Becoming trusted at the base of the pyramid

Strategies for the Base-of-the-Pyramid
Becoming trusted at the Base-of-the-Pyramid

Master thesis
M.Sc. in Organization Studies 2007/2008
Tilburg University

Author
Peter Grootveld
ANR: s577220
Tel.: 06 52 30 7700
Email:

Supervisors
Dr. Patrick A.M. Vermeulen
Prof. Dr. Jac L.A. Geurts


Abstract
Numerous academics and business managers believe that western MNCs can create new markets and
help eradicate poverty at the same time, once they recognize the poorest of our world, the so-called
“base of the pyramid” (BoP) as novel consumers and innovative producers. To be successful in this
bipartite mission, MNCs are dependent on successful collaboration with local parties in the developing
countries. However, collaboration with western partners is based on other grounds than collaboration
with local parties, often living in remote communities. Trust appears to be the key word in the latter
and BoP literature provides quite some propositions on trust building activities. However, despite the
acknowledgement of the necessity of trust building with local partners, there is no empirical research
specifically aimed at MNCs trust building processes with people in the remote communities. Hence,
this master thesis sets out to explore how western multinational companies build trust with local
communities in developing countries. Departed from present BoP and trust literature this thesis studied
a BoP case in Tanzania and confirmed five variables causing trust: outset manifestation, reciprocity,

consistency, adaptation to institutional framework and communication. Moreover the results of this
thesis show that the relation between the variables and the actual processes that account for the
relationship between the concerning variables are determined by the context of the BoP.
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“Cooperation is sustained by the shadow of the future” (Axelrod, 1984)
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Preface
This master thesis presents the results of an inductive research on “strategies for the base of the
pyramid”. I conducted the preparing and concluding parts of the research at Tilburg University
and the field research in Tanzania. The finished thesis brings along ambivalent feelings. On the
one hand, it means the successful ending of a fruitful period of studying. On the other hand, it
means the end of working on a subject that inspired me increasingly, day after day. However, as
Jac Geurts spoke to me reassuring: “it’s just like a boomerang, it will return to you once again”.

The thesis has its origins in the strategy classes of Patrick Vermeulen and Jac Geurts. Their
enthusiastic introduction of the Base of the Pyramid made many hearts beat faster, and “Strategies
for the Base of the Pyramid” became a very interesting thesis subject. Hence, I want to thank both
Patrick and Jac for their impassionate classes. More specifically, I want to thank Patrick for his
professional supervision. His feedback was always quick, clear and to the point. It was not only
helpful to conduct better research, but also taught me to sharpen my vision in general.

Furthermore I want to thank Harrie Hendrickx from Unilever, who supported me in studying the

Allanblackia case - which was perfect for my thesis - and connected me to the right people. One
of these people was Fidelis Rutatina from NDTL. Fidelis introduced me to the real world of
Allanblackia and to Tanzania in general. He is the best host in Tanzania one could imagine. Next,
I want to thank Godfrey Nkongolo who not only helped me translating the interviews, but also
guided me during the trips across Tanzania.

Of course, I owe the results of this thesis to all the interviewed people. Hence, I thank all the
community members I interviewed and their villager leaders. I also want to thank, Maria and Tom
from FaiDa Mali, Ndanshau from SNV and Doris from ICA. I admire them for their dedicated
work to create a better life for the people in Tanzania.

I am also very grateful to all the people that have read my thesis and thought along with me, with
special thanks for their critical feedback to Michel Bachmann and Chris van der Schoor.

Peter Grootveld
Nijmegen, January 2009
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Table of contents

1. INTRODUCTION 5
2. THEORETICAL BACKGROUND 10
2.1 Organizing the trust literature 10
2.2 Trust defined 11
2.3 Antecedents of trust 11
2.4 Trust in BoP studies 17
2.5 Insights from other studies 20
2.6 Comparing visions on trust building 21
3. METHODOLOGY 24
3.1 Research design 24

3.2 The case 25
3.3 Data collection 26
3.4 Data analysis 29
4. RESULTS 32
4.1 Introduction 32
4.2 Build trust incrementally 32
4.2.1 Outset manifestation 33
4.2.2 Manage reciprocity 36
4.3 Consistency 41
4.4 Manage communication 42
4.5 Adapt to institutional framework 44
4.6 An overview of the results & a BoP trust building model 49
5 DISCUSSION AND CONCLUSION 51
5.1 Introduction 51
5.2 The suitability of prevailing trust literature 54
5.3 Comparison with the BoP literature 55
5.4 Conclusion 57
5.5 Limitations 58
5.5 Further research 59
6 REFERENCES 59

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1. Introduction
“If we stop thinking about the poor as victims or as a burden and start recognizing them as
resilient and creative entrepreneurs and value-conscious consumers, a whole new world of
opportunity will open up”. (Prahalad, 2004, p.1).

This proposition is illustrative for the increasing signs of interest in the possibility of doing
business in developing countries and alleviating poverty at the same time.

The websites and annual reports of fortune global-500 companies show that nearly all of them
are to a certain extent serving the poorest of our world, the so-called “base of the pyramid”
(hereafter: BoP). Wal-Mart, for example, moved into the Mexican retail banking sector.
According to themselves, not only to ‘sell more stuff’ but also to compete against the
entrenched domestic businesses that are not fulfilling local demand. And as the New York
Times (2006) stated affirmatively: “Poorer Mexicans have been largely shut out of
traditional banks by minimum balances, high fees and intimidating paperwork. Community
banks barely exist”. Another illustrative example is Unilever. It notifies on its website that
their deep roots and early engagement in BoP markets gave them valuable experience in
meeting the needs of BoP consumers. For instance, one of Unilevers oldest brands is
“lifebuoy”, once launched in the UK as an affordable soap. Today it is mainly consumed in
BoP countries. Nearly half of the sales take place in rural Asia, where hygiene issues such as
hand washing are of vital importance for whole communities. Another ‘BoP-aware’ company
is DSM. This multinational proclaims they started three concrete ‘Base of the Pyramid’
projects in India this year. According to their website these projects will focus on the topics:
increased production of milk, better nutrition and the development of sustainable construction
materials. Like this, numerous other examples of companies entering the BoP can be found.

