Abstract
This paper provides an overview of the Integrative Justice Model (IJM) for impoverished populations that was introduced in the marketing literature in the year 2009. The IJM was developed as a normative ethical framework to guide the growing corporate interest in the base of the pyramid (BoP) market to be fair and just to all parties but particularly the impoverished customer. In an impersonal marketplace that often exploits the less advantaged participant, the IJM provides five characteristics of “just” market situations. These are an authentic non-exploitative engagement, value co-creation, investment in future consumption, stakeholder interest representation and long-term profit management. At the heart of the IJM is love that flows from a recognition of the inherent dignity of those at the BoP and the need to respect and uphold that dignity in the marketplace. The hope is that as companies embrace the IJM in their functioning it will result in a marketplace that is fair, just, humanistic and loving.
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At the beginning of the new millennium there emerged a growing interest in a segment of the population, characterized as the bottom or base of the pyramid market (BoP) (Prahalad 2005; Rangan et al. 2007; Silverman 2006; Simonian 2006). The BoP includes groups that are most constrained by income and often lack economic opportunities, literacy, market access and political power among other factors. In the wake of the corporate scandals around that time involving multinational companies (MNCs), entering the BoP market afforded the opportunity of regaining public trust as well as tapping into an emerging market segment. There were multiple analyses that demonstrated the profit potential in the BoP market and thus made it financially attractive for MNCs to consider this market (Hammond et al. 2007; Hammond and Prahalad 2004; Hart and Christensen 2002; Prahalad 2005; Rangan et al. 2007).
As MNCs embraced the BoP as an economically viable market segment, it became critical that their engagement in the BoP market be shaped in such a manner that was “fair” and “just” to both parties but particularly the impoverished consumer. Such an approach was particularly important in an impersonal economic marketplace that too often exploited the less advantaged participants. The need for a “fair” and “just” approach to guide MNC engagement in the BoP was what led to the development of the Integrative Justice Model (IJM) for impoverished markets (Santos and Laczniak 2009b). While the term “love” was not used and in fact a google scholar search will show that the term “love” is absent from the BoP literature, it is indeed love that is at the heart of the IJM. Love that flows from a recognition of the inherent dignity of the BoP individuals and a need to uphold that dignity in the marketplace. Thus, “human dignity,” one of the foundational pillars of Catholic social teaching, is at the core of the IJM (Santos and Laczniak 2009a). In this paper, we briefly present an overview of the IJM and elaborate on its key elements drawing a connection with love and organizing that is the focus of this special issue of the Humanistic Management Journal.
The Integrative Justice Model: A Broad Overview
The IJM is constructed using the normative theory building process in philosophy proposed by the philosopher, Bishop (2000) and is comprised of ethical elements that ought to be present when MNCs engage the BoP (Santos and Laczniak 2009b). The IJM does not blend different types of justice such as legal justice, procedural justice, compensatory justice etc. Instead, it integrates the notions of fairness and equity in marketing transactions as developed from different strands thought. These strands of thought are: (a) Catholic Social Thought; (b) Classical Utilitarianism; (c) Habermas’ Discourse Theory; (d) Kant’s Categorical Imperative; (e) Rawls’ Theory of Justice; (f) Ross’ Theory of Duty; (g) Sen’s Capability Approach; (h) Service-Dominant Logic of Marketing; (i) Socially Responsible Investing; (j) Stakeholder Theory; (k) Sustainability; (l) Triple bottom line approach; (m) Virtue Ethics (see Table 1 for a brief elaboration of these perspectives).
Based on these thirteen perspectives, five key characteristics of “just” market situations are developed. These are: (1) An authentic engagement without exploitative intent; (2) Value co-creation; (3) Investment in future consumption without endangering the environment; (4) Interest representation of all stakeholders; and (5) Focus on long-term profit management. See Table 2 for the theoretical foundation for each of these characteristics. The expected outcomes for MNCs that adhere to the IJM dimensions are long-term relationships, customer empowerment, sustainable business initiatives, and the creation of a fairer marketplace (see Fig. 1). The aim of the IJM is to enhance fairness and equity in the marketplace particularly when engaging the BoP. In the next section we elaborate each of the key characteristics of the IJM.
