Humanizing the Base of the Pyramid: Exploring the Influence of Resource (Dis)Advantages on Value Creation

Abstract Base of the pyramid (BoP) scholarship emphasizes the potential for enterprises to generate profits by enhancing the well-being of the impoverished, often by selling socially-beneficial products (SBPs). Yet, many such BoP enterprises have experienced mixed results. We argue that this may stem from insufficient attention to how BoP consumers value SBPs and other products. We frame SBPs as a type of human capital investment and thus use human capital theory to study how the consumption of SBPs does or does not create value for consumers. Specifically, we use a novel data set from rural India to measure value creation in terms of changes in well-being. We test competing hypotheses about how consumer resource (dis)advantages influence well-being changes associated with SBP consumption. Our results show support for both the logics of cumulative advantage and diminishing marginal returns. Further analysis indicates that the source of the resource (dis)advantage, whether it is acquired or ascribed, explains these results. These findings help to humanize the BoP by showing how well-being changes depend on the details of consumers’ lives. The fact that differences in starting levels of human capital influence subsequent value creation offers insights that could lead to better enterprise performance in impoverished contexts. The paper closes by exploring ethical issues associated with BoP enterprises and encouraging SBP consumption.