Photo: © Arne Hoel/World Bank
By Dr Noshua Watson, Research Fellow, Institute of Development Studies
The May 3 debate on Bottom of the Pyramid: Responsible Capitalism or Business as Usual ended with a rousing call for more evidence on what works. But how do we generate that evidence? There are a number of methodologies (BCtA, INSEAD Economic Footprint, Oxfam Poverty Footprint, BIF, IRIS,WBCSD and so on) and a few well-known studies (e.g. Unilever, Coke and SABMiller, Nestle) but how much do these really tell us about business impacts?
Elise Wach of IDS finds that the current inclusive business evaluations fall short in a few ways: we need to clearly define inclusivity; clarify the expected causes, effects and beneficiaries; and also examine alternative explanations. ‘Inclusive business’ generally refers to business models that have a positive development impact. But definitions vary with respect to whether it involves the poor as producers or consumers or whether it involves multinational value chains, small and medium enterprises or social entrepreneurs. When measuring and comparing inclusive business impact, we need to be explicit about who we are supposedly helping and how.
How we help can also be confusing because economic, social and moral imperatives can collide. Is it inclusive to include poor people in value chains for tobacco, alcohol or junk food? Both positive and negative impacts may occur in the same project and Wach recommends examining causal chains of outputs and outcomes to clarify where, how and for whom we expect impact to occur.
Finally, many current inclusive business impact studies do not collect sufficient baseline data or examine alternative cases. How many of the benefits are attributable to the programme and how many would have occurred anyway? While it isn’t always possible (or ethical) to assign people to experimental control groups, there are other ways of determining the counterfactual ‘what if’ or ‘what if not’ case. Wach argues that doing so is essential if we really want to know the real impacts of a business.
If we want more inclusive business, we need our impact studies to actually demonstrate impact so we know what practices really work.
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