Legitimacy Contexts of BoP Markets: Characterization and Implications for Supply Chain Functions

Abstract

An important market that is receiving increasing attention by firms relates to the poorest at the Base of the Pyramid (BoP). BoP businesses contribute to the first UN Sustainable Development Goal that calls for an end to poverty in all its manifestations. BoP businesses are regarded as financially and socially beneficial for both participating firms and poor communities. It is, however, understood that success in BoP markets cannot (and should not) be assumed, as it demands a profoundly different view towards managing supply chains. Focusing on this issue, our conceptual study contributes to the emerging debates in BoP and supply chain management research by elaborating the notion of legitimacy contexts (LCs) at BoP. We draw on institutional theory to characterize the LCs in BoP markets and discuss their implications for key supply chain functions. We argue that firms often design their supply chain functions for BoP business using their own LCs as opposed to those of BoP actors. This implies ignoring the institutional distance between BoP markets and firms and reveals a key culprit in the failure of BoP projects. We offer practical implications for firms intending to engage in BoP business.

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