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Skip to main content. Log In Sign Up. Dynamic transformations for base-of-the-pyramid market clusters. Mohr University of Montana Extending scholarship on industry clusters, this article re- consumers in these markets London and Hart ; considers the relationship between development and mar- Murphy ; Prahalad and Hart Recent literature on industry clusters another perspective, developing strategies for firms and suggests a set of theoretical themes regarding cluster effi- policy makers to target BOPMs to stimulate economic ciencies, governance, adaptability, and performance.
The cluster concept, a ploying longitudinal, ethnographic data collected from an development of ideas Albert Marshall originally indigenous leather-working cluster in West Africa. The advanced, provides a promising approach to identifying authors’ findings provide guidance in identifying local BOPM economic agglomerations with potential for mar- clusters with global market potential in BOPMs. They lead ket-led development Gordon and McCann ; Porter us to a dynamic market-driven transformational model of a, b; Schmitz Clusters have been identi- BOPM clusters.
Consequently, the authors recommend sev- fied across a wide range of industries from information to eral keys for leveraging investments in boundary-span- plastics, entertainment, and fashion, and across national ning firms in BOPM clusters.
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Finally, the article borders. Such global spanning networks could link kets; marketing and development; market local firms to skills and resources they often lack e.
Marketing tify such indigenous market clusters with global potential. Known as base-of-the-pyramid markets McCormick mean that survival of the indigenous BOPMs hereaftermuch of the literature in this area has market clusters over time may be tenuous. Ominously, focused on product and wrnould strategies tailored to some firms have found that the global capabilities articu- lated in the transnational strategy model Zrnould have actually constrained success in BOPMs London and Journal of the Academy of Marketing Science.
This article extends recent strategic thought in BOPM How can transnational entities leverage local contexts and on industry clusters. On the basis of an over- BOPM players’ existing strengths and provide fur- view of the literature on industrial and market clusters ther development assistance?
How can BOPM including those in emerging markets, we explore factors in countries leverage existing local marketing net- cluster development with longitudinal, ethnographic data works to ensure survival and vibrancy? What are the from an indigenous leather-working industry in the Niger managerial and policy implications?
Our research offers implications for stra- tegic marketing thought. It clarifies how BOPM, small Research Context enterprise clusters are similar to and different from clus- ters in developed or even emerging markets, reinforcing The firms involved in the leather-working industry in the emerging perspective that BOPMs are not like early- the Niger Republic, West Africa provide an appropriate phase developed country markets London and Hart context in which to explore the issues raised above.
This research also suggests factors that allow specifics demonstrate Niger’s extreme BOPM challenges. BOPM clusters to persist in the face of radical environ- For example, Niger’s foreign debt is 86 percent of its gross mental shocks.
Moreover, we demonstrate the oftentimes- domestic product GDPmore than twice the emerging competing needs and social purposes that members of market country average of 35 percent UNICEF We also show that boundary-spanning players poorest country; its GDP has been declining at more than 2 in BOPM clusters appear to be a key to vitality.
All tolled, it seems like a fail- Bagella and Pietrobelli ; Porter a. From a pol- ure of political and social development. Why should mar- icy or managerial standpoint, in specifying leverage keters not write off Niger and similar BOPMs?
Some local marketers have con- ; London and Hart ; van Dijk and Rabellotti tended successfully with a hostile policy environment and Finally, a methodological contribution is showing even prospered Arnould ; Collins ; Gr6goire microlevel, longitudinal analyses help identify BOPM They have weathered successive failures of various clusters with transformative potential.
Table 1 pro- currency in ; Franke and Chasin ; New Interna- vides an overview of the article, highlighting key points in tionalist In the aggregate, regional marketing sys- the literature on clusters in developed economies and how tems distribute consumer nondurables with reasonable these are modified and adapted in their application to efficiency Amould ; Caupin and Laporte The final column Table 1 features Innovative export channels that distribute significant eco- salient findings from the Niger-based case study, pre- nomic benefits to Nigerian suppliers and channel captains sented subsequently in this article.
