Who stick their necks out: A behavioural explanation of Multinational Enterprises’(MNEs) entry into the Base of the Pyramid (BoP) markets?

By Sarada Devi Gadepalli, Aneesh Banerjee, Sougata Ray

Citation

Gadepalli, Sarada Devi., Banerjee, Aneesh., Ray, Sougata. (2023). Who stick their necks out: A behavioural explanation of Multinational Enterprises’(MNEs) entry into the Base of the Pyramid (BoP) markets? .

2023

Abstract

Research indicates that the Covid-19 pandemic can nullify decades’ worth of progress made on several developmental objectives including poverty alleviation. For the first time since the 2008 financial crisis, the GINI coefficient: an index for income inequality, worsened by 6 percent for developing countries and another 70 million people are likely to be pushed into extreme poverty. This impending developmental crisis, calls for renewed research and managerial focus on market-based approaches to poverty alleviation. Building on prior research, we argue that the decision of Multinational Enterprises (MNEs) to enter Base of the Pyramid (BoP) markets can have positive externalities for development and poverty alleviation. But only a small number of MNEs are able to overcome several external and internal challenges associated with BoP markets. Using a behavioural lens, we propose and highlight the importance of internally generated resources in facilitating innovations and BoP market entry. While constraints due to structures and processes remain, slack resources allows room for experimentation and even bypass some of these processes and demonstrate the power of the ideas, before formally following the structured innovation and entry processes. We empirically test this explanation with a unique dataset of innovations and BoP market entry. We conclude by drawing insights for research in BoP markets as well as managers and policymakers to incentivise MNEs to participate in regional development.

Sougata Ray is a Professor of Strategy and Entrepreneurship (Practice), Thomas Schmidheiny Chair Professor, and Executive Director of the Thomas Schmidheiny Centre for Family Enterprise, at the Indian School of Business (ISB). Earlier, he served at the Indian Institute of Management Calcutta for over two decades as a Professor of Strategic Management, a member of the Board of Governors, and Dean. He was also a senior-level executive at Infosys Technologies Limited for two years in a strategic role as Head of innovation Lab. He is an alumnus of Indian Institute of Management, Ahmedabad and the Indian Institute of Engineering, Science and Technology, Shibpur.

Professor Ray’s research interests have evolved over the years in understanding various facets of strategic management, entrepreneurship, innovation and the governance of firms and business groups in high-growth economies. Given the ubiquity of family firms in India and observing how family owners and leaders play a pivotal role in shaping the future of enterprises, he was gradually drawn into family business research. In recent years, under the aegis of the Thomas Schmidheiny Centre for Family Enterprise, he has been spearheading a mega programme towards developing a solid research-based understanding of family firms and business groups in India and South Asia. He has also been leading a research programme in the areas of social entrepreneurship, corporate sustainability strategy and practices, bottom-of-the-pyramid initiatives, and involvement of corporations in inclusive and sustainable development.

Professor Ray is one of the most prolific and cited home-grown strategy scholars in India. He has been publishing regularly in reputed scholarly journals and presenting in leading peer-reviewed international conferences. He has received over half a million dollars in research grants, several prestigious research and teaching awards, and numerous award nominations.

He blends over three decades of experiences in diverse roles – as an international-quality academic, research, and institution builder, alongside hands-on corporate managerial and governance roles as an executive, member of the Board of Directors, and co-founder of startups.. He has been an advisor to numerous medium and large corporations, family businesses, and startups, and he has served as Principal Consultant to leading international development agencies. He currently sits on the governing and advisory boards of several listed and unlisted companies, startups, and social enterprises.

Professor Ray has taught in numerous executive education programmes and has designed and conducted many workshops exclusively for owner-managers, entrepreneurs, and C-level executives of companies in India, Asia, Middle East, Nordic and Scandinavian countries. Over the years, he has led over thirty C- level executive delegations to countries on every continent for high-level meetings with the ministers, high-ranking officials, multilateral agencies such as the WTO and ILO, Chambers of Commerce, MNCs, industrial organisations, research labs, and academic institutions.

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Sougata Ray