Market entry of multinational companies in markets at the bottom of the pyramid: A learning perspective

Multinational companies (MNCs) can play an important role in poverty alleviation. The international business literature, however, lacks theoretical insight and systematic empirical evidence of MNCs entering low-income markets. Therefore, this study sheds light on the questions: How MNCs enter low-income markets? How MNCs operate? And how they gain knowledge in these markets? Using a multiple case study approach, we analyze MNCs with business activities in low-income markets by taking recourse to the internationalization process model of Johanson and Vahlne. The results reveal that companies develop knowledge by enlarging their mode of market commitment to a new level that exceeds local manufacturing and production facilities.

► The entry of MNCs in BOP-markets is initiated through knowledge/experience-based factors.
► MNCs cooperate with non-market partners to overcome market constraints.
► MNCs require a new mode of market commitment in BOP-markets: Embedded subsidiaries.