Strategies to enter the BoP are also increasingly subject of interest in Academia. In 2002 an
article named the fortune at the bottom of the pyramid caught not only the eye of the corporate
world, but attracted also many scholars of different disciplines. In this article Stuart Hart and
C.K. Prahalad capture the division of the worlds purchasing power parity in a pyramid with
four consumer tiers. They sketch the top tier as a saturated market accommodating about
hundred million people earning more than $20.000 a year. The bottom tier consists of more
than four billion people with an annual per capita income of less than $1500. Thereupon, they
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state that although these bottom tier people are poor, they represent an underserved multi-
trillion dollar market. Hart and Prahalad continue in their article with quashing the prevailing

assumptions why these people should not be seen as potential consumers for western
companies and subsequently they draw attention to a few crucial elements to create a
commercial infrastructure in developing countries. For instance, they assume that the poor can
afford and do have use for the products and services in developed markets and they argue that
it is crucial to pay special attention to improvement of access to these products. Considering
the scholars innovatory train of thought, it is not surprising that many colleagues reacted on
Prahalad and Hart by publishing articles in line with The Fortune at the Bottom of the
Pyramid. Some of them primarily in a critical way (e.g. Jenkins, 2005; Crabtree, 2007;
Karnani, 2007) and others elaborated on Prahalad’s and Hart ‘s ideas by studying certain
aspects of the BoP proposition, or by approaching it from a specific angle. For example, it is
studied how to create successful business models for entering the BoP (London, 2007; Seelos
& Mair 2007), how corporations and NGOs can partner successfully to learn from each other
(Brugmann & Prahalad, 2007), how a BoP perspective can complement other poverty
reduction programs (London, 2007), alternative perspectives on BoP concept are explored
(Jaiswal, 2007) and there is even a BoP protocol, helping organisations step by step to launch
a BoP venture (Simanis & Hart, 2008).

It seems convincing that the BoP philosophy receives increasing and mainly positive attention
by both academics and business managers. However, it is not all roses in the BoP markets.
Among the high number of organizations that entered the BoP, there are also many examples
of failed initiatives. A typical example is the Word Shoe project of Nike. In its attempt to
supply low priced shoes to the low-income-populations in China, it failed in meeting its sales
goals. According to McDonald et al (2002), Nike was unsuccessful in reaching the target
consumer because its business model was not based on an emphatic understanding of the
context. Stuart Hart (2007) has put forward that if Nike had started with a pre-commercial
period of engagement, deep listening and building trust with local parties, it would have had a
greater chance of being successful in resolving the contradictions between its used business
model and the one required to serve the low-income-populations of China. And even if a BoP
venture seems to have success in the beginning, it can still easily fail to meet its targets. The
detergent product ‘Wheel’ of Unilevers subsidiary Hindustan Lever Ltd. (HLL) perfectly

illustrates this failure to make a BoP initiative grow. The business model was based on single
serve packaging, low-cost production, and distribution through small local companies.
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Although rapid growing sales figures were visible in the beginning, the business model was
not suitable to reach 500 million potential customers in rural villages. After a few years
HLL’s rapid growth began to stagnate. In 2004, the HLL share price ended up in a downward
spiral, and shed over 25 percent within 3 months (Financial Express, 2004). HLL became
aware that it had to integrate deeper into the local communities to reach the 500 million
people. Hence, “Project Shakti” came into existence: through women’s self help groups, HLL
trained thousands of entrepreneurial women in building a local HLL micro-franchise. This
project has resulted in both income creation for the female micro-entrepreneurs and the
possibility of reaching the 500 million previous unreachable customers.

The interested reader has probably considered what might be essential if a MNC wants to be
successful in entering the BoP. Consulting the BoP literature to explore this matter, results in
finding many factors that influence the consolidation in the alien BoP market. London and
Hart (2004) make a fundamental point with respect to becoming successful: “Business
strategies that rely on leveraging the strengths of the existing market environment outperform
those that focus on overcoming weaknesses”. All of the BoP scholars seem to comply with
the proposition that it is necessary for MNCs to become integrated in the concerning context
and hence they have to collaborate with local governments, local NGOs, local firms and local
individuals. Furthermore, literature suggests that MNCs have to develop a learning process
with the local people in order to create relevant ideas for products or services that the people
really need and to obtain other needed knowledge about the local context. Frequently
mentioned is the importance to have local companies and individuals taking over a part of the
MNCs activities and include them in supply chains. Logically, this creates income generation
in local communities and hence eradicates poverty. And indeed, also the earlier described
examples of BoP initiatives leads one to suspect that involving local communities in BoP
ventures calls for special attention and even determines the success of the venture. Unilever

brings its soap hand in hand with education on hygiene and according its website, it “visits
each village several times, engaging all parts of the community”, Nike failed because it didn’t
engage with the local community and HLL began to meet its objective not before it started to
collaborate intensely with rural women.

