Identifying Key Success Factors for Social Enterprises Serving Base‐of‐Pyramid Markets through Analysis of Value Chain Complexities

Abstract

There are people in this world who have little or no access to basic needs and they struggle financially, living on less than a handful of dollars a day. A better understanding of how to supply/serve the world's poor is needed. In this paper, through the lens of Porter's value chain framework we investigate the challenges and opportunities social enterprises face in base‐of‐pyramid (BoP) markets based on secondary data on 23 organizations. Our contribution is twofold: First, we analyze value chain complexities for the social enterprise based on the value creation role (consumer, coproducer) and income level (poverty, extreme poverty) of the local population. We find that nature of customers’ requirements varies across customer segments in the BoP markets and social enterprises face unique challenges in fulfilling such differentiated demand patterns. Second, we develop an affordability–accessibility framework that helps to identify the situations that may be favorable/unfavorable for social enterprises to meet the challenges in BoP markets. We make four propositions that social enterprises may use to cope with difficulties in affordability and accessibility. Our findings will be useful for such organizations to understand and design better supply chains for the base of pyramid.

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“…This study can be further extended to developing decision-making models in global and complex supply chain systems. In addition, comprehensive empirical research using in-depth case studies or a large-scale survey could be undertaken to develop a theory regarding supply chain recovery plans and strategies for high-demand and essential items during an extraordinary outbreak such as COVID-19 (Pal and Altay 2019 ).…”

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“…They form the last‐mile link for the upstream corporations whose products they help distribute into the BOP market (Sodhi and Tang, 2016). Specifically talking about the role of such continued micro‐entrepreneurship at the BOP, Pal and Altay (2019, p. 163) argue that “micro‐enterprises could help overcome the high cost of delivering the last mile .” Indeed, such initiatives are the personification of the call to think differently when developing supply chains for the BOP (Fawcett and Waller, 2015). While the role of such micro‐enterprises is therefore indispensable in BOP SCM, such enterprises also continue to be exposed to disruptions and shocks (e.g., natural calamities or cash flow challenges) at a much higher frequency than would normally be expected (Heltberg and Lund, 2009).…”

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