International Business Review: Stefan Gold, Ru Diger Hahn, Stefan Seuring

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IBR-978; No. of Pages 16
International Business Review xxx (2013) xxx–xxx
Contents lists available at SciVerse ScienceDirect
International Business Review

journal homepage: www.elsevier.com/locate/ibusrev
Sustainable supply chain management in ‘‘Base of the Pyramid’’ food

projects—A path to triple bottom line approaches for multinationals?
Stefan Gold a,*, Rüdiger Hahn b,1, Stefan Seuring c,2
a
Université de Neuchâtel, Faculty of Economics and Business, Production and Logistics Management, Avenue du 1er-Mars 26, 2000 Neuchâtel, Switzerland
b
Universität Kassel, Department of Sustainability Management, Untere Königsstraße 71, 34117 Kassel, Germany
c
Universität Kassel, Department of Supply Chain Management, Untere Königsstraße 71, 34117 Kassel, Germany
A R T I C L E I N F O A B S T R A C T
Article history: Conducting business operations at the Base of the Pyramid (BoP) have necessitated the
Received 7 February 2011 need for multinational corporations (MNCs) to involve poor communities in production
Received in revised form 6 November 2012 processes including management of critical supply chains. However, current research on
Accepted 21 December 2012 the interface between supply chain management and BoP business operation is lacking. In
Available online xxx analyzing three cases of BoP projects in the food industry this study addresses the question
of how sustainable supply chain management (SSCM) applied to BoP projects can help
Keywords: MNCs to achieve their sustainability goals. Findings indicate that applying SSCM to BoP
Base of the Pyramid
projects can complement economic, social, and environmental dimensions of sustain-
Developing countries
ability. In particular, the BoP projects analyzed show viable paths for integrating the social
Food industry
Supply chain management
domain of sustainability with general SSCM theory and practice. From the perspective of
Sustainability international business research, the findings help to link sustainability activities to MNC
Triple bottom line operations at the BoP. Accordingly, further research is needed to advance integration of
these two research streams.
ß 2013 Elsevier Ltd. All rights reserved.
1. Introduction
In recent years, issues of sustainability and poverty alleviation have gained increasing attention on the international
business (IB) research agenda (e.g., Kolk & van Tulder, 2010; Levy, 2007; Rodriguez, Siegel, Hillman, & Eden, 2006). In this
paper, two emerging areas of research are at the center of analysis: first, a growing stream of academic literature on
businesses for and with the poor of the world has developed in recent years. Following seminal papers by Prahalad and
Hammond (2002) and Prahalad and Hart (2002), scholars refer to the so called Base of the Pyramid (BoP) as the bottom tier of
the world income pyramid which represents the large share of people living in extreme and moderate poverty. Recent
research contributes to a holistic view embracing poor communities as an integral part of productive processes and
(international) supply chains (e.g., Hahn, 2009; London, Anupindi, & Sheth, 2010; Simanis, Hart, & Duke, 2008). Second,
research on sustainable supply chain management (SSCM) as the intersection of supply chain management and
sustainability has likewise developed extensively in recent years as a response to increasing stakeholder pressures on focal
companies to ensure simultaneous performance of the entire supply chain on a triple bottom line (economic, social,
environmental) (Elkington, 1997).
* Corresponding author. Tel.: +41 32 718 1587.

E-mail address: stefan.gold@unine.ch (S. Gold).
1
Tel.: +49 561 804 3082; fax: +49 561 804 7739.
2
Tel.: +49 561 804 7515; fax: +49 561 804 7514.
0969-5931/$ – see front matter ß 2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.ibusrev.2012.12.006
Please cite this article in press as: Gold, S., et al. Sustainable supply chain management in ‘‘Base of the Pyramid’’ food
projects—A path to triple bottom line approaches for multinationals?. International Business Review (2013), http://
dx.doi.org/10.1016/j.ibusrev.2012.12.006
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2 S. Gold et al. / International Business Review xxx (2013) xxx–xxx
Combining these two streams of research is intriguing for several reasons: on the one hand, the social dimension of
sustainability has been neglected within SSCM research and practice; the focus is so far predominantly on environmental
aspects (Seuring & Müller, 2008). On the other hand, BoP projects usually address social issues while tending to neglect
environmental sustainability (Kandachar & Halme, 2007; Hahn, 2009). Furthermore, the academic research on related
supply chain issues is limited (for an early notable exception, see Bellur, Singh, Chaganti, & Chaganti, 1990; recently Hall &
Matos, 2010; Sodhi & Tang, 2011). This dearth is astonishing since SSCM concepts offer promising ideas and tools for
integrating poor communities as value-creating actors into international supply chains. Against this background, we posit
the following research question: How can multinational corporations (MNCs) use SSCM to integrate the BoP appropriately in
creating sustainable value?
We show the status quo of SSCM in BoP endeavors from an analytic perspective and thus contribute to the sprouting
discussion of sustainability issues in BoP literature. On the basis of these findings, we advance theory and practice on BoP and
SSCM by offering avenues on how to combine both concepts from an IB perspective. Our research focuses on BoP projects in
the food industry which is particularly relevant for the poor as consumers (catering to a basic need) as well as being one of
the most important sectors in many developing countries.
The paper is structured as follows: in Section 2 we outline the state of the art in SSCM theory to arrive at a pattern of
analytical constructs for the subsequent case analysis. This pattern is meant to cover the broad concept of SSCM by three
dimensions and varied analytical constructs. By doing so, we aim at providing a bird’s-eye perspective of the interface of
SSCM and BoP. Within our literature review, we further highlight how much various SSCM issues are already present in BoP
research and point to the main shortcomings in extant literature. Subsequently, we outline the methodology of the multi-
case study research design in Section 3. After presenting our findings in Section 4, we discuss them against the background of
SSCM as a facilitator for sustainably integrating poor communities in value creation in Section 5. In doing so, we derive
insights regarding how much aspects of SSCM have already been considered in BoP practices; further, we draw attention to
blind spots and aspects neglected within SSCM so far. We specifically contribute to IB research by discussing our findings in
light of relevant IB literature and by further integrating the SSCM as well as the BoP topic into this domain. Furthermore, this
study contributes to the literature on SSCM by offering insights into complementing the triple bottom line approach in an IB
area with insights from specific BoP projects and vice versa. Finally, we suggest some possible avenues for further research.
2. SSCM theory and BoP research—a review of the literature
We begin our study by presenting an analytical framework derived from SSCM literature which will be used later on to
assess the status quo of SSCM practices in the BoP projects at hand. By combining SSCM theory review and the
development of the analytical framework in this section, we deviate slightly from a traditional paper structure. The
immediate introduction of analytical categories is reasonable in the light of our specific research problem that transfers
SSCM theory to the empirical field of BoP projects. We develop categories taking the comprehensive model of SSCM
practices by Pagell and Wu (2009) as a mental starting point. We supplement the work of these authors with relevant
further articles not included in their initial model. Furthermore, the constructs described in this section have been
iteratively refined throughout our case analysis. In sum, we introduce nine analytical categories (associated with three
main dimensions of SSCM) throughout our review of SSCM theory. This allows us to provide a bird’s-eye perspective on
the question of how firms involved in BoP projects can achieve corporate and supply chain performance on the triple
bottom line. As a second step in our literature review, we synthesize the two research streams by highlighting SSCM
issues in extant BoP research following the structure of our analytical framework developed beforehand and we point to
the main shortcomings in this respect.
2.1. Deriving analytical categories from SSCM theory
The underlying logic of the SSCM model illustrated in Fig. 1 is that the focal company’s orientation toward sustainability
(Section 2.1.1) translates into a specific supply chain design and operation fostering sustainability (Section 2.1.2), which
leads to improving the supply chain’s sustainability performance (Section 2.1.3).
2.1.1. Corporate orientation toward sustainability

