ISSN 228I -3993 (Print)ISSN 2281 -4&12 (online)

Academic Jourilal ofI nterd isci pl i n aty Stud ies

Special IssueYol.2, No.8

October 2013

Academic Journal of Interdisciplinary Studies

Editor in ChiefProf. Paul Nervman

Executive Director, MCSERProf. Francesco Tarsia

EditingDr. Lisa Licata

Editorial AssistantDr. Michela Gallo

Scientific CoordinatorProf. Bidzina Savaneli

Graphic DesignDr. Elisabetta Tarsia

Editorial ManagingDr. Sokol Pacukaj

Copyright @ 2013 MCSER - Mediterranean Center of Social and Educational ResearchO MCSER Publishingr Rome-Italy

ISSN 228l-4612 (online) ISSN 22El-39?3 {print)

Yol.2, No.8, October 2013

Doi: I 0.5901 /ajis.20t 3.v2n8s

Global Impact Factor Indexed

Publisher

O MCSER - Mediterranean Center of Social and Educational ResearchO MCSER Publishing, Rome-Italy

Piaz.z.ale AIdo l?loro 5,Cap.00183, Rome, Italy

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E.tssN 22tit-16t 2

tssN 228 t -3993.1 ca tle mic J ourna I oJ I nte rtli sci pl ; n ar r Stu di es

,11 CS ER Publ ;shing, Rome - lralS,

Euroisation-. Advantages and Disadvantages of Albanian Economy byProceEs of Cash Domestic ReBlacementElidiana Bashi /

The Proiect E.CH.|. and the lnvedarisation of tntangibte Cutturat HuihgeEmanuel Valentin

Avani.eCroe Drama ino G impi* on uocim Aiaaniln oiami or KorovoErenestina Halili

From working-class to lmmigrantAreas? The case of Tum Former lndustrial DistrictsGiacano hlanoiiliiiir]*Eilfrifiii,orinsti'Si,'kod6Gl{ii5irrrad;viiAiitGHd;-midffi"Fi;nt$sai--*-fln1s l!_e$ {oj4dp1i), Drtlka Ko-ptrku

lna K Tiupa

Neutral Monism and conceptions of Historiosofical syrthesis as Methodotogy of HistoryLdionava,l.L.

Kementin Mile

The Loan Ma*et in Lithuania: Evaluation of Developments in 2002.2012 YearsLarisa &el!!s$iaThe Making of Political Rituals in Albanian SocietyLukim Hoxha

BoP and trillcs: wtriie G tie trliitrei ano tiuniiC ttri sourie iit iinoviiioni

Byzantium: Religion, Art, Archltecture.Arbela Ksilntegration Policy Concerning Temporary Labor Migrants as aPad of Geoesonomical Strahgy of Russia in EurasiaTkachenka Madna

itrl orimituigy ano ne nrnatdur *uiresrittreaiir-@tlSnop!, Denis Himci

To Ullhat Extent is the HDla Good lndicator of theRelative Success' or'Fallure' of llatioral Soclal Policies?Mellh Sever

lnformal Economy in AlbaniaMeite &aka, Gruseppe Twluccia

Mert Avan (Twkey)

Hardiness as a Resource of Personalitfs Coping Behaviour in Difficult $ituationsMilana R. H*haturovaDifficulties in Translating the Language of Pirandello's Noyels

Nslsf:pnLr:yEfiss*Lln the tlame of God the Mercifulthe Compassionate.The Roh of Congregational Rituals in lslamic Pattern of LifuMohggm.g! Mo1tlb,Jlloirammgf Sa des! !,mj!l Dj1

Fadors Caueing Stress: A Study of lndian Call CentresMohsin Aziz

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Octobcr 201 3

BoP and MNCs: Where is the Market and Where the Source of lnnovation?

Dr. Marcello Tonelli

Auskalian Centre of Entrepreneurship Research {ACE)Business School Queensland University of Technology

GPO Box 2434 Erisbane 4001, Australia

m,tanell@qut.edu.au

Nicold Fabrizio Cristoni

Master MaGER (Master in Green Management, Energy and CSRJ

Bocconi University, Sarfafti Slreel 25, Milan 20136, ltaty

nicolo. cri slo n i@masteL u ni boc con i. it

Doi: 10.5901/ajis.2013.v2n8pl 84

Abstect

ln 2004 Prahalad made managers aware of the grcat economic oppodunity that the population at the BoP (Base of the

