Building the BoP Producer Ecosystem: The Evolving Engagement of Fabindia with Indian Handloom Artisans

Recent research on the base of the pyramid (BoP) has called on firms to initiate market‐driven interventions directed at the BoP population with the objective of identifying and pursuing mutually profitable means of attaining meaningful poverty alleviation outcomes. In response, firms as well as scholars have engaged at length with the creation of new products and services for the BoP consumer but paid far less attention to the BoP producer—a member of the BoP population who creates value by producing goods and services for sale in nonlocal markets. Additionally, extant studies have largely focused on snapshot views of BoP interventions by firms, thereby limiting our understanding of the emergence of meaningful poverty‐alleviating outcomes over time from these interventions. This paper seeks to redirect attention toward the dynamic of the long‐term engagement between the firm and the BoP producer. Using rich qualitative data from Fabindia—an Indian handloom retailer—this paper examines how the engagement between Fabindia and communities of handloom artisans in India has persisted over a period of five decades. We found that, even as it encountered changes in the external environment and pursued newer organizational goals, Fabindia repeatedly renewed its engagement with handloom artisans and facilitated progression in poverty‐alleviation outcomes. Building on the insights from the case study, this paper presents a process model that highlights the role of innovative management practices in sustaining engagements between firms and BoP producers over time. Additionally, this paper proposes the concept of the “bridging enterprise”—a business enterprise that originates at the intersection of specific BoP communities and the corresponding nonlocal markets—as an interpreter and innovator reconciling the interests of stakeholders across the pyramid.     

The sites and practices of business models

This paper examines the concept of business models. Drawing on the business model literature, we first identify technology, market offering and network architecture as the three core elements of business models. The theoretical routes of each element are then examined through the associated literatures: technology and innovation studies, industrial marketing, operations strategy, and evolutionary economics. Multiple dimensions of each element are identified and the resultant framework is used to explore developments within the recorded music market across three centuries.Through changes in the recorded music market since the 1870s, we explore how business models emerged, took on multiple sites and evolved through their practice over time. We look at how interlinking business models become spread out across the business network as different network actors play their part. The recorded music market generates important insights into how business models are created, developed and practiced. We suggest that firms, business networks and markets form embedded systems within which multiple overlapping business models can be considered as constituent parts. In this way, the business model is understood as having agency to shape action; but in turn actions (of others in the business network as well as within the firms themselves) also shape the business model.     

Supporting product innovativeness and customer value at the bottom of the pyramid through context-specific capabilities and social ties

Local firms operating in bottom of the pyramid (BoP) markets face significant challenges in managing their innovation practices and creating value for customers. Operating in resource-constrained environments, local BoP firms need to behave as bricoleurs, deploy capabilities that help creatively combine and leverage their limited available resources to innovate and create value for customers. Employing the capability-based view (CBV) of the firm and social capital theory (SCT), we develop a research model to explain the extent that local BoP manufacturers use bricolage to develop innovative products that create value for BoP customers. Analysis of data obtained from 150 local BoP manufacturing firms (three managers in each firm) and two of their major customer firms shows that the relationship between bricolage and product innovativeness is more complex than previously understood. Results show that the curvilinear relationship is attenuated differently by social ties with government versus ties with civil society organizations. Furthermore, findings also support the contingency role of BoP firms' marketing capabilities in translating product innovativeness into customer value in BoP markets. These findings present specific implications for scholars and practitioners interested in BoP markets.     

The evolution of base of the pyramid approaches and the role of multinational and domestic business ventures: Value-commitment and profit-making perspectives

Anchored in the current controversy around the role of multinational enterprises (MNEs) in promoting base of the pyramid (BoP) initiatives in developing nations, this paper analyzes the evolution and changes in BoP approaches associated with the roles of MNEs and domestic business ventures at the BoP, applying both value-commitment and profit-making theoretical lenses. Despite the practical importance of BoP initiatives and the special role assigned to the MNEs involved, the literature shows a lack of established theoretical knowledge on the topic. This paper presents a review of the existing research on management studies, industrial marketing, strategies and related disciplines, and offers three main contributions. First, it provides a categorization of the literature into four approaches to BoP: 1.0 – ‘finding fortune’ at BoP; 2.0 – ‘creating fortune’ at BoP; 3.0 – ‘sharing fortune’ with BoP; and 4.0 – ‘enabling fortune’ with BoP. Second, it analyzes each of these BoP approaches by applying value-commitment and profit-making theoretical lenses, highlighting a persistent interactive tension between these perspectives and synthesizing the results into an integrative framework. Third, it offers a comprehensive agenda for future research and elaborates on the implications for business-to-business (B2B) research.     

