid Business Strategies

  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract

Numerous scholars have observed that the relationship between poverty and violent conflict is endogenous. As a result, the area of Peace Through Commerce argues as one of its central tenets that the institution of business may be able to contribute to sustainable peace by creating economic development where poverty is a critical issue. While this argument may be valid, it leaves the question open – what is the business case for engaging in poverty alleviation business strategies? Strategic Management scholars are addressing this question, arguing the general proposition that poverty is not only experienced by the people, but also impacts businesses operating in environments where the phenomenon is pervasive. By addressing poverty, businesses can help themselves. Yet, organizational theory justifying this proposition is still emerging, consisting of only a few studies that generally suggest that these strategies can help firms develop competitive advantage through the lens of the resource-based view. This article extends the theoretical application of the resource-based view, suggesting that conditions of poverty directly suppress the value of organizational resources and capabilities that are or could be contributed by people affected by it. In addition, it characterizes poverty alleviation strategic capabilities as dynamic capabilities. Finally, it describes a framework of “base of the pyramid dynamic capabilities” that could guide both future discourse in the area and deductive-disconfirmatory research examining the efficacy of these strategies.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Subscribe and save

Springer+ Basic
$34.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or eBook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Explore related subjects

Discover the latest articles, news and stories from top researchers in related subjects.

References

  • Anupindi, R. and S. Sivakumar. 2007, ‘ITC’s e-Choupal: A Platform Strategy for Rural Transformation’, in V. K. Rangan, J. Quelch, G. Herrero and B. Barton (eds.), Business Solutions for the Global Poor, (Jossey-Bass, San Francisco, CA), pp. 173-182.

    Google Scholar 

  • Barcelo, I. M.: 2007, ‘Patrimonio Hoy: Low-income housing that improves quality of life’, Development Outreach 10, 27-29.

    Google Scholar 

  • Barney, J.: 1991, ‘Firm Resources and Sustained Competitive Advantage’, The Journal of Management 17, 99-120.

    Google Scholar 

  • Barney, J.: 2001, ‘Resource-based theories of competitive advantage: A ten-year retrospective on the resource-based view’, Journal of Management 27, 643-650.

    Article  Google Scholar 

  • Basu, K.: 2006, ‘Globalization, Poverty, and Inequality: What is the Relationship? What Can Be Done?’ World Development 34, 1361-1373.

    Article  Google Scholar 

  • Brugmann, J. and C. K. Prahalad. 2007, ‘Cocreating Business’s New Social Compact’, Harvard Business Review 85(2), 80-90.

    Google Scholar 

  • Carpenter, M., W. Sanders and H. Gregersen. 2003, ‘Bundling Human Capital with Organizational Context: the Impact of International Assignment Experience on Mulinational Firm Performance and CEO Pay’, Academy of Management Journal 44, 493-511.

    Article  Google Scholar 

  • Collier, P.: 2007, The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It, (Oxford University Press, New York).

    Google Scholar 

  • Collier, P. and D. Dollar. 2002, Globalization, Growth, and Poverty: Building an Inclusive World Economy, (The World Bank, New York).

    Google Scholar 

  • Collier, P., L. Elliott, H. Hegre, A. Hoeffler, M. Reynal-Querol and N. Sambanis. 2002, Breaking the Conflict Trap: Civil War and Development Policy, (World Bank and Oxford University Press, Washington, DC).

    Google Scholar 

  • Crane, A. and D. Matten. 2004, Business Ethics: A European Perspective, Managing Corporate Citizenship and Sustainability in the Age of Globalization, (Oxford University Press, Oxford).

    Google Scholar 

  • Davis, G. and C. Marquis. 2005, ‘Prospects for Organization Theory in the Early Twenty-First Century: Institutional Fields and Mechanisms ‘, Organizational Science 16, 332-343.

    Article  Google Scholar 

  • Donaldson, T.: 1989, The Ethics of International Business, (Oxford University Press, New York).

    Google Scholar 

  • Donaldson, T. and T. Dunfee. 1999, The Ties that Bind: A Social Contracts Approach to Business Ethics, (Harvard University Press, Cambridge).

    Google Scholar 

  • Duffield, M.: 2000, ‘Globalization, Transborder Trade and War Economies’, in M. Berdhal and D. Malone (eds.), Greed and Grievance. Economic Agendas in Civil Wars, (Lynne Reiner, Boulder, CO), pp. 69-89.