It might be clear that collaboration with diverse local parties plays a major role in becoming
successful at the BoP. Consequently, the next question would be: how to collaborate with
local parties in this new market? Also this question is broadly discussed by BoP scholars and
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the ever returning key word in this discussion is “trust”. For instance, Stuart Hart (2007,
p.213) states: “unleasing the wellspring of innovation at the BoP(…) requires developing a
personal relationship of trust, understanding and respect through which new possibilities for
locally-embedded businesses can emerge”. In the same line, his colleague Simanis et al.
(2008) mentions that the corporate team will depend heavily on the trust they have to obtain,
because it will enter the local community as an outsider. Some imminent phrases in BoP
publications attach even more weight to “trust” because they could have the reader presume
that trust building in a developing country brings along more barriers than just differences in
cultural background. For example, Prahalad (2004, p.20) notices that “Both sides- the large
firms and the BoP consumers- have traditionally not trusted each other. The mistrust runs
deep. Private sector firms approaching the BoP market must focus on building trust […}.” ,
and Hart (2007, p.213) emphasizes that “the key to success in the BoP is trust […] because
the poor are frequently exploited by predatory lenders and unscrupulous vendors.”

The importance of collaborating with local partners and the striking statements about trust in
the BoP literature raise undeniable inquisitiveness about the way in which trust is build in the
BoP. Surprisingly, there is no empirical research aimed at a MNCs trust building process with
the people in the remote communities. Statements are mainly conceptual or derived as side
effects from other studies. To the best of my knowledge, not even one of the BoP articles
refers to the mature field of organisational trust research. Trust is, after all, recognized in

several scholarly disciplines as a crucial element in business partnerships. McEvily et al.
(2006) designate various viewpoints. Referring to Arrow (1974) they mention that economics
argue that trust is an essential ‘lubricant’ necessary for even the simplest forms of economic
exchange. Strategy researchers believe that trust is a strategic resource providing a source of
sustained competitive advantage (Barney & Hansen, 1994) and other organisational
researchers describe trust as a governance form which helps organisations to coordinate its
economic activity (Powell 1990). It could be well conceivable that findings in general trust
research are applicable in BoP ventures and help MNCs to become successful in their mission
to create new markets and eradicate poverty at the same time. Hence, departed from the
mature field of trust research this thesis sets out to explore:

how western multinational companies build trust with local communities in developing
countries.

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The importance of trust building is obviously discussed in the BoP literature, but it falls short
when it comes to the actual process of trust building with local partners. Consequently,
answering the research question will contribute to closing this important gap. Besides closing
the gap, it will also hold the proposed methods for launching BoP ventures in general against
the light. An interesting question is if these methods, for instance the ones elaborately
discussed in the BoP protocol by Simanis and Hart (2008), are fostering the trust building
process as well. But there is even more theoretical relevance. Also within the mature field of
trust research is the context of the BoP unknown. Hence, answering the research question will
provide insight in the applicability of the long standing trust antecedents in the context of the
BoP. Then there is the more practical point of view. The outcome of this thesis is valuable for
MNCs in search for the crucial relationship with local people in the yet untapped new market.
It will provide a model that can be used by MNCs as a guideline to build a trusted relationship
with local partners at the BoP.

The theoretical framework will first expound on the mature field of organisational trust
research. Subsequently, the conversely juvenile field of BoP research will be turned inside out
to make an inventory of ideas on trust building living in this academic domain. Also the
literature from the development field and on cross cultural collaborations will be shortly
visited to derive potentially important insights for this thesis.

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2. Theoretical background
2.1 Organizing the trust literature
Many interesting but not always convergent streams of trust research have developed among
scholars (Bachmann and Zaheer, 2006). Already for decades, but especially at the moment of
writing (2008), trust in economies is a much discussed topic. Also trust in (groups within)
societies is studied a lot (Bachmann and Zaheer, 2006) and even within organisations trust is
studied on various levels.

Why is trust that interesting to study? It was already discussed in the introduction that trust is
a key factor in collaborations. McEvily et al. (2003) pointed out that economics define trust as
an essential ‘lubricant’ necessary for all forms of economic exchange, strategy researchers
believe that trust is a strategic resource providing a source of sustained competitive advantage
and other organisational researchers describe trust as a governance form which helps
organisations to coordinate its economic activity. In addition, Larson (1992) claims that trust
reduces the extent of formal contracts needed. Furthermore, trust determines the likelihood of
future cooperation (Williamson, 1993), lowers transaction costs (Gulati, 1995), induces
desirable behaviour (Madhok, 1995) and facilitates dispute resolution (Ring & Van de Ven,
1994). Trust appears to be a broadly discussed concept, so it is important to be clear about the
context in which trust is studied and what is meant by the concept of “trust”.

This thesis explores how companies can become trusted by people within developing
communities. Hence, this theoretical background will go more deeply into how companies

can become trusted by individuals. However, trust in a company appears to be closely
connected with trust in an individual. For instance, Zaheer et al. (1998) conducted empirical
work on the relationship between trust in a specific individual dealt with, and trust in that
individual’s organisation. They found that there is a significant relation between these two
levels of trust. Trust in the organisation is a result of trust in individuals from the concerning
organisation. With respect to this relation, McEvily et al. (2003) found evidence that negative
experience with individuals from a collective have even more impact on the trust in the
concerning organisation. Hence, the focus will be on both trust building between individuals
and between organizations and individuals.