An initial step toward achieving holistic sustainability objectives lies in a corporation’s orientation toward sustainability.
The respective relevant aspects and corresponding analytical categories are summarized in Table 1.
On the individual level, research indicates top management’s proactive stance toward the environment paves the way for
including ecological issues in supply chain management (Klassen & Whybark, 1999; Pagell & Wu, 2009). Employees facing
supervisory encouragement are more likely to show environmentally friendly behaviors (Ramus & Steger, 2000). Thus,
managerial support helps enroot sustainability behavior among all employees, which is indispensable since otherwise
sustainability issues risk being neglected in day-to-day behavior (Simpson, Power, & Samson, 2007). Consequentially,
Reimann, Ehrgott, Kaufmann, and Carter (2012) show that—apart from the necessity of top-level engagement—corporate
social efforts are often driven by MNCs’ local mid-level employees. Furthermore, Ramus (2002) stresses the importance of an
environmental vision and its implementation with policies and a participative communication style for sharing
sustainability concerns across the organization.
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S. Gold et al. / International Business Review xxx (2013) xxx–xxx 3
Corporate Orientation towards Features of Supply Chain Supply Chain Performance

Sustainability Design and Operation
Individual level • Reconceptualizing supply • Sustainability performance

• Proactive top management chain design and operation (i.e., economic, ecological,
• Employee commitment • Decommodization social)
• Standards and third-party

Corporate level certification
• Employee motivation via
rewards and incentives
• Company values and policies
• Alignment of environmental,
social, and economic goals
and activities
Fig. 1. The model of sustainable supply chain management.
On the corporate level, Ramus (2002) highlights the use of rewards and recognition to encourage employees to act
sustainably. This is in line with Pagell and Wu (2009) who state that intrinsic motivation in general is not sufficient to guide
the behavior of every employee. They recommend complementing it with (extrinsic) ‘‘measurement and reward systems
that link employee behaviors to sustainability outcomes’’ (Pagell & Wu, 2009, p. 539). This applies to environmental
management practices and operations (Sroufe, 2003) and sustainable product design (Handfield, Melnyk, Calantone, &
Curkovic, 2001; Seuring, 2011). Without such organizational incentives, employees are likely to ignore sustainability issues
and focus on more traditional goals (Handfield et al., 2001). Furthermore, there is evidence that incentives and intrinsic
motivation need to be backed by a firm’s corporate commitment to sustainability, which can be reflected in the form of a
written environmental policy, for example (Ramus, 2002; Ramus & Steger, 2000). Halldórsson, Kotzab, and Skjøtt-Larsen
(2009) even argue for the need for a radical change in the corporate mindset to think boldly beyond the—mostly efficiency
centered—principles of traditional supply chain management. In any case, aligning environmental, social, and economic
goals is regarded as crucial so that the former two do not succumb to the quest for financial performance, but instead
reinforce it (Pagell & Wu, 2009), ideally supporting the corporate strategy and leading to a (measurable) competitive
advantage (Rao & Holt, 2005; Seuring & Müller, 2008).
2.1.2. Features of supply chain design and operation

This corporate orientation then has to be implemented through corresponding features within the supply chain design
and operation as the next element of SSCM (see the summary of analytical constructs in Table 2).
Reconceptualizing supply chain design and operation is often discussed as a means of enhancing sustainability
performance (cf. Seuring, 2011). Here, a vast and growing stream of ‘‘literature on ecocentricity, servicing, reverse logistics,
and the like focuses on changing who is in the chain, what the chain does and how success is measured’’ (Pagell & Wu, 2009,
p. 39). This embraces, among others, upstream and downstream collaboration within the supply chain (Vachon & Klassen,
2008) or even the inclusion of nontraditional chain members such as non-governmental organizations (NGOs) (Pagell & Wu,
2009). Perez-Aleman and Sandilands (2008) investigate partnerships between NGOs and MNCs that implement social and
environmental standards in global supply chains. Interestingly, the authors specifically illuminate possible adverse impacts
for firms at the BoP and conclude that including poor producers requires an ‘‘active assistance approach,’’ providing support
when adopting new sustainability practices. Furthermore, a reconceptualization toward SSCM includes different operational
Table 1
Analytical constructs part 1—corporate orientation toward sustainability.
Analytical construct Characterization
Individual level
Proactive top management Time and resources contributed by top management to proactively implement sustainability goals
within the organization.
Employee commitment Responsibility for social and environmental concerns shared across the organization, and the respective
goals proactively pursued by the entire organization.
Corporate level
Employee motivation via Extrinsic measurement and reward systems linking employee behavior to sustainability outcomes
rewards and incentives complement and reinforce employees’ intrinsic commitment to sustainability.
Company values and policies Generally defines what sustainability means to the organization, i.e., is tightly connected to the
business model and brands, and guides decision making.
Alignment of environmental, Environmental and/or social goals and activities have to be aligned to the organization’s economic
social, and economic goals activities, so that non-economic performance is a crucial factor in financial performance.
and activities
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Table 2
Analytical constructs part 2—features of supply chain design and operation.
Reconceptualizing supply chain Reconceptualize supply chain design to include (and thus leverage) skills and abilities of a broad
design and operation scope of non-traditional actors such as NGOs, local communities, or competitors and reorganize
processes to aim for sustainability.
Decommodization Focal company moves its suppliers out of commodity supplier status by granting above-market
prices, offering long-term relationships, and engaging in supplier development.
Standards and third-party Certification of suppliers on social and/or environmental actions and outcome via third-party
certification certification schemes and standards (e.g., ISO 14000, SA8000).
procedures such as reverse material flows (Paksoy, Bektas, & Ozceylan, 2011) as well as altered process design and
operational procedures (Klassen & Whybark, 1999), or even completely new business models, for example, by redefining
business and industrial ecosystems to create closed loops of inputs and outputs between several different entities (Sharma &
Henriques, 2005).
Furthermore, other issues such as decommodization and supplier development are also in line with such alternative
views on supply chains. Although in traditional supply chain literature suppliers of commodities are often perceived as non-
strategic and the focal company’s strategy involves exploiting the firm’s purchasing power, SSCM literature suggests that
moving suppliers out of commodity status can be beneficial for the entire chain’s sustainability performance (Hall & Matos,
2010). Decommodization, thus, means treating a commodity supplier like a strategic supplier, for example, by heading for
long-term partnerships, paying above-market prices, and engaging in supplier development and education (Pagell, Wu, &
Wasserman, 2010) with the final aim of having suppliers that thrive, invest, innovate, and grow for the benefit of the entire
chain (Pagell & Wu, 2009). Similarly, Ahtonen and Virolainen (2009) conclude that strategic supply decisions should always
consider the whole supply chain with supply chain actors mutually exchanging their points of view and with powerful chain
actors (focal firms) holding a key responsibility in this respect. Such strong vertical links of MNCs to supplier firms in
developing countries are found to be beneficial for spreading technology and knowledge (Giroud, 2007; Ivarsson & Alvstam,
2005), both basic pre-conditions of enhanced sustainability performance.
To monitor the sustainability of the entire chain, focal firms usually demand information on the supplier’s achievements in
the social, environmental, and economic domains (Müller, Gomes dos Santos, & Seuring, 2009). With regard to social and
environmental performance, focal firms rely on (third-party) standards and certificates to reduce reputational risks and
safeguard minimum standards. Certification schemes are being used regularly in traditional supply chain management to
enhance different performance goals via constant process improvements promoting discipline within a single plant and
throughout the supply chain (Sroufe & Curkovic, 2008). In SSCM, standards and certificates are promising instruments bringing
environmental and social issues to more widespread attention (e.g., Teuscher, Grüninger, & Ferdinand, 2006). Especially
environmental management systems and standards such as ISO 14000 (Darnall, Henriques, & Sadorsky, 2008) have been widely
disseminated. Social standards, such as Social Accountability SA8000 (Ciliberti, de Groot, de Haan, & Pontrandolfo, 2009) and
the recently published ISO 26000 (Hahn, 2012), however, are still much less prevalent in corporate management systems.
2.1.3. Supply chain performance

