Innovation for the poor : a study of Swedish micro-SMEs social innovations towards subsistence markets in East Africa

Abstract: Problem statement Previous studies have indicated that poverty can be reduced through selling products to the poor. Moreover, these markets contain a large potential for profit that is currently untapped. Reaching these however requires substantial innovativeness and many companies have tried and failed. Surprisingly then, little theoretical guidelines exist on how to create social innovative products for poor markets. Purpose and research question The purpose of this study is to contribute to a better understanding of social product innovation for poor markets. This is done through investigating key factors to consider for SMEs emanating from developed countries in order to create social innovative products for these markets. Methodology This paper is a qualitative research and takes an exploratory approach, and uses a cross- sectional, multiple case study methodology. This study has investigated four products emanating from Swedish micro-SMEs, sold primarily in Tanzania, Zambia and Kenya. The empirical data was collected through conducting 12 semi-structured interviews. Results and conclusion The result of this paper contributed to a deeper understanding of social product innovation in subsistence markets. Theoretical guidelines in form of a model has been developed which summarizes 19 key factors that SMEs emanating from developed countries need to consider in order to create social innovative products for subsistence markets. Out of these, three are deemed to be of particular importance, namely the need to understand the marketplace, to develop the product in a price-based costing framework, and to scale.