Exploring the role of spatial relationships to transform knowledge in a business idea — Beyond a geographic proximity

The “space” dimension has characterized the aggregation of firms, ranging from industrial districts to clusters. Within a local system, as emphasized by the Triple Helix model (Etzkowitz & Leydesdorff, 2000), universities, firms, and public institutions generate synergies by producing and exploiting technological knowledge. From this perspective, local relationships become synonymous with spatial relationships characterized by geographic proximity. However, is it possible to find different dimensions of proximity influencing spatial relationships in order to support innovation? This paper demonstrates that different proximity dimensions influence firms' boundaries and the development of spatial relationships through which actors interact to develop resource combinations identified in innovation. After a review of the these topics, the paper provides findings related to the spatial relationships developed by Petroceramics as a hosted spin-off of the Italian Technological Pole (POINT) as well as its subsequent relocation to the Kilometro Rosso Science Park. As such, this paper deals with how technological knowledge is transformed into a business idea through spatial relationships based on different dimensions of proximity.     

Industrial internet of things business models in the machine-to-machine context

This study analyzes Industrial Internet of Things (IIoT) business models in the machine-to-machine (M2M) context. Thereby, it develops a conceptual framework to categorize different types of business model innovation for companies operating in the M2M business space. Business model innovations tend to cross multiple industries and drive ecosystems in which smart objects facilitate business models and service applications that are incrementally or radically novel in terms of their modularity or architecture. Our framework identifies four distinct types of IIoT business models: (I) Company-specific business models, (II) Systemic business models, (III) Value designs, and (IV) Systemic value designs. Moreover, it sheds light on different abstraction levels of business model building blocks and exposes the characteristics and differences in the value potential between the four business models. Finally, we advance the idea of ‘value design’ referring to business models of multiple actors coupled together, ultimately resulting in complex networks and ecosystems of diverse things, processes, and companies.     

Processes of business model evolution through the mechanism of anticipation and realisation of value

This study applies a process approach to analyse the evolution of a business model in a network environment. The business model provides a context in which to observe change processes arising through interactions amongst network actors. Based on a systematic search of the literature, the study proposes six processes by which business models evolve, motivated by the causal mechanism of value anticipation/realisation. We argue that actors' anticipations and realisations of value, arising continuously through repeated interactions, motivate changes in their interactions, which cause their interlinked business models to evolve over time. We explain the connection between the evolving business model and value in a way that accommodates interactive and time dimensions of value. The process explanation is demonstrated with empirical evidence from the longitudinal case history of an IT company. What appear to be discontinuous phases in the history of the focal firm's business model are shown to be causally connected by continuous event sequences. The study contributes to process methods by providing a worked example of a strong process explanation applied to a network business phenomenon.     

Strategy over the business cycle

This article develops an analytical and empirical framework for examining strategy over the business cycle. Firms were observed to adjust their strategies significantly and asymmetrically over business cycle stages. There was no consistency in performance between up markets and down markets. A variable-parameter profitability model of strategy in a cyclical industry suggested the importance of a strategy's contemporaneous and inter-temporal relationships with performance. Discrepancies were observed between actual strategies and optimal strategies over business cycle stages.     

