Conclusions

As the foundation piece of the thesis, the chapter has reviewed the broad concepts of energy’s role in poverty alleviation, and linked this to the value propositions of the private sector operating in this space. Specifically, the chapter has addressed the intended research objective of understanding how electrification creates value that contributes to poverty alleviation, and how this can translate to private sector value propositions. This has been guided by two research questions and an extensive literature review at the intersection of energy (specifically electrification), poverty alleviation and business.

The chapter has made the following research contributions:

1. Conceptualizing the economic flows of energy in an economy, from the energy sector and non-energy sectors to poor households, has assisted in clarifying the direct, indirect and dynamic effects on poverty alleviation. This has contributed to understanding the unique role of energy in society and its effects across a range of dimensions.

2. Using this conceptual representation, classification of literature linking electrification technologies with poverty alleviation has revealed some general trends. Direct effects occur across all electrification technologies, with higher levels of energy (kilowatts) producing larger utility effects. Those technologies that greatly enhance income-generation activities, such as micro-grids and centralised electricity grids, are likely to produce higher levels of indirect effects. Similarly, while all electrification technologies can produce dynamic effects such as health and education improvements, intuitively such effects might be evident in trends over several years. Income-generating electrification technologies, such as micro-grids and the central grid, where there is a high economic utilisation by the non-energy sector, are more likely to generate additional dynamic effects, such as long-term structural changes in an economy.

3. Value propositions of firms operating at the BoP were directly connected to the identification and enhancement of direct, indirect and dynamic effects. Indeed, the key concept of Shared Value which is a recurring theme in BoP business practices, may be enhanced by focusing on dynamic effects creating long-term societal value, which eventually translates into business value. Interactive business models, where firms create supportive ecosystems around the energy product or service, can enhance the income-generating potential of energy, thereby magnifying the dynamic effects upon which Shared Value is sustained.

The literature review showed that research has, in general, focussed separately on electrification opportunities and effects, and business models and value propositions. The need to fully capture the translation of Shared Value opportunities in the electrification of the BoP, into firms’

actions, remains an important research gap. This thesis contributes to addressing this gap by examining the role of the private sector in the electrification of India, through a variety of perspectives, as presented in Figure 1.2 (Chapter 1).

Research Objective 1, addressed in this chapter, has examined the effects of energy and electrification on poverty alleviation, and how the private sector interacts with this opportunity.

Subsequent research objectives provide further expansion of this foundation work. The thesis investigates both the market level situation of private sector electrification, and the firm level implementation in terms of value propositions, motivations and actions. To do this on a meaningful level, where research outcomes will be useful and implementable in terms of policy and firm actions, India presents a fascinating and pressing context, as discussed in Chapter 2.

In the next chapter, Research Objective 2 evaluates Indian corporate actions focussed on the BoP.

CHAPTER 4 BOP PRACTITIONER ACTION – DEVELOPMENT OF A TAXONOMICAL MODEL AND EVIDENCE IN THE TOP 100 INDIAN FIRMS

4.1 INTRODUCTION

This chapter turns to focus on India as the contextual setting of the thesis. Relatively little is known about the Indian Base of the Pyramid (BoP) market as a whole. In the absence of a comprehensive understanding of corporate actions in this market, it becomes difficult to assess responses to the energy access issue. This conundrum is tackled through Research Objective 2 (To evaluate the motivations and actions of Indian firms’ engagement with the BoP), addressed in this chapter via two research questions.

The first research question asks How can the reasons and motivations of BoP practitioner actions in a given market be explained using the emergent, and overlapping, BoP concepts in literature? The BoP is a market that elicits varying responses from corporate firms. At one end of the spectrum, firms seem to have responded by directly addressing consumer demand through making and selling tailored products and services (Prahalad, 2010). At the other end, firms may have used this segment as a context in which to showcase their philanthropic, Corporate Social Responsibility (CSR) initiatives (Ramani & Mukherjee, 2014). Still other corporate responses may focus on the development of social value external to the firm that may have flow-on benefits back to the firm (Porter & Kramer, 2011).

Explaining the reasons, and motivations, for BoP practitioner action can thus necessitate a variety of conceptual approaches that varyingly interpret the relationship of a firm to its wider society. Initial BoP concepts focused on the idea that firms would initiate market responses to unmet demand of consumers whilst also enabling some social benefit to occur as a result (Prahalad, 2010). Along the way, a range of CSR approaches were frequently discussed as explanations, and included the consideration of, and obligations to, other stakeholders (Singh, Bakshi & Mishra, 2015). The more recent, emergent Creating Shared Value (CSV) concept is grounded on the simultaneous addressing of corporate and societal values, and is claimed as a cornerstone of the next wave of economic development (Porter & Kramer, 2011).

These concepts overlap considerably, both in terms of theoretical construction and the value propositions which they present. For example, Hindustan Unilever sells salt in India with a modified composition in response to health problems in some population segments, using highly localized distribution channels (Rajendra & Shah, 2003). This practitioner action is a response

to a market opportunity at the BoP, but as the action simultaneously addresses a perceived social need, the CSV paradigm is also consistent. The incorporation of specific compounds in the salt product, at an additional cost to the firm not passed on to the consumer, has aspects of more traditional CSR approaches.

Thus it is seldom clear which theory represents the dominant rationale for a particular BoP activity. This confusion presents a problem for firms seeking to establish new engagements with BoP markets, as it may not be readily apparent which concept to apply. Furthermore, the confusion can further muddle the policies of regulatory bodies attempting to encourage CSR and BoP activities. The present chapter attempts to resolve this confusion by developing a taxonomical model incorporating all three approaches (McKercher, 2016; Rich, 1992). The model serves as a useful empirical tool to classify and interpret BoP practitioner actions in a manner that unifies these approaches. As classification is acknowledged to often be the starting point for rigorous scientific investigation of emergent phenomena (Harvey, 1969, as cited in Hunt

& Burnett, 1982), the value of such a model in the emergent BoP literature is evident.

The empirical application of such a BoP taxonomical model can also provide substantial insights into BoP actions in specific markets; in this case, India. The second research question of this chapter, What are the reasons, motivations and extent of BoP action by India’s Top 100 firms?

examines the intersection of India’s large BoP segment and a dynamic corporate sector.

Numerous Indian case studies of BoP corporate activity (London & Hart, 2004; Seelos & Mair, 2007) suggest a prime market where one would expect to see significant BoP practitioner action.

Accordingly, the taxonomical model is used to analyse the BoP activities of the Top 100 Indian firms using evidence found in publically available corporate reports. By doing so, this work aims to nudge the BoP literature toward an evidence-based approach, seeking to interpret BoP motives based on large volumes of publically available data.

The subsequent analysis indicates less than half of the Top 100 Indian firms showed evidence, during the sample period, of engagement with BoP marketplaces, with varying levels of engagement as classified by the taxonomy. Understanding the extent to which emergent theories are grounded in observable actions will help to enhance their future influence on corporate strategy in BoP marketplaces (Swanson, 1999; Eisenhardt, 1989). The model and these findings would be of relevance to firms engaging in the BoP marketplace, and public policy makers.