Multinational Firm Strategy and Global Poverty Alleviation

Abstract

Bottom of the Pyramid (BOP) strategies recognize for the first time that global companies can contribute to the alleviation of worldwide poverty by adopting non-traditional and mostly non-Western models of business involvement. It is now widely accepted that poverty and hunger arise not because there are no goods or food, but because billions of people lack income to purchase them. It is also a common belief that the private sector can play a significant role in lifting the poor from the margins of the market system. This would require strategic and mindset shifts in global companies leading to a very different path where their operations intersect with the greater good of communities, societies, and nations. Successful engagement in the untapped market space at the base of the global income pyramid calls for completely new capabilities, responsibilities, and values. Alliance building with local and non-traditional partners, promoting bottom-up solutions and understanding social sustainability are some of these new managerial challenges. This article reflects on some of the critical challenges of global companies and global managers in their strategic engagement at the BOP and explores how large firms can become involved in the pursuit of social capital acquisition and how new approaches of public–private partnerships in reformulating the profit-performance links, the downscaling of products or services without compromising their quality and integrity, the bridging of the information and infrastructure gap, educating, and empowering the poor, together with innovations through technological adaptations can be managed through the embracing of new mindsets. A number of frameworks are presented with a view to contributing to the debate and outlining new value objectives for global companies.

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