Learning from the resourceness blind spot for service innovation at the base of the pyramid

2.1 The base of the pyramid context

Whilst BOP contexts are found in various locations, there are unifying characteristics. Poverty is not merely a shortage of money but a lack of basic elements of well-being (World Bank, 2018b). Resource scarcity is a fact (Pels and Mele, 2018) that BOP consumers cope with daily. Economic constraints (Banerjee and Duflo, 2011; Pels and Kidd, 2012) and low product knowledge (Yunus, 2010) are compensated for by non-market sourcing strategies depending on social capital, social networks (Viswanathan et al., 2010) and the creative use of resources from non-market sources (London et al., 2014). These micro-level transactions are embedded in layers of meso and macro social systems that simultaneously provide direction and constraints on individual actions (Fisk et al., 2016; Lawler et al., 2016; Turner, 2016). This is a novel and complex context, likely to yield patterns of consumer practices beyond current theoretical insights, as the context is seldom covered in extant market theories (Dean and Indrianti, 2020; Brodie and Peters, 2020; Kistruck and Shulist, 2020).

2.2 Resourceness in the service-dominant logic discourse

SDL is an important unifying framework that emphasises the consumer as a beneficiary, patterns of resource exchange and integration and outcomes such as value in context (Koskela-Huotari and Vargo, 2018). Exchanges are unique and experiential with the value determined by the beneficiary (Axiom 4), who is always a co-creator of value (Axiom 2) (Vargo and Lusch, 2016), as opposed to traditional views of value propositions predefined by a manufacturer/seller (Kline and Rosenberg, 1986; Toivonen-Noro and Kijima, 2018). Value is co-created in a given context and is conditional upon that context (Helkkula et al., 2018), thus requiring contextual investigation (Brodie and Peters, 2020). SDL is, thus, highly appropriate as a framework for the analysis of consumer practices at the BOP, which to date are largely uncharted but assumed to be different from those of consumers at higher levels of economic strata.

In SDL, resources are considered abstractions (Koskela-Huotari and Vargo, 2018); resources are not, they become (de Gregori, 1987) and as such, they gain their resourceness (Lusch and Vargo, 2014). This is understood as the ability of potential resources to facilitate the achievement of a desirable outcome, achieving the purpose at hand (Koskela-Huotari and Vargo, 2018; Lusch and Vargo, 2014). This process is driven by service consumer appraisal and action, which is contextual and systemic and depends on the institutional arrangements that are used as a sense-making frame (Koskela-Huotari and Vargo, 2016). Consumers only draw on the potential of resources when they have had the opportunity to develop skills and knowledge to integrate these with other resources (Peters, 2018; Koskela-Huotari and Vargo, 2018). Understanding the motivation and behaviour of resource integrators and implications thereof for adoption is, thus, the appropriate starting point for a service innovation process (Kleinaltenkamp et al., 2012; Lusch and Vargo, 2014; Vargo and Lusch, 2017).

Innovation is not about goods or materiality per se but fundamentally about human knowledge and skill development (Lusch and Vargo, 2014). Consumers bring previous experience, skills, knowledge and access to other resources into each service encounter and evaluate functional, technical and image dimensions of quality based on what they experience in that encounter (Bitner et al., 1994; Grönroos, 1990; Kang and James, 2004). The service environment, including ambient conditions and social factors, affects the perception of functional quality (Grönroos, 1990). In the BOP context, environmental factors such as a lack of basic infrastructure, social norms and economic limitations are inseparable from consumer behaviour patterns such as lack of motivation for change (Behailu et al., 2017). How consumers navigate the context of a service encounter directly affects their resource use and integration (Lusch and Vargo, 2014; Vargo and Lusch, 2017). It is important to specify the resources that are and are not integrated (Kleinaltenkamp et al., 2012), as their contextual value, and thus their resourceness is conditional on circumstances, access, consumer skills and knowledge (Akaka et al., 2013; Chandler and Vargo, 2011; Vargo and Lusch, 2017). For example, how does illiteracy or a lack of formal education impact operant resources such as consumer knowledge or motivation to reach a positive future state and how does poverty impact the operant resources purchasing power and prioritisation of spending?

