| Abstract (ENG): |
The term “Bottom of the Pyramid” (or “Base of the Pyramid”, BOP) was coined by the late C. K. Prahalad, an Indian professor of corporate strategy at the University of Michigan and graduate of the Indian Institute of Management Ahmedabad. Prahalad stimulated the idea that private companies can find a potential fortune at the bottom of the pyramid and simultaneously provide the poor with business and employment opportunities, access to products and services, empowerment, self-esteem, and hopes for a better future. The most powerful contribution that Prahalad makes in his path-breaking book “The fortune at the bottom of the pyramid” is that he recognizes that being poor does not automatically mean being excluded from business activities. In fact, people at the bottom of the pyramid trade cash, assets, and labor to meet their basic needs. He explicitly points out that the poor must not be seen as helpless victims who are dependent on charity and foreign aid, but as capable actors who offer huge business opportunities. This idea initiated a paradigm shift in development aid policy, which mainly considered poor as recipients of foreign aid, and in the mindset of private companies, which regarded markets at the bottom of the pyramid as inaccessible and unprofitable.
According to Prahalad, private companies, and multinational corporations in particular, should consider the population at the bottom of the pyramid as affluent consumers and target this segment with radically adapted and novel products and services. As the market condition of this segment significantly differs from traditional “high-income” markets, Prahalad proposed 12 business principles including radical product and process innovation, the need for market development and the inclusion of the local population in order to establish profitable business activities in this segment.
Prahalad’s view of markets at the bottom of the pyramid did not remain without critique and subsequent studies provided contrasting perspectives. For example, Karnani stressed the argument to consider the poor as producers and potential employees instead of treating them as consumers. London and Hart promote the idea that companies won’t find a fortune at the bottom of the pyramid, but have to create a fortune with the poor. |
| Citation: |
Schuster, Tassilo and Holtbrügge, Dirk
(2015)
Chapter B - "Bottom of the Pyramid-Concept" : Prahalad.
In:
Dictionary of Corporate Social Responsibility : CSR, Sustainability, Ethics & Governance / Idowu, Samuel O. et al. (Eds).
Cham: Springer.
(CSR, Sustainability, Ethics & Governance book series).
ISBN 9783319105369
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