These latter facts cast doubt on the hasty conclusion that such a country is an impossible site for marketing-led How do indigenous market clusters in BOPM com- development.
Moreover, the more positive highlights of pare with clusters in more developed economies? Cluster Characteristics Data Collection and Analysis According to Marshall I and later commentators, agglomerations of localized industrial entities enjoy pas- This investigation adopted an extended ethnographic sive economies of scale or scope in the employment of case method, a method especially suited to exploring capital inltia interfirm flows of information, ideas, labor, implicit assumptions and examining new relationships and technology.
Furthermore, agglomerations generally and constructs in underresearched contexts. In extended benefit from urbanization economies including the con- case research, analysis continually moves between field centration of capital, transportation and communications data and existing theory during ijitia extended period e. Burawoy ; Numagami Case-based findings Like agglomerations, clusters are concentrations of are used to develop, critique, reformulate, and extend gen- economically and socially linked companies and institu- eral theory, here as represented in the theoretical intia tions, typically with some time depth Porter b; identified in Table 1 and discussed below.
The themes sug- Schmitz Clusters differ from agglomerations in the gest what data to analyze. Data are not used to test statisti- presence of social capital, that is, active cooperation cal relationships between variables.
Instead, findings are between actors, interagent loyalties, and long-term rela- marshaled to uncover specific determinants and patterns tionships between actors Gordon and McCann Find- Some propose quantitative criteria to characterize clusters ings, especially those anomalous from the standpoint of Appold ; Bagella and Pietrobellibut BOPMs prior theory, become the basis for revising and recon- with weak formal macroeconomic and sector-level data structing such theory.
Rather than falsifying an a priori collection and large informal sectors present insurmount- framework as in the hypothesis-testing modelcase data able measurement obstacles.
The enforcement of exchange agreements Gordon and findings presented below draw on data collected primarily McCann ; Gulati ; Kennedy ; Traeger I.
Data collection in and to was sup- of clusters in developed economies illustrate various plemented by additional research in and a series of forms and benefits of proximity and social linkage that related arnohld consulting projects Iniria, in may also accrue in BOPMs. Cluster members should ex-a brief follow-up was conducted.
Analytic arnojld hibit forward, backward, and horizontal market linkages. Procedures to ensure trustworthi- mies of scale across firms and institutions are important to ness included triangulation across informants, sites, and realizing the benefits. The proximity of companies and in- time e. Saxenian ; Schmitz It identifies key actors, b. Indeed, some dismiss them as “ghettos” or “sur- sources of macro-environmental volatility, and variations vival clusters” Altenburg and Meyer-Stamer ; in sector marketing performance during five historical McCormick characterized by limited scale, entre- periods.
It provides an arhould sequence that highlights preneurial competence, dynamism, arnouod competitive cluster dynamics. The Findings section below is organized potential. Some adapt to used the leather; hair produced as a by-product of tanning local demand in terms of products and prices Arnould was used to stuff saddles.
Another tanning by-product, ; Hernandez ; Hrnault and N’Rabet ; trimmed flesh, was exported to Nigeria for feed production. Moreover, in some cases, coordination of The small business census showed that the tanning and iniita across firms improves collective productivity leather-working arnou,d were geographically clustered. Arnould ; Clough In addition, it is often Zinder is a town of about 50, people, so all firms are remarked that African business relationships are embed- reasonably close.
However, in25 percent 33 of ded in ethnic and gender relationships that arnouod trust of these small firms could be found in one urban and reduce moral hazards Cohen ; Landa ; ward, Abdou Dan Dabba. The remainder could be found Lovejoy ; Traeger Finally, some scholars have in just 5 of the 15 urban wards.
All the tanners operated in identified robust clusters in outlying regions of emerging two wards. Tanners in Abou Dan Dabba produced a iinitia markets like Brazil, India, Mexico, and Pakistan array of leather products, while those in Garin Malam spe- Knorringa ; Nadvi ; Rabellotti ; Schmitz cialized in traditional plain and red-dyed sheepskins.