2.3 Diffusion of innovation theory and passive innovation resistance

Diffusion of innovation theory explains how individuals navigate a decision-making process that goes from the initial knowledge of the existence of innovation to forming an attitude towards it and deciding to adopt or reject (Rogers, 2010; Wejnert, 2002). More recent theoretical discussion is concerned with exploring barriers that impede the innovation-decision process that is driven by resistance towards the change that an innovation embodies (Heidenreich and Spieth, 2013; Laukkanen, 2016; Ram and Sheth, 1989). In the presence of high levels of innovation resistance, for example, the early stages of the innovation-decision process may be disrupted and yield alternative outcomes such as postponement or rejection (Laukkanen, 2016; Talke and Heidenreich, 2014; Heidenreich et al., 2016; Ram and Sheth, 1989). These are decision outcomes reflecting an actor’s (un)willingness and (in)ability to integrate resources.

Innovation resistance is considered in active and passive forms. Active resistance occurs when a negative attitude towards a new product or service is formed based on a deliberate, cognitive evaluation of innovation-specific factors (Laukkanen et al., 2008; Talke and Heidenreich, 2014) such as functional or psychological benefits (Heidenreich and Handrich, 2015; Ram and Sheth, 1989). Passive innovation resistance, in contrast, is an individual-level predisposition to resist innovation which is based on the degree to which the adoption of a given new product or service is anticipated to cause discontinuity or change (Heidenreich and Kraemer, 2015). Both passive and active forms of innovation resistance relate to the (un)willingness and (in)ability to integrate resources and are conceptually related to resourceness (Table 1).

Passive innovation resistance determines the whole course of the adoption process because it is apparent in the early stages and leads to an individual already rejecting an innovation before cognitive evaluation of innovation-specific factors takes place (Heidenreich and Handrich, 2015; Nabih et al., 1997; Ram and Sheth, 1989; Talke and Heidenreich, 2014). It is defined as “the resistance to change imposed by an innovation. It evolves from adopter-specific factors that form personality-related inclination to resist changes and situation-specific factors that determine their status-quo satisfaction” (Talke and Heidenreich, 2014, p. 897). The individual inclination to resist change is an important inhibitor of innovative behaviour (Oreg, 2003). The most prominent conceptualisation (Heidenreich and Handrich, 2015; Talke and Heidenreich, 2014) is based on six elements:

1. fear of loss of control;

2. cognitive rigidity;

3. lack of ability to cope with change as a stressor;

4. low need for stimulation;

5. desire to avoid effort in the short term; and

6. reluctance to give up old habits (Oreg, 2003).

Further, situation-specific factors such as the general prevailing level of innovation on status quo satisfaction (Heidenreich and Handrich, 2015) and satisfaction with status quo, i.e. products or services currently used, provide an important reference point for the innovation-decision process. When exposed to innovation, individuals frequently prefer tried and trusted approaches (Van Tonder, 2017); meaning that innovations with superior qualities, irrationally, do not get considered (Szmigin and Foxall, 1998).

2.4 Research questions

The challenges in service innovation and diffusion for BOP beneficiaries are manifold (Garrette and Karnani, 2010). Based on the low level of market infrastructure, new markets must be created through the institutionalisation of new patterns of consumption and demand (Dolan and Roll, 2013; Faulconbridge, 2013). This requires change, often towards new preventive behaviour (Rogers, 2010) such as saving to avoid financial risk. For the beneficiary, this is highly intangible and potentially represents a large degree of newness. Forces in the social system affect actor appraisal and actions, for example, through lack of market infrastructure or low consumer literacy. This may constitute a barrier to integrating potential resources and enabling resourceness. The nature of the barrier depends on extant patterns of resource integration, as these are powerful indicators of the predisposition towards new resources (Talke and Heidenreich, 2014). This leads to the following research question:

Resourceness is pivotal to service innovation because it is directly connected to the activation of resources in context and patterns of resource integration. Resourceness is an important indicator that can reveal the potential existence of passive innovation resistance at the BOP. This provides a basis for the discussion of implications for practitioners of service innovation and delivery:

3.1 Sampling and data collection

Interviewees were recruited through a snowballing approach, which is considered appropriate for BOP contexts (Ingenbleek et al., 2013; Viswanathan et al., 2017), in the city of Ndola in Zambia. With over half the population classified as poor, Zambia represents a BOP context (World Bank, 2018a). A local research assistant supported interviewee selection and the development of inclusion criteria:

• adult responsible for or involved in household consumption choices;

• having an income;

• urban dweller and

• willing to share information on household consumption; and

• likely to be poor.