The two aforementioned SSCM dimensions then ideally lead to improved supply chain performance on the triple bottom
line. Traditional performance management approaches or specific supply chain performance measurement systems
(Shepherd and Günter, 2006) usually concentrate on financial and operational performance measurement. Within SSCM,
measuring non-economic implications comes to the fore. Tools such as life-cycle analysis and eco-balance, however, often
capture only the environmental aspects within a supply chain (e.g., Awasthi, Chauhan, & Goyal, 2010). In the end, this leads
to a focus on double bottom line performance rather than a truly holistic triple bottom line approach. Only recently has
performance on the triple bottom line, in a limited fashion, come to the fore in SSCM research (e.g., Pagell & Wu, 2009).
Table 3 summarizes the third part of our analytical constructs.
2.2. Linking SSCM theory to BoP research
When linking SSCM theory to BoP research, one has to be aware of the differing nature and background of these research
streams. BoP issues mainly focus on a specific business model in certain developing country environments, while SSCM may
Table 3
Analytical constructs part 3—supply chain performance.
Sustainability performance Striving simultaneously and equally for performance in

(a) two sustainability dimensions: economic and social, economic and environmental, social
and environmental (double bottom line)
(b) three sustainability dimensions: economic, social, and environmental (triple bottom line)
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be considered an overarching concept of inter-organizational business activities/processes and a toolset for analyzing and
managing these activities aiming for comprehensive supply chain performance. Thus, SSCM with its focus on inter-
organizational supply chain collaboration and toolsets to foster sustainability can be applied to various business
environments. In the extant paper, we apply SSCM to BoP business models since this link offers promising insights related to
IB issues (e.g., the interplay between MNC headquarters and their developing country subsidiaries).
Initially, emphasis in BoP literature has been placed on the poor as consumers and related marketing activities without
deeper acknowledgment of additional supply chain issues. In the wake of fierce criticism (e.g., Jenkins, 2005), however,
research has gradually evolved into viewing the BoP as an integral part of value creation as producers, distributors, or service
providers. While the earlier customer-focused conceptions of BoP strategies were labeled ‘‘BoP 1.0,’’ the new inclusive
strategies are often called ‘‘BoP 2.0’’ (Simanis et al., 2008) or ‘‘integrative BoP’’ (Hahn, 2009). Screening the academic
literature on BoP, several of the aforementioned categories from SSCM can be retrieved. This shows that constructs borrowed
from SSCM are useful for describing and analyzing BoP projects, but a comprehensive attempt is missing so far, which again
underlines the contribution of the present paper.
2.2.1. SSCM issues in BoP literature

In terms of corporate orientation toward sustainability, research indicates that a lack of strategic commitment and clear
guidelines could easily lead to failures in BoP ventures (McFalls, 2007). In addition, building up local legitimacy facilitating
social capital and hence the commitment of local communities has been found to substantially impact the success of such
projects (Gifford & Kestler, 2008; Gifford, Kestler, & Anand, 2010). Furthermore, Schuster and Holtbrügge (2012) highlight
the decisive role of knowledge and experience when MNCs attempt to enter BoP markets.
Perhaps the most prominent relationship between BoP and SSCM can be found in supply chain design and operation. BoP
researchers indicate the need to include non-traditional actors such as NGOs or government agencies in the supply chain to
overcome institutional barriers, create legitimacy, or overcome gaps between the focal companies and communities (e.g.,
London & Hart, 2004; Rivera-Santos & Rufin, 2010). Closely linked to these novel partners are the functions the various actors
and the focal companies adopt. Exemplary cases refer to innovative business ideas (e.g., London & Hart, 2004; Prahalad &
Hart, 2002), to new partners taking over vital roles in the supply chain, for example, as facilitators of mutual commitment
and common codes as pre-conditions of developing and deploying co-creation capabilities (e.g., Simanis et al., 2008), or to
focal companies internalizing formerly outsourced activities such as financing or distribution since they are not readily
available at the BoP (e.g., Rivera-Santos & Rufin, 2010). A lack of external expertise and appropriate partners could otherwise
easily lead to failures (McFalls, 2007). Furthermore, the idea of decommodizing suppliers is also well-grounded within BoP
literature. Since the BoP is usually more vulnerable in terms of their economic and physical condition compared to more
affluent parts of the population, it might be in the best interest of companies to engage in decommodization to ensure the
stability of their supply chains (Rivera-Santos & Rufin, 2010). Finally, when turning to the different pillars of supply chain
performance, social aspects of human development have been discussed in the BoP literature from the very beginning (see for
example Prahalad & Hammond, 2002; Prahalad & Hart, 2002) while a deeper consideration of environmental sustainability
came to the fore only recently (Hahn, 2009).
2.2.2. Synthesis of the two streams of research