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2.2 Trust defined
According to the “ISI web of knowledge” it was Morgan and Hunt (1994) who published the
most cited article with respect to organizational trust. They conceptualize trust as existing
when one party has confidence in an exchange partner’s reliability and integrity (p.23). The
second most cited article is published by Mayer et al (1995). Their definition is more
comprehensive: “the willingness of a party to be vulnerable to the actions of another party
based on the expectation that the other will perform a particular action important to the
trustor, irrespective of the ability to monitor or control that other party” (p.712). In the
second part of their definition, Mayer et al. explicitly mention the irrespective relation
between trust and the ability to monitor the other party. In this thesis, monitoring is seen as an
important part of trust building. Several scholars claim that the instrumental or functional
value of trust, lies in its power as a risk-coping strategy in social relationships (Koeszegi,
2004) and hence monitoring could be an important part in the concept of trust. Furthermore,
monitoring is also seen as a way to create routine in the contact between partners and also
make parties critically reflect on the partnership. This way adjustments in the relationship can
be made on time (Sabel,1993). Lewicki and Bunker (1995) proclaim that the presence of
monitoring could be a measure to determine the extent of trust. Besides monitoring, there is
another point of attention. There is a difference between plans and actions. In this sense, trust

is found in actions, not in words. Hence, in this thesis trust will be described as the found
willingness of a party to be vulnerable to the actions of another party based on the
expectation that the other will perform a particular action important to the trustor.

2.3 Antecedents of trust
This section will discuss relevant ideas and antecedents of trust, found in prevailing trust
literature.

Incremental trust building and reciprocity
Two of the most often discussed points of interest in the trust literature are reciprocity and
incremental trust building (e.g. Creed & Miles,1996; Johnson et al., 1997; Larson, 1992).

Das & Teng (1998) mention that theorists (e.g. Bowman & Hurry, 1993) propose incremental
resource commitments as the preferred strategy when risk and uncertainty levels are high. In
that sense they note, trust is the accumulation of prior satisfactory experiences (Gulati, 1995;
Luhmann, 1988). Also Burt and Knez (1996) discus trust building as an incremental process.
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Citing Blau (1968, p.454) they summarizes the process as follows: social exchange relations
evolve in a slow process, starting with a minor transaction in which little trust is required
because little risk is involved and in which both partners can prove their trustworthiness. This
enables them to expand the exchange process in their relation and hence, after a certain
period, they can engage in major transactions. Thus, the process of exchange leads to the trust
required for it in a self-governing fashion. Lewicki and Bunker (1995) call this insight in the
behaviour of the trusted partner “knowledge-based trust”. There is a willingness to rely on the
other person because of direct knowledge about this persons behavior. Knowledge-based trust
is grounded in the predictability knowing the other party sufficiently well so that the other’s
behavior is anticipatable. Knowledge-based trust relies particularly on information about the
other.

Part of reciprocity is the way in which benefits of a partnership are divided. Das & Teng
(1998) derive insights from Adams (1963) equity theory of motivation. This theory suggest
that people have a strong need to maintain their sense of equity in exchange relationships. In
this context it means that the all parties benefit from the collaboration in accordance with the
amount of resources they bring in. On occasion, this feeling of getting an equal return on
investment can even be more important then maximizing the synergy of the collaboration
(Ring & van de Ven, 1994). At the other side, if there is a high level of trust, partners tend to
be more flexible in getting an unequal share of the collaboration’s results for a short time.
When there is inequity felt for a longer term, tension will arise and trust will decrease. So, for
successful trust building, profits need to be distributed in an equal manner.

Das & Teng (1998) linked reciprocity also with risk taking. They explain that trust researchers
usually link risk taking with trust to notify that trust leads to risk taking (e.g. Coleman, 1990).
However, from another perspective, Das and Teng suggest that trust and risk taking forms a
reciprocal relationship because risk taking increases the level of trust. When it is visible that
one of the parties within a relationship takes a risk in trusting the other, the other tends to feel
incumbent upon the other to behave in a trustworthy manner. So risk taking is a way to show
one another his trustworthiness. Again, in this technique of trust building, people will not at
once take a lot of risk in the hope that it will cause reciprocal trust from the other party.

When partners get used to each other, they slowly develop a customary way of working. Van
Ees & Bachmann (2006) introduce the concept of “extended trust”. This form of trust is not
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really build on personal contacts, but is rather grounded in patterns of routines and rules,
which people use to predict their partners future behaviour. This would mean that over time,
trust is not only determined by personal contact and (cultural) similarity of partners, but can
also be based on norms produced by and integrated in an institutional framework (Arrighetti
et al., 1997).

The first steps
Knowing that trust is subject of reciprocity and is build incrementally, doesn’t say much about
what a MNC could do when it first enters a remote community in a developing country.
However, the trust literature also proposes ideas about the very beginning of a partnership. To
start with, even without any direct assignable factor, the extent to which a person trust one
another can vary. Mayer et al. (1995) explain this by the difference in people’s propensity to
trust, or in other words, the tendency to which a person will trust another before having any
information. This propensity can differ per person, but is also often dependent on culture.

Das & Teng (1998) suggest a more tangible step to take in order to build a trusted
relationship, namely locating a partner with a good reputation. This might provide the first
piece of evidence to take some initial trust (Barney & Hansen, 1994). Mayer et al. (1995)
suggest that another way of becoming trustworthy is showing your ability. As expounded in
the definition of trust, trusting one another, means being vulnerable to the actions of the other.
The willingness to be vulnerable will partly be determined by the extent to which a party is
really able to fulfil its promises. According to Mayer et al. (1995) this ability depends on the
specific technical skills and competences needed for the situation.

