cooperation issues in developing the bop market - amcis

Cooperation issues in developing the BOP market

Kobus SmitAnand SheombarGilbert Silvius

Utrecht University of Applied ScienceThe Netherlands

6,776,034,371

World population

60

Bottom of the Pyramid

Bottom of the Pyramid

5,000,000,000,000

Estimated BOP market

The BOP & ICT Research Project

How can Multinational Information and Communication Technology companies (ICT MNCs) gain benefit from entering the Bottom of the Pyramid (BoP) market in a commercial successful and sustainable way?

And what could be the opportunities in the BoP market for multinational ICT companies?

Why BoP as a Market?

better meet their needs

increase their productivity and incomes

empower their entry into the formal economy

A Mindshift …

… also in Business

BOP 1.0 BOP 2.0 BOP as consumer Deep listening Reduce price points Redesign packaging, extend distribution Arm’s length relationships mediated by NGOs

BOP as business partner Deep dialogue

Expand imagination Marry capabilities, build shared commitment

Direct, personal relationships facilitated by NGOs “Selling to the Poor” “Business Co-Venturing”

Table 1: First Generation BOP Strategy compared with the new BOP (2.0) strategy (Hart et al., 2008)

Three elements...

Research Questions

What are the difficulties that ICT MNCsexperience in their cooperation with partners in their efforts to reach the BOP market;

And more specifically, how could these observed issues be categorized

Local

for-profit

organisationLocal

Non-profit

organisation

MNC

ICT

“an association between two or more persons, groups, or

organizations who join togetherto achieve a common goal that

neither one alone can accomplish”

(Mullinix, 2002:78)

Partnerships are…

Partnerships are…

Important

Have some advantages

Need to be managed

The Research – 10 Cases

10 Cases M-Pesa Village Phone in Uganda Village Connection Unlimited Potential Public-private partnerships - Tapping into innovation Public-private partnerships - ICT & media i-Community in South Africa World ahead (e.g. Classmate PC) Digital Bridge Communication for all

The Research – Sources of Evidence

Interviews Archival records Documents

The Research - Analysis

USED basic analysis techniques of grounded theory

NOT develop grounded theory

Findings- Cooperation Issues

Driving force factors Skill factors Input-Output factors Socio-cultural factors Systems factors Trust factors

Driving Force Factors

Driving Force factors refers to problems that occur as a result of misaligned fundamental driving forces that shape the goals, purposes and process of ICT projects in developing countries, both from the perspective of the ICT MNC as well as that of local partners

Skills Factors

ICT MNCs tend to have unrealistic expectations about local skills and knowledge on a variety of topics ranging from IT skills and knowledge to managerial skills and knowledge.

Input-Output Factors

Input-Output factors refer to difficulties that may arise as a result of unequal investments by partners in projects, as well as unequal gains by partners from their projects.

Socio-cultural Factors

Difficulties related to social & cultural differences

System Factors

Difficulties relating to the integration of systems, as well as the eventual use thereof

Trust Factors

Includes issues related to expectation management as well as business desirability bias

Factors Examples of Relevant LiteratureDriving force factors

Different foci on results versus process (Kumar et al., 2005)Technocratic approach of MNCs (Chio, 2005)Over-emphasis on "top-down, closed access and 'expert' driven" research

(Gurstein, 2005)Bottom-up approach that builds on indigenous knowledge (Simanis et al.,

2008b) Failure to continuously monitor the relationship (Seelos and Mair, 2007)

Skill factors Becoming and staying aware of the variety of resources, e.g. Prahalad (2005), Simanis et al. (2008a) and Jenkins (2007)

Input-Output factors

Sustainable business (Prahalad, 2005, Simanis et al., 2008b)Business partnerships related to intellectual property and patents

(Matson, 2006)Socio-cultural factors

Social embeddedness (London and Hart, 2004)Culture shock (Oberg, 1960, Marx, 2001)U-curve theory e.g. Lysgaard and (Ward et al., 1998)

Systems factors Integration of systems (Butt et al., 2008)Trust factors Trust as a relevant factor (Das and Teng, 2001).

"Social desirability bias" (Randall et al., 1993)

The road ahead

Limitations Future research Recommendations