The personal touch of business relationship: A study of the determinants and impact of business friendship

Business friendship refers to the integration of “business” dealings and personal “friendship” that permeates many markets. As relationship marketing and customer relationship management become increasingly prevalent practices, business friendship as a fundamental element embedded in business relationships needs to be better understood. This paper studies how business friendship is formed and its impact on key marketing outcomes. We propose that business friendship is driven by three factors spanning business and personal domains—congeniality, rule adherence and business reputation. Our empirical analysis is based on survey and actual sales data from 263 client firms of a leading provider of business intelligence and strategic planning services. The results show the three factors contribute significantly to business friendship. We find that business friendship between the client and the supplier significantly impacts the sales to the client, and this impact is further moderated by how the two parties share responsibilities in achieving common goals. In addition, we show that business friendship induces one party to accommodate and cooperate with the other (i.e., compliance), and to engage in positive word-of-mouth. The framework and findings shed lights on how companies may influence (and be influenced by) business friendship as they increasingly emphasize long-term business relationships.     

Temporality of resource adjustments in business networks during severe economic recession

Business cycles are not a new phenomenon. Firms have in the past found ways to, more or less successfully, adjust their resources to such cyclical changes. However, the combination of a global crisis in financial markets and a severe down turn in demand on globally interdependent markets in the “real” economy is unprecedented which suggests that established business practices to handle cyclical variations are challenged. In this article we focus on temporal aspects of resource adjustments, taking into account also network interdependencies in contemporary markets. We develop a conceptual framework towards understanding how business actors construct temporality of resource adjustment activities. We relate temporal orientation of actors to temporal profiles of activities, seeing them as both influenced by actors' network orientation.     

Investigating the implications of business and culture on the behaviour of customers of international firms

For many years international firms have been leveraging from the consistent growth rate of the Indian economy and, considering forecasts, will continue to do so in the future. This study identifies factors that influence the behaviour of business customers of international firms in emerging markets such as India. Based on the extant literature and in-depth personal interviews with practitioners, combined with a field survey, the authors have tried to understand the impact these factors have on the behaviour of business customers of international firms. The data were useful for testing the model developed using regression analysis and were found to be significant. The model demonstrates that the behaviour of local firms as customers of international firms in emerging markets is governed by factors such as business risk and a propensity to business sustainability. The model will be useful for international firms who wish to operate in emerging markets through local business firms that seek to associate with international firms.     

A solution business model: Capabilities and management practices for integrated solutions

The developed solution business model framework assists firms wishing to design solution business models by categorizing capabilities and management practices necessary for the effective management of such a business model. The developed framework integrates findings from a wide variety of research streams with the empirical data collected in an abductive research process, involving ten firms with multi-national operations. The framework consist of a solution process with four phases (develop solutions, create demand, sell solution, and deliver solution) and three groups of cross-functionality issues (commercialization, industrialization, and solution platform). The framework identifies twelve capability categories, and sixty-four capabilities and management practices pertinent to the effective management of solution business. The research points to the importance of cross-functional alignment within firms. An effective solution business model requires the intricate coordination of resources and business processes across all functions.     

Up-grading and performance: the role of design, technology and business strategy in Hong Kong's electronics industry

This study tests the hypothesis that companies who move away from the traditional Hong Kong business model by adopting ‘up-grading’ strategies enjoy superior performance. A set of 14 variables is used to capture the dimensions of strategy, encompassing the business, technology and design domains. The results of both comparative and configurational approaches show that there are indeed performance benefits to be had. The broader implication is that Hong Kong manufacturing firms are beginning to escape the ‘iron fetters’ of a business model originally imposed on them by both material and ideational constraints, and to reap performance benefits as a result.Howard Davies is an Associate Dean in the Faculty of Business at the Hong Kong Polytechnic University. David Ko completed his DBA thesis under Prof. Davies's supervision.     

Pathways for knowledge exchange in SMEs in software-driven knowledge-intensive business services

This paper presents pathways for knowledge exchange as regards innovation in R&D-active SMEs in software-driven knowledge-intensive business services in a capital city environment. A semistructured qualitative analysis focusing at social capital enablers for knowledge exchange reveals that interpersonal social proximity is the primary driver for knowledge exchange. Structural enablers for knowledge exchange include accessibility for clients, geographical proximity to research partners, temporary places for formal and informal meetings, specialization and diversification in terms of human resources skills, and informal interpersonal networks. Market and government-related goals, access to public funding and possibilities for lobbying, as well as openness to a multicultural environment, are all underlying cognitive factors. Relational social capital dimensions include organized trust in terms of neutral ground, goodwill trust-based interpersonal weak ties, and mutually embedded businesses and processes with institutions.     