Pyramid) could represenl for business in the tom of new potential consuners. However, MNCs (Multi-National Corpofttions)

have cantinued to fail in penebating low income markets, arguably because applied strctegies are ofien lhe same Nopted at

the top of the pyramid. Even in lhose few cases rvhere producls get re-envisioned, thek inlroduction in conlexls of exlremepoverty only induces new needs and develops new dependenctes. Af best lhe rearrangemenl 0f Dusiness models by MNCs

has reant the realization of CSR (Corporate Socral Responslbil$ schenes that have ualidily from a markeling perspective,

bul stili lack lhe crucial elenent of social enbeddedness (London & Han, 2004). Today the challenge rs lo reach the lowestppulaliw tier with reinvented busrness modeis based on principles of value co-creation. Stading tron a view ol the potenlial

cansumet al the 3aP as a ring of continuity in the value chain process - a resource that can rlself produce value - this paper

concludes propasing an alternative innovative appraach to oryrate in developing markels thal oveiurns the roles of MNCs and

lhe BoP. The proposed pe$pective of reversed' source of innovation and primary target narket builds on two fundamenlal

lenets: traddianal knowledge is rich and greatly unexploded, and markets at the lop of the pyranid are saturated with

unnecessary products / practices that have lost contact with the natural envirovnen{

Keryads: Base of the pyramid, grassroofs innovation, inclusive development, povedy alleviation, tradilional knov,iedge.

f. introduction

The BoP can no longer represent for MNCs iust the new market opporlunity identilied by Prahalad in 2004, The emphas:

of their international business development strategies cannot be based on making a profit by selling products ar:services to 4 billions of poor people; the concept of 'selling lo the poor needs lo be replaced with a new terminolo;.aimed at solving together the great challenges of the world, among which is poverty. Open business models (How;

2008), requalification of lhe consumer as prosumer (Toffler, 1980), strategies lo co-create (Hart & Sharma, 200r

appreciation of traditional knowledge {Seyfang & Smilh, 2007) are some of the concepts discussed in this paper.

One of the primary causes o{ the failure by MNCs in penetrating the BoP is considering lhe poor as regu.a

consumers, representing the last link of the economic value chain only devoted to destroy value. it is only recently the

MNCs have started to recognize the potential of the BoP in terms oJ its innovative power. Another reason for the difficu-

of MNCs in gaining a positive presence in developing countries is the incorrect or insignificani implementation of CS:strategies (Davidson, 2009), too oflen used as a'mask'1or conscious consu!'ners and to gain access in BoP markets. 8":the use of CSR to somehow iustify business wrongdoing in the eyes of scciely is lusl a lemporary patch as informatic'

travels fast in today's world and consumers are growing more and rncre alei i!a* & Sharma, 2004). Also, CSR as :marketing stralegy carries only short{erm rewards that are oflen not wc'1'r 1.1e lire and resources invested.

Those organizations that seek t0 successfully enter the BoP car ac s; 'i tney arknowledge the latent potential :'the people in those setlings and learn to co-operate with other stakehclte.s r' a'::'li achieve sustainable developmer':

Furthermore, there is growing evidence that the BoP might contarn i:e.:-s .':* r:jr icsl by the lrvestern world, th.could solve giobal challenges and set human development 0n a ner,. .,:r':?

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2. The Failure of MilCs in Penetrating ihe SoP

ln 2004 prahalad found a new market opportuniiy al lhe 8oP. He suggested the idea that 4 billions of poor people have

immense business capacity and purchasing porver, thaugh individually limited. They represent, therefore,.a market lhat

,tirr nri to G conque;ed, 3in;; ;arkets ,i in. top o{ th6 pyramid are characterized.by ever-shorter producl life cycles

anO atmost compleiely satisfied needs, the lndian economisi urged MNCs to turn their efforts toward the BoP' However

piinifrO OiO noigo beyond the concepl of selirng tothe pool, considering poor people only as new potential consumers

able to absorb the supply of MNC products'

As a result, MNCs have replatedly tried to p€netrate the BoP on a markefbased strategy, backed up by the belief

lhat "narket-based approaches' offer an attracitive alternative [to donation-based aid programs], as they can be

iioroiicany sustalna'b'le" (fonaon 2008, p. 6); they help fostering a 'padicipated economic growth that can. arg-uably

ifl.uiit por.rty in tne wortd, olspite such troie, ur6nitoi Group (2011)demonstrated that unlortunately most MNCs fail

because they try to penetrate tf,. Aop without rearranging their business models. Why don't MNCs define business

*oa*t, appropriite for new markets at the BoP? This iiprimarily due to two factors The first is linked to the company

itself: business model rearrangement is a very complex and expensive process requiring innovation and changes at the

orgrniiutionri.ulture level, T"he second set bf causes relates to what companies thlnk about the BoP: it is not worth

*ri,rgh to make organizaiionaicnanges; it does not have a great purchasing power; it is hard to reach due to wide

medii-dark areas an'd a weak infrastructure; people do not have clear needs.

