Leading Latin America’s
impoverished communities
into the marketplace
can be a path out of poverty,
but is harder than it looks.
Panrd tohe Pfoorits
By Patricia Márquez and Michael Penfold
Can the private sector fight poverty and
still make money? Social initiatives have
become increasingly attractive to companies around the world who believe
that pursuing strategies which empower low-income groups and impoverished
communities is also smart business. In Latin America, that argument has become the focus of debate
among scholars and anti-poverty activists who
question whether integrating low-income groups in
the global or national economy through markets—
“democratizing the economy,” as the development
economist C. K. Prahalad has called it—really represents a passkey to social change.
Much of the attention to so-called “
bottom-of-the-pyramid” strategies has focused on the activities
of major multinationals, such as Unilever in India
and CEMEX in Mexico. But three recent case studies
conducted by the Social Enterprise Knowledge Net-
work (SEKN), a partnership of eight business schools
in Latin America (EGADE, INCAE, IESA, Pontificia
Universidad Católica de Chile, Universidad del Pacífico,
Universidad de los Andes, Universidad de San Andrés,
and Universidade de São Paulo), the Harvard Business School and ESADE in Spain, suggest that poor
and marginalized communities can be transformed
by the creation of new market-oriented networks
operating at lower levels of economic activity. 1
The case studies examined three business
operations: Colcerámica in Colombia, Electricidad de Caracas (EDC) in Venezuela, and ASMARE,
a recycling cooperative in Belo Horizonte, Brazil.
Both Colcerámica and EDC developed local relationships, which made it possible for the firms to
develop new markets for their goods and services
in communities that were once written off the
economic map. ASMARE demonstrated how new
value chains could be created in which groups of