On an overarching level, the critique has been voiced that ‘‘sustainability as a topic in relation to the BoP does not appear
to be a major area of inquiry’’ (Kandachar & Halme, 2007, p. 9; similar Hahn, 2009). The numerous links between BoP
literature and the different SSCM categories outlined above entail a promising potential of theoretical cross-fertilization
between the two domains of SSCM and BoP. This potential may be productive particularly for companies operating in an
international environment. Concerning corporate orientation toward sustainability, the strategic high-level dedication of
MNCs and the strong commitment of local supply chain partners feature indispensable prerequisites for successful SSCM, be
it on the BoP or elsewhere. Supply chain design and operations at the BoP call for innovative ideas for integrating various non-
traditional supply chain members and effort by all supply chain actors involved in building up trusting and committed long-
term partnerships. In terms of sustainability performance, the objective of economic sustainability is well-grounded in SSCM
and BoP; while SSCM scholars have so far predominantly addressed environmental sustainability, BoP ventures distinctly
aim for social sustainability.
This reasoning suggests that SSCM may develop particular strength when applied to the BoP business environment. This
is hardly surprising since key characteristics of SSCM, such as its accent on supply chain integration and long-term
partnerships, respond to key challenges of BoP projects, featuring vulnerable actors on the BoP on the one side and
unsuspecting MNCs on the other side. This two-sided handicap may not be resolved by engaging in arm’s-length business
partnerships but requires a long-term collaborative approach. SSCM provides tools that help MNCs implement this
approach in BoP projects, while measuring its success in the economic, environmental, and social performance dimensions.
This links back to our research question of how MNCs can use SSCM to appropriately integrate the BoP into sustainable
value creation. Seen through an IB lens, MNCs might be especially qualified to foster such integration: their often
substantial resources allow for several trials and pilot projects that might be necessary to find new avenues of conducting
business in new fields. Additionally, MNCs can often draw upon knowledge concerning ecological issues of production and
consumption that is often lacking in developing countries and might be used for new endeavors at the BoP. Injecting this
expertise in BoP projects, however, might not be easy since the BoP is usually a new field of activity for Western companies.
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It can be possible only in long-term reciprocal learning partnerships where both sides build up specific skills and
capabilities over the course of time.
3. Methodology and data
3.1. Multiple-case study design and sampling approach
We applied a multiple case study research design (Yin, 2009). This is appropriate ‘‘especially when [. . .] the boundaries
between phenomenon and context are not clearly evident’’ (Yin, 2009, p. 18). Supply chain business relationships operating
in BoP environments with mostly informally codified behavioral patterns clearly fulfill these attributes. Empirical evidence
covering the overlap of SSCM and BoP research is indeed scant. Multiple cases allow for iteratively approaching the research
objectives, thus checking inferences drawn from one case against the empirical evidence of the other cases through
replication logic (Yin, 2009). We use three case studies (see Table 4), which is on the lower margin of a multiple-case study
design but still well in line with various suggestions for the number of cases to process (e.g., Eisenhardt, 1989). The
underlying logic of our case study research design based on an analytical framework from SSCM theory follows Yin (2009)
who sees case studies suitable for various deductive research procedures such as proposition testing and the revision of
existing theories. Thus, our research builds on theory from an already well-established field (i.e. SSCM) and verifies its
applicability to the specific conditions and environments of BoP projects. On this basis we identify areas where our
Table 4
Overview of main elements of the case studies.
Company (project) Description Innovative aspects and BoP focus Sustainability focus
Danone The social business joint venture aims Local production of dairy products by Economic: Finding a viable
(Grameen at providing the poor in Bangladesh way of small ‘‘micro-factories’’. business model.
Danone Foods) with affordable and nutritious dairy BoP as customers and as suppliers/ Social: Providing healthy and
products. To achieve this, producers. affordable dairy products to
‘‘micro-factories’’ (i.e., comparably BoP while increasing the local
small factories for dairy products) population’s income.
have been built in decentralized Environmental: No distinct focus.
locations. The project organizers Local procurement and
cooperated exclusively with local distribution minimize transport;
farmers as suppliers for raw environmental aspects (e.g., of
materials and employ solely local packaging) considered.
small and micro-entrepreneurs as
distributors. Grameen acts as a
facilitator in the local business
environment while Danone brings
in managerial and technological
expertise.
BASF Foods producers in developing B2B business model targeting local food Economic: Focus on quality and
(Micronutrition countries are supplied with stable producers with products (i.e., vitamins cost-effectiveness of food
Initiative) and cost-effective encapsulated for food fortification) benefiting the fortification to ensure positive
vitamins and minerals to enrich end consumer. health effects and avoid jeopardizing
their products. The aim is to achieve Indirect BoP connection via B2B affordability of product.
positive health effects on the end relationships with local businesses. Social: Enriching local food
consumer. BASF acts as supplier for ingredients with vitamins to
the food processing industry while achieve positive health impacts
offering its business partners at BoP.
expertise on cost-effective Environmental: No distinct focus.
fortification of food products that Local procurement and distribution
are affordable at the BoP. minimize transport.
Nestlé (Milk The central aim of the project is to Improving local supply chains and Economic: Sourcing is economically
Districts) establish local sourcing of raw overcoming infrastructural deficits viable and adds to Nestlé’s economic
materials (i.e., milk) for Nestlé’s by innovative handling and processing bottom line.
production centers in developing of raw materials. Social: Local procurement of milk
countries. Over the years, Nestlé BoP as suppliers of raw material. adds to generating income at BoP.
built a network of decentralized Environmental: No distinct focus.
collecting points equipped with Local procurement reduces transport.
‘‘cooling centers’’ to circumvent
insufficient infrastructure and
distribution systems. Milk is
cooled down and transported in
insulated tanks to ensure freshness.
Backup cooling stations add to
supply chain security, and
administrative centers ensure
fast payment to farmers.
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framework needs modification, without taking the long road of merely inductive theory discovery (Welch, Piekkari,
Plakoyiannaki, & Paavilainen-Mäntymäki, 2011).
The BoP projects and MNCs as focal firms were chosen based on theoretical (and not statistical) reasons, thus facilitating
theory development (Eisenhardt & Graebner, 2007). This selection process was carried out along two main criteria to strive
for contextual appropriateness (Poulis, Poulis, & Plakoyiannaki, 2012): first, we focused on BoP projects in the food industry
since we consider them particularly revelatory for investigating how SSCM may assist in integrating the BoP in value
creation, hence yielding benefits for several sustainability dimensions. Food is a basic human need, and malnutrition
represents a key challenge in many parts of the developing world (FAO, 2006). Providing the population with good-quality or
fortified (by adding nutrients or vitamins) food provides opportunities to enhance people’s health and living conditions.
Moreover, a large number of rural poor people make their living from smallholder subsistence farming; hence integrating
these farmers into larger supply chains could enhance the farmers’ productivity and income. Second, we chose to investigate
MNCs playing a leading role in BoP projects that can—from the perspective of an initial overall evaluation—all be considered
‘‘best practice’’ projects. Although in the same industry, the projects are characterized by substantially different approaches,
hence displaying various facets of SSCM constructs reflected in BoP project implementation. The projects show different
avenues toward and priorities regarding the triple bottom line performance criteria.
A profile of all cases is presented in Table 4.
3.2. Data sources and material
Primary data gathering for all cases consisted of eleven semi-structured interviews (see Table 5) in English and German,
with the average length of an interview of 60 min. These interviews were conducted partly telephonically and partly face-to-
face, with managers from different organizations involved in the respective projects.
Aiming for some equilibrium between leading MNC managers in charge of the projects at the main offices and in
developing countries as well as managers from other involved organizations allowed a balanced picture and a differentiated
perspective of the projects. The main criterion for choosing interviewees was their intimate knowledge of the project. Data
collection took place from November 2008 to February 2009 in the course of a project about MNCs’ contributions to
sustainable development in BoP markets. Accordingly, the interview guidelines were not focused specifically on SSCM
theory, but covered the broader topic of how to do business for and with the BoP (Schrader, 2011). Interview techniques such
as non-directive questioning with spontaneous in-depth follow-up questions enhanced the accuracy of the information
received (Huber & Power, 1985). Questions aiming at specific constructs were avoided (cf. Ozcan & Eisenhardt, 2009).
Afterwards, the interviews were transcribed and returned to the interviewees for validation. The data was selectively
triangulated with information from various sources (see Table 6).
3.3. Data analysis
In terms of data analysis, Siggelkow (2007) highlights the necessity of a strong theoretical background that helps
consistently filter data according to conceptual arguments for successfully dealing with the abundance of data case study
research produces. We responded to this call by using qualitative content analysis to analyze the data (see Duriau, Reger, &
Pfarrer, 2007).
Table 5
Primary data—overview of interviewees.
BoP project Position of focal informant Organization Type of organization
Grameen Danone Foods Deputy General Manager Danone, France MNC

danone.communities
General Manager of Danone Danone, India MNC
India/South Asia
Senior Manager Investments & GAIN (Global Alliance for Improved NGO
Partnerships Nutrition)
BASF Micronutrition Global Coordinator, Micronutrition BASF, Germany MNC

Initiative Initiative
Head PPP (Public-Private-Partnership) GIZ (German Agency for International Governmental body
Fortification Cooperation), Germany
Program Manager Food Fortification IRD (Institut de Recherche pour Public research institute
le Développement), Cambodia
Project Manager Micronutrition Ministry of Planning, Cambodia Governmental body
Nestlé Milk Districts Corporate Head of Agriculture Nestlé, Switzerland MNC

Manager Fresh Milk Sourcing/Milk District Nestlé, Switzerland MNC
Manager Milk Sourcing Nestlé, Pakistan MNC
Project Manager ‘‘Women Livestock UNDP (United Nations Development Supra-national organization
Training’’ Program), Pakistan
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Table 6
Secondary data—main sources of triangulation.
BoP project Secondary data source Type of data
Grameen Danone Foods Danone (2010) Company report

Danone (n.d.) Company website
Ghalib et al. (2009) Case study-based research articles
Govind (2007) Case study
Grameen Creative Lab (n.d.) Partner website
Humberg (2011, pp. 128–176) Case study-based dissertation
Rangan and Lee (2011) Case study
Yunus, Moingeon, and Lehmann-Ortega (2010) Case study-based research articles
BASF Micronutrition Initiative BASF (2011) Company website

