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A Base-of-the-Pyramid Perspective on Poverty Alleviation

A Base-of-the-Pyramid Perspective on Poverty Alleviation

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Published by Jenny M. Melo
The purpose of this paper is to review the existing literature on the BoP and put forth a set of principles that distinguish the BoP perspective from other poverty alleviation approaches. These principles also provide insight on when a BoP perspective is most effective and how it can complement other poverty reduction efforts.
The purpose of this paper is to review the existing literature on the BoP and put forth a set of principles that distinguish the BoP perspective from other poverty alleviation approaches. These principles also provide insight on when a BoP perspective is most effective and how it can complement other poverty reduction efforts.

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Published by: Jenny M. Melo on Sep 17, 2010
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10/31/2011

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A Base-of-the-Pyramid Perspective on Poverty Alleviation
Working Paper
By: Ted London
William Davidson Institute/Stephen M. Ross School of Businessat the University of MichiganE-mail: tlondon@umich.eduJuly 2007
Ted London
is a Senior Research Fellow at the William Davidson Institute (WDI) and on the faculty atthe Ross School of Business at the University of Michigan. At WDI, he directs the Base of the PyramidInitiative, a program that generates groundbreaking research and innovative thinking on the role andimpact of market-based strategies on poverty alleviation. Previously, he was on the faculty at theUniversity of North Carolina’s Kenan-Flagler Business School, where his research focused on povertyalleviation, capability development for emerging markets, and cross-sector alliances. Prior to pursuing hisPh.D. at the University of North Carolina, Dr. London worked for more than a decade in seniormanagement positions in the private, non-profit, and development sectors in Asia, Africa, and the U.S.This paper was commissioned as a background paper for the Growing Inclusive Markets Initiative, a newmulti-stakeholder initiative led by UNDP that strives to study, understand and share with the broaderdevelopment and business communities ways in which the pursuits of profit and human progress canwork to mutual advantage
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. This paper is part of a series of inputs to the Initiative, together with fifty casestudies and other research papers. The views expressed in this paper are the author’s and do notnecessarily reflect those of the United Nations Development Programme.
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For more information, please visitwww.growinginclusivemarkets.org.
 
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ABSTRACT
While interest and debate about the base of the pyramid (BoP) as a poverty alleviationperspective is growing, most of the current research has focused on business strategies fororganizations interested in exploring these markets. Indeed, a deep exploration of the uniquepoverty alleviation implications of a BoP perspective has lagged. With a growing number of organizations from the development, non-profit, and private sectors claiming to incorporate BoPventures as part of their portfolio of activities, this gap in our knowledge is increasinglyuntenable. The purpose of this paper is to review the existing literature on the BoP and put fortha set of principles that distinguish the BoP perspective from other poverty alleviation approaches.These principles also provide insight on when a BoP perspective is most effective and how it cancomplement other poverty reduction efforts.
 
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A Base-of-the-Pyramid Perspective on Poverty Alleviation
Since its initial articulation (Prahalad & Hammond, 2002; Prahalad & Hart, 2002),interest in a base (or bottom)-of-the-pyramid (BoP) perspective on business strategy and povertyalleviation has continued to grow. There have been several major conferences on the topic and agrowing number of authors and researchers are using the term BoP in their writings (Hart, 2005;Hart & Christensen, 2002; London & Hart, 2004; Prahalad, 2004; Rangan, Quelch, Herrero, &Barton, 2007). More importantly, interest in supporting the development of BoP ventures is alsooccurring in the field (see Table 1). These ideas are crossing sectors, as organizations in theprivate, non-profit, and development communities are interested in applying BoP ideas to theirnew initiatives (Gardetti, 2007).Interestingly, while much debate and most of the writings on this perspective havecentered around who is in the BoP (Hammond, Kramer, Katz, Tran, & Walker, 2007) and howBoP ventures need fundamentally new market entry strategies (Hart, 2005; Hart & London,2005), a deep exploration of the poverty alleviation implications has lagged (London, 2007b).What has not yet been fully articulated is how this perspective differs from other market-basedpoverty alleviation approaches, and thus, how its poverty alleviation outcomes may be different.Indeed, to give credence to the BoP perspective’s claim of having unique poverty alleviationimplications, we must explore the core components of this approach and understand how theydiffer from other market-based poverty reduction efforts (Walsh, Kress, & Beyerchen, 2005).As such, the purpose of this paper is to review the existing literature on the BoP andidentify a set of principles that distinguish the BoP perspective from other poverty alleviationapproaches. These principles also provide insight on when a BoP perspective is most effectiveand how it can complement other poverty reduction programs.

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