    Google Scholar 

  • Dunfee, T. and D. Hess. 2000, ‘The Legitimacy of Direct Corporate Humanitarian Investment’, Business Ethics Quarterly 10, 95-109.

    Article  Google Scholar 

  • K. Eisenhardt and J. Martin (2000) Dynamic Capabilities: What Are They?. Strategic Management Journal, 21, 1105–1121.

    Article  Google Scholar 

  • Fort, T. and C. Schipani. 2004, The Role of Business in Fostering Peaceful Societies, (Cambridge University Press, Cambridge).

    Book  Google Scholar 

  • Goldberg, R. A. and K. Herman. 2007, ‘Nestlé’s Milk District Model’, in V. K. Rangan, J. Quelch, G. Herrero and B. Barton (eds.), Business Solutions for the Global Poor, (Jossey-Bass, San Francisco, CA), pp. 183-192.

    Google Scholar 

  • Goodhand, J.: 2001, ‘Violent Conflict, Poverty and Chronic Poverty’, Chronic Poverty Research Centre.

    Google Scholar 

  • Hammond, A., W. Kramer, J. Tran, R. Katz and C. Walker: 2007, `The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid', World Resources Institute.

  • Jain, S. and S. Vachani. 2006, Multinational Corporations and Global Poverty Reduction, (Edward Elgar, Northampton).

    Google Scholar 

  • Johnson, K. and I. Abramov. 2004, Business Ethics: A Manual for Managing A Responsible Business Enterprise in Emerging Market Economies, (United States Department of Commerce, Washington, DC).

    Google Scholar 

  • Justino, P.: 2009, ‘Poverty and Violent Conflict: A Micro-Level Perspective on the Causes and Duration of Warfare’, MICROCON.

  • Kogut, B. and U. Zander. 1992, ‘Knowledge of the firm, combinative capabilities, and the replication of technology’, Organization Science 3, 383-297.

    Article  Google Scholar 

  • London, T. and S. Hart. 2004, ‘Reinventing Strategies for Emerging Markets: Beyond the Transnational Model’, Journal of International Business Studies 35, 350-370.

    Article  Google Scholar 

  • Margolis, J. D. and J. P. Walsh. 2003, ‘Misery Loves Companies: Rethinking Social Initiatives by Business’, Administrative Science Quarterly 48, 268-305.

    Article  Google Scholar 

  • Matten, D. and J. Moon. 2005, ‘Corporate Citizenship: Toward an Extended Theoretical Conceptualization’, Academy of Management Review 30, 166-179.

    Article  Google Scholar 

  • Milstein, M. B., T. London and S. L. Hart: 2007, ‘Revolutionary Routines: Capturing the Opportunity for Creating a More Inclusive Capitalism’, in S. Pederit, R. E. Fry and D. L. Cooperrider (eds.), Handbook of Transformative Cooperation: New Designs and Dynamics (Stanford University Press, Palo Alto), pp. 84–103.

  • Moesinger, K. and A. Maglio. 1997, ‘Ogoni and Nigeria Conflict Over Oil’, American University.

    Google Scholar 

  • Porter, M.: 1979, ‘How Competitive Forces Shape Strategy’, Harvard Business Review 57(2), 137-145.

    Google Scholar 

  • Porter, M.: 1985, Competitive Advantage: Creating and Sustaining Superior Performance, (The Free Press, New York).

    Google Scholar 

  • Porter, M. E. and M. R. Kramer. 2006, ‘Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility’, Harvard Business Review 84(12), 78-92.

    Google Scholar 

  • Post, J., L. Preston and S. Sachs. 2002, Redefining the Corporation: Stakeholder Management and Organizational Wealth, (Stanford Business Books, Stanford, CA).

    Google Scholar 

  • Prahalad, C. K.: 2006, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (Wharton School Publishing,

    Google Scholar 

  • Prahalad, C. K.: 2007, ‘Forward’, in V. K. Rangan, J. Quelch, G. Herrero and B. Barton (eds.), Business Solutions for the Global Poor, (Jossey-Bass, San Francisco, CA), pp. xv-xvi.

    Google Scholar 

  • Prahalad, C. K. and S. Hart. 2002, ‘The Fortune at the Bottom of the Pyramid’, Harvard Business Review 26(1), 1-14.

