In the last decade, the so-called BoP —acronym that stands for Base (or Bottom) of the Pyramid—consolidated as a strand of research and practice that approaches the poor not as objects of charity, but as active economic agents (Márquez, Reficco, & Berger, 2009). However, increased interest on the subject has not been accompanied by a surge in lucrative BoP ventures; on the contrary, those “still are the exception, not the rule” (Jenkins & Ishikawa, 2010, p. 4). To the extent that successful experiences with the BoP have been documented, those werenot led by large established corporations, but by NGO’s or SMEs (Márquez & Reficco, 2007; Reficco & Gutiérrez, 2016). “Despite enthusiastic advocacy by prominent management scholars and endorsement by large multinationals, BoP has failed to deliver its promise of a market-driven solution to poverty” (AoM, 2011). Such a performance deficit is regrettable, as large corporations have the scale, the financial muscle, the R&D capabilities and the global reach to potentially have the most positive impact on the lives of the poor (Prahalad, 2005).
The scarcity of success stories makes the publication of case studies of prosperous BoP ventures by large MNC all the more valuable, as "empirical research on the profitability of market-based initiatives involving low-income sectors (LIS) remains scarce” (Bruni Celli & González, 2010, p. 229). The crux of the matter in this literature is showing real profitability, as many MNC have succumbed to the temptation of bragging about unprofitable ventures with the poor, that were actually little more than disguised philanthropic or public relations programs, aimed at boosting reputation or social goodwill, not shareholder value (Bruni Celli, González, & Gómez Samper, 2009, p. 52).
This paper seeks to contribute to filling that gap. We document in detail a commercial initiative carried out by Nestlé, a Swiss multinational, in the Dominican Republic. This is a mature initiative, that has been running for over a decade, which has achieved scale and solid performance results, both on the business and on the social sides. Those attributes make the experience a rara avis in the field, a succulent “information-rich” case “from which one can learn a great deal about matters of importance and therefore worthy of in- depth study” (Patton, 2002, p. 242). Nestlé’s BoP venture focused downstream, with an innovative “micro-franchise” scheme that engaged the company mainstream distributors and community organizations. This novel approach has been termed “inclusive distribution” (Observatorio SCALA, 2016), and published academic cases studies on the subject are virtually non-existent.
In this study, we show how this value network has created the incentives for all parties involved to scale up. Preliminary results suggest that venture growth and community betterment did not come about through the redistribution of value from one pocket to another. On the contrary, the BoP appears to have succeeded in creating value, or “expanding the pie” of the value system (Brandenburger & Stuart, 1996; Nalebuff, 1997), with all parties operating at or above cost of opportunity.