Bianchi (2007) Case study
Blüthner (2008a) Company presentation
Blüthner (2008b) Company presentation
Nestlé Milk Districts Goldberg and Herman (2005) Case study

Goldberg and Herman (2006) Case study
Goldberg and Herman (2007) Case study
Nestlé (2009) Company report
Dimensions and analytical categories had been deductively developed beforehand as outlined above. After one third of
the data analysis was completed, some categories were further specified (in terms of their definitions) in an inductive
approach from the interview material under examination, iteratively passing through category building, testing, and revising
by constantly comparing categories and data. By following this technique proposed by Eisenhardt (1989), we fitted the
contents of our constructs into our specific research needs thus making them more valid instruments of data analysis. In the
following section, the findings of these case studies will be summarized in a cross-case analysis along our pattern of
dimensions and analytical categories to highlight matching and contrasting findings throughout the three cases.
Replicability of the research design is facilitated by a comprehensive and detailed documentation of the research process.
Moreover, a high degree of reliability is achieved by thoughtful selection of key informants, as well as careful transcription and
multi-coder analysis of the interviews. Involving several researchers in content analysis is considered to substantially enhance
validity and reliability of data analysis. This holds particularly true when dealing with ‘‘soft’’ criteria largely referring to the
deeper meaning buried in the text (Duriau et al., 2007). To make judgments intersubjective, the coders’ differing judgments
were individually assessed and resolved through discussions, thus gradually aligning differences regarding the mental schemes
of the coders (Seuring & Gold, 2012). Internal validity was enhanced by repeatedly checking each case against the source data
(the single interviews) and by triangulating the findings from the interviews with those from desk research. Occasional
discrepancies between our data sources were explored and settled through searching and including various publicly available
documents, thus approximating the ‘‘true story’’ (Pentland, 1999). Furthermore, validation of findings was facilitated by
feedback from various conference presentations as well as by intensive discussions within the research team. Finally,
de-contextualization and theory-led abstraction allow a certain degree of generalization for the findings (Avenier, 2010).
4. Findings
4.1. Corporate orientation toward sustainability
Regarding the first SSCM category, the case study data shows on the individual level that proactive top management was
crucial for providing an initial impetus for implementing all BoP projects under consideration as well as for their long-term
continuation. Likewise, employees’ commitment was found to be very important since, throughout all cases, it was
considered indispensable for a successful and enduring project. Especially at Danone and BASF, the BoP ventures were
considered highly emotional projects that, in turn, would help to motivate employees.
On a corporate level, employee motivation via rewards and incentives was not addressed in our case material. Project
employees were influenced by a highly intrinsic motivation that was not accompanied by extrinsic (material) incentives.
Nonetheless, all cases suggested a proactive organizational stance and organizational commitment as enabling factors for
BoP ventures. Our data indicates that sustainability values pervading the mission, strategies, and culture of the focal
companies are a prerequisite for engaging in BoP business ventures.
4.2. Supply chain design and operation
Reconceptualizing supply chain operations is often connected to innovative approaches for sourcing, manufacturing, and
distribution processes when integrating the BoP as consumers and/or producers. We found this to be a key concern in all
three cases. The companies relied extensively on help and input from various external partners with the potential of
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complementing resources and capabilities and thus fostering mutual learning processes. In terms of supply chain operation,
all projects built on strongly localized approaches. The most radical form was found in the Danone case where the whole
supply chain was located at the BoP, which also represents the consumer target group. Raw materials (mainly milk) were
procured from farmers near the newly designed small micro-factories where goods (yogurt) for the BoP are produced. The
yogurt was then sold to the local population. Similarly, BASF’s fortification project aimed at local food production in
developing countries. However, this production might still be centralized while the vitamins for the fortification are
produced abroad. In the Nestlé Milk Districts, the main emphasis was on procuring milk locally, which was then transported
to regionally centralized production sites.
The SSCM construct of decommodizing suppliers (i.e., moving them out of the commodity supplier status) by offering long-
term privileged business relationships and by engaging in supplier development was broadly covered throughout our cases. The
Danone case reports that management and technical trainings as well as educational programs were provided to women
working as distributors, to local farmers, and to dairy employees to tackle the challenges arising from general low levels of
education. Since BASF cooperates with local food producers in fortifying food products, this case refers to the capacity building
and technical assistance provided to these firms to ensure compliance with international food fortification standards. Finally,
Nestlé aimed for an increase in milk output and quality by implementing Good Agricultural Practices (as defined by the Food
and Agriculture Organization of the United Nations). This was accomplished by demonstrations and training in the
communities and at model training farms run by Nestlé. Moreover, cooling center employees were trained to conduct quality
checks, as well as monitoring and recording milk supply, and field offices provided farmers with technical assistance.
Finally, standards and third-party certification did not seem to play a role in any of the cases. Nestlé, for example, instead
used locally implemented supply chain internal measurements systems (regarding profit margins, free cash flow, product
quality, etc.) that evaluate the ability of supply chain members to keep up operations, invest, grow, and ensure quality.
Hence, first-party audits substitute for third-party assessments. Table 7 provides an overview of approaches with regard to
supply chain design and operation.
4.3. Supply chain performance in sustainability
Sustainability performance on the triple bottom line was barely mentioned in the interviews. One interviewee talked
about this construct when picturing the ideal model that serves as guiding principle for Danone. This ideal model was
corroborated by some of the secondary data. The model merges environmental goals (CO2 emission reduction) and social
goals (local value creation, improved nutrition) with reduced but still decent profitability margins. Altogether, though, the
analysis shows that triple bottom line considerations did not play a substantial role in the BoP cases. Instead, they focused
very strongly on social and economic outcomes, thus following a shortened double bottom line that reflects the usual
performance objectives of BoP projects as can be seen in Table 8. Interestingly, we found a close interconnectedness between
these two dimensions. In the Danone project, for example, various social goals were complemented by the goal of efficient
and cost-effective operations. Furthermore, the business experience at the BoP in developing and transition countries should
help the entire corporation develop agile and responsive manufacturing and supply chain operations, and thus be able to
deliver (more) competitive products in Western markets.
Table 7
Approaches and typical quotes on supply chain design and operation.
Category Main approaches Typical quotesa
Reconceptualizing Partnerships with various By working together with new partners . . . we are learning a lot of things for Danone. . . .
supply chain design types of organizations This model has been absolutely co-invented, co-built. We would not have been
and operation enable reconceptualization capable to do this ourselves. (Danone representative)
Another important factor is strong collaboration between the parties. We cannot do
without strong partners from the private sectors. On the other hand private
sector alone cannot do this either. (Partner representative BASF project)
It’s clear, nobody can do everything himself. Wherever you go, whatever you do, you
look for partners and stakeholders to cooperate. (Nestlé representative)
Localization of supply chains The objective is truly to really localize . . . we want to have this base for the local
proximity business model. (Danone representative)
99.9% of the products are locally produced so that we can say with a little pride that
more local production in a BoP project is hardly possible. (BASF representative)
In 99% of the cases we source local raw materials, we locally process them and we sell
them in the local communities again. (Nestlé representative)
Decommodization Training, education, and You will have to train people, you will have to build capacity on the ground to make sure
technical assistance for you have the right capabilities, management, technical, everything. (Danone representative)
suppliers at the BoP The local producers . . . are not on a highly industrialized level, so they really
needed technical assistance. (Partner BASF project)
We had to start educating the farmers. . . . Now we have this whole agricultural extension
services and we have people coming to the village making trainings and educating farmers,
training farmers, demonstrating things, making trials. (Nestlé representative)
Standards and third-party certification: no focus identified
a
Some quotes translated by the authors.
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Table 8
Focus and typical quotes on supply chain performance in sustainability.
Dimension Focus Typical quotesa
Aim of economic sustainability broadly acknowledged in all cases