An integrative justice model for impoverished markets (Santos and Laczniak 2009b)
Key Characteristics of the IJM (Santos and Laczniak 2021)
The thirteen perspectives mentioned previously, when examined together, reveal certain ethical imperatives that in general ought to guide the allocation of income, wealth and power in the marketplace. These ethical imperatives are the five key characteristics that are also termed as the value inputs of the IJM. They are not intended to be an exhaustive list of “just” market situations. Instead, they can be seen as both distinct and symbiotic dimensions of what constitutes a just marketplace. These five characteristics are not fragmented, isolated ones, but rather are to be considered in their entirety, as interdependent and related characteristics. We elaborate on these five IJM elements below.
Authentic Engagement Without Exploitative Intent
An authentic engagement is one that should possess the intrinsic quality of being trustworthy as well as being a process that aims to win the trust of the constituents engaged. The corporate scandals at the beginning of the new millennium, the subprime mortgage crisis, and the 2008 meltdown of the financial markets all contributed to a fundamental breakdown of trust. This is unfortunate, as the value of trust in business functioning cannot be overemphasized. Thomas (2002) points out that trust is crucial in a stakeholder society. Murphy (1999) argues that trust is one of the five core virtues that an ethical business organization should possess. In the context of relationship marketing, Murphy et al. (2007) see trust as a primary virtue. One important means of developing trust with impoverished customers is by engaging them authentically and without trying to exploit them unfairly.
Samli (2008) makes a distinction between greed and ambition. A company that is motivated merely by greed will attempt to win at any cost, in any way possible, trying to get as much for themselves as possible, as fast as they can, without any concern for the external environment. In contrast, an ambitious company realizes that working and collaborating with other stakeholders increases opportunities for progress and benefits a larger number of people. Such a firm takes a long-term perspective and holds that improving the quality of society and the environment is to the benefit of all.
Value Co-Creation
Cocreation of value is an approach in marketing which holds that, instead of autonomously positing what constitutes value for consumers, a firm ought to involve such consumers in the value-creation process itself since value is ultimately determined by the beneficiary (Vargo and Lusch 2004, 2006, 2008). As Prahalad and Ramaswamy (2002, 2004a, b) indicate, this value creation does not just take place at the point of exchange but at all points of interaction between the firm and the consumer. It should be noted that Prahalad and Ramaswamy’s position on “joint value creation” is based on their perception of consumers being well informed, empowered, connected, and actively engaged. However, this perception is not necessarily true of the BoP segment where there is often lack of education, information asymmetries, and economic, cultural, and social deprivations (Karnani 2007). Therefore, in the case of VCC with impoverished consumers, a higher social responsibility falls to the more informed and more powerful market participant, namely the business firm (Laczniak 2006).
In cocreating value with impoverished customers, a firm should not make the assumption that just because the customer is involved in the cocreation process there is going to be resultant value or benefit for the customer. It is incumbent upon the firm to ensure that there is resultant value for the impoverished customer by engaging in a cocreation process that fosters partnership and develops mutual trust that extends beyond the consumption of the product or service (Murphy et al. 2007).
Investment in Future Consumption
At first glance, an investment in future consumption might seem to imply the promotion of increased consumption. However, this particular element is influenced by the capabilities approach of the Nobel laureate in economics Sen (1999). In line with Sen’s idea of expanding people’s capabilities and freedoms, an investment in future consumption is an attempt at procuring better participation of the impoverished in the market system. This participation can be as producers, innovators, employees, distributors, customers, consultants, etc. In order to enhance such participation, it is important that the capabilities of the impoverished population be developed and the freedoms they enjoy be expanded. Strategies aimed at increasing the capabilities of impoverished segments create enabling conditions that contribute to the long-term functioning of the business enterprise.
Interest Representation of All Stakeholders
This IJM element implies that a business firm should consider in its functioning what matters to its stakeholders and what is to their advantage or benefit. By “stakeholder,” we mean any group or individual who can affect or is affected by the firm’s functioning (Freeman 1984). As such categorization is rather broad, Freeman et al. (2007) distinguish between primary stakeholders, who are vital to the survival and growth of the business, and secondary stakeholders, who can affect the relationship with the primary stakeholders. In order that the interests of the stakeholders are better served, Freeman et al. (2007) recommend that managers put themselves in the place of the stakeholder and see things from that perspective. This can be a challenge in the case of impoverished stakeholders. For example, a manager who has lived an affluent lifestyle and faced few disadvantages has little idea about the situation of an impoverished consumer. Thus, such a manager might misrepresent what she or he perceives to be the interests of such a stakeholder. It is important, then, that managers familiarize themselves with the situation of impoverished stakeholders by either immersing themselves for a short while in that context or making greater effort to learn about them.
