Alignment in the Base of the Pyramid Producer Supply Chains: The Case of the Handloom Sector in Odisha, India

• Author: Ramakrushna Padhy,Winfred S. William,Santosh Mahapatra
• DOI: http://doi.org/10.1111/jbl.12211
• Date: 01 June 2019
• Published date: 01 June 2019

Alignment in the Base of the Pyramid Producer Supply Chains:

The Case of the Handloom Sector in Odisha, India

Santosh Mahapatra

1

, Winfred S. William

2

, and Ramakrushna Padhy

3

1

Clarkson University

2

XIM Bhubaneswar

3

IIM Kashipur

This investigation seeks to explore the effectiveness of alternative approaches to supply chain management for developing the base of the

pyramid (BoP) community. Using case research methodology, we investigate the issue of supply chain alignment when the supply base

consists of BoP producers. We consider the handloom supply chains in Odisha, India, as the context of our analysis. The study analyzes the

supply chains of four handloom retailers. The retailers represent cooperative and private organizational systems with varied levels of operational

integration. In light of the insights from these case studies, we theorize factors contributing to operational cost-effectiveness and conceptualize

approaches and considerations for improving the BoP community. Specifically, we clarify the usefulness of alternative supply chain alignment

practices in promoting efficiency, innovation, and equitability among the BoP constituents and advance a set of propositions linking the motiva-

tions, strategies, practices, and performance in handloom supply chains. Limitations, theoretical and managerial contributions, and future

research directions are discussed.

Keywords: base of the pyramid; handloom sector; supply chain alignment; welfare; economic performance

INTRODUCTION

In response to Prahalad and Hart0s (2002) call to recognize the

poor as resilient and creative entrepreneurs, corporates are paying

increased attention to the issue of simultaneous advancement of

the base of the pyramid (BoP) population and business goals

(London et al. 2010; Hahn and Gold 2014; Sodhi 2015). Their

efforts can be characterized as corporate and community partner-

ships for the “creation of shared value (CSV)”(Porter and Kra-

mer 2006). However, corporates find it difficult to advance BoP-

oriented business goals because it is not clear how shared value

can be created when the utilities of the BoP community and that

of the company are distinct or in conflict. To illustrate, the CSV

efforts, often resulting in reconceived products and processes,

could be unprofitable (Karamchandani et al. 2011); distribution

of CSV benefits could also be inequitable, causing negative

intra-community relationships (Varman et al. 2012). Against this

backdrop, Sodhi0s (2015) stakeholder resource-based view

(SRBV) offers a framework that suggests how business can be

conducted while accommodating the utility maximization objec-

tives of all stakeholders including the poor producers and cus-

tomers. However, SRBV in its current form does not address the

plausible conflicts or challenges in utility maximization

approaches when government and community are the stakehold-

ers (Sodhi 2015: p. 1382).

Further, due to its roots in RBV, SRBV is probably more rele-

vant when the corporates aim to gain competitive advantage

based on their engagement with the BoP community. Thus, it is

not obvious if the SRBV framework readily applies to the BoP

context when: (1) the supply chains are anchored to products that

are conceived, designed, and produced by the unorganized,

socially backward, poor producers, and (2) the economic growth

and sociocultural welfare of the community members are the

prime objectives. We seek to understand how business success,

sociocultural development, and individual growth can happen

simultaneously by examining the BoP business dynamic when

the products are conceived, designed, and manufactured by a

socially and economically disadvantaged community. Consistent

with Sodhi and Tang (2014) call to investigate BoP supply chain

issues in developing countries, our study explores how BoP pro-

ducer-based supply chains operate in India.

We use the handloom sector in the state of Odisha, India, as

the context of our investigation because the sector characterizes

the social, cultural, economic, and political context of the BoP

producers (Notes on Handloom Sector, Ministry of Textiles,

2015). Handloom refers to a manually operated loom used to

weave clothes. The first four digit of NIC classification codes

1

for handloom-related manufacturing activities are 1,713, 1,714,

and 2,926. The sector faces significant operational and economic

challenges. About 50% of the people employed in this sector live

below the poverty line (BPL),

2

an economic benchmark used by

the Government of India to identify people in need of economic

assistance (Handloom and Handicraft Report 2012, Government

of India). The income criterion for inclusion in the BPL category

is about $1.9/day per head, which is less than the $2.5/day

3

per

head used internationally to define BoP.

There are two organizational systems that conduct business in

handloom sectors: (1) the government-aided cooperative

Corresponding author:

Santosh Mahapatra, School of Business, Clarkson University, 311

Snell Hall, 8 Clarkson Avenue, Potsdam, NY 13699, USA; E-mail:

smahapat@clarkson.edu

1

http://mospi.nic.in/classification/national-industrial-classification/

alphabetic-index-5digit.

2

https://en.wikipedia.org/wiki/Below_Poverty_Line_ (India; accessed

on February 10, 2018).

