NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, April 19, 2013

It is no secret that, when it comes to commercial ventures at the base of the pyramid, our greatest hopes and expectations have been placed on the potential of multinational corporations to mitigate poverty.

Early studies on the BoP relied on the premise that large companies, with their financial muscle, distribution channels, technological know-how and managerial sophistication, are best positioned to meet the challenge of serving the poor. This assumption continues to guide the efforts of multilateral agencies, NGOs and development organizations that work on market-oriented solutions to poverty.

In practice, however, large companies have been less than fully enthusiastic when given the chance to engage the low-income segment commercially.

Large companies, large disappointment

Consider a program called “Developing New Market Opportunities for the Base of the Pyramid,” launched in 2006 by the Inter American Development Bank’s Multilateral Investment Fund and the Mexican Business Council’s Private Sector Study Commission for Sustainable Development to drive Mexico’s large companies to develop inclusive business ventures.