The practical consequences of such aitlviiy over the last decade are that MNCs still try lo sell products 1o- the poor

that peopie at the top of the pyramid no longer want;-consumers at the BoP do not appreciate orfind useful th-e newly

introduced products uecauru, i'n most casesJare not fitting their basic needs; and the corporate involvement at the BoP

g.trijri.O at best to CSR exercises to strengthen reputation in lhe eyes of the Western world'

when Nike launched iti yvorra br,or pr{ra* in iggg witr the sc'ope of penetrating lorrv]ncome markets, it pursued

a new business model. Local-forlocal manufadturing, concurrent engineering product development approach and market

classilications had been envistned as the three riain pillars of the market entry strategy, However, as_the company

faited to understand that sellinj to the poor requires complex interaction, empathy (Harl & Sharma, 2004) and a deep

,nO.ot.nOing of ncd needs, cirfiure in'O habits, so did its business plan, Nike's misstep provides the insight that.unless

businesses are locally .rdO.O in the targeted region, plans for conquering new markets in developing countries are

bound to fail in the long run ti*rnir a ffri, ZOOA1. lccordingly, business models.need to be re-shaped in light of the

,r';nii.. of the comm-uniti.Jit tn. BoP, specifically by focusing efforts on satisfying unmet needs instead of creating

ngvit OneS.

The Reurers Market Light (RML) project, as an example, found its success by providing lndian farmers.with a

customized information re*i.iiriinro liir'proring their yields. RML follows the simple idea of providing rurallarmers

with a comprehensive set of information, from ciops mirket price and weather forecast, lo crop advisory tips and

commodity news. SMS **.rg.r ir* received by su'bscribers in English or the language of their choice on a daiiy basis'

il;;p, of the service ir id.nnin.. farmers"ability to negotiate with buyers and to enable them to arbilrage better

across sales outlets. Furlhermoie. weatner forecasts attows thlm to reduce irop losses due to unforeseen storms. Crop

.O*iiori irto*rtion, finatty, nas in. ..opu of letting farmers develop better cultivation practices and to push them in

making timely decisions to aOopt n.* oop varieties-when needed (Fafchamps & Minten, 2012), ln lndia, a country with

127 million cultivators 1OOV,-oitne total population) devoted to ciops'cultivation either directly or indirecllyl, where

.gii*ii;i; *;i,tuuiei t'o zov. oi coF, the penetraiion of RML represents a unique opporlunity to enable farmers to

operate more efficienlly while minimizing uncertainty.' When approaching consumers aime Bop, companies must realize lhat value creation is the key. Usefulness and

affordability are the dflvers tnai*ilf .urnt rlly mark the line between success and failure. The Swiss-based healthcare

t..ill.gi.r cgmpany Vxte,rgaar| Frandsei, provides products that embody both characteristics of being useful and

nLtiurfy low-priced.'tne coirpany pursues a 'profit ior a purpose approach' by delivering innovative ernergency

response and disease control devices in the most disadvantaged regions oI the planet at affordable prices lts products,

ranging from a mosquito net that releases anti-malaria insecticides in the air lo porlable water filters, have been

rrri"r"tt f by virtue olthe fact that the company operates at the core o{ the communities it serves. A consequence of this

1 lcRlER, (200g). .lndia: The impact ol mobite 6 ones" iThe Polrcy Paper Series, Number 9). Relrieved May 02, 2013' from

http:/r\vww. icrier.org/pdf /pu blic-policy 1 9jan09. pdf

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approach is simple: urgent needs are readily identified and promptly satisfied. By placing laboratories in Cote d'lvoire andVietnam and centres of production in China, lndia, Korea, Thailand and Vietnam, Vestergaard Frandsen can match its

locat embeddedness with the capability to perform fast responses to humanilarian emergencies and disease outbreaks in

many parts of the world,

3. CSR To Mark Common Practices

Corporale Social Responsibility {CSR) has deflnitely contributed to change the practice ol MNCs, Over the last decades,

MNCs have been increasingly forced to modify their behavior towards stakeholders, largely because o{ the major

changes occurring in the environment they used lo operate, Firstly, the number of NGOs monitoring MNCs practices

especially in third world counkies has increased dramatically during the last ten years (Hart & Sharma, 2004).

Additionally, the spread of the lnternet and the explosion of social media have contributed to make consumers more

informed and aware of MNCs unethical practices. Millions of people are now able to access information live and can

communicale with each other instantly, thereby creating a global network of bonsclous consurners'. As a resull of such

major changes, large corporations have been exposed to public opinion in a way that is nearly impossible ior them to

behave unethically without ending up under the attack of some NGO, consumer association or an individual blogger,

Accolding to lhis logic, several industries are undergoing important lransformations. Some o{ the largestpharmaceutica! companies2, for instance, have lately implemented more socially sound business models setting drugprices based on a country's population ability to pay. This has resulted in price dropping in developing countries up to

90?i (Gotllieb, 2000). After having repeatedly been accused of operating detached from society, the pharma business

fas ricw come t0 realize that in order lo sustain long-term success, expectations from a growing body of conscious

