Impact at the ‘Bottom of the Pyramid’: The Role of Social Capital in Capability Development and Community Empowerment

Abstract

Rooted in the notion of inclusive capitalism, the Bottom‐of‐the‐Pyramid (BoP) approach argues for the simultaneous pursuit of profit and social welfare by creating markets for the poor. This idea has been both celebrated and criticized in the literature. We do neither in this paper. Instead, by leveraging insights from Amartya Sen's work on capability development and the literature on social capital, we offer a more socially embedded and community‐centric BoP approach. By redefining poverty not just as a lack of income, but also as a lack of ‘capabilities’ in Sen's sense that can be developed through leveraging social capital, we offer a systemic framework for understanding the societal impact of business‐driven ventures in the BoP and empowering BoP communities through these ventures. Specifically, we argue that any business initiative in the BoP ought to be evaluated on the basis of whether it advances capability transfer and retention by (a) enhancing the social capital between a particular community and other more resource rich networks, and (b) preserving the existing social capital in the community.