Are MNCs better suited than local entrepreneurs to develop inclusive businesses in India ?

Abstract

Over the past decades, many multinational companies facing tough economic climate in the West have focused on emerging markets to find new sources of growth. Most have for long done so by pushing to these new markets products developed at home, favouring the most privileged segments of the population. These segments are made of people who are already in the market, i.e. who can access and afford these products. The ones who are not in the market are left aside. This is how 80% of the global wealth is concentrated in 20% of the population. In this increasingly competitive, globalised and interconnected world, challenges like poverty, pollution, and inequalities have also become global and of public concern. As a consequence, MNCs are now not only judged on their financial performance, but also on the actual social and economic value they spread. Foundations and CSR sponsored by MNCs have then mushroomed. Unfortunately, the impact of these philanthropies élans has often turned out to be pretty limited. This, added to governments’ helplessness, leads to a seeming dead-end. But many local entrepreneurs have developed creative ways to tackle the problems around them, one of the most famous examples being the creation of Grameen Bank by Nobel Prize Muhammad Yunus. These businesses, with both social and financial objectives, are called inclusive businesses, for they include the marginalised in multiple ways (as employees, suppliers, distributors or consumers) while remaining profitable. Inclusive businesses are meant to do well by doing good, in a sustainable and commercially viable way. But in order to alleviate global challenges and include billions of disadvantaged people, scale is critical. Indeed, local initiatives usually lack budget and influence. On the other hand, MNCs are often considered to be too global to develop efficient tailored solutions for the marginalised in emerging countries. So, which one is best suited to conduct effective inclusive businesses?. Our initial objectives were: * Identify key factors of success of inclusive business: for a given industry or situation, we aim to point out the criteria that are necessary to succeed. * Understand potential entities complementarities (MNCs, local entrepreneurs, NGO, institutions…). * Understand the opportunities for the “other India”