Product Differentiation at the Base of the Pyramid: Individual-Level Antecedents and Performance Outcomes

Abstract

Entrepreneurs at the base of the economic pyramid often follow an imitation strategy, whereby the products and services they offer are similar or identical to those of their competitors. Although mimicry is not unique to impoverished and developing contexts, it appears to happen therein with much greater frequency. This has led some scholars to propose that there are significant and unique benefits to imitation in the base of the pyramid context. As such, using survey data from a sample of business owners in Nigeria, we first investigate the degree to which differentiation is beneficial to performance. Contrary to findings in the mainstream strategy literature, we find evidence of a U-shaped relationship between the constructs, suggesting that business owners should either follow closely or distance themselves greatly from what others are doing. We further explore two novel antecedents of differentiation: unconventionality and risk-taking propensity. Our results suggest that there is a positive impact of both unconventionality and risk-taking upon differentiation. Each of these findings advance differentiation theory and literature.

Keywords: differentiation, imitation entrepreneurship, BOP, unconventionality, risk-taking