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Harnessing Innovation for Change in Developing Countries


Harnessing Innovation for Change in Developing Countries

Garry Bruton’s research into emerging economies provides helpful insights for businesses looking to expand into those areas, especially companies providing products and services that contribute to sustainability.
 
“With businesses increasingly expanding into developing countries, firms of every size should understand that many of their potential customers are living in poverty,” said Bruton, Professor of Management, Entrepreneurship and Leadership at the Neeley School of Business. 
 
“For firms to succeed in making the world more sustainable while making a profit in settings of poverty, the firms’ products and services must consider local customers’ needs, the networks among those customers, and ecosystems that affect any business effort.” 
 
Bruton’s research, with colleague Susanna Khavul of the University of Texas at Arlington, was published in the Journal of Management Studies. The study cites the successful example of an innovation that succeeded both in terms of sustainability and profitability: mobile telephone technology in Kenya.
 
Cell phones allow immigrant workers to make mobile payments or transfer funds to families living in their home villages. The transfers have no wire service fees or banking fees, thus the transactions save money for the consumers. In addition, the technology is environmentally sustainable since landlines can be avoided. The cell phone industry also is profitable. Thus, it creates a win for the environment, consumers and the businesses.
 
Bruton’s research found significant technological issues for people who live in poverty that must be addressed to help solve the matter in a sustainable manner. For example, the United Nations reports that  half of the 2.6 billion people in the developing world lack access to basic sanitation, including clean water. Research has shown that water-borne diseases account for 80 percent of all diseases and death among poor people.
 
“These ailments drag down the GDP of the developing counties by an estimated 2 percent annually, so these countries are ripe and ready for easily obtained clean water,” Bruton said. “Yet, while there are many potential technological solutions to improve water for the poor, none have been widely accepted to date by those living in poverty.”
 
Another technological need in developing countries that could help advance sustainability is improving the methods used for heating and cooking. Biomass, including wood, is primarily used, yet the practice results in significant pollution and health issues from the smoke and misuse.
 
“Technological solutions that could solve this problem have been developed but not widely adopted because the firms developing them have not heeded the needs and purchasing nature of those living in poverty,” Bruton said.
 
The professor’s research provides three keys for business success and sustainabilty when introducing a product or seeking to solve a problem in settings of poverty:
 

Develop a deep understanding of people living in poverty.

Poor people have specific needs and desires that do not necessarily equate to people who live in wealthier environments in the same country. “Rich or poor, actual consumer needs should direct what the firm does, not what the firm thinks the consumers should be doing,” Bruton said.
 

Realize that each community is unique.

“Assuming that ‘the poor’ all act the same or need the same things is like assuming all Asians or Africans are the same,” Bruton said. He said each population has distinctive dimensions that must be carefully and thoughtfully understood.  

 

Focus on understanding local behavior. 

Communication in poor communities is different than in wealthier domains. “Usually in settings of poverty, the communities are very tight-knit,” Bruton said. Rather than communicating through advertising, obtaining the support of people who are leaders in these communities may result in better success.
 
Bruton said the ability of businesses to understand the nuances of poverty in emerging economies, to create trusted connections within these communities and to support development and service at every level is the key to global success now and for the future.

— Elaine Cole
 



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