Economic Visions of profitability Grameen Danone Bangladesh can run with two to three percent EBITDA.
(Danone representative)
We had long conversations with Danone that the business model should be
self-sustainable. . . . For them it’s not a CSR project. It’s a core business
project. (Partner Danone project)
We make a moderate profit. But we don’t need to compare ourselves
with the highly profitable nutrition business. (BASF representative)
We have an internal controlling system measuring the profit margins. . . .
If you have a positive free cash flow—no matter if you look at a small
or large business—you can thrive, invest, and grow. (Nestlé representative)
Emphasis on additional economic benefits You cannot expect to have the same economic performance [as other
beyond direct project profits business units; the authors] since we offer added-values in terms of
communication, employee-motivation, recruitment, partnership brokering
which provide measureable business benefits despite otherwise lower
margins. (Danone representative)
Aim of social gains broadly acknowledged in all cases
Social Income generation, health improvement, and You are creating value, because you are using the milk of the local farmers
capacity building at the BoP as main focus and thereby you can help the farmers to be more productive. . . . In our
genes there is this obsession for holistic value creating: social and economic
impact. (Danone representative)
And regarding the health impact: We try to measure this in a clinical study
in a serious way. (Danone representative)
Reaching more people, end malnutrition. (BASF representative)
Our success indicators were provision of local employment. . . . Secondly to
provide access to fortified food, which represents more the health or social
side. . . . They [the local producers; the authors] understood that producing
these noodles can be both, economical sustainable as well as with positive
social effects. (Partner BASF project)
Then you start buying milk which generates cash—weekly wages for the
farmers. . . . This is generating a lot of activities in these villages, employment,
commerce, people wanting another telephone line and stuff like that. It’s the
perfect thing for rural development. (Nestlé representative)
Women are empowered, education is getting improved in this area, also
children education through raised income, and also health is improved
because normally people have little money to spend on their own
health. (Partner Nestlé project)
Environmental
No distinct focus identified, some limited indications (especially in the Danone case) of environmental issues being also of concern
a
Some quotes translated by the authors.
In terms of economic viability, sourcing raw materials in developing countries was already part of Nestlé’s core business,
while BASF and Danone were in earlier stages of developing a sound business model, so the economic viability of their
activities was still somewhat uncertain. Interviewees from BASF and Danone underlined the importance of keeping the BoP
projects self-sustaining in the long run; nonetheless, profitability expectations were limited (and not comparable to the
corporations’ other business segments) since the projects simultaneously pursued social benefits. Nestlé, on the contrary,
had a clear purpose of ensuring proper returns on investments, for the corporation itself but also to some degree for its
suppliers. Reliable relationships between Nestlé and smallholder farmers, facilitating a regular cash flow from wealthier
urban regions to poorer rural ones, safeguarded the economic viability (and maybe prospering) of these suppliers. Here the
economic and social dimensions of sustainability overlapped, since economically thriving smallholder farming may also be
considered an asset for the social bottom line.
5. Discussion
5.1. Linking case findings to extant IB research
5.1.1. Integrating ecological issues into MNCs’ BoP projects

The cases reinforce the idea that simultaneous consideration of triple bottom line issues is still broadly lacking, while the
shortened double bottom line (limited to economic and social performance) guides BoP activities (Kandachar & Halme, 2007;
Hahn, 2009). This could be due to the MNCs’ profit aspirations flanked by public relations intentions as well as the altruistic
development and empowerment objectives (Simanis et al., 2008) driving the BoP projects. Thus, these projects consumed a
good part of the firms’ resources in the struggle to reconcile these partly antagonistic founding spirits, entailing the neglect of
the environmental dimension, which has been considered a secondary priority. This limited target horizon is reflected by the
observation that MNCs’ most important external partners are NGOs and government agencies concerned with
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infrastructural or social issues. The core rationales of these partnerships are coverage of consumers, the poor peoples’
standard of living, and empowerment of the BoP workforce (Reficco & Márquez, 2012); consequently, the impact control
measurement focuses on the BoP’s health and social/economic conditions instead of ecological dimensions.
Our analysis of the constructs ‘‘double bottom line’’ and ‘‘reconceptualizing supply chain design and operation’’ points to
the opportunity and need to further integrate the environmental dimension of sustainability in BoP supply chains. This
assessment can be assumed to be quite uncontested; a debated issue is the time schedule and sequencing. Earlier research
suggests that MNCs increasingly standardize their environmental strategies to achieve cost benefits and prevent
reputational damage (e.g., Christmann, 2004; Sharfman, Shaft, & Tihanyi, 2004). However, BoP projects often hold a special
status within the MNC’s organization and are often not yet integrated into mainstream day-to-day business operations.
Thus, the projects might not fall under the conventional patterns of a MNC’s environmental standardization strategies.
Drawing analogies from the historical development in the Western world, one may argue that environmental issues will
become more important in developing countries once the most pressing economic and social objectives have been largely
satisfied. Successful (and unsuccessful) BoP projects teach us the outstanding importance of support from the local
population (Gifford & Kestler, 2008; Gifford et al., 2010; McFalls, 2007). Setting environmental objectives on top of the
agenda has to be acknowledged, shared, and proactively driven by the local BoP—by no means a simple task. However, global
awareness concerning the restricted carrying capacity of the planet and the implied time pressure for business responses
seem to interdict the inert logic of postponing addressing environmental issues.
Seen through an IB lens, this analysis points to some interesting avenues for driving a holistic integration of all three
sustainability dimensions and pursuing research in the field: MNCs familiar with SSCM could foster integrating
environmental aspects in BoP projects, for example, by pushing the ecological agenda on their developing country
subsidiaries and from there also explicitly on BoP projects. Vertical links of MNCs to supplier firms in developing countries
can have positive effects on developing suppliers that benefit from technology and knowledge transfer or otherwise (e.g.,
Giroud, 2007; Ivarsson & Alvstam, 2005). Within the setting of BoP projects, this provides specific opportunities to build
awareness of ecological issues and, more specifically, to introduce expertise concerning, for example, environmentally
friendly production techniques, recycling schemes, and product features. The distinct focus of moving the suppliers out of a
commodity status (‘‘decommodization’’) in the case studies indicates the MNCs’ willingness to engage in developing their
BoP supply chain partners. Long-term relationships have indeed proven to be important for inter-firm learning (Ivarsson &
Alvstam, 2005) so that an MNC-driven integration of the ecological perspective in BoP projects offers promising avenues
toward a triple bottom line approach.
However, implementing such business practices at the global level proves to be a complex process. Pushing a global
environmental strategy might be especially difficult since ecological issues often are to a high degree location-bound and
context-specific (Foss and Pedersen, 2002) or require advanced technologies (Tsai & Child, 1997) that might not be available
and affordable in a BoP context. To overcome some of these difficulties, Pinkse, Kuss, and Hoffmann (2010) suggest that a
high level of absorptive capacity at the subsidiary level fosters the adaptation of global environmental practices since it
allows subsidiaries to adapt global strategies and lower the cost of implementation. Nevertheless, several IB scholars
indicate that there are limits to globalization and that it is necessary to emphasize complementary regional strategies (e.g.,
Ghemawat, 2003; Rugman & Verbeke, 2004). In this respect, SSCM may contribute to strengthening the environmental
performance dimension of BoP projects by translating (headquarters and subsidiary) top management support and the
MNC’s corporate values and policies into a reconceptualized supply chain (Pagell & Wu, 2009) that explicitly includes
environmental NGOs as actors and that optimizes supply chain operations regarding not only social and economic factors
but also environmental parameters such as energy consumption or depletion of non-renewable resources. Such a three-
sided optimization could, however, prove to be difficult in cases of trade-offs between any of the three dimensions. If, for
example, a gain in social sustainability (e.g., by moving a significant number of people out of poverty) leads to a reduced
ecological sustainability (e.g., when all these people significantly increase their consumption levels), the overall effect on the
triple bottom line is ambiguous (Hahn, 2009). Thus, trade-offs between the performance dimensions at the triple bottom line
have to be explicit to facilitate improvements in one or two dimensions of sustainability without (unwittingly) harming the
other dimension(s). In this regard, moving forward to holistic triple bottom line thinking instead of looking at a reduced
double bottom line might be of particular importance.
Future research could act on such discrepancies and, for example, focus on the question of how to balance standardized
global strategies and environmental challenges with the need to find local and regional approaches at the BoP. In addition,
the entire possible range of roles and interaction between (top) management from the MNCs’ headquarters and less-
developed countries’ subsidiaries in setting up BoP projects may be further explored.
5.1.2. Fostering social issues in MNCs’ SSCM practices

