tread4001By Paul Polak and Mal Warwick

We recognize that a great many readers of our book, The Business Solution to Poverty, might fear that the big companies we advocate building — the “new breed of multinational corporations” we write about — would simply exploit the poor people we seek to help. We would be naive to assert that this would never happen.

The history of business is studded with examples of predatory enterprises. We needn’t turn to exploitative ventures such as check-cashing businesses in the U.S. or water-lords in poor countries to find present-day examples. In recent times, Americans have learned more than we ever wanted to know about how so many of the nation’s largest and most prestigious banks victimized millions of low-income families by persuading them to take out mortgages they couldn’t possibly pay and to acquire credit cards they didn’t need and overextend their credit.

In countries where the legal system may be weak and laws against fraud, if any, are rarely enforced, the threat of exploitation by business is even greater than it is in the Global North.

So, you might ask, aren’t we worried about this problem?

The answer is yes. However, as you’ve seen if you read our book, the approach we advise for the development of businesses to serve the poor—those earning $2 a day or less—includes built-in safeguards:

  • the companies we recommend have a social mission with measurable impacts built into the mission and DNA of the organization;
  • if these companies are to thrive, they need to employ stakeholder-centered management, to ensure that all concerned may meet their needs;
  • if products are to sell, they must meet local standards for quality, functionality, and price;
  • if they are to reach the hundreds of millions of potential customers who live in sometimes isolated rural areas, they must employ armies of local people in marketing, sales, and distribution; and,
  • if a business is to be sustainable, it must fulfill enduring needs shared by large numbers of people.

Admittedly, the decentralized business model we favor nonetheless poses risks of bad behavior at the local level. For that reason, we introduce both tight financial controls and rigorous monitoring and evaluation (M&E). There may well be problems from time to time, but we’re confident that we’ll root them out in short order.

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