; rag;.ii ec'riiled: 'Haw Unilever palm oilsuppllers are burning up Borneo'it became clear to the company that a new

s*+.er$ebrs-fi*€lted slra{egy had to be pursued or the repori would have jeopardized the reputation of Unilever

,*:r*#€ie. ! e€i+re, *:r '1uj May 2008 Unilever announced its commitment to import only Certified Sustainable Palm Oil

* i*ilar* iarnried a patnerchip with WWF to hail further deforestalion..1 c*er *ards. il is reasonable to say that CSR has emerged amongst MNCs as the new frontier for reconciliation

*t:, *o g.;:*ai carnmunity. lntemational companies seeking to protect thek corporate image against human rights

scandais, ei:tjrcarrenlal cataslrophes and unveiled corruption practices have found the way la'greenwash'lheir brands

Dy.&?mitling tiremselves to CSR behaviors and transparency,

However, CSR practices at the BoP have generally been limited to proiects unable to have a substantial, long-term

impact {Davidson, 2009). At best, companies' commitment has resulted in projects sponsoring social initiatives or the

delivery of low-cost services to underdeveloped regions in Africa, South-America or Asia. As a result, CSR often appears

to be no more lhan a marketing lool, a'mask'that MNCs can wear to appear ethical.

ln fact, when CSR initiatives approach the poor distributing them products or services at apparently eonvenient

terms, negotiations still follow lhe traditional market notions, according to which companies are aulonomous in the design

and manufacture of goodslservices and customers are just users (Prahalad & Ramaswamy, 2004), This is a typical firm-

centric view of the market, which considers consurners as the last link of the value creation process and dedicated only to

consumption. The two sides of the economic equation - producer and consumer - remain distinct and the only

connection between them are activities such as customer satisfaction and customer relationship management, none of

which however allow consurners to actively participale in the production process. Therefore, the vast majority of

implemented CSR initialives do nol seem sufficient to satisfy the needs at the BoP because they continue to create value

just for MNCs and not for the communilies they serve.

4. MNCs Recognize the Potential of the BoP to lnnovate and Co-Create

The obvious consequences of adopting a standard transnational business model (Bartlett & Goshal, 1989) at the BoP are

the creation of new needs amongst the poor, the introduction of hardly suslainable products in markets not ready to

accept them (largely because of missing specific infrastructure), and the encouragement of new habits far from ordinary

life. Keeping the distance beMeen who creates value and who consumes it, the transnational model excludes the

z Glaxo Wellcome, Boehringer lngelheim, Bdstol-Myers Squibb, Hoffman-La Roche and Merck & Co.

.lc aie m i c J o ur nal of I nte rdi sc lp I ; narS' Stud ies

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possibility that the BoP could create value'

On the other nanO, tfre co+realion 'r*c+i

l;ralralad & Ramaswami, 2000) lies on the principle that companies,can

harness their customers *rrpgL;* ;t e*gag1t:E #th lhem and move beyond the mere buyerseller relatio.nship' Thus'

on the basis of this new seioico-creitlpeiperiences (Prahalad & Ramaswami,,2004)the interaction between the

**piny rrO ihe ctient becomes itself the iocus where the value creation process finds its climax'

Examples of co-creation in mature ma.kels are growing and spread'ing,over the entire spectrum of industries Take

Amazon.since its incepti.n, in. onrin. book-seiler bus-iness irodel has reiie-d heavily on readers'feedbacks and reviews,

encouraging the customers ;;fu;tk h thrive and share information about books' Or take FIAI' the ltalian aut.maker'

prior to taking the final O..irion'.norithe design of its new Punto car, the cgmpany invited potential customers to visit

the website and choose rrongtt d]ff.itnit rtrL. and options' By doing so, the firm was abie to tesl different designs at

a negligible cost ending up wifi a vehicle that was way moie inciJsive olf custorners' preferenceE' Future clients' on their

prriiiJtnrrnrnce tdshape the model according to their wants and needs.

Companies operating -in

,rtri. *r*tts plrsue the co-creation approach in order to gain competitive advantage

and build a tong-term .urto*.iiriltionship. Similarty, we suggesl ttrai.inalogous slrategies could apply to the BoP'

lndeed, forms of co{reati0n are emerging even in the poresi[ails of the globe' ln more than 50 countries' the Sawa

World proiecl3 seeks to eraOicate povirt/by training younl gen'eralions oi iiurnalists to document local agricultural best

practices and then snaring't-nlm'via-a'gtioar neivort<, Es'sentiarry, short videos about bold solutions are reported,

regularly updated, ,no p,rr.nt.O to n.i,6y .o*runities Uy-rtre 'Sai'va vo*n !9y-r!,2s"