Together, these indications lead us to cautious opti- census did not include several dozen butchers, upstream mism about the possibility of identifying indigenous suppliers of hides to the tanners, one of whose work sites market clusters in BOPMs.
Although Small enterprise clusters in BOPMs contend with per- the production of the cluster output was geographically arbould resource scarcities, corruption, policy uncertainty, localized, the market networks accessed by and focused and market volatilities Arnould ; H6nault and on the workshops were iniitia in scope discussed N’Rabet ; McCaffey not found in the devel- subsequently.
To survive, they are identification and meeting new market opportunities, likely to invest in flexible, multipurpose fixed assets and while still meeting demand for traditional products. One only relatively specialized labor. They may minimize use conclusion that can be drawn from a survey of output is of inifia capital and employ unskilled labor on an as- that roughly 20 percent of the overall production of the needed basis.
They may operate on a small and variable handicraft tanneries was for markets developed in the scale and incorporate diversification strategies to buffer post-World War II period.
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Two tanning workshops con- themselves from economic shocks and informal taxes i. Each characteristicmay contribute to cluster sheepskins in an array of “new” colors employing innova- survival but simultaneously detract from growth and per- tive commercial dyes.
For example, Tahirou, whose out- formance. Furthermore, where clusters have evolved in put of goat and sheepskins accounted for 30 percent of periodic market towns, and hence enjoyed collective effi- total sales of this segment from one workshop, maintained ciency based on temporal concentrations of demand, a long-standing alliance with a leather-working shop oper- vertical interfirm coordination may be limited Pederson ated by a relative, thus guaranteeing a regular market.
Nigerien evidence of cluster characteristics. An indus- try cluster is geographically localized and has socially and In the post-World War II years, leather workers in the economically linked businesses with an extended time cluster produced innovative patchwork goatskin rugs, line.
A survey of cialized in producing exotic hides leather workers used in enterprises conducted in the main weekly town market in producing goods for these markets. October found 50 tanners and 42 leather workers on A second relatively new growth business comprising site. In addition, six cowhides and leather well buckets produced for the cattle men worked steadily for SOTAPO aenould semi-industrial tan- business; tanners had ceased producing cowhides for shoe nery whose employment is not reflected in the census; see leather in the early s field notes May 3, A third Table 2, column 3and others found occasional employ- segment consisted of local consumers for whom the tanners ment there.
Firms linked in the value chain included tan- produced sheepskin prayer rugs, usually on commission.
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Saddlers not only drove this primarily seasonal market. However, they often dealt with opportu- accrue in clusters. In contrast to passive efficiencies, ac- prayer rugs to finish in slack times. Examples could include flows such as communication about market prices and of the joint funding of a training program, measures to re- occasional technological innovations.
For example, spond to environmental shocks, development of shared quality standards, or the investment and development of 1 sat [in the market] with Elhadji Oumarou and agnould waste treatment.
Joint investments shared by cluster mem- sheep and cow hide brokers. These two fellows who bers differentiate clusters from agglomerations Gordon sat with him are from Bakin Birji [50 kilometers and McCann and contribute more to cluster produc- north of Zinder] and trade throughout kasar tivity than do passive efficiencies Appold ; Gertler Ollelewa [Tuareg country further north].
One said of ; Saxenian In BOPMs, particularly those with the other that he was the main hide broker up there. They discussed prices and hide quality, and one of periodic markets, collective efficiency may take the form them gave me a F goat hide with a hole in it. Although transaction costs increase as Use of acetylene ash with superior depilatory properties the scale of transactions decreases and their frequency in- over wood ash rapidly diffused through the cluster field creases as between small firmscolocation offsets and notes May 23, Similarly, tanners changed their reduces transaction costs for cluster members Storper and method of tanning cowhides when they shifted from pro- Christopherson The cluster often presents access to duction for sandal leather to well buckets field notes a significant local market.