Fostering Entrepreneurship in Underserved Markets


In a January 2020 article in Entrepreneurship and Regional Development—An International Journal Sanjay Jain and I construct a grounded theory of market creation and entrepreneurship in underserved base-of-the pyramid (BOP) communities. This framework is based on an analysis of how the specific activities of entrepreneurs in four ventures in India, Bangladesh, and Cambodia contribute to environmentally sound and operationally viable energy access for the poor.  It also draws upon literature in the sociology of markets and development economics such as the work of recent Noble Prize winning scholars Banerjee and Duflo (Poor Economics:  A Radical Rethinking of the Way to Fight Global Poverty) to define what social entrepreneurs must do in order to adapt technology solutions to BOP settings, develop transaction systems fitted to the severely constrained incomes of the poor, and embed their organizations into local infrastructure and socio-cultural realities.

We undertook this research to identify processes which are integral to the introduction of products and services by social entrepreneurs in settings where infrastructure constraints and institutional voids—such as the lack of information, scarcity of well-trained people, unbanked populations, weak rule of law and mechanisms to enforce contracts—hinder market creation. In these settings we identified three processes which require entrepreneurial attention:

    1. Localizing refers to the indigenizing process by which entrepreneurs craft technology offerings to attend to local material understandings, customs, and relevant use cases to be acceptable.
    2. Microprovisioning involves gaining a deep appreciation of resident consumptive practices to develop transaction systems that deliver goods in miniscule quantities while charging extremely low prices and providing high levels of service—antecedent considerations for configuring business models.
    3. Co-developing entails both leveraging and upgrading local infrastructure through organizational forms that comprehend and respond to the needs of local clientele.

These processes and their associated sequence of activities are crucial first steps to be performed to craft markets based on empathic engagement and to tailor the fits of technology, business models, and organizational design to BOP communities.

As we survey the broader landscape of development economics and public policy it is clear that the bottom up work of social entrepreneurs offers a vital and complementary approach to top down strategies for the eradication of poverty.  BOP social ventures are expressly founded to provide products and services to households with minimal incomes and to foster economic empowerment by strengthening the knowledge and skills needed to increase incomes and improve life choices.  These ventures are set up to be self-sustaining from a business operations viewpoint. They provide employment, generate local entrepreneurship, stimulate value creation up and down broken supply chains, and improve living standards in poor communities.  In this way social ventures seed a broader entrepreneurial mindset and ecosystem around the specific products and services they offer.

Miller Center for Social Entrepreneurship has trained more than 1,000 social entrepreneurs in more than 100 countries around the world.  They represent a potentially catalytic resource for regional economic development.  Their compassion, combined with practical approaches to venture creation, are at the forefront of effective strategies for social change and the empowerment of people in underserved populations.  Through the diffusion of their approaches to market creation and social innovation they are charting a course for others who can benefit from the tools they helped to validate in Miller Center for Social Entrepreneurship at Santa Clara University (for a reference guide see, Eric Carlson and James Koch, 2018. Building a Successful Social Venture—A Guide for Social Entrepreneurs, Berrett-Koehler Publishing , Oakland, CA,.

For additional resources, see the related articles section below.