By doing so' rural populations

are encouragd to impremeni, io'rpi anO'upgrade innovaiive techniques: co-creation processes thus thrive amongst

Oiuetse neigrinourhoodi and in different locations simultaneously'

There is growing evioence t-niir,apc, ,,, ueginnin;;;ecognize.11g.pglenlial value of consumers at the BoP 10

more effectively penetrate t or. *rit.tt (Simanisi Ha",t,-eOOOt. nt highlighted by Hart and Sharma (2004) 'fringe'

stakeholders - those who lie at the periphery of a co*panis networt< jca-n

inAeed become a source of innovation'

provided that they are enabl;i; irLd inlii r*ji..s and eip-ress their ideas. Forlhem to do so, companies must therefore

iocus their efforts on ouiloing a network able to engage with these groups. Thus, Hart and sharma propose a new

approach of stakeholder intefiration, wnfn, "move,s iryl.niin, st,'ti'"management of knawn palies in the center of a

network to the dynamicproc;ss of identifying uni.engagiig' aitii t o^ li 1rirye'.(Hart & Sharma' 2004:9)' ln light of

this assumption, the BoP assumes if,.'t n.i, r6te of a Ou#e"st patfrer instead ot-Ueing considered iust a passive body of

*n'utl]ftJur,urting alternative innovation-driven business models there seems to be an emergent trend towards open

systems (Brabham, zooa; nowe,'iooaiinqipl*9t9 ojarogue imong the various stakeholders involved and contemplate

different provisions rror rr.iilJoi-ii orbi.t"o in nsuili, econ"omic and socialtransformation can result from the

interactions of native people who bring know-how and tradilions, BoP entrepreneurs who contribute with their drive to

grow, MNCs which supply itrtltttt,"t"trr.orosv, ano reso;ices, aid and development agencies thai provide cultural

mediating skills, govemmeniUoOi.i tt rt set lawiind regulations, and BoP consumers who are given a voice'

:Sawa World, (2013). Whatwe do

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This indication of a possible alternative way of conducting business operations is in line wilh what vras proposed by the

World Business Council for Sustainable tjevelopment in 2001 : a joint growth between MNCs, governmeals and civil

society in grder to sustain social development. in this regard, the United Nations had also launched in 2000 a robust

camp;ign to involve the business worH ln the practice olsustainable development and poverty alleviation. The Globa/

Compait program aims in fact to establish global 'sustainable development partnerships'between the UN, governments,

civil socieiy, iaOor, and business 1o promole the achievement of the MDGs (Millennium Development Goals), Hovever

the results stili appear controversial as being a member of the program has not yet proven to be a guarantee of effeclive

CSR management (Ecovadis, 2012).

When interactions am6ng stakeholders work, the resuits can be really promising in setting a palh that will

eventualiy iead to the elimination of challenges that have ior centuries plagued most of the southern hemisphere. ln this

regard, the Lighting a Eillion Lives (La1Llproject provides a clear understanding of the magnitude of the potential

be-nefits deriving from an open-system approach. Launched in 2008 by The Energy and Research lnstitute (TERI) and

the lndian Gov6rnment with the-aim of bringing clean light and socio-economic development to remote unclectrified

villages in lndia, the initiative is based on a localized, bottom-up entrepreneurial model, Essentially, local social

entr[preneurs are trained to run small enterprises within the context of their villages offering the rent of high-qualily solar

lamps to rural people for an affoldable fee. ln order for the proiect to have effeclive, large-scale impact (1 million rural

lndians was the original target) promoters envisioned a 5P's plan of action: 'pro-po$ public-private pafinership',

Embracing both, purily comirercial and social welfare approaches (UNESCAP, 2010), the 5P's main scope is to

encouragi community fiarticipation and education and the generation of income for social development. To this end, not

only goibrnments and the private sector are involved but also NGOs, development banks, philanthropic institutions,

comrnunity-based organizatibns and even private citizens are called to give their contribution to the success of the

pro.ject,

Thus, in this new form of inclusive partnership, the'pro-poor element has been added to lhe usual public-private

relationship. By enabling the poor to play the double role of end consumers and business partners, this ploneering

business moCet intenOs to move beygnd the traditional public-private partnerships (PPP), which have often ignored the

needs of those at the BoP (UNESCAP, 2010), Arcordingly, LaBL's pro-poor commitment pursues the main obiective of

effectiveiy empowering and engaging with rurai communities through a s-stage process. As illustrated in Figure 2,

communities ire {irst-approactieO to evaluate projecls acceptance and to forge it according to local needs and

requiremenls. Subsequently, an intensiye ln-loco training program is provided to the selected entrepreneur on both

technical and economic aspects of the solar enterprise, The third stage is focused on the engagement of second level

users and aims al making ihem aware of their consumers' rights and of lhe proper usage ol lamps by a nexldoor.after-

sales support. TERI then-harnesses feedback from the populations it serves so as to continuously ameliorale the design

and the iunctionality of its service, Finally, the project aligns wilh oiher sociai programmes to bring training to the BoP on

other income generation activities such as taltoiing and selling mobiie services iChaurey, Krilhika, Palit, Rakesh &

