The lives of the poorest on our planet, are devastated by deprivation due to the lack of access to good health, water, infrastructure and other normally public organized services. In Europe new technologies exist that could meet these needs . However, in all cases the current design only becomes accessible and affordable to the poor through economies of scale and/or product adjustments to enable local production using local resources and local distribution channels. The private sector has the potential to create such innovations through product and process (re)design. This capacity is one of Prahalad's (2004) arguments to promote private sector involvement in developing new business opportunities through effective linkages with the Base of the Pyramid (BoP) market. However, successful access to this market requires new insights in international business theory. Especially during the phases of market identification and product design, ‘social embeddedness' is essential to define more effectively the opportunities for product and process innovations to access this new BoP market (London and Hart, 2004). This requires cooperation and building coalitions with “fringe stakeholders (Hart, S & S. Sharma (2004).
The international management literature on firm embeddedness in local contexts tries to derive management prescriptions based on organisations' need to adapt to local circumstances in order to survive (Lawrence & Lorsch, 1967), as sources of information, knowledge, physical resources, but also of power and legitimacy (Gnyawali & Madhavan, 2001). The local context is seen as a source of important information that headquarters are unable to obtain and that local embeddedness can deliver strategic advantages (Bartlett & Ghoshal, 1986; Birkinshaw, 1997). Despite the prescriptions for local responsiveness and the seemingly high value of firm embeddedness into local networks, the international business literature is ripe with examples of under-adaptation of firms to their local environment, be it in marketing (Dow, 2006), human resource management (Johnson, Lenartowicz, & Apud, 2006), or internationalisation strategy (Magnusson, Baack, Sdravkovic, Staub, & Amine, 2008). Local adaptation is normatively seen as a specific success factor (Hamann, 2004; Reichardt, 2006) but hardly reached in practice. This paper seeks to conceptualise social embeddedness in the light of IB theories, and to understand its effects on IB when aiming on the successful introduction of product innovations to BoP markets.
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