Overcoming Rural Distribution Challenges at the Bottom of the Pyramid

49 Pages Posted: 10 Sep 2010

Date Written: September 9, 2010

Abstract

While management scholars and development economists have provided a compelling case for greater attention to the bottom of the pyramid, few contributions have examined specific strategies for reaching the bottom of the pyramid. The majority comprising the bottom of the pyramid resides in hundreds of thousands of villages located beyond most multinationals’ distribution networks. Its access to essential goods is limited not just by high prices, but also by inadequate rural distribution. We use the term socially responsible distribution (SRD) to describe initiatives that provide poor producers and consumers with market access for goods and services that they can benefit from buying or selling by helping neutralize the disadvantages they suffer from inadequate physical links to markets, information asymmetries, and weak bargaining power. This paper examines five SRD case studies of MNCs, government and NGO initiatives. It identifies the role they play in promoting SRD, the different kinds of intervention strategies they use, and the payoffs for multinationals and people at the bottom of the pyramid. The paper examines the obstacles to higher earning potential and access to cheaper consumer goods for poor consumers, identifying direct (e.g., infrastructure shortcomings) and moderating factors (e.g., illiteracy), and the strategies of organizations from the three sectors in addressing these obstacles using broad and targeted interventions. These strategies include bridging the infrastructure gap, use of empowering information, leveraging technology, and cross-sectoral collaboration as well as differentiated distribution and leveraged-bidirectional and leveraged-shared distribution.

Suggested Citation

Vachani, Sushil and Smith, N. Craig, Overcoming Rural Distribution Challenges at the Bottom of the Pyramid (September 9, 2010). INSEAD Working Paper No. 2010/65/AL/INSEAD Social Innovation Centre. Available at SSRN: https://ssrn.com/abstract=1674418 or http://dx.doi.org/10.2139/ssrn.1674418

Sushil Vachani (Contact Author)

affiliation not provided to SSRN ( email )

N. Craig Smith

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

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