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Sovacool, 2012). Thus far, the implementai lr .i L:a- 5i s f;'amework has proven successful. Maior benefits for the pcor

have been attaned by virtue of a weii-crshesira:e. rechanism. Governments commitment to financially support the

iniepttn of 1.,,r progr;m has proceeded hard jr nard w.ith the willingness of the private sector lo devote technological

r,norireoge and'buiiness sliirs to a nely typolcgy of cuslomers. Concunently, non-profit and community based

orgr.ir-ti*r have played the fundamentai rcie cr niicg;ng the gap with rural communities by involving them in the co'

creation and development of the proJect.

Figure 2. LaBL's S-stage Process

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'IryIThis is clearly a successful case, but not all scenarios are the same. when the process is manipulated by corruption,

lobbying, snort-term goals, and unethical business conduct aimed solely at profit maximization, lhen the consequences

.in n""it.urrtrting. ihe niai eiriciinure Growth Corridars proiect, as an example, whilst being acclaimed by its

ip"niorsrnO t;e ileOia .r m. *rV tolu.kle food security concernsand pove(y,^raises a series of questions on why

tocat communities have not ueen cionsurted oyer iis implementation. The idea of African Agricultural Growlh coridors

was envisioned to speed rpin.'pror.ir of converling millions of hectares of land in the African continent to industrial

agriculture use. Originally pr.i"nt.O at the UN Genera-l Assembly in 2008, the proiect,. endorsed by the World Economic

Forum as a part of rn. uroia.i wiew visian for Agricutture'ltrategy, claims the transition to industrial agricultural

praclices in Africa will boost "conomic

gro*th in the dntinent thereby liiting targeted regions out of poverty' ln the words

of mr fry sponsor of tfre proiect, itri agribusiness multinational Yara lnternational: 'by connxting liese areas to

infia,it,uciure, effcrent loglsfr'cs' jrorilng liputs, storage and transpoftation to markets, the goal is to farge viable value

chains suppoling bolh laige*cate and smallholder farminga''

But to what extent smatthoio.r i.i*ing will benefit fiom the development of the agricultural conidors?,Land grabs'

impoverisnment and vast Oisplacemeni Or."to tf,. shift to industrial agriculture are amongst the many troubles farmers

*lfififJfiniu* to face. Localcommunilies and farmers associations 1e.g. me lnternational Peasants Movement) complain

tne massive proiect is being implemented with no previous public debaie, especially with smallholders. Local knowledge'

rrno *a*g,j*,;nt, hablts inJ Lrrtur" are not only being 16fi out of the conversations, but are also jeopardized by the

advent of wistern agricultural syslems. ey nanowly direc:ting their attention to old mainstream stakeholders managemenl

practices, agribusiness .orprni", have made no ifforts toingage with local communities and to get the best out of the

native knowledge.

5. lnnovation at the BoP May Hold the Key to Global Challenges

Low tech, grassrootsJevel innovations (GRl) may hold the key to overcomins:019 of the resource challenges we face

today. Over the last decades, in..on..pt oi'suitainabte devetopmenf has giined increasing importance and popularity

.r itir.napng.s posed by ;iil;;d;ge, resource and food scarclty, environmental degradation and biodiversity.loss

have become tangible tnreati roi irumaniiy. within the nascenl field of sustainable innovation studies, attention has been

raised on the magnitude requiieo for innivative ideas and practices lo overcome sustainability challenges. lndeed' in

oiOrito radicallyievolutlonize moaern consumption habits and lifestyles, changes with systemic impact are needed

H;;Gr.., ;ighurst & s.yrrng, iori). tn tignt of this assurnption, a variety oi innovalions have recently been the

i,o*",it*" oi susiainabitity ri6nJr]'ootn iechnologicat (the spreading of renewable technologies) and social (ethical

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consumers movements). However, very few of these new developments have been capable of having repercussions on aglobal scale.

ln this regard, a recenl body ol literature known as'sustalnab/rly fransllions' (Hargreaves, Longhurst & Seyfang,2013; Seyfang & Smith, 2007; Smith, 2007) has tried to invesligate and explain the circumstances under which greentechnological innovation are best able to thrive and to break up the paradigms of the existing system. Building on lheseefforts, the focus has then shifted to linking sustainabie developmenl with innovation al 'grassrools /evef (Seyfang &Longhurst, 2012; Seyfang & Haxeltine, 2012). Although GRI might not possess enough power to drive society into a moresustainable fulure, it has nonetheless begun to be considered a valuable source of innovative diversily. Seyfang & Smith(2007) argue thal civil society initiatives, whilst differing greatty from mainstream business-driven transformations, hide alatent and under-estimated potential. Given their local embeddedness, community{riven innovations possess theknowledge, experience and capabilities to succeed where top-down, incremental and path dependenl reforms havefailed.

