Ecosystem and Local Context

It is crucial that inclusive businesses carefully consider the ecosystem and the local context that impact the scaling ambition’s realization. This allows them to avoid resistance from the BoP community and other key stakeholders during implementation.

Definitions
The ecosystem is the network of interconnected, interdependent actors whose actions determine whether or not your inclusive business model will succeed.

The local context represents the systemic level factors that influence your scaling efforts in the operating context. Examples are government policies which can either facilitate or hinder the scaling of inclusive value creation, or inclusive solutions that will create resistance from the local community because it clashes with the community’s dominant values or ideologies. Understanding the local context helps you recognize the institutional infrastructure and government policies as well as technological, social-economic and cultural contingencies that either facilitate or hinder the scaling of inclusive value for the poor. Consequently, without support from the local context, the efforts of scaling inclusive value creation may indeed grow inclusive businesses, but without bringing substantial social change.

Inclusive business
Inclusive businesses have to become truly embedded in the local context to reduce poverty in BoP communities. Therefore, it is suggested that they must develop native capabilities, which is ‘’the ability to develop fully contextualized solutions to real problems in ways that respect local culture and natural diversity’’. This capability consists of five key competences:
1. Working with non-traditional partners,
2. Co-creation of local solutions,
3. Development of local expertise,
4. Coping with central government, and
5. Building social, not legal, contracts.

These competences positively influence the impact of inclusive businesses, in terms of improving the economic situation, capabilities, and relationships of buyers, sellers and communities at the BoP.

References
[1] Brehmer, M., Podoynitsyna, K., & Langerak, F. (2018). Sustainable business models as boundary- spanning systems of value transfers. Journal of Cleaner Production, 172, 4514–4531.
[2] Han, J., & Shah, S. (2020). The Ecosystem of Scaling Social Impact: A New Theoretical Framework and Two Case Studies. Journal of Social Entrepreneurship, 11(2), 215–239.
[3] London, T. (2009). Making Better Investments at the Base of the Pyramid. Harvard Business Review Magazine (May 2009).