The dominant focus on environmental issues in SSCM cases and literature may be explained by the fact that SSCM is
distinctly biased by industrialized countries’ business and socio-political conditions. From a historical IB perspective, in the
Western world, the struggle for social and economic advancements dominated wide parts of history, until the 1970s when
environmental awareness got a strong societal voice—next to the civil rights movement and consumerism. During that
period, considerably elevated living standards for major parts of the population relegated social demands (directed to
safeguarding a minimum livelihood) to the back seat for the time being. A novel vigor of social demands that have been
basically reimported from the developing world through increasingly globalizing economic activities (Hult, Ketchen, &
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Arrfelt, 2007) came to the fore only recently. Focal firms in developed countries are now held accountable for the conditions
and activities in their often global supply chains. Nevertheless, standardized responses toward these new social demands are
still missing: the status quo of SSCM in Western countries predominantly features collaboration with advocacy groups and
third-party bodies for auditing and certification that refer to the environmental pillar of the triple bottom line. Social
standards such as SA8000 have not reached equal consideration yet.
Our analysis points to some interesting corporate-level opportunities for integrating the social dimension of BoP ventures
into MNC supply chain management to complete the triple bottom line approach. Successful BoP projects could offer ways to
further integrate social issues in other business units with a bottom-up, grassroots-type approach. Earlier IB research focused on
the impact of MNCs’ subsidiaries on a company’s headquarters and overall organizational performance. Andersson and
Forsgren (2000), for example, found that local subsidiaries could gain status as ‘‘centers of excellence’’ by gathering expertise or
capabilities in specific functions or activities. All our cases indicate the potential for corporate units involved in BoP projects to
become such centers and to drive the whole organization toward an organic integration of social issues. The projects under
investigation emphasize the importance of organizational learning and innovative approaches to integrate the BoP into their
supply chains. The distinct reliance on local partners and on including non-traditional actors such as NGOs, local communities,
or competitors indicates the need for permeable organizational boundaries to act in a BoP environment. This is in line with
business network literature showing that a subsidiary’s importance—meaning that the headquarters and other organizational
units acknowledge the subsidiary to have specialized valuable capabilities—is strongly linked to its external embeddedness
with outside partners (Yamin & Andersson, 2011). Thus, the capacity for integrating and applying external knowledge and
expertise seems to be a core competency of BoP ventures to become centers of excellence. The intention of conveying the
acquired expertise to other parts of the company was mentioned frequently, especially by the MNC interviewees, and might be
considered a decisive argument for company-internal justification of BoP ventures.
However, being a ‘‘center of excellence’’ is not sufficient to disseminate a subsidiary’s knowledge in an MNC if this
knowledge is not perceived as strategically important by the headquarters. Incoming knowledge in MNCs’ headquarters is
mainly filtered depending on its source so Ambos, Ambos, and Schlegelmilch (2006) suggest ‘‘managers may find it most
convenient to focus on strategic lead units’’ (p. 308), the knowledge input of which is rated as most beneficial. If BoP projects
are not considered such lead units, valuable knowledge from this source might simply be ignored. Here, again, our cases offer
some interesting insights. The distinct proactive top management commitment displayed throughout the projects shows the
cases at hand offer the potential not only to become centers of excellence but also to simultaneously be regarded as strategic
lead units. This, however, is by no means a predetermined outcome. If, for example, the projects fail to demonstrate their
potential contribution to the economic bottom line in the long run or their strategic value in terms of showing feasible
avenues of how to do business at the BoP, they might easily be abandoned and ignored. The same applies to ventures that are
merely perceived as philanthropic projects, shop-window CSR measures, or temporary fashion.
Furthermore, and similar to the above-mentioned research on absorptive capacities in subsidiaries, IB research suggests
the absorptive capacity in an MNC’s headquarters is positively related to achieving benefits from subsidiary knowledge.
Additionally, MNCs without prior experience in the field might fail to generate benefits from subsidiary knowledge since
they prove to be unable to comprehend and use this knowledge (Ambos et al., 2006). In all cases at hand, managers from the
headquarters in developed countries as well as local affiliates were part of the projects. Thus, a proactive (headquarter’s) top
management (as well as a complementary commitment by the project managers) might be beneficial not only in terms of
securing internal firm support for the respective projects but also for the entire company since it might help to comprehend,
appreciate, spread, and deploy BoP knowledge throughout the company.
Regarding the issue of how to actually implement social standards in supply chains, the localized multi-stakeholder
approach implemented in numerous BoP projects may be one promising way that might be transferable to broader
application. Multi-stakeholder initiatives embrace many actors controlling each other. Furthermore, local production (and
consumption) systems make third-party certification redundant, since performance is directly controlled by the focal
company and other stakeholders. Therefore, it is not astonishing that we did not observe supplier certification as an
analytical construct in our case studies. Similarly, transparency is not considered a big issue because the focal companies and
other stakeholders are locally involved and can easily implement systems to ensure product quality, fair prices and wages,
and decent working conditions. This contradicts Ciliberti et al. (2009) who encourage focal firms to introduce third-party
certification in their supply chain due to its favorable effects on reduced information asymmetry and transaction costs. Such
a ‘‘back to the roots’’ kind of doing business with a plethora of local suppliers represents a common strategy for targeting
sustainability at the BoP, which might be transferable to supply chains in other business environments. This is in contrast to
some of the current state-of-the-art approaches in traditional supply chain management which considers a multitude of
suppliers favorable only for hedging risks of supply disruptions or for leveraging buying power in arm’s length supplier-
buyer relationships (Lee, 2002); and in SSCM where the commonly favored strategy is selecting and concentrating on a few
key suppliers (Pagell & Wu, 2009). As possible drawbacks, these multi-supplier approaches entail increased demands of
supply chain coordination and thus possibly reduced efficiency (cf. Lee, 2002) as well as the need to engage in time-
consuming training for a large number of suppliers. Nevertheless, if implemented properly localized approaches are
additional important strategic elements for improving the social domain in MNCs’ BoP strategies.
Finally, it is not surprising that the analyzed projects include the local BoP in their value chains—either as consumers,
producers, or distributors—since otherwise the projects would not have been selected as BoP cases in this study. The degree
of inclusion of local communities, however, is interesting here. The Grameen Danone project follows an integrated BoP 2.0
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approach. The same can be assessed for the BASF project, although with the restriction that the initiating company (i.e., BASF)
itself does not produce the vitamins locally at the BoP. BASF instead acts as a facilitator, contributing only a minor share to
the final product (the fortified vitamins account for roughly 1% of the costs of the end product). BASF’s technical know-how,
however, adds significantly to the specific added value of the product at the BoP. The Nestlé project seems to be the least
integrated since it concentrates on procurement issues concerning the basic raw material milk. Although there is no distinct
focus on processing the milk further at the BoP, capacity building for farmers is still a central aspect of the Nestlé project that
goes far beyond simple customer-centered BoP 1.0 strategies.
5.2. Limitations
Our findings are based on a multiple-case study design containing three cases, and there are some limitations. Since BoP
projects may still be characterized as expeditions into unknown territories, the projects’ approaches are often rather
idiosyncratic and may, in many cases, not be directly applicable to other firms. In this respect, for example, the influence of
specific cultural backgrounds on design, success, or failure of BoP projects could not be sufficiently taken into account in our
analysis. In general, we did not include any environmental moderators in our categories since this would have been beyond
the scope of this paper. Instead, we focused on best-practice constructs from SSCM literature. A focused analysis of
environmental moderators as well as a more in-depth investigation of specific constructs from SSCM theory is left to follow-
up studies that may build on our findings.
Furthermore, the cases focus rather narrowly on the food industry. As discussed before, theoretical sampling of ‘‘best
practice’’ BoP cases from the food sector is considered particularly illustrative regarding novel BoP 2.0 approaches. This
balances the limited number of cases with their importance for elucidating our specific research objective, thus enhancing
the validity of our analysis. Similar patterns regarding the role of SSCM in BoP projects may probably (at least within rough
frames) be identified in other comparable BoP projects (from other industries). Findings could be used as decision support
and guidelines for other companies planning to engage in BoP business models and aiming for a comprehensive triple
bottom line performance. However, the findings might not be applicable to other industries facing different challenges and
structures. For example, industries receiving intensive attention from environmental advocacy groups might feel impelled to
proactively introduce environmental aspects in BoP projects right from the beginning.
Finally, the findings of our qualitative approach rely strongly on (subjectively dyed) conceptualizations and theory-led
de-contextualization to achieve a certain level of generalization (Avenier, 2010). Here our procedure might find backing from
Weick (1989), who explicitly encourages creative handling of theory in the name of a disciplined imagination. With this
approach, the researcher is supposed to attempt thought trials when building theory to avoid the trap of overly mechanistic
and, thus, uninspired theory use.
6. Conclusion
The analysis of the three food industry cases Danone, BASF, and Nestlé offers interesting insights on the current level of
integration of SSCM in BoP research and practice and on future opportunities of combining these two concepts. SSCM may
help enrich the current focus of BoP projects on the double bottom line (social and economic) with the so-far neglected
environmental dimension of sustainability. Furthermore, BoP supply chains show avenues for integrating the social
domain into general SSCM theory and practice. Such bi-directional fertilization may considerably advance the
implementation of the triple bottom line approach. Equal treatment of all three performance objectives may, however, in
fact only be achieved through fundamentally challenging the business logic, thus finding new forms of integrating profit,
social and ecological business. BoP supply chains may serve as experimental laboratories for exploring new kinds of
business thinking that may be transferred to other business fields and world regions. They are suitable for generating the
necessary innovative power and creativity since the mere adaptation of Western business models and/or products often
proves insufficient at the BoP (Giroud & Scott-Kennel, 2009; Hart & Christensen, 2002). Such a transfer of underlying
assumptions on the role of an enterprise within society is spurred if MNCs are involved that are diversified in terms of
geography and product range; subject to the condition that the BoP projects are organizationally embedded within the
overall corporate structure facilitating resource and knowledge exchange between different functions, between the
headquarter and subsidiaries, and between different geographically dispersed subsidiaries. For bundling all three
sustainability dimensions, it is important though to have a realistic eye on potential win-wins and trade-offs between the
various dimensions (Seuring & Müller, 2008). This assessment of synergies and conflicts of goals may then serve as starting
point for adequate business process improvements.
In our BoP projects, a wide range of different actors is actively involved, although currently with a distinct focus on social,
infrastructural, and development issues. One major characteristic of how BoP supply chains are designed and operated is
their localized approach, that is, local communities are included as producers and, partly, as consumers of the food products.
These local production and consumption schemes eliminating far distance logistics operations and thus a large part of energy
demand represent as well promising paths of pushing ecological business impacts below the planet’s carrying capacity.
Future research could investigate such aspects in more details, hence enhancing our knowledge of how BoP supply chain
function, how they can be improved against the triple bottom line, and which interactions and information flows
characterize multi-actor BoP projects and MNCs involved. Follow-up studies may furthermore consolidate the
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current findings by taking up other conceptualizations of SSCM as analytical tools, by extending the investigations to other
industry sectors, and by zooming in on individual constructs. Based on further theory-framed empirical studies, the
conceptual integration of SSCM and BoP as well as its link to IB theory may be advanced and placed on increasingly solid
ground.
Acknowledgements
We thank Christian Schrader for his invaluable input to the project.
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IBR-978; No. of Pages 16