Researchers (Seyfang & Smith, 2007) have poinled at 'experimental nlches' as the locus where disruptive,environmentally friendly innovations have historicaliy originaled. The term refers to networks of organizations,lechnologies and users that operate at the fringe of the system forming an allernalive (i.e., niche) practice. Nichesituations have proven successful in providing a'comfort zone" lor new alternative insights and green practices lo ariselaraway from the regime's net of constraints and pressures (Smith, 2007), ln other words, niches offer a safe operatingspace where actors can experiment sustainable technologies and processes wlthout being curbed by limitationsconventionally imposed by society,

Thus far this intriguing body of literature has focused soleiy on innovation led by individuals and organizalions lndeveloped countries, but little is known about innovalion driven by BoP actors. ln this article we argue that what has been

to date discovered about bottom-up innovation and niche developmeni in the weslern world could find rewardingapplication also in the context of the BoP. The concept of sustainable development has arisen in response to a widerange of unsustainable practices evolved in the 'developed' side of lhe globe. Eeing at the margin of lhe industrialized

system, we maintain that underdeveloped counlries offer the right conditions where fruitful, sustainable ideas can spring.Furlher, lhe motivations behind the efforts toward innovative solutions would appear to be even more robust with respectto individuals and communities at the BoP, Smith i2007) points at the will to meet social needs and the commitment toembody the "green ideologf as the major drivers for sustainability in grassroots level communities, though no distinction

has been made between communities in western countries and those acting at the BoP. When it comes t0 the main

drivers of sustainabie innovalion, indeed, the diflerences between the two contexts might be significant, ln the two cases

of GRI that will follow, for instance, whal led farmers to experiment novel ideas was lhe urgency to face poverty, hunger

and extreme climate conditions, ln such contexts, local knowledge has been leveraged by the community as the onlymeans to achieve better living conditions.

The two recent cases were chosen because they brought to light the immense potential of indigenous knowledge,thus attracting the attention of the global community, The protagonists of this stories, smallholders in Burkina Faso andlndia, have innovated the way cultivation had been traditionally conducted {or centuries in order to face drought andfamine. The outcomes achieved, however, have gone far beyond anyone's expectations.

The Method Zal, an innovative tree-farrning approach, owes its success to the pioneering creative insight of Mr.

Yacouba Sawadogos, a smallholder living in the remote village of Goura, Burkina Faso, Located in the semi-arid Sahel

Belt and bordering the Sahara desert to the north and the Sudanian Savannas to the south, the Yatenga region suffersfrom periodical rainless periods. Afler the massive drought of the 1980s, the rapid desertification of the once fertile plains

forced the majority of the local population to migrate in search of more productlve lands, Though, rather than abandoninghis family+wned piece of land, Mr. Sawadogo brought to new light an encienl farming method local farmers had utilizedfor centuries, adapting it to the new climate condilions he had to face. Prior to Mr, Sawadogo's adaptation, Sahelianfarmers had in fact long practiced the technique to dig holes (zal in the local language) so as to concentrate rainfall ontolhe roots of crops, Sawadogo's insighl consisted of making larger pits in order 1o capture more rainfall and adding manure

to the eai during the dry season. As a result, tree seeds in the manure germinated amid his rows of millet and sorghum

thereby increasing soil fertility (by retaining moisture) and shielding crops from ovenuhelming heat and wind. 0ver aperiod of more than two decades, Mr. Sawadogo's efforts allowed him to create a lorested area of approximately fiftyacres, Technically known as "agro-forestry' or 'farmer managed naturai regene{alron" (FMNR), the innovation has

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akeady been spread in vast portions of Eurkrna F*c a*d neighbouring Niger and Mali. Remarkably, according to The

Nalion: 'Ihe transformation has been so peryasirs lf:at the new greenery is vkible frcm outer space via satellite pictures'

(Hertsgaard, 2009). Local farmers are thus sucreeding where government agencies, NGOs and development-project

planners have always failed: winning the fight against desertification'

Bottom-up innovation is often trlggered by desperate living conditions, Mr. Sawadogo's achievement has to do with

his unwillingness lo surrender to the desertification of his land and be forced to leave his muntry. Therefore, when it

cgmes to fighling massive challenges such as poverty, drought and famine GRI might not surprisingly hold the key to

success, tnlndia, the spreading of an organic, fully sustainable and ultra-productive crop cultivation method developed by

farmers at the BoP for bxampli, promises to dramatically increment rural farmers yields whilst, at the same time, oflering

a concrete solution to the feeding of a fastgrowing wortd population. Originally devised in the early 80's by the French

Jesuit and agronomist engineer ilenri de Laulanie in tandem wilh Malagasy farmers, the Syslem of Rice lntensificatian

(SRl) was br6ught to AsiJin later 1990s by Norman Uphoff, an American scientist and professor, After a slow beginning

itrat iasteO mori tnan 20 years, the oulcome of the implernentation of this altemative farming now seems mhaculous.

