Advancing the ‘Base of the Pyramid’ Debate

This paper offers a critical analysis of the vision put forth in The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (Prahalad, 2005) which claims that the suggested strategies will result in profits for multinational corporations while simultaneously alleviating global poverty. C.K. Prahalad’s (2005) book, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, has been gaining much attention. Dr. Prahalad’s vision “is the co-creation of a solution to the problem of poverty” and that “entrepreneurship on a massive scale is the key” (p. 2). Prahalad outlines a plan for how private enterprise, government, non-governmental organizations, and the poor can work collaboratively toward economic development and social transformation. Prahalad’s vision outlines a need for free and transparent private-sector competition which will reduce corruption, a challenge to our current logic and assumptions regarding the base of the pyramid (BOP) and emerging economies, and the need for transition to a market-based economy in emerging economies. His vision also requires the BOP be viewed as a growth opportunity and as a source of innovation in products, services, organization and governance, technology, and business models for the private sector. Furthermore, his vision states that the BOP must become an integral part of the work of the private sector – part of their core business, and that collaboration between private, government, NGO, poor consumer is necessary. Prahalad then provides twelve principles for innovation which are necessary to operate within the BOP. As a result, Prahalad concludes that BOP consumers will have increased engagement in the global economy, increased dignity and self-esteem, reduced poverty, and “that a 10 to 200 times advantage (compared to the cost structures that are oriented to the top of the pyramid markets) is possible if firms innovate from the BOP up” (Prahalad, 2005, p. 9). This vision, the required actions, and the resulting outcomes are based upon the notion that “the BOP market also represents a major engine of growth and global trade” (p.10). The number of individuals living in poverty globally (less than $2 per day), according to Prahalad, is estimated to be 4-5 billion; this is the population referred to as the bottom or base of the pyramid (BOP). He advocates that corporations find innovative ways to tap into this neglected bottom of the pyramid market to increase their profits while simultaneously eradicating world poverty. Prahalad’s vision (and work by colleague Stuart Hart) has spawned enormous interest in base of the pyramid markets as evidenced by the creation of centers and/or projects at Cornell University, Illinois Institute of Technology, the University of Michigan, the BoP e-journal, several conferences, numerous media articles, BOP initiatives by corporations, and renewed interest by industries, such as banking and technology. Amazon.com, Fast Company, the Economist, and Barnes & Noble, all listed Prahalad’s publication among their best selling business books. This growing interest in the bottom of the pyramid cannot be denied and Prahalad has received much credit for popularizing this invisible market. Prahalad is to be commended for the very creative solutions and strategies he highlights for competing in emerging markets. This knowledge challenges corporations