Mirage at the Bottom of the Pyramid

Poor people -- at the bottom of the pyramid (BOP) -- represent a very attractive market opportunity. The ‘BOP proposition’ argues that selling to the poor can simultaneously be profitable and help eradicate poverty. This is at best a harmless illusion and potentially a dangerous delusion. This paper shows that the BOP argument is riddled with fallacies, and proposes an alternative perspective on how the private sector can help alleviate poverty. Rather than focusing on the poor as consumers, we need to view the poor as producers. The only way to alleviate poverty is to raise the real income of the poor.http://deepblue.lib.umich.edu/bitstream/2027.42/57215/1/wp835 .pd

Corporate Social Responsibility Does Not Avert the Tragedy of the Commons - Case Study: Coca-Cola India

'Tragedy of the commons' is a powerful concept to analyze a variety of problems related to environmental sustainability. The commons problem can be solved if individuals behave altruistically. In the business context, this article studies the proposition that corporate social responsibility (CSR) can avert the tragedy of the commons by examining one case study in depth: Coca-Cola's bottling operations in Rajasthan, India. In spite of choosing a context favorable to the proposition, the results indicate that CSR does not avert the tragedy of the commons. To address the major environmental challenges, it is essential to develop regulatory regimes with appropriate incentives and ability to enforce sanctions.http://deepblue.lib.umich.edu/bitstream/2027.42/90509/1/1173_Karnani.pd

Dubious Value of International Acquisitions by Emerging Economy Firms: The Case of Indian Firms

This article addresses the question whether companies from emerging economies create shareholder value through foreign acquisitions. The popular business press usually views these foreign acquisitions very positively. The stock markets have often reacted negatively to the acquisitions. The management always claims that the acquisition is in the long term strategic interests of the firm. This article attempts to shed light on these conflicting positions: short term versus long term, and financial versus strategic logic. Using a mix of stock market reaction for a small sample and three in-depth case studies, I conclude that large foreign acquisitions from India have not created shareholder value. The causes of this under-performance are: too little integration, agency problems, and easy capital. Finally, I use a case study to illustrate a successful approach to foreign acquisitions: significant synergies, reasonable price, and deep integration.http://deepblue.lib.umich.edu/bitstream/2027.42/66465/1/1140_karnani.pd

Doing well by doing good—case study: ‘Fair & Lovely’ whitening cream

According to the ‘doing well by doing good’ proposition, firms have a corporate social responsibility to achieve some larger social goals, and can do so without a financial sacrifice. This research note empirically examines this proposition by studying in depth the case of ‘Fair & Lovely,’ a skin whitening cream marketed by Unilever in many countries in Asia and Africa, and, in particular, India. Fair & Lovely is indeed doing well; it is a profitable and fast-growing brand. It is, however, not doing good, and I demonstrate its negative implications for public welfare. I conclude with thoughts on how to reconcile this divergence between private profits and public welfare. Copyright © 2007 John Wiley & Sons, Ltd.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/57340/1/645_ftp.pd

Employment, not Microcredit, is the Solution

Most studies suggest that microcredit is beneficial but only to a limited extent. The problem lies not with microcredit but rather with microenterprises. With low skills, little capital and no scale economies, these businesses have low productivity and lead to meager earnings that cannot lift their owners out of poverty. Creating opportunities for steady employment at reasonable wages is the best way to take people out of poverty. The government is responsible for providing public services that are critical for increasing the productivity and the employability of the poor.http://deepblue.lib.umich.edu/bitstream/2027.42/49419/1/1065-Karnani.pd

Social Entrepreneurship: Beyond the Hype

While social entrepreneurship has been attracting increasing attention, it is not clear what it really is. I argue that the term ‘social entrepreneurship’ is too ambiguous to be useful. It is more appropriate to characterize a particular organization, be it public, for-profit or not-for-profit, by how entrepreneurial it is and how much social value it creates. This article discusses the distinct characteristics of the three types of organizations. I then argue that the boundaries between these three sectors are not getting blurred; more importantly, it is better to sustain these boundaries.http://deepblue.lib.umich.edu/bitstream/2027.42/69232/1/1142_karnani.pd

Better Vision for the Poor

About 500 million to 1 billion poor people in the world need eyeglasses but do not get them. Visual impairment is more than just a health problem; it has economic, educational, and public safety implications. In 2005, the French multinational Essilor launched a 'bottom of the pyramid' initiative to market eyeglasses to the Indian rural poor. VisionSpring was founded in 2001 as a social enterprise with the mission to provide affordable eyeglasses to the poor. Another approach to solving the vision problem emphasizes technological innovation to provide low-cost self-adjustable spectacles. None of these approaches has succeeded on a large enough scale so far. We propose an alternative solution that emphasizes dramatic cost reduction by utilizing ready-made eyeglasses, basic screening without a trained optometrist, economies of scale, piggyback distribution, and low overheads.http://deepblue.lib.umich.edu/bitstream/2027.42/65066/1/1137_Karnani.pd

Romanticising the poor harms the poor

A libertarian movement that emphasises free markets to reduce poverty has grown strong in recent years. It views the poor as ‘resilient and creative entrepreneurs and value-conscious consumers’. This romanticised view of the poor is far from the truth and harms the poor in two ways. First, it results in too little emphasis on legal, regulatory and social mechanisms to protect the poor who are vulnerable consumers. Second, it results in overemphasis on microcredit and under-emphasis on fostering modern enterprises that would provide employment opportunities for the poor. More importantly, the libertarian proposition grossly under-emphasises the critical role and responsibility of the state for poverty reduction. Copyright © 2008 John Wiley & Sons, Ltd.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/61445/1/1491_ftp.pd

Romanticizing the Poor Harms the Poor

A libertarian movement that emphasizes free markets to reduce poverty has grown strong in recent years. It views the poor as “resilient and creative entrepreneurs and value-conscious consumers”. This romanticized view of the poor is far from the truth and harms the poor in two ways. First, it results in too little emphasis on legal, regulatory, and social mechanisms to protect the poor who are vulnerable consumers. Second, it results in overemphasis on microcredit and under-emphasis on fostering modern enterprises that would provide employment opportunities for the poor. More importantly, the libertarian proposition grossly under-emphasizes the critical role and responsibility of the state for poverty reduction.http://deepblue.lib.umich.edu/bitstream/2027.42/55470/4/1096-karnani_update.pdfhttp://deepblue.lib.umich.edu/bitstream/2027.42/55470/1/1096-Karnani.pd

How the private sector can help alleviate poverty

Poor people – at the bottom of the pyramid (BOP) – represent a very attractive market opportunity. The ‘BOP proposition’ argues that selling to the poor can simultaneously be profitable and help eradicate poverty. This is at best a harmless illusion and potentially a dangerous delusion. This paper shows that the BOP argument is riddled with fallacies, and proposes an alternative perspective on how the private sector can help alleviate poverty. Rather than focusing on the poor as consumers, we need to view the poor as producers. The only way to alleviate poverty is to raise the real income of the poor.https://deepblue.lib.umich.edu/bitstream/2027.42/41223/5/1035-Karnani_OLD.pdfhttps://deepblue.lib.umich.edu/bitstream/2027.42/41223/6/1035-Karnani.pdfhttps://deepblue.lib.umich.edu/bitstream/2027.42/41223/8/1035-Karnani.pdfDescription of 1035-Karnani_OLD.pdf : OLD Version - DO NOT USEDescription of 1035-Karnani.pdf : OLD Version - DO NOT US