Institutional imperfections and heterogeneity in the base of the pyramid: implications for entrepreneurship and informality

Oscar Barzuna-Hidalgo and Justin W. Webb

Chapter 3 in Handbook of Research on Base of the Pyramid Entrepreneurship, 2026, pp 44-60 from Edward Elgar Publishing

Abstract: Base-of-the-pyramid (BOP) markets, comprising approximately 2.8 billion adults with annual incomes of US$10,000, represent significant consumer potential and a gauge of economic development. These markets face substantial poverty-related vulnerabilities, including health issues, child labor, and unreliable safety, exacerbated by environmental conditions. Research on BOP markets often focuses on the roles of institutions and entrepreneurship in poverty alleviation. Institutions, both formal and informal, govern resource distribution and support entrepreneurial activities, which can drive economic development. This chapter explores the entrepreneurship process in BOP markets, highlighting institutional imperfections and their impact on entrepreneurial activities. It emphasizes the heterogeneity within BOP contexts and the prevalence of informal economies. Key contributions include differentiating types of institutional imperfections, understanding contextual heterogeneity, and examining the informal economy's role in addressing institutional challenges and fostering economic development.

Keywords: BOP Entrepreneurship; Institutions; Informality; Poverty; Institutional Imperfections; Economic Development (search for similar items in EconPapers)
Date: 2026
ISBN: 9781802202137
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