Inclusive Business at the Base of the Pyramid: The Role of Embeddedness for Enabling Social Innovations

Abstract

Inclusive businesses that combine profit making with social impact are claimed to hold the potential for poverty alleviation while also creating new entrepreneurial and innovation opportunities. Current research, however, offers little insight on the processes through which for-profit business organizations introduce social innovations that can profitably create social impact. To understand how social innovations emerge and become sustained in business organizations, we studied a telecom firm in Kenya that successfully extended financial services across the country through a number of mobile banking innovations. Our qualitative analysis revealed the strong role of being embedded in local networks and structures for initiating and implementing social innovations. Strong embeddedness enhanced the pragmatic and ethical imperative for internalizing social issues, but also provided access to diverse resources for implementing and legitimizing social innovations. However, hybridization processes that emphasized social issues introduced organizational tensions by increasing goal diversity and requiring adapting organizational processes and structures. The case shows how developing a mission-driven identity enabled the sustenance of social innovations by providing a meta-narrative that bridged goal diversities and rationalized organizational change.

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Fig. 1

Source Constructed based on data from annual reports

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Notes

  1. 1.

    Innovations that create social value have also been referred to by other names such as ‘inclusive innovation’, ‘below-the-radar innovation’, ‘frugal innovation’ and ‘sustainable innovation’ (Prahalad 2004; Simanis and Hart 2009; Hart 2005).

  2. 2.

    Apart from Kenya, M-Pesa is presently in use in Tanzania, South Africa, Lesotho, the Democratic Republic of Congo, Egypt, Mozambique, Romania, Albania and India.

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Acknowledgements

This project is part of the research agenda of the Knowledge Platform Development Policies, which was funded by the Dutch Ministry of Foreign Affairs through NWO-WOTRO with the Grant Number W 08.350.102. The authors would like to thank NWO-WOTRO for making available the resources that made the research possible.

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Correspondence to Lydia Bals.

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Appendix

Appendix

See Tables 5, 6, 7.

Table 5 Timeline of key Safaricom incidents and product adaptations
Table 6 Latest figures and facts on Safaricom (2016/17)
Table 7 Illustrative quotes for major themes and sub-themes

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Lashitew, A.A., Bals, L. & van Tulder, R. Inclusive Business at the Base of the Pyramid: The Role of Embeddedness for Enabling Social Innovations. J Bus Ethics 162, 421–448 (2020). https://doi.org/10.1007/s10551-018-3995-y

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Keywords

  • Inclusive business
  • Hybridity
  • Sustainable business
  • Social innovation
  • Social mission
  • Base of the Pyramid (BoP)