3

https://en.wikipedia.org/wiki/Bottom_of_the_pyramid (accessed

on February10, 2018).

Journal of Business Logistics, 2019, 40(2): 126–144 doi: 10.1111/jbl.12211

© 2019 Council of Supply Chain Management Professionals

enterprises with weavers as the constituents, and (2) the private

enterprises that have developed in response to the government0s

economic liberalization policies in the 1990s. However, unlike

the large corporates who have resources to build the infrastruc-

ture for a BoP business, handloom enterprises lack the experi-

ence and capital for building resources and capabilities for

commercial success (Prasad and Tata 2009). Further, since wea-

ver cooperative societies are government-aided, they are exposed

to nonentrepreneurial, nonmarket influences. The approaches for

cost-effective value creation, delivery, and sharing in the BoP

producer-based handloom supply chains are not clear. To our

knowledge, there are few studies that shed light on these issues.

We address this gap through a phenomenological investigation

of the supply chains of four handloom retailers using the case

research method. Our research aims to identify and explore:

•What are the priorities, opportunities, constraints, and organi-

zational mechanisms of the producers in handloom supply

chains?

•How do alternative organizational and supply chain manage-

ment (SCM) strategies and practices compare in promoting

efficiency, innovation, and welfare in handloom supply

chains?

In our investigation, we utilize a research framework (refer to

Figure 1) that reflects supply chain alignment (Frohlich and

Westbrook 2001; Fawcett et al. 2008) perspectives. It accommo-

dates the SRBV (Sodhi 2015) tenets by including the objectives

and behaviors of various stakeholders in handloom supply

chains.

Since handloom supply chains involve multiple stakeholders,

there is a need for structural, operational, and behavioral align-

ment among all concerned. Supply chain process integration is

crucial to such alignment. Our research explores how the supply

chain contexts of various stakeholders influence the alignment

strategies and integration practices that contribute to profitability,

distributional efficiency, community development, and innovation

in handloom supply chains.

Our investigation offers several nonintuitive insights into the

effectiveness of alternative approaches to manage handloom sup-

ply chain operations, including:

•A cooperative organizational system with weaver welfare and

economic development objectives can be less effective in fos-

tering efficiency and innovation even though it has weavers as

constituents and receives the government0sfinancial and nonfi-

nancial support;

•A basic challenge in the handloom sector is the unorganized,

low-scale operations by independent weavers; yet, integrated

operations under the formal control of one organization may

not result in high performance especially when the producer

base is inefficient;

•Contrary to the general perception that market-driven, private

retailers can be solely profit-driven, supply chains managed by

entrepreneurial private retailers seem to offer stronger opportu-

nities for artistic, social, and economic wellbeing;

•Unlike conventional business, inducing competition among

weavers for higher performance might not be effective because

of the community bonds among weavers;

•It is difficult to motivate weavers purely on monetary incen-

tives; instead, a balanced use of monetary incentives and trust

is useful to improve commitment and performance.

The paper is organized as follows. In the next section, we

review the extant literature that aids in defining our research

agenda. We then discuss the research design and research

methodology. Next, we analyze the case data to characterize the

supply chain strategies and practices in alternative operating con-

texts, and advance a set of propositions that contribute to a theo-

rization of the BoP supply chain dynamic. Thereafter, we discuss

our main findings and present a conceptual framework that sum-

marizes our key insights. Finally, we recognize the limitations of

the study and suggest directions for future research.

LITERATURE REVIEW

To our knowledge, there is no established theory to explain opera-

tional effectiveness in supply chains dealing in products designed

and produced by BoP producers. Therefore, we began our investi-

gation without any a priori theoretical anchors. After a pilot study

consisting of a discussion with the secretary of the department of

textiles and cooperatives and a visit to a handloom cluster, we felt

the supply chain alignment perspective (Fawcett et al. 2008) advo-

cating smooth linkage among the operating context, strategies,

practices, and performance across various entities in the supply

chain would be a useful frame of reference. At a later stage, we

relied upon the extant BoP and social microenterprise literature to

interpret data, infer, and theorize. Specifically, we found Sodhi

(2015) SRBV and Fawcett et al. (2008) supply chain alignment

frameworks useful for our analysis. In the ensuing discussion, we

articulate the theoretical and empirical rationales that were kept in

reference while analyzing and interpreting the case data.

Handloom supply

chain context

Weavers

•

•

•

•

•

•

•

•

•

•

•

•

Government

Organizations

Social, economic

and cultural norms

Strategies and practices for

alignment and value creation

Strategic: resources and

capabilities creation

Tactical: uncertainty

management

Operational: demand and

supply management

Coordination and control

Performance

outcomes

Innovation

Financial

Relationship

Organizational

development

Figure 1: Research framework (adapted from Sodhi 2015 and Fawcett et al. 2008).

Alignment in the BoP Supply Chains: The Handloom Sector 127