Since 2@1, the Darveshfura village in the Nalanda district ha$ been renamed "the miracles vrllage": yield production

world records are being broken one after the other in lhis remole village of one of the lndian's poorest states. ln the

beginning was iust abolt rice, with an outstanding result of 22.4 tonnes of rice produced on one hectare of land attained

Oyine nca hero Mr, Sumant Kumar. Few months bter, similar astonishing yield performances had been achieved by

pitatoes and wheat growers. The reason for that impressive outcome is SRI which, as described by The Guardian,

consists in: -rnsfead of ptanting three-weekqld ice seedlings in clumps of three or faur in waterlogged fields, as rice

{arrners around the world tradiionatly do, lhe Darveshpura faffners carefully nufture only half as many seeds, and then

transplant the young plants into fields, one by one, when much younger. Additionally, they space them at Z1cm_intands

tn a grid pattein, keep the sorl much drier and carefully weed around the plants to allow ai la thek roots' (Vidal, 2013).- By leveraging this revolutionary crop intensification system, farmers end up using less water, seeds and chemicals.

W1h no harmfui iripact on the enviionment and no additional investmeni required, cultivators in the Nalanda district

egion have been able to increase their yields up to 45% on ayerage. Presently, it has been estimated that approximalely

4-5 million farmers are utilizing SRI woildwide, with goyernments in China, lndia, lndonesia, Cambodia, Sri Lanka and

"Jletnam sponsoring il. ln lighiof recent events, SRI has the potential to become-what in the business environrnent is

.inown as a 'lisruittve innovation'(Christensen, Baumann, Ruggles & Sadtler, 2006; Schumpeter, 1942). As Uphoff

;i99g) also suggeited, if SRI proves to be surcessfully scalable, industrial agricultural practices worldwide would likely

:ave io be re*-oirceived and brought back to their biological roots. Over the last decades, agribusiness corporations have

ianowly focused their efforts on 6nhancing crop yields by utilizing ferlilizers and chemicals while guiltily forgetting about

:rops management. So did not farmers at the BoP, apparently' The tio cases presented here offer clear and convincing proof of the great potential impact GRI can have al lhe

Eop in overcoming some of the world's most urgenl needs. According lo this view, traditional knowledge in indigenous

s€ttings can thereiore represent the springboard for that type of innovation that has.the potential of redirecting socio-

:*onjmic development iowards a more sustainable and greener future for all of humanity {Figure 3),

figure 3. A reinterpreted role of the BoP

i. Conclusions

-.e old inclusive capitalism of 'sel/lng to the poor',without invoiving them in a value co-creation process, just ends wilh a

".$porary improvement of the poor c-onditions, but it keeps them at a perpetual dependence from the Western world. The

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main potential of the BoP is not so much represented by its purchasing power, but rather the embedded entrepreneurial

spirit and capability. According to this logic, we consider the BoP a rich source 0f innovation and opportunity lhat needs to

be nurtured rather than exploited.

Several cases of GRI at the BoP have recently captured the attention of the global community. The cases provided

by the authors offer indeed clear evidence of the fact that rural praclices in underdeveloped countries hold a latent

potential to benefit the entire world and nol ,iust to solve local problems, For centuries, rural communities in Asia, Africa

and South America have nurtured a kind of knowledge the western world seems to have lost due to the fostering of the

kind of specialization that has progressiveiy isolated biologists into separale camps - experts 0n soil structure versus

plant nutrition - causing disastrous effects for the humus, critical ingredient of the nitrogen cycle. The natural tendency 0f

the modern society (and therefore MNCs) to think of only one thing at a time is a chief reason why we have failed to

understand the environment on countless occasions and are 0n the brink of destroying it.

As in lhe case of agribusiness, the same principles of identifying lraditional knowledge and applying lt on a large

scale - in place of existing harmful business practices - can be valid ior many other industries. This has to be empirically

further explored, A second consideration that we hope will lead to future research is related to lhe acknowledgment that

everything on Earth (and beyond) is interconnected. Keeping things simple, the four geochemical cycles critical lor life -nitrogen, water, carbon, and oxygen - are governed by lhe laws of nature according to which 'everything is connected to

everything e/se'and "everything must go somewhere". As a result of these assertions, what happens at the BoP will

eventually impact the way of liie of those in developed counlries and vice versa, hence we can no longer think of us' and

'them'; a new understanding of 'globalization' needs to emerge and be recognized by society at large.

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