Purpose – The availability of basic public services which are reliable, affordable and available when needed are one of the key challenges in the developing economies. These challenges are further aggravated at the bottom of the pyramid. Realizing this as a social challenge and an economic opportunity (shared value), there has been an emergence of impact investors as capital providers to support social enterprises who have bundled entrepreneurial attitude and passion with available scarce resources to design and implement cost-effective, reliable and scalable market solutions for the BoP. The purpose of this research paper is to understand the underlying operating principles of these impact investing firms and their business models aimed at providing basic services to the BoP segment in India.
Design/methodology/approach – The empirical context involves the use of case study research methodology, where the source of data is published case studies and the company websites of three impact investment organizations who have made a socio economic difference in the lives of the rural and semi-urban population lying at the BoP in India through judicious investments in social enterprises.
Findings – The analysis and findings reflect the key operating principles for successful impact investing in the business ventures at the BoP. These include focus on 4A’s (accessible, affordable, acceptable and awareness), local engagement, local skills building, learning by experiment, flexible organizational structure, dynamic leadership, technology integration and scalability.
Research limitations/implications – This research study has focused mainly on the published case studies as source of data. In addition the study included interviews with the impact investors and investee social enterprises.
Originality/value – The intent is to understand and bring forth the learning and guiding principles, which act as a catalyst for the future researchers and business ventures engaged in the impact investing within the BoP context.
Keywords: Base of the pyramid, UN MDGs, Low income markets, Emerging markets, Impact investment, Developing countries, Poverty
Paper type: Research paper
References:
Brett, D. Aavishkaar India Micro Venture Capital Fund (2013).
Dacin, M. T., Dacin, P. A., & Tracy, P. (2011). Social Entrepreneurship: A Critique and Future Directions. Organization Science, 22(5), 1203–1213.
Eisenhardt, K. M. (1989). Building Theories from Case Study Research. The Academy of Management Review, 14(4), 532–550.
Hebb, T. (2013). Impact investing and responsible investing: what does it mean? Journal of Sustainable Finance & Investment, 3(2), 71–74. doi:10.1080/20430795.2013.776255
Lyon, F., & Fernandez, H. (2012). Strategies for scaling up social enterprise: lessons from early years providers. Social Enterprise Journal, 8(1), 63–77. doi:10.1108/17508611211226593
Mair, J., & Marti, I. (2009). Entrepreneurship in and around institutional voids: A case study from Bangladesh. Journal of Business Venturing, 24(5), 419–435. doi:10.1016/j.jbusvent.2008.04.006
UN. (2012). The Millennium Development Goals Report. New York: United Nations.
Yin, R. K. (1981). The Case Study Crisis: Some Answers, 26(1), 8–58.
Yunus, M., & Jolis, A. (1999). Banker to the Poor: Micro-Lending and the Battle Against World Poverty.
Yunus, M., Moingeon, B., & Lehmann-Ortega, L. (2010). Building Social Business Models: Lessons from the Grameen Experience. Long Range Planning, 43(2-3), 308–325. doi:10.1016/j.lrp.2009.12.005
4. Financing issues for social enterprises, philanthropy and social finance
Effectiveness_of_Impact_Investing_EMES_2017_FD.pdf 