During the last decade, business scholars have joined the fight against poverty. The resulting Base of the Pyramid (BOP) literature recommends co-creation of new, poverty reducing business models by multinational enterprises... [ view full abstract ]
During the last decade, business scholars have joined the fight against poverty. The resulting Base of the Pyramid (BOP) literature recommends co-creation of new, poverty reducing business models by multinational enterprises (MNEs) and non-governmental organizations (NGOs) (e.g. London and Hart 2004; Hart and Sharma 2004; Rivera-Santos and Rufin 2010; Seelos and Mair 2006). Authors see that MNEs can benefit from NGO resources, competencies, legitimacy and networks (Dahan et al 2010; Holmes and Smart 2009; Murphy and Arenas 2010; Rein and Stott 2009; and Webb et al 2009).
We know, however, very little about MNE-NGO interactions in these contexts. This paper addresses the question of how do NGOs bring their resources to such innovation processes. The analysis builds on practice theories (Miettinen, Samra-Fredericks and Yanow 2009; Nicolini 2012) and particularly the concept of “resourcing”, which underlines that assets only become resources when used (Feldman & Worline 2010). The knowledge, competencies and contacts of an NGO only become resources for an MNE, if and when the NGO is willing and able to bring them to the partnership.
Empirically, this paper draws on an inductive, longitudinal study of partnerships between one international NGO and seven companies. Each partnership aimed to create profitable business that engages low-income communities and solves social, environmental and economic problems in India or Sri Lanka. Two of these partnership were studied in depth, five others less intensively.
My analysis suggests that we can distinguish four practices NGO staff engaged with: facilitating, empowering, co-creating and reflecting. The NGO facilitated valuable contacts and mutual intelligibility between each MNE and relevant actors in India or Sri Lanka. Nevertheless, its’ limited interest in and contacts among other than the poorest communities sparked considerable tensions between the NGO and most companies. At times, NGO facilitation itself caused misunderstandings, as it created false expectations among Indian and Lankan actors that the companies would operate on a charitable logic.
The NGO empowered poor communities to seek equal partnerships with the companies. This was essential in several cases. For example a textile company tapped directly into self-help groups, set up by poor handicraft producers with support from the NGO. The NGO also protected the communities. It refused, for example, to arrange community workshops for one company, because they considered the benefits to these communities uncertain.
The NGO contributed to the creation of business models and markets at the brainstorming and implementation phase. Market creation was central for example with a composting company, because compost markets were constrained by several bottlenecks that the NGO worked on: low availability of suitable micro-loans as well as a lack of certification and sales outlets for organic produce. Overall, however, joint co-creation practices were difficult to develop due to lack of experience and different temporal orientations, communication cultures and strategic interests.
The NGO encouraged reflecting and learning in the companies. The NGO had a rather developed practice of reflecting, fostered by ongoing monitoring and reporting to external funders.
My analysis contributes to BOP-literature by extending the discussion from what NGOs can contribute to business creation to how, in what circumstances and to what degree. Many development NGOs have resources, competencies, legitimacy and networks that can be valuable for business creation in BOP markets, but bringing these assets requires considerable adaptations in NGO practices. Further, I identify two NGO practices – empowering and reflecting – that are almost invisible in previous literature. This is an important contribution, because empowering is a core competence for many development NGOs. Recognizing and utilizing each partners’ core competencies is necessary, in order to assess the full potential of cross-sector partnerships to solve complex problems (Austin 2010).
Keywords: Social innovation, co-creation, Base of the Pyramid, cross-sector collaboration, non-governmental organizations