International Business Review xxx (2013) xxx–xxx

Contents lists available at SciVerse ScienceDirect

International Business Review

Sustainable supply chain management in ‘‘Base of the Pyramid’’ food

* Corresponding author. Tel.: +41 32 718 1587.

2 S. Gold et al. / International Business Review xxx (2013) xxx–xxx

2. SSCM theory and BoP research—a review of the literature

2.1. Deriving analytical categories from SSCM theory

2.1.1. Corporate orientation toward sustainability

S. Gold et al. / International Business Review xxx (2013) xxx–xxx 3

Corporate Orientation towards Features of Supply Chain Supply Chain Performance

Individual level • Reconceptualizing supply • Sustainability performance

• Standards and third-party

Fig. 1. The model of sustainable supply chain management.

2.1.2. Features of supply chain design and operation

Analytical construct Characterization

4 S. Gold et al. / International Business Review xxx (2013) xxx–xxx

Analytical construct Characterization

2.1.3. Supply chain performance

2.2. Linking SSCM theory to BoP research

Analytical construct Characterization

Sustainability performance Striving simultaneously and equally for performance in

S. Gold et al. / International Business Review xxx (2013) xxx–xxx 5

2.2.1. SSCM issues in BoP literature

2.2.2. Synthesis of the two streams of research

6 S. Gold et al. / International Business Review xxx (2013) xxx–xxx

3. Methodology and data

3.1. Multiple-case study design and sampling approach

S. Gold et al. / International Business Review xxx (2013) xxx–xxx 7

3.2. Data sources and material

3.3. Data analysis

BoP project Position of focal informant Organization Type of organization

Grameen Danone Foods Deputy General Manager Danone, France MNC

BASF Micronutrition Global Coordinator, Micronutrition BASF, Germany MNC

Nestlé Milk Districts Corporate Head of Agriculture Nestlé, Switzerland MNC

8 S. Gold et al. / International Business Review xxx (2013) xxx–xxx

BoP project Secondary data source Type of data

Grameen Danone Foods Danone (2010) Company report

BASF Micronutrition Initiative BASF (2011) Company website

Nestlé Milk Districts Goldberg and Herman (2005) Case study

4.1. Corporate orientation toward sustainability

4.2. Supply chain design and operation

S. Gold et al. / International Business Review xxx (2013) xxx–xxx 9

4.3. Supply chain performance in sustainability

Category Main approaches Typical quotesa

10 S. Gold et al. / International Business Review xxx (2013) xxx–xxx

Dimension Focus Typical quotesa

Aim of economic sustainability broadly acknowledged in all cases

5.1. Linking case ﬁndings to extant IB research

5.1.1. Integrating ecological issues into MNCs’ BoP projects

S. Gold et al. / International Business Review xxx (2013) xxx–xxx 11

5.1.2. Fostering social issues in MNCs’ SSCM practices

12 S. Gold et al. / International Business Review xxx (2013) xxx–xxx

S. Gold et al. / International Business Review xxx (2013) xxx–xxx 13

14 S. Gold et al. / International Business Review xxx (2013) xxx–xxx

We thank Christian Schrader for his invaluable input to the project.

S. Gold et al. / International Business Review xxx (2013) xxx–xxx 15

16 S. Gold et al. / International Business Review xxx (2013) xxx–xxx

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