Lewicki & Bunker (1995) describe the whole process of trust building and divide it in phases.
The first phase they distinguish is “calculus-based trust”. This trust is derived from
consistency of behaviour that leads to expectations that the other party will behave
predictably; this trust could be determined by the perceived costs and benefits from staying in
the relationship vs. the costs and benefits of cheating on the relationship. Calculus-based trust
is sustained through a clear deterrent which is likely to occur if trust is violated.

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Communication
Another, more generic antecedent for trust that is often discussed by trust scholars in varying
ways, is communication. By studying relationships between 204 independent automobile tire

retailers and their suppliers Morgan and Hunt (1994) found, among other factors,
communication as significant antecedent to trust. Communication was defined as the formal
and informal sharing of meaningful and timely information between parties. Also Das & Teng
(1998) suggested communication and information exchange as a point of attention during
trust building. Partners can avoid conflicts by constantly discuss differences. Van Ees &
Bachmann (2006) describe communication as an antecedent to trust in the same way, but
more specifically. They discuss that interpersonal trust builds on frequent face-to-face
contacts. Two arguments endorse this proposition; misplaced trust tends to be low because
information about the potential trustee is available and untrustworthy behaviour can
immediately be sanctioned.

Bacharach and Gambetta (2001) introduce communication from a somewhat different point of
view. They propose that many trust precursors as suggested in the literature indeed influence
the trust in a relationship, but the extent of the effect of the precursor is dependent on the
extent in which the precursor is noticeable to the other party. For instance, a person or
organization can be very capable to carry out certain activities, but the other party must also
be acquainted with this capability. In other words, the performative acts of self-presentations
influence the effect of the trust enablers. Bacharach and Gambetta call the signals that form
the empirical basis from which the trust-giver makes the decision for the first move in the
development of trust ‘manifesta’. Hence, communication in the form of manifesta can be seen
as a moderator variable between other precursors and trust. Creed & Miles (1996) describe the
function of communication in a way that perfectly fits in the point made by Bacharach &
Gambetta. They state that communication facilitates the process of proving trustworthiness
and credibility to each other.

Not only communication between the trustor and the trustee influences the trust within a
relationship. Mayer et al. (1995) notice that also the credible communications by others
determines the extent to which a party trust one another.

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Summarized, communication can be seen as an independent variable influencing trust from
various viewpoints. It can also be seen as a moderator variable, determining the impact of
other dependent variables.

Integrity and consistency
The earlier described research by Morgan and Hunt (1994) on independent automobile tire
retailers and their suppliers also pointed out that integrity plays a major role in trust building.
Not surprisingly, they state that opportunistic behaviour lowers the level of trust within a
business relationship. Opportunistic behaviour is adopted from Williamson (1975) and
defined as self-interest seeking with guile. Also Mayer et al. (1995) portray ‘integrity’ as an
important factor in trust building activities. According to them, integrity is determined by the
consistency in past actions of a person, the credible communications about a person and to
which extent actions are consistent with words. This is also a good example in which one
factor is complementing another. Communication is associated and preceding to integrity.

Norms, values and friendship
When partners share values, they are more committed to the relationship (Morgan & Hunt,
1994). Mayer et al. (1995) portray this commitment as benevolence, determined by the
specific attachment to a person. Also Creed & Miles (1996) recognize this mechanism, but
describe their point a little bit more specifically and appoint characteristic similarity as an
enabler of trust between parties. Special attachment is not only created by existing similarity
but also by adapting to each others norms values and needs. Das & Teng discuss “interfirm
adaptation” as a trust building technique. Trust is earned from partners if one adapts to the
needs of cooperation in partnerships (Heide & John, 1992). A willingness to do this, even if it
means financial or other concessions, would earn trust from the partner. Consequently,
making adaptations according to the needs of the partner catalyses the process of trust
building. However, an attachment or commitment cannot already exist at first sight. As
discussed before, Lewicki and Bunker (1995) divide the trust building process in several
phases. Trust in the last and most solid phase is called identification-based trust, and is created

because parties develop a social bond with each other based on mutual appreciation of each
others needs. Identification-based trust is also created by having collective identity,
collocation of personnel, creating joint products or goals, and commonly shared values.


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An overview
Trust research has been very popular the last decades. Many research, however, is conducted on
different levels of analysis, from different viewpoints and certainly not as a coherent whole. A
great overlap is visible in the factors that explain how trust is built and many similar concepts are
given a different name. To create an orderly overview of the above described trust literature, and
to gain insight in the overlap, a table with the discussed antecedents is presented below. The trust
building antecedents are divided in five main categories.

Trust antecedents Authors
Incremental trust building and reciprocity
• Experience of reciprocity
• Prior satisfactory
• Longer time positive experiences
• Anticipatable behaviour of other
• Risk taking
• Incremental commitment
• Slow process of exchange
• Equal return on investment
• Routine & Rules

Creed & Miles 1996
Gulati, 1995
Van Ees & Bachmann 2006

Lewicki & Bunker 1995
Das & Teng 1998
Bowman & Hurry, 1993
Burt and Knez, 1996
Das & Teng 1998
Van Ees & Bachmann
The first steps in trust building
• Propensity to trust
• Locating a partner with a good reputation
• Possibility of deterrence if trust is violated
• Skills and competences

Mayer et al. 1995
Das & Teng 1998
Lewicki & Bunker 1995
Mayer et al. 1995
Communication
• Communication
• Frequent face-to-face contact
• Communication and information exchange
• Manifesta (trustworthiness is noticeable)
• Credible communications of others

Morgan & Hunt 1994, Creed & Miles 1996
Van Ees & Bachmann 2006
Das & Teng 1998
Bacharach & Gambetta
Mayer et al. 1995
Integrity & consistency
• Lack of opportunistic behaviour