Practice theory and the study of interaction in business relationships: Some methodological implications

Research on customer–supplier relationships in business markets has evidenced the centrality of interaction processes. However, while several studies examine interaction processes and their consequences in relation to the resource and activity layers of business relationships, the actor layer has not attracted the same attention. This raises the question: how adequate are our methodological approaches for investigating interaction processes in business networks? In this paper, we examine how practice-based approaches, with their preference for ethnography and techniques such as multi-site observations and analytical interviewing and treating actors as emergent entities, can help orient the research on business interaction. We argue that some of the themes emerging in practice-based approaches, applied to studies of interaction in business networks, could yield a better understanding of the dynamics of organizing across organizational boundaries. We conclude that research on interaction in business relationships would benefit from (1) zooming in and zooming out of multiple sites of interaction to better understand interaction processes and the role of controversies and interdependences among the different interacting roles; (2) including fluid multiple roles in business relationships that treat actors as emergent entities and transcend the ‘fixed’ conceptualization of two actor levels – individual and organizational; and (3) paying major attention to the reproduction of interaction practices and the role of materiality that permit relationships to be temporarily stabilized.     

Marketing's contribution to the implementation of business strategy: an empirical analysis

This paper describes a study that assesses the performance implications of matching marketing strategy to business strategy. In order to conduct this study we first reviewed the literature on marketing strategy to identify its key dimensions. We then conducted a survey of 1000 senior marketing executives about the strategic marketing practices adopted in their respective firms or business units, and developed scales to describe 11 strategic marketing activities. We next performed a K‐means cluster analysis using these scales to develop a taxonomy of marketing strategy types consisting of: Aggressive Marketers, Mass Marketers, Marketing Minimizers, and Value Marketers. We then observed that superior performance at the firm or SBU level was achieved when specific marketing strategy types were matched with appropriate Miles and Snow (1978) business strategy types. Copyright © 2001 John Wiley & Sons, Ltd.     

Service innovation of cold chain logistics service providers: A multiple-case study in China

This exploratory study investigates how cold chain logistics service providers (LSPs) in emerging markets gain competitive advantage through service innovation, and how state ownership and regulatory pressure influence their innovation practices. By applying a multiple-case study research design, this study examines service innovation in four leading cold chain LSPs in China. For each case, specific service innovation practices are documented and coded according to the service innovation framework adapted from previous research. The results show that service innovation is indeed important impetus for cold chain LSPs' superior competitiveness, even though previous research suggested that firms in this industry are not as innovative as others. Cold chain LSPs in emerging markets tend to innovate in providing new value-added and differential service offerings to specific customers, industries or regions. Cross-case analysis also reveals that high state-owned share and regulatory pressure may limit LSPs' capability for investing service innovation and developing novel business models.     

Normative Models and Practical Applications of Segmentation in Business Markets

This article attempts to add to the debate surrounding the application of existing normative and rational segmentation models within a business environment. The main theme of the research stems from current concern over the apparent gap between academic research that, until very recently, has followed normative and rational pathways and actual business practices of business segmentation. More specifically, we provide an empirical investigation into the extent that segmentation is applied within the UK pharmaceutical sector, and the bases employed at different stage of the process. The findings support current research that indicates that business markets are becoming increasingly sophisticated in the way that they apply segmentation practices. Furthermore, the results indicate that the adopted approaches are, to a large extent, consistent with normative models proposed by academics.     

Conceptualizing business models in industrial networks

This paper is concerned with business model conceptualizations and outlines a framework for their analysis in industrial networks. A literature review suggests that there is a broad range of current conceptualizations of business models. Analyzing them as they pertain to interaction, business relationships, and industrial networks reveals two main explanations for their differences: first, they clearly rely on different basic theoretical assumptions, and second, they seem to address two types of business models. We refer to these as firm-centric and network-embedded business models. Based on this distinction, a scheme of analysis at the levels of the firm, relationship and network is suggested for the two types of business models. Business models are challenging from an analytical as well as managerial perspective. Further research on emerging network-embedded business models is suggested.