Review of the Literature

The rationale for focusing on developing markets has been documented and established The saturation of existing developed markets in some businesses and the vulnerability associated with business cycles have resulted in a focus on new ways to create value (Seelos & Mair, 2005). Traditional measures such as restructuring and cost-cutting have a short-term impact and may hamper innovation. Luo and Tung (2007) proposed a springboard investment perspective, according to which developing-market multinationals leverage international expansion opportunities as a way to overcome problems in their local (home) markets.

Raynor (2003) recommended that businesses should look beyond their existing core markets and customers, and instead consider simple disruptions that can help to develop new approaches to price and quality, so as to develop new clients. Hammond (2007) differentiated between the market-based approach to poverty reduction, vis-a-vis the more traditional approach, which aims at addressing basic needs of the poor through subsidies and dole-outs, but does not produce striking results. A market-based approach, on the other hand, recognizes that it is not just the poor who have unmet needs. Rather, it considers willingness to pay across market segments. Solutions are then developed by designing new business models and products.

Abramovitz (1986) argued that it is the inability of the poor to create or respond to economic opportunities that results in sustained poverty. The World Business Council for Sustainable Development has advocated the development of a stable market economy that emphasizes collaboration, innovation, eco-efficiency, informed consumer choice, improved market framework conditions, and making the market work for everyone (WBCSD, 2001).

The rapid growth of the e-commerce sector in India has managed to overcome some barriers associated in linking businesses with clients. In fact, the growth, both in the numbers and in the features of the e-commerce retailing models (e.g., Snapdeal, Flipkart, and Jabong, to name a few), has been extraordinary, compared to even the phenomenal Chinese success; as Hu (2004) noted, Alibaba was operating at a loss until 2004. The Indian e-commerce retailing space has managed to scale the model to suit a diverse set of clients and markets. The main feature of e-commerce is its ability to transcend physical boundaries and reach customers in a manner different from the traditional brick-and-mortar stores, at their very doorstep. Efficient logistics and infrastructure are the backbone, and many investment opportunities exist in this sector because these are the weak links, at present, in the Indian context (ASSOCHAM, 2014).

This sector has attracted considerable activity and funding, as investors have put money into companies that are selling a variety of products to clients across India. With close to 250 million Internet users, the Indian e-commerce industry represents an interesting opportunity for foreign institutional investors. For example, in 2015, Flipkart and Snapdeal received US$750 million and US$500 million, respectively. The e-commerce delivery and logistics management company E-Com Express received US$133 million, while the Grofers (an online grocery) portal received US$165 million.2,3,4 [1] [2] [3]

Given the challenges of operating in a demanding scenario, particularly that prevailing in developing nations, the inputs from, and the symbiotic arrangements with community associations and NGOs, can prove very useful in helping businesses in accessing resources that, in turn, can influence profit-related outcomes. Successful community-based organizations are thus able to build and blend resources and capabilities, to achieve social as well as economic objectives. Rich (1980) noted the triple roles performed by such institutions, viz.: (1) consumer cooperatives, (2) alternative producers of desired services, and (3) organizers of citizen’s cooperative efforts.

  • [1] Source: https://www.techinasia.com/asia-biggest-funding-rounds-2015, accessed on April 82016.
  • [2] The main investors during 2015 in the above-mentioned e-commerce companies were as follows:Flipkart (Morgan Stanley, Vulcan Capital, Naspers, Qatar Investment Authority, and T. RowePrice), Snapdeal (Soft Bank, Black Rock, EBay, Intel Capital, Alibaba, and Fox Conn), E-ComExpress (Warburg Pincus).
  • [3] Source: https://e27.co/softbank-backed-grofers-shuts-operations-9-cities-due-poor-uptake-20160105/, accessed on April 8, 2016.
 
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