The base of the pyramid: a growth framework for SMME action

Van der Merwe, Michael David (2017-12)

Thesis (PhD)--Stellenbosch University, 2017.

Thesis

ENGLISH ABSTRACT: A key challenge faced by South African enterprises operating in the market made up of the poorest socio-economic segment, namely the Base of the Pyramid (BOP), pertains to the difficulty of achieving sustained profitable growth whilst simultaneously promoting sustainable poverty alleviation. This study focuses on how growth promoting factors might be incorporated into a cohesive framework to provide consultants, enterprise owners, and academics alike with a means by which to guide Small, Medium and Micro-sized Enterprises (SMMEs) operating in the BOP towards attaining higher, lasting growth and socio-economic development. Existing enterprise growth models and frameworks have been found wanting in terms of their ability to cater for the unique approach necessary for navigating through the adverse and atypical conditions prevalent at the BOP. Grounded on an empirically backed literature base arrived at via a systematic literature review, an expansive list of antecedents to enterprise growth, i.e. growth factors, was developed. These factors, when addressed appropriately, have previously been shown to improve enterprise growth. This study therefore addressed the development of a framework to aid enterprises in simultaneously promoting for-profit growth and maximising sustainable impact in the BOP. The systematic literature review revealed 25 growth factors, of which five were within this study’s scope in that they are business strategy related and within direct control of the enterprise. The five growth factors are: business modelling for detailed planning; following a suitable and detailed business strategy for long-term growth; utilising innovation to consistently create value and respond rapidly to market changes; implementing good marketing practices to ensure maximum value delivery to customers, and; forming strategic alliances to bolster core competencies, leverage resources, and scale operations. Furthermore, pursuing sustainable development was determined as crucial to ensuring both lasting profitability and social impact is realised. Guided by the tenets of Soft Systems Methodology (SSM), the framework was iteratively developed by synthesising the BOP requirements with conventional growth factor processes, verifying the preliminary framework, and incorporating validation findings in its final design. Framework validation entailed four mechanisms, namely conducting: a retrospective case study to determine credibility and confirmability; expert screening interviews to ensure it is efficable, efficient, effective, and ethical; a survey of 57 for-profit South African enterprises to empirically establish need, reliability, relevance, and usefulness, and; expert focus interviews to maximise usability by identifying key stakeholder requirements within the framework. All routes validated the framework for use as a consultative tool in guiding SMME owners towards improved growth at the BOP. The unique contribution is embodied in: the framework’s novelty, combining multiple fields of knowledge pertaining to success at the BOP and in traditional markets into a cohesive whole for the first time; the confirmed practical significance of the framework requirements in that it provides users with an empirically vetted procedure for increasing growth potential as evidenced by the survey data, and; the optimised usability due to the visually clear framework, the easy to use evaluation scorecard, and incorporation of key focus areas for dealing with key stakeholders.

AFRIKAANSE OPSOMMING: 'n Sleuteluitdaging vir Suid-Afrikaanse ondernemings wat opereer in die armste sosio-ekonomiese segment, naamliks die Basis van die Piramide (BOP), is die uitdaging om volgehoue winsgewende groei te handhaaf en terselfdetyd volhoubare verligting tot armoede te bevorder. Hierdie studie fokus op hoe groeibevorderende faktore in 'n samehangende raamwerk geïnkorporeer kan word om konsultante, ondernemings-eienaars en akademici te voorsien van 'n metode om klein, medium en mikro-grootte ondernemings (KMMO's) in die BOP te bestuur vir volgehoue winsgewende groei en sosio-ekonomiese ontwikkeling. Bestaande groeimodelle en -raamwerke vir ondernemings skiet tekort in terme van die unieke benadering wat nodig is om te navigeer deur die uitdagende en atipiese toestande wat in die BOP voorkom. Deur gebruik te maak van ‘n sistematiese literatuuroorsig, is 'n empiries-ondersteunde literatuurbasis geskep waarvandaan daar 'n uitgebreide lys van voorlopers tot ondernemingsgroei oftewel groeifaktore ontwikkel is. Hierdie faktore het voorheen getoon dat indien dit korrek oorweeg word, dit groei van die onderneming mag verbeter. Hierdie studie het dus die ontwikkeling van 'n raamwerk aangespreek om ondernemings te help om gelyktydig groei vir wins te bevorder en volhoubare impak in die BOP te maksimeer. Die sistematiese literatuuroorsig het 25 groeifaktore geidentifiseer, waarvan vyf binne die omvang van die studie geval het, aangesien hulle besigheidstrategie verwant is en direk binne die beheer van ondernemings is. Die vyf groeifaktore is: besigheidsmodellering vir gedetailleerde beplanning; 'n geskikte en gedetailleerde besigheidstrategie vir langtermyngroei; gebruik van innovasie om konsekwent waarde te skep en vinnig te reageer op markveranderinge; die implementering van goeie bemarkingspraktyke om maksimum waarde-aflewering aan kliënte te verseker; en; vorming van strategiese alliansies om kernvaardighede te versterk, hulpbronne te hefboom, en bedrywighede op te skaal. Voorts is volhoubare ontwikkeling nagestreef as noodsaaklik om winsgewendheid te handhaaf en sosiale impak te realiseer. Die raamwerk is iteratief ontwikkel deur van die beginsels van Sagte Stelselmetodologie (SSM) toe te pas, en die BOP vereistes te sintetiseer met konvensionele groeifaktor prosesse. Die voorlopige raamwerk is verifieer en verifikasiebevindings in die finale ontwerp ingesluit. Die raamwerk se validasie het uit vier meganismes bestaan, naamlik die uitvoer van 'n terugwerkende gevallestudie om geloofwaardigheid en bevestigbaarheid te bepaal; onderhoude met deskundiges om te verseker dat die raamwerk doeltreffend, effektief en eties is; 'n meningsopname van 57 Suid-Afrikaanse ondernemings om empiries behoefte, betroubaarheid, relevansie en bruikbaarheid te vestig, en; laastens kundige fokusonderhoude om bruikbaarheid te optimeer deur sleutelbelanghebbendes se vereistes binne die raamwerk te identifiseer. Al 4 meganismes valideer die raamwerk vir gebruik as 'n konsultasiemiddel om KMMO-eienaars te lei tot beter groei in die BOP. Die unieke bydraes is gevestig in: die raamwerk se nuutheid, die kombinasie, vir die eerste keer in 'n samehangende geheel, van verskeie kennisvelde met betrekking tot sukses by die BOP en in konvensionele markte; die bevestigde praktiese betekenis van die raamwerkvereistes, omdat dit gebruikers 'n empiries vasgestelde prosedure bied (soos vasgestel deur die opname) om groei potensiaal te verhoog, en; laastens, die optimale bruikbaarheid as gevolg van die visueel bruikbare raamwerk, die maklik om te gebruik evalueringskaart, en die inlywing van sleutelfokusareas vir die hantering van sleutelbelanghebbendes.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/102877
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