Focus on Long-Term Profit Management
Financial returns undoubtedly play an important role in the functioning of a business enterprise and are a central indicator of whether the company is performing efficiently. However, an obsession with immediate financial rewards can, ironically, act against the long-term interests of the business firm and its stakeholders. The examples of Enron and WorldCom’s accounting manipulations at the turn of the century are cases in point. More recently, Volkswagen’s “Dieselgate” scandal and Wells Fargo’s “account churning” indicate how executives keen on maximizing short-term gains can put not only their company, but also the entire market at risk (Murphy et al. 2017). Instead of profit maximization, a firm ought to concentrate on long-term profit management. This element is intended as a better long-view strategy because, if impoverished segments are developed for their sustainability, their eventual profit stream might also prove to be superior.
If a business organization considers itself to be only a money-making enterprise, it is likely to base all its decisions in terms of financial value. However, a business firm is more than just a money-spinning endeavor. It is an economic institution that plays a social function. While profit maximization aims at increasing financial returns, often in the short run, profit management strives at increasing long-term business success. The notion of long-run profit management is consistent with the triple bottom line (TBL): namely, that the measure of business success is based on social, environmental, and financial returns (Elkington 1998). While many companies accept that they have a responsibility toward social and environmental issues, this responsibility is often looked at as a “cost” or “strategy constraint.” Instead, Porter and Kramer (2006) advise that these should be viewed as sources of opportunity, innovation, and competitive advantage.
Love, Organizing, and the IJM
In his book, Heroic Leadership: Best Practices from a 450-year-old company that changed the world, Lowney (2009) identifies “love” as the glue that unified the Jesuits (a male religious order in the Catholic Church since 1540) and a motivating force that energized their efforts. More recently, Hummels et al. (2021) propose an agenda for growth and affirmation of people and the environment (AGAPE) in the context of the future of love and business organizing. This special issue continues down that path. Hummels et al.’s use of the acronym AGAPE is undoubtedly intentional as agape love is considered the highest form of love. As Hummels points out in the introduction, agape love is an “expression of the fundamental respect for others and the commitment to their wellbeing and flourishing.”
We are indeed honored that the IJM has been chosen as the north star for this special issue. While the word “love” was not used in the derivation of the IJM, agape love is indeed at the heart of the IJM. The fundamental research question that drove the development of the IJM was how could market exchange situations directed at impoverished segments be better shaped in order to be fair and just to all the parties involved, but particularly the impoverished and disadvantaged participants. In an impersonal marketplace that too often exploits the less advantaged participant because of an imbalance of resources, information, or power, the IJM provides a roadmap for organizations to take the high road and to commit to the wellbeing and flourishing of the BoP. Authentic engagement, value-creation, empowerment, interest representation, a long-term perspective as well as amplifying the voices of marginalized customers are an expression of a fundamental respect for those at the BoP and a commitment to their wellbeing.
Since the IJM’s introduction in the marketing literature in 2009, it has been applied and expanded to varied contexts. Some of these contexts include social entrepreneurship (Santos 2013); subsistence marketplaces (Facca-Miess and Santos 2014); social marketing (Kennedy and Santos 2019); social programs (Deutsch 2023) and to social enterprises (Jagadale 2023; Jagadale and Santos 2022). We are indeed delighted that there is continued interest in the IJM and hope that it continues to motivate a growing number of researchers, executives and business organizations towards building a marketplace that is fair, just, humanistic and dare we say, LOVING.
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Santos, N.J., Facca-Miess, T.M. Love and Organizing in the Context of the Base of the Pyramid: An Integrative Justice Perspective. Humanist Manag J (2024). https://doi.org/10.1007/s41463-024-00176-w
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DOI: https://doi.org/10.1007/s41463-024-00176-w