What works: Serving the poor, profitably

The growing debate over the impacts of global capitalism presents a paradox. Global firms have demonstrated their ability to create wealth around the world, but the benefits of the capabilities of these firms and of the global market system do not yet reach most of the 4 billion people who live in relative poverty. It seems clear that the world’s prosperity and security, and perhaps even the growth and legitimacy of global corporations, are linked to our ability to remedy this disconnect.

What if it were possible to expand the global market system to include those who now have no stake in it – to grow the market at the bottom, providing direct benefits and expanded opportunity to many of the 4 billion? Prahalad and Hammond are not suggesting that multinational corporations get involved in direct social development, or that targeted international aid and improved governance in developing countries are not urgently needed. But they argue that there exists a counterintuitive synergy between the aspirations of the poor and the needs of multinational firms for growth. This synergy creates an opportunity for multinationals to use their reach, scale, and resources to fundamentally change the paradigm for dealing with the poor – by bringing them into the market and providing efficient and affordable access to basic goods and services. They argue that this is not only feasible, but will benefit poor communities, generate other collateral social benefits, and provide significant competitive advantage to those firms that lead the way.

In this paper, Prahalad and Hammond document the business case for multinational corporation involvement at the bottom of the pyramid and describe corporate strategies for making it happen.