Bottom of the pyramid

The concept of base (or bottom ) of the pyramid or the bottom of the pyramid in the management literature describes business models and approaches to successful inclusion of hitherto largely neglected population in corporate value chains. As the " Base of the Pyramid ", the lowermost part of the world income pyramid is first described it. These " poorest of the world " are in the context of action-guiding elements of the BoP concept in business value as customers, suppliers, distributors, or the like. be integrated. The basic idea is that the pursuit of entrepreneurial opportunities can be combined in a targeted manner with the efforts of long-term poverty reduction in this way.

Origin of the BoP concept and delimitation as population segment

The BoP concept was originally coined under the name " Bottom of the Pyramid " by Prahalad and Hart, who introduced this concept in a working paper from the year 1998. In the current literature is the term used synonymously " Base of the Pyramid ", which characterizes the context of meaning of the pyramid base better, but more widespread. The delineation of these base varies depending on the source. Accessible now seems it off to the World Bank data, the basis of which a state of "extreme poverty " with a disposable per capita income ( measured in purchasing power parity) of U.S. up to $ 1.25 per day and a state of " moderate poverty " in an income is defined from 1.25 to 2.5 U.S. dollars. The overall BoP thus covers more than half the world's population, some authors even speak of more than 4 billion at the BoP living people. In this context, in part, a little bold of " B24B (business-to -4 -billion ) " is spoken. A definition based on such " poverty lines " but is subject to a variety of criticisms, so that suggest different authors, the BoP do not have income (or similar monetary values ​​) to define, but on specific characteristics of such markets, especially subsistence and informality.

The original BoP approach by Prahalad et al. focuses primarily on hitherto unused opportunities at the BoP as a market. Contrary to widespread opinion is overall an unexpectedly high market potential at the BoP identifiable, which is currently at more than 5 billion U.S. $, again measured in purchasing power parity, is estimated. Despite therefore obviously existing market opportunities, people are at the BoP to date been largely outside the global market system. This is - we conjecture - especially to prevailing misconceptions, especially in more affluent parts of the world. In particular, the assumption that there was not enough purchasing power and thus no viable market at the BoP, it is important to contrast the opinion of the mentioned authors. They argue, inter alia, that the aggregate purchasing power and poor communities is substantial and allows businesses that would be denied to the individual because of a too low income.

Modern interpretations of the BoP concept consider the BoP, however, is usually not only as a potential market at the end of a value chain, rather than their integrated supply with its own value creation potential. Especially for higher income - and thus indirectly to creating more sales opportunities - make this a truly integrative approaches including the BoP in various value chain at the center of considerations. It is inter alia assumed that remain as a resource pool by a limited view ( ie, for example, the exclusive consideration of markets ) economic opportunities of BoP unnoticed. The focus of such real integrative efforts - from Simanis et al. in comparison to the original BoP idea as a "second- generation BoP strategy" (or " BoP 2.0" ) and referred to by Hahn as " integrative BoP " - are particularly numerous, strongly represented just at the BoP small and medium-sized enterprises (SMEs ), where the integration into global value chains promises a connection to markets beyond their original business areas.

Criticism of the BoP concept often refers in particular to the original idea, which the BoP considered exclusively as a potential market. So criticism is that the markets at the BoP have as calculated in part a significantly lower sales potential. To some extent, but also already fundamentally questioned whether the sale of certain products (eg tobacco and alcohol ) can be an advantage for the poor. Also, the full dissemination western consumerism and Western styles of consumption can have negative consequences for both the BoP as well as for a future sustainable development in general. In addition, sometimes doubted whether private companies alone can significantly contribute to improving the situation of the world's poorest and if need on the BoP concept based business models not at least flanking efforts of other actors (eg, government or civil society institutions ).

Further considerations, conceptual extensions and empirical relevance

Major complications has, inter alia, through the above consideration of procurement markets and production activities at the BoP found lately the BoP concept. In particular, the cooperation with other actors in development cooperation is increasingly coming to the view of science and business practice. The empirical relevance of such forms of cooperation, as well as the BoP thinking in general, is also revealed in numerous case studies of successful BoP business models as they exist today. Various discussions explicitly link private-sector efforts to fight poverty in the context of reflections on corporate social responsibility (see also Corporate Social Responsibility or Corporate Citizenship ) with successful corporate efforts to BoP. Recent research efforts also go into the question of whether and how such business models are developmental and sustainability -promoting, for example because the approaches to the resource-intensive Western lifestyle may endanger the natural foundations of life for future generations.

A related approach in economics is to be found also in the idea of ​​social business. During the BoP approach specifically focuses on the profitability of appropriate business models in social business models is the social objective (eg job creation or the supply of certain essential goods ) in the foreground. The purpose here is therefore in the solution of specific social problems, any profits are reinvested to do so.