• Integrity (consistency in behaviour)

Morgan & Hunt 1994
Mayer et al. 1995
Norms, values & friendship
• Institutional framework
• Shared values
• Benevolence (special attachment)
• Similarity
• Social bond because of mutual appreciation
• Adapt to norms, values and needs of each other

Arrighetti 1997
Morgan & Hunt 1994
Mayer et al. 1995
Creed & Miles 1996
Lewicki & Bunker 1995
Das & Teng 1998
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2.4 Trust in BoP studies
The BoP phenomenon as discussed in the introduction is a very recent one and literature on
the subject seems to develop increasingly. So far, most of the publications, especially the
earlier ones, are rather prescriptive and normative, i.e. provided information is not profoundly
based on empirical evidence. Trust building practises are mentioned a lot, but largely to
emphasize the importance of it or as a side effect of other practises and not because it is
specifically studied how to build trust. Hence, this part of the theoretical framework is used to
explore ideas and initial findings on trust building in publications about strategies for the BoP.

Already the first article speaking in terms of BoP, “the fortune at the bottom of the pyramid”
(Prahalad & Hart, 2002), notices the importance of building a personal relationship with “the
poor”, or as they describe, to “build a local base of support” . They exemplify this
proposition with the situation in which a sunflower-seed company threatens the existing
power structure within the community by empowering some of the poor involved in the
company. As a result, two of the companies offices were burned and local politicians revolted
against the firms seed business. After investing in the community with training, education and
supply of farm inputs, they improved the relation with the farmers. Nowadays they are seen as
a friend and the political opposition has vanished. With respect to the creation of business
relationships, London & Hart (2004) mention the informal character of BoP economies and
that relationships in informal economies are grounded primarily in social, not legal contracts.
Informal, social boundaries often dominate over formal legal documentation they continue,
and hence trust cannot be obtained by having the backup of enforceable legal systems.
Consequently, insight in social infrastructures is necessary to successfully operate in this
business environment.

By interviewing MNC managers from four multinationals involved in BoP market entry,
London & Hart discovered that western companies can receive legitimacy of local people by
collaborating with non-traditional parties or people. Seelos and Mair (2007) emphasize the
value of collaborating with trustable partners by discussing a case in which the Norwegian
telecommunications company Telenor partnered up with the Grameen Bank, which was
founded by Muhammad Yunnus, the 2006 Nobel Peace Prize winner. Together they founded
for-profit ventures bearing Grameens name. The objectives of both organisations could be
pursued by this venture. The venture became successful for a greater part thanks to the well
18

know Grameen brand. Other important non-traditional partners are for example the so called
“fringe stakeholders” (Hart, 2007) like individuals and small companies in local communities.
Based on experiences of organisations like Nike, Shell and the Word Trade Organisation, Hart
& Sharma (2004) state that firms can develop intimacy and trust with fringe stakeholders by

generating complex interactions. Complex interactions are explained as interactions in which
managers from MNCs empathize with diverse and disconfirming perspectives of these
stakeholders and try understand their culture, thought processes and language.

In another BoP related article, Hart and London (2005) explain the success of Grameen Bank
and Honey Care Africa because of their embeddedness in the BoP communities. By building
partnerships from the ground up with local entrepreneurs, NGOs and local governments, they
created a web of trusted connections through which they became integrated in the local
communities. Creating embeddedness takes a lot of time, but brings along the advantage that
it cannot quickly be duplicated by competitors. Also Wheeler et al. (2005) discuss the
importance of a trust-based, densely networked environment. According to their examination
of 50 case studies, it are the development organisations who can act as catalysts for these
partnership opportunities by convening dialogues between local and international businesses.
Arnould & Mohr (2005) go more deeply into the functioning of embedded ties. Natural
channels in BoP markets are embedded in relationships and networks. For being successful at
the BoP, they contend, it’s critical to create an understanding of the embedded ties in a
community and to cultivate and mobilize them. They state that trust in these networks is often
produced by culturally specific, familial, ethnic and religious ties. When a dominant actor is
granted decision-making authority on behalf of the community, it is likely that he has
developed the ability to mobilize the embedded relationships and norms. In addition, Stuart
Hart (2007) mentions the importance of avoiding a short-term commercial agenda. He
underpins this statement with an example of Cemex. In order to find possibilities for a home
building business in Mexico, Cemex managers had to live in shantytowns for six months. One
of the managers said “they had to remove the cement chip from their brains” which led to
unanticipated insight in how they could serve the real needs of the communities. This, in
combination with the long term stay created the crucial trust with the local people. Finally
BoP ventures become trusted over time, when the (financial) outcomes are felt by the ventures
local partners and the community in which it operates (London, 2007).

19

It appears that the BoP literature contains quite some ideas about how trust is built with local
people in communities of developing countries. The table below shows a summary of the
salient catalysts appointed by BoP scholars.


