News

Dissertation: Business development possibilities in low-income markets

Business solutions based on local needs are crucial in low-income markets.
Innovation takes place in resource-scarce environments

Resource constraints and local needs guide the process when innovating business in low-income markets, according to Paula Linna’s dissertation. The dissertation will be examined on Friday 2 June.

‘Low-income markets in emerging countries, so-called BOP or Base of the Pyramid, require a new attitude towards innovation and business development. Focus should be on local needs and solving everyday problems,’ states Linna ‘BOP markets of approximately four billion people are challenging, however, it is possible to build successful business and the potential return on investment is high.’

Building business in low-income markets can take time and may require actions that are not part of the company’s core competence. In practice, this can mean, for example, participating in legislative work, building infrastructure and training employees.

Companies must be very aware of local needs and conditions, which often requires a lot of new learning for western companies. For example, low-income markets may lack access to the actors and information generally utilised during internationalisation, such as market data and subcontractors.

‘Companies have to co-operate with local players to develop business and create new partnerships often with non-typical partners, such as NGOs,’ says Linna. ‘It’s also essential to have a strong will, understand resource limitations and be able to produce solutions that are suitable for the particular context. The goal is to create solutions that are affordable, reliable and easy to use.’

Innovators play a key role in solving poverty-related problems

Linna’s research analysed the innovation methods and business strategies of 11 different companies operating in the mobile or energy industry, especially in East Africa.

‘It’s interesting that the driving force behind a single innovation might be a determined individual from the middle management of a multinational company or a self-taught innovator who has grown up in a low-income market. The common thread between these types of innovators seems to be their strong desire to solve poverty-related problems,’ says Linna.

In her research, Linna observed that the resource-scarce environment of emerging countries contains a lot of self-taught innovators who want to create solutions for problems experienced by themselves or their village communities. Local innovator-entrepreneurs are well prepared to operate in resource-scare environments and innovate by making do with what is at hand, for example, by using waste material such as old car engines as wind turbine generators.

‘They deal with environmental constraints in a creative way. For example, product development does not take place in a laboratory but by collecting experiences directly from the customers, and people upgrade their own technical knowledge by watching Youtube videos,’ explains Linna. ‘Sometimes the problem might arise that demand exceeds supply, but local people don’t have the possibility to expand their business to meet the growing demand.’

Paula Linna will defend her doctoral dissertation on Friday 2 June 2017 at the Department of Management Studies at Aalto University School of Business. The name of the dissertation is "Innovating by "making do with what is at hand": Creating opportunities in low-income markets". The public defence will begin at 10.00 in the Chydenia building at Aalto University School of Business (Runeberginkatu 22-24) in the Saastamoinen Foundation Hall (H-324) on the 3rd floor. Professor Rüdiger Hahn, University of Hohenheim, Germany, will act as opponent and Professor Minna Halme, Aalto University School of Business as custos.

Linna's dissertation (pdf)

Further information:

Paula Linna, Researcher
[email protected]
Tel. +358 50 40 54942

  • Published:
  • Updated:

Read more news

A group of people walking along the linden alley in summer
Research & Art, University Published:

Strong overall result: 27.5 million euros from the Research Council of Finland

A total of 52 Aalto researchers received Academy Research Fellowship and Academy Project funding. The total funding awarded to Aalto University amounts to 27.5 million euros
Appointments, Cooperation Published:

Introducing three new professors at the School of Electrical Engineering

Assistant Professors Gopika Premsankar and Johannes Arend and Associate Professor (tenured) Marko Kosunen were appointed to the career path of professors during January-June 2024.
insole at pdp gala
Press releases, Research & Art, Studies Published:

Compostable wood foam replaces plastic in shoe insoles

Aalto University students develop prototype of durable wood-based insole – Finnish shoe company starts testing material on users this autumn
Opiskelija Aallossa lukemassa kirjaa
Press releases Published:

Aalto University adds steps to reduce emissions

Aalto University has mapped key measures for reducing climate emissions in all areas of its operations. The greatest reductions will be in energy use and procurement.