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Strategic motivations and choice in subsistence markets

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  • Elaydi, Raed
  • Harrison, Charles

Abstract

This paper examines the different motivations behind strategic choice in base of the pyramid or subsistence markets. Two strategies are examined through comparative analysis: market extension and strategic intent. Using two commercial bank's micro-lending business strategies in Sri Lanka, a comparative case study suggests that strategic intent is motivated by building capabilities over time that results in successful poverty alleviation, whereas market expansion is motivated by an immediate desire to expand overall sales revenue. This conclusion may help reframe subsistence market or BoP arguments away from such false choices as appropriate size (e.g., multinational corporations versus small and medium size enterprises) toward more useful discussion on understanding why firms participate in subsistence markets and what is the motivation behind their strategic choice. By considering more than just size and scope and studying the motivations behind long-term solutions to poverty alleviation, firm success can be better understood and achieved.

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  • Elaydi, Raed & Harrison, Charles, 2010. "Strategic motivations and choice in subsistence markets," Journal of Business Research, Elsevier, vol. 63(6), pages 651-655, June.
    • Handle: RePEc:eee:jbrese:v:63:y:2010:i:6:p:651-655
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    References listed on IDEAS

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    1. Gallardo, J.S. & Randhawa, B.K. & Sacay, O.J., 1997. "A Commercial Bank's Microfinance Program: The Case of Hatton National Bank in Sri Lanka," World Bank - Discussion Papers 369, World Bank.
    2. Ted London & Stuart L Hart, 2004. "Reinventing strategies for emerging markets: beyond the transnational model," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(5), pages 350-370, September.
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    Cited by:

    1. N’Guessan, Marie Noëlle & Hartarska, Valentina, 2021. "Funding for BOP in Emerging Markets: Organizational Forms and Capital Structures of Microfinance Institutions," Research in International Business and Finance, Elsevier, vol. 58(C).
    2. Carlos M. Jardon & Xavier Martinez-Cobas, 2022. "Leadership and Marketing Capabilities in Small Businesses of Subsistence Marketplaces," SAGE Open, , vol. 12(2), pages 21582440221, April.
    3. Umawadee Detthamrong & Lan Thi Nguyen & Wirapong Chansanam, 2023. "Leadership and Group Management: Key Success Factors for Microfinance Institutions in Chaiyaphum Province, Thailand," Sustainability, MDPI, vol. 15(14), pages 1-20, July.
    4. Pooja Goel & Nitika Sharma & Raiswa Saha, 2024. "Consumption Behaviour of Poor Consumers: A Bibliometric and Content Analysis," FIIB Business Review, , vol. 13(3), pages 304-317, May.
    5. Aman, Sadaf & Seuring, Stefan, 2022. "Interestingly it's innovation: Reviewing sustainability performance management in the base of the pyramid (BoP)," Technovation, Elsevier, vol. 112(C).
    6. Yan Yuan & Toshiyuki Sueyoshi, 2017. "Effects of balance transfer offers on consumer short-term finance: evidence from credit card data," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 6(1), pages 1-30, December.
    7. Raja Usman Khalid & Stefan Seuring, 2019. "Analyzing Base-of-the-Pyramid Research from a (Sustainable) Supply Chain Perspective," Journal of Business Ethics, Springer, vol. 155(3), pages 663-686, March.
    8. Elaydi, Raed & McLaughlin, Josetta, 2012. "Cultivating terroir in subsistence markets: Development of terroir strategy through harmony-with-community framework," Journal of Business Research, Elsevier, vol. 65(12), pages 1743-1748.
    9. Cristián Pinto, 2015. "The Effect of Labor Market Flexibility on Microfinance Institutions Performance: International Evidence," Serie Working Papers 21, Universidad del Desarrollo, School of Business and Economics.
    10. Mariadoss, Babu John & Johnson, Jean L. & Martin, Kelly D., 2014. "Strategic intent and performance: The role of resource allocation decisions," Journal of Business Research, Elsevier, vol. 67(11), pages 2393-2402.
    11. Hahn, Rüdiger & Gold, Stefan, 2014. "Resources and governance in “base of the pyramid”-partnerships: Assessing collaborations between businesses and non-business actors," Journal of Business Research, Elsevier, vol. 67(7), pages 1321-1333.
    12. Simon Joncourt & Heiko Gebauer & Javier Reynoso & Karla Cabrera & Ana Valdes & Katharina Greve, 2019. "Extending the Base-of-the-Pyramid Concept," Service Science, INFORMS, vol. 11(3), pages 241-261, October.
    13. Avinash G. Mulky, 2011. "Marketing to the Bottom of the Pyramid and subsistence markets - A research agenda," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 59(2), pages 9-14.

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