Contention on trust building Author

Invest in the relationships by providing training, education and
farm inputs

Prahalad, 2004

Create insight in, and use social infrastructures, often
determined by culturally specific, familial, ethnic and religious
ties

London & Hart, 2004; Arnould & Mohr, 2005

Become related with trustable people or brands

London & Hart, 2004; Seelos & Mair, 2007

Create complex interactions by empathizing with diverse and
disconfirming perspectives local people and try to understand
their culture, thought processes and language

Hart & Sharma, 2004

Take the time to create a web trusted connections by building
partnerships from the ground up with local entrepreneurs

Hart & London, 2005

Avoid short-time commercial agenda’s

Hart, 2007

Have the local people feel the financial outcomes

London, 2007


The above listed trust building activities are put forward by academics based on their general
studies on BoP phenomena without departing from prevailing trust literature. However,
prevailing trust research could contain many trust enabling factors which are also relevant for
companies entering the BoP market.
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2.5 Insights from development studies and research on cross-cultural collaboration
Non-governmental organisations have many experience with building trust in the concerning
context. A salient view within the field of development research, which is likely to be useful
for the BoP proposition, is the importance to distinguish formal and informal institutions (i.e.
Leach et al. 1997). Informal institutions are socially embedded and exist because of the shared
acceptance of the actors involved. To become trusted, it is important to anticipate on the
informal institutions. Participatory Rural Appraisal (PRA) is a suitable approach to make use
of informal institutions (Chambers, 1994). Hence, insights from this approach could also be
valuable for private corporations working in local communities. PRA is used for
development projects and programmes and involves the knowledge, opinions and perception

of rural people. Robert Chambers (1994) claims that by using this approach, rural people are
more willing to collaborate and provide high valid and reliable information. He puts forward
the following shifts in mechanisms to achieve the pursued collaboration: “from etic to emic,
closed to open, individual to group, verbal to visual, measuring to comparing, and from
extracting information to empowering local analysts”.

Next to the lesson from development studies, insights can be derived from research on cross
cultural collaboration between private corporations. Although dealing with a corporation is
different that dealing with an individual or a community, there is some similarity with respect
to overcoming cultural differences.

Child and Faulkner (1998), discuss that there is more risk and uncertainty involved in
collaborations between parties with a different nationality. Cross-national differences between
partner firms with respect to culture, law, politics, and trade policy give trust an extra
important, but also fragile role in the collaboration (Child and Faulkner,1998). Cultural
barriers obstruct initial trust building because (potential) partners are less able to rely on
interpersonal similarity, common background and experience. These obstruct the contribution
to the mutual attraction and the willingness to work together (Mayer et al., 1995).

Other research shows that the precursors of trust as described earlier, are applicable in
different cultures, but the extent to which factors influence trust differ across cultures. For
example, Schoorman et al. (2007) argues that task-oriented cultures as found in European
countries, seem to have a high initial trust of strangers and therefore a high propensity to
21

trust. Conversely, relationship-oriented cultures, like in African countries, need time to
develop a relationship prior to working on the task.

It turns out that cultural differences obstruct trust building and hence a more specific approach
is needed in the concerning context. There are several studies that show how parties in cross-

cultural collaborations can overcome these barriers in general. For example, Johnson et al.
(1997) studied trust enablers in an international cooperative alliance between Japanese and
U.S. partners and found significant trust enablers. They state that transactions crossing
cultural boundaries are calling for “cultural sensitivity” which is the firm’s awareness of
cultural differences and the ability to manage them. This statement was based on research of
several scholars in several types of relationships (e.g. Johnson et al., 1997). So, in addition to
the already discussed “interfirm adaption” of Das & Teng (1998) a partner must not only
invest money, managerial effort and time in creating an understanding of the partner's needs,
but also in understanding and managing its culture. Cultural sensitivity depends on the ability
to relate to cultural counterparts and colleagues, the understanding of the other culture, the
ability to adapt, received sensitivity training, and the willingness to communicate and make
relationships in the other culture. Johnson et al. (1997) found the lack of cultural adjustment
as a major reason for failed cross cultural collaborations.

2.6 Comparing visions on trust building
The literature on BoP, development and cross cultural collaboration shows similar ideas about
trust building, but often on studied within different contexts, on different levels or formulated
in different ways. However, these ideas can be subdivided into the categories of antecedents
as found in the general trust literature. In other words, lifting these ideas to a more abstract
level of observation, make them fit almost perfectly within the findings of the prevailing trust
research. By doing this, it is subsequently possible to discover if specific antecedents from the
trust literature are more popular within the BoP and related fields than others. If this is the
case, it will possible to discuss the findings of this thesis more precisely in the light of the
studied literature. The tables on the next page present how this subdivision can be made.
22


BoP literature Trust literature
Invest in relationships by providing training,
Education and farm inputs.

Incremental trust building and reciprocity
- Longer time positive experiences
- Risk taking
- Incremental commitment
- Slow process of exchange
Create insight in, and use social infrastructures, often
determined by culturally specific, familial, ethnic and
religious ties.
Norms, values and friendship
- adapt to norms, values and needs of partner,
integrate in institutional framework
Become related with trustable people or brands.
The first steps in trust building
Locate a partner with a good reputation
Create complex interactions by emphasizing with
diverse and disconfirming perspectives of local people
and try to understand their culture, thought processes
and language.
Communication
- communication and information exchange
- frequent face to face contact
Take the time to create a web of trusted connections
by building partnerships from the ground up with local
entrepreneurs.
Incremental trust building and reciprocity
- incremental commitment
Norms, values and friendship
- adapt to norms, values and needs of each other
- create social bond because of mutual
appreciation

Avoid short-time commercial agenda’s.
Incremental trust building and reciprocity
- longer time positive experience
- slow process of exchange
- incremental commitment
Have local people feel the outcomes.
Incremental trust building and reciprocity
- equal return on investment


Development literature Trust literature
Anticipate on informal institutions.
Norms, values and friendship
- adapt to norms, values and needs of partner,
integrate in institutional framework
Involve knowledge opinions and perception of rural
people: “from etic to emic, closed to open, individual
to group, verbal to visual, measuring to comparing,
and from extracting information to empowering local
analysts”.
Norms, values and friendship
- adapt to norms, values and needs of partner,
integrate in institutional framework
Communication
- communication and information exchange
- frequent face to face contact
23

