Invisible rules: How institutional voids in base-of-the-pyramid markets influence adoption and diffusion of transformative service innovations

Abstract

In base-of-the-pyramid (BOP) markets, introductions of transformative service innovations—aiming for the alleviation of poverty and to improve wellbeing—are often unsuccessful. This article creates a framework allowing a fundamental understanding of the barriers to adoption and diffusion of service innovations aiming for poverty alleviation in these markets. Building on Edvardsson et al.’s (2014) seminal framework, we explore the role of institutional voids - prevalent at BOP - in adoption and diffusion of service innovations. We integrate findings from international management and institutional economics and use an existing case study to illustrate the problem of low service innovation adoption rates at BOP. We provide a guide to identifying and understanding the nature and influence of formal/informal institutional voids in BOP service ecosystems. Their influence on consumer behavior—which is missing in extant frameworks—is significant and impacts the adoption of transformative service innovations. We prepare transformative service research (TSR) for the study of service innovation for poverty alleviation in BOP markets. New key success factors for market-based poverty alleviation at BOP emerge, e.g., triggering actor agency for change to facilitate the adoption of transformative service innovations. Our findings enhance the potential of service research to help achieve transformational change, such as poverty alleviation, at BOP. This is the first study to explicate institutional voids in BOP service ecosystems. It addresses calls to better understand the complexity of idiosyncratic and important BOP contexts.