Business strategies help alleviate poverty: study

Source:Xinhua Published: 2017/8/10 8:18:41

Researchers at the University of Michigan (UM) have compared several business strategies to explore how each impacted young children.

They looked at businesses selling to and buying from those at the "base of the pyramid," or the 4 billion people who live on roughly 4 dollars a day or less in low-income markets in the developing world. Their impoverishment, combined with the impoverished market environment in which they transact, excludes them from participation in the formal economy.

Ted London, adjunct professor of business administration at UM Ross School of Business, together with co-author Colm Fay, analyzed four enterprises that showed substantial similarities within each strategy and substantial differences across strategy, and the results are: both business strategies have both positive and negative impacts.

Moreover, while no bottom-of-the-pyramid business strategy excels on all poverty-alleviation dimensions, the researchers found identifiable relationships between business strategies and poverty alleviation outcomes.

The impact varied by business strategy, the role of the stakeholder in the business model, and decisions by intermediaries within family unit. Also important were the relative weightings of different impacts and the unequal impacts of positive versus negative changes in well-being.

"People assume poverty is income. Poverty is about a lack of well-being and well-being is multidimensional," London said. "If we use a multidimensional view of who is impacted, the key stakeholders in the business model, and how they are impacted or the key dimensions of poverty-we can compare impacts across different business strategies."

Young children were the focus of the study as they are the most vulnerable to any changes in well-being.

Posted in: ECONOMY

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