Cross cultural collaborations literature Trust literature
The extent to which factors influence trust differ
across cultures.
Norms, values and friendship
- adapt to norms, values and needs of partner,
integrate in institutional framework
Transactions crossing cultural boundaries are calling
for “cultural sensitivity” which is the firm’s awareness
of cultural differences and the ability to manage them.
Norms, values and friendship
- adapt to norms, values and needs of partner,
integrate in institutional framework
Cultural sensitivity depends on the ability to relate to
cultural counterparts and colleagues, the
understanding of the other culture, the ability to adapt,
received sensitivity training, and the willingness to
communicate and make relationships in the other
culture.
Norms, values and friendship
- adapt to norms, values and needs of partner
- benevolence (special attachment), integrate
in institutional framework
Communication
- communication and information exchange
- frequent face to face contact


The three discussed disciplines show an apparent conformity to the importance to adapt to
norms values and needs and the necessity to integrate in the institutional framework of the
(potential) partner. Also communication is mentioned a lot as an essential factor. It will be

interesting to study if these factors also stand out in practise. The absence of many other trust
enablers mentioned in the general trust literature, does not mean that those factors are not
applicable in BoP ventures. Hence, the next chapter will describe the used methodology,
departed from, but not bounded to the factors stood out in the tables above.
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3. Methodology
3.1 Research design
The introduction and theoretical framework pointed out that trust building in the context of
the BoP is a relatively new phenomenon. According to Eisenhardt (1989), a qualitative case
study is appropriate to understand relationships between variables within an unknown context.
Also George & Bennett (2005) state that “an unfamiliar context requires a detailed
consideration of contextual factors, which is extremely difficult to do in statistical studies, but
is common in case study”. Consequently, to inductively identify causal paths and potentially
new variables, a “heuristic” case study approach is chosen to explore trust building processes
in the BoP (George & Bennett, 2005, p.75). Since the amount of time was limited and suitable
cases to study were not proximate, a single-case research design is used to conduct the
research. The theoretical framework provided potentially suitable concepts which could be
useful to guide the research. Hence, methodological insights are derived from the “grounded
theory” approach (Glaser & Strauss, 1967). Grounded theorists, do not construct theory by
testing hypothesis, but have theory slowly emerge by creating an interplay between data
collection and analysis (Charmaz, 2006). Data collection is often started by using “sensitizing
concepts”. Charmaz (2006) states that “these concepts give you initial ideas to pursue and
sensitize you to ask particular kind of questions about your topic”. In this thesis, the trust
antecedents on page 16 are used as sensitizing concepts and are used to determine the initial
interview questions. The section about data collection shows examples of the initial interview
questions.

The selection of the studied case is based on two kinds of criteria. The first kind are criteria to
select a genuine BoP case. Hence, this thesis used a case that meets the criteria of the BoP-as-

producer venture, as described by Ted London (2007): “a scalable profit-oriented venture,
operating in the informal economy, catalyzed by external participation and co-created with
those at the BoP, that connect BoP producers of goods and services to non-local markets”.
The second kind of criteria had to indicate that there is a relationship of trust between the
MNC and the local people within the BoP communities. The definition of trust, as outlined in
the theoretical framework (p.11) is used to determine the actual presence of trust in the case.
This means that the local people had to be willing to be vulnerable to the actions of Unilever
based on the expectation that Unilever would perform a particular action important to the
local parties. The next section provides an elaborated case description.
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3.2 The case
About ten years ago a Dutch Unilever manager re-discovered an edible oil that could be
abstracted from the nuts of the African Allanblackia tree. After profound research in the
laboratory, it seemed that the oil from this Allanblackia nut had very good characteristics for
soap, shampoo, butter and all kind of other products produced by Unilever. However,
Unilever found that this Allanblackia tree only grows in difficult passable areas in African
countries and was therefore hard to obtain. Hence, it was decided to developed supply chains
for this oil, in which they would collaborate closely with the people in the remote areas where
the Allanblackia tree grows. In first instance to have them collect, dry and sell the nuts, but
nowadays also to manage nurseries where techniques are explored on how to grow the
Allanblackia tree as quick as possible. In the near future, farmers in the communities will
have the Allanblackia tree as a new crop on their farm land. Unilever has the advantage that it
has offices all around the world. Therefore it was possible to involve Tanzanian Unilever
people in the Allanblackia activities in Tanzania. Next to it, Unilever’s strategy is to organize
supply chains in a sustainable manner, which means that activities should not have a negative
impact on people or the environment. Consequently, one of the first steps taken was the
involvement of the international NGO called SNV. SNV worked with communities through
local NGOs and defines its task as “connecting people’s capacities”. In this situation it meant
that SNV deployed several NGOs to reach the communities located in the areas where

Allanblackia trees grow. Unilever also involved a NGO that promotes the conservation of the
forests in Tanzania and is connected to the government, to cover that side of the picture. As a
synergetic team, communities were approached and local people were moved to create the
supply chain. These local people received trainings on all kind of subjects. The trainings were
related to Allanblackia, but also to other, more general business subjects. At this very moment
in Tanzania, the Allanblackia supply chain is managed and executed solely by Tanzanian
people. The supply chain is beneficial to all parties. At the one side, it creates businesses for
people in remote villages and hence eradicates poverty in the poor African countries. At the
other side, it creates an efficient way for Unilever to obtain the oil that is very useful for them.
This thesis studied the way in which this supply chain was created in Tanzania in order to
obtain a clear understanding in which way Unilever managed to build trust in local
communities.