Reducing Global Poverty: Building the Business Case
Global poverty is nothing new. As development economist Jeffrey Sachs reminds us, most people were poor until the 18th century. The industrial revolution, however, changed that, and globalization has further widened the gap between rich and poor. At the beginning of the 21st century, numerous local and regional efforts, including the United Nations, World Bank, Soros Foundation and Earth Institute, are working to reduce global poverty. Until recently, though, poverty reduction efforts of multinational corporations have been limited to philanthropy. In this paper we explore making a business case for multinational enterprises to view poverty reduction as a sustainable and sustaining corporate strategy. Because so much attention has already been given to microfinance efforts (including the award of the 2006 Nobel Prize for Peace to Muhammed Yunus of Grameen Bank), we have chosen to focus on consumer goods companies, like Johnson & Johnson, Sony, Nestle and Samsung. To move from a position of philanthropy to a position of profitability, such companies must think of the global poor as viable business markets that can create shareholder wealth and value, just like all other markets. We propose that they must identify and capitalize on core competencies, creating business value. We have used this essential relationship between substantive value and core competence to create a framework that can help executives develop a rationale for “pro-poor” business strategies. These approaches are not philanthropy. This paper builds on the work already done by C. K. Prahalad on marketing to bottom-of-the-pyramid consumers and by Jane Nelson on poverty reduction efforts as expressions of corporate social responsibility. We also look for guidance to the few corporations that have begun to transform their thinking, considering innovative products that serve both the corporation and the poor.
Keywords: Poverty Reduction, Multinational Corporation, Business Case
Associate Professor, Graham School of Business, Saint Xavier University
Saint Xavier University, Chicago, Illinois. Al is also a Fulbright Scholar who
has taught and worked in Nepal. His research interests include student case
writing, international marketing in the context of countries with developing
economies and in marketing to bottom-of-the-pyramid consumers.
Dr. RuthAnn Althaus
Professor, Graham School of Management, Saint Xavier University