    Google Scholar 

  • Rangan, V. K. and A. McCaffrey. 2006, ‘A ‘Customer-Centric’ View of Global Economic Development’, in S. C. Jain and S. Vachani (eds.), Multinational Corporations and Global Poverty Reduction, (Edward Elgar, Northamption), pp. 177-203.

    Google Scholar 

  • Rangan, V. K., J. Quelch, G. Herrero and B. Barton. 2007, Business Solutions for the Global Poor, (Jossey-Bass, San Francisco).

    Google Scholar 

  • Rodriguez, P., D. Siegel, A. Hillman and L. Eden. 2006, ‘Three Lenses on the Multinational Enterprise: Politics, Corruption and Corporate Social Responsibility’, Journal of International Business Studies 37, 733-746.

    Article  Google Scholar 

  • Seelos, C. and J. Mair. 2007, ‘Profitable Business Models and Market Creation in the Context of Deep Poverty: A Strategic View’, Academy of Management Perspectives 21, 49-63.

    Google Scholar 

  • Segel, A., N. Meghji and R. Garcia-Cuellar. 2007, ‘Patrimonio Hoy: A Groundbreaking Corporate Program to Alleviate Mexico’s Housing Crisis’, in V. K. Rangan, J. Quelch, G. Herrero and B. Barton (eds.), Business Solutions for the Global Poor, (Jossey-Bass, San Francisco), pp. 155-166.

    Google Scholar 

  • Sen, A.: 1999, Development as Freedom, (Anchor Books, New York).

    Google Scholar 

  • Shapiro, C.: 1989, ‘The theory of business strategy’, RAND Journal of Economics 20, 125-137.

    Article  Google Scholar 

  • Teece, D.: 2007, ‘Explicating Dynamic Capabilities: the Nature and Microfoundation of (Sustainable) Enterprise Performance’, Strategic Management Journal 28, 1319-1350.

    Article  Google Scholar 

  • Teece, D., G. Pisano and A. Shuen. 1997, ‘Dynamic Capabilities and Strategic Management’, Strategic Management Journal 18, 509-533.

    Article  Google Scholar 

  • United Nations Development Program (UNDP): 2007, ‘Human Development Report’, http://hdr.undp.org/en/media/hdr_20072008_en_complete.pdf.

  • United Nations Development Program (UNDP): 2008, ‘Creating Value for All: Strategies for Doing Business with the Poor’, United Nations Development Program.

  • Wernerfelt, B.: 1984, ‘A resource based view of the firm’, Strategic Management Journal 5, 171-180.

    Article  Google Scholar 

  • Williamson, O.: 1979, ‘Transaction-Cost Economics: The Governance of Contractual Relations’, The Journal of Law and Economics 22, 233-261.

    Article  Google Scholar 

  • World Bank: 2002, ‘Institutions for Markets: The World Bank’s World Development Report 2001/2002’, World Bank.

  • World Bank: 2005, ‘World Development Report’, World Bank.

  • Wright, P.: 1984, ‘MNC-Third World Business Unit Performance: Application of Strategic Elements’, Strategic Management Journal 5, 231-240.

    Article  Google Scholar 

  • Yaziji, M.: 2004, ‘Turning Gadflies into Allies’, Harvard Business Review 82(2), 110-115.

    Google Scholar 

  • Yunus, M and A. Jolis (2003) Banker to the Poor: Micro-Lending and the Battle Against World Poverty. New York: PublicAffaris.

    Google Scholar 

Download references

Acknowledgments

Pete Tashman thanks the Institute for Corporate Responsibility (ICR) at the George Washington University School of Business for financial support, and Patrick McHugh, Tim Fort, and two anonymous reviewers for their valuable comments. Valentina Marano thanks the financial support of the University of South Carolina Graduate School.

Author information

Authors and Affiliations

  1. Department of Strategic Management and Public Policy, School of Business, George Washington University, Washington, DC, 20052, U.S.A.

    Pete Tashman

  2. Department of International Business, The Moore School of Business, University of South Carolina, Columbia, SC, 29201, U.S.A.

    Valentina Marano

Authors
  1. Pete Tashman
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Valentina Marano
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Pete Tashman.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Tashman, P., Marano, V. Dynamic Capabilities and Base of the Pyramid Business Strategies. J Bus Ethics 89 (Suppl 4), 495–514 (2009). https://doi.org/10.1007/s10551-010-0403-7

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-010-0403-7

Keywords

Search

Navigation