At 29 narrative interviews, new insights for the formation of consumption categories and patterns of resource integration were no longer generated and saturation was reached (Boeije, 2009; Ingenbleek et al., 2013). Organisation of data and meta findings were shared with two Zambian experts in consumer behaviour. This provided important context expertise to avoid misinterpretation based on researcher unfamiliarity (Reynoso et al., 2015) (Table 2).

In line with the Zambian census approach, consumption expenditure is used as a proxy for household income, as individuals are more willing to report consumption than income [Central Statistical Office (Zambia, 2016)]. This results in the categorisation of interviewees according to the degree of poverty, reflecting various degrees of inability to afford minimum basic human needs, comprising food and non-food items, given total income [Central Statistical Office (Zambia), 2016]. Of the 29 interviews, seven were with non-poor informants, enabling identification of contrasts in patterns of behaviour, the average age was 40, with 62% male and 38% female interviewees (see Table 2 for an overview).

3.2 Data gathering

Qualitative narrative interviews according to the methodology outlined in Jovchelovitch and Bauer (2000) and based on a format systematised by Schütze (1992) were systematically applied in data gathering. This is a form of unstructured, in-depth interviews with specific features conducted using a four-step elicitation technique (Jovchelovitch and Bauer, 2000). The interview begins with one central question: “Can you tell me how you spent your household budget last month”? To avoid a “question-answer” structure and elicit self-generated narrations on the topic of interest, the interviewer avoids asking “why” and merely uses prompts to keep the story flowing. In a series of “small stories”, interviewees recount lived experience in field texts rich in authentic recounts of social life and with a minimum of interviewer mediation (Bamberg, 2006; Dwyer, 2017) and this allowed informants to feel comfortable at their own cognitive level (Viswanathan et al., 2017). All interviews were conducted in Ndola with the support of a local research assistant. The epistemological viewpoint of this study and the low volume of research in this field to date are factors influencing the choice of qualitative research and this phenomenological form of narrative research (Dwyer, 2017; Jovchelovitch and Bauer, 2000; Ingenbleek et al., 2013).

Data were gathered systematically according to the given schema and with a minimum of interviewer, intrusion to avoid, as much as possible, that the outcome is an artefact of the chosen method (Dwyer, 2017; Freeman et al., 2007). This constitutes good evidence, as it is consistent with the SDL underpinning the study, is collected systematically, is authentic and is compelling (Freeman et al., 2007).

3.3 Data analysis

Narrative interviews generate a wide variety of stories and rich data in the form of spoken words. Interview quotes are the raw material for constructing evocative representations that recreate lived experiences (Dwyer, 2017; Freeman et al., 2007). There is no prescribed procedure for the analysis of such data (Jovchelovitch and Bauer, 2000). The scheme proposed by Schütze (1992), which facilitates the organisation and analysis of such diverse material, is adapted to the particularities of this study and applied systematically. This procedure for data analysis is outlined in Table 3.

Findings in relation to research question one – How do extant patterns of resource integration relate to a lack of resourceness as a result of status quo BOP consumption behaviour and what are its antecedents? – are summarised in Table 4 and discussed in Section 4. This provides the basis for discussion on research question two – How is potential passive innovation resistance revealed through the lack of resourceness of the resources discussed in the BOP sample? – which is illustrated and discussed in Section 4.

4.1 Status quo patterns of resource integration

Four consumption categories, groceries, utilities, financial services and telecommunication, emerged as most significant after the initial steps of organisation and analysis of interview material. Table 4 provides an initial, condensed overview of the status quo patterns of “what” and “why” in consumption behaviour that emerge from the narrative recounts of daily life in the sample.

The next step in the analysis was to express findings in the theoretical frame of SDL through the concepts of “resource”, “resource integration” and “value in context”. This enables the grouping of processes and conclusions to be drawn regarding resourceness in the status quo of consumption behaviour. These findings are summarised in Figure 1. The process of actor appraisal in all four consumption categories led to a reduced set of potential resources becoming actual resources. This reflects the notion that resources, being subject to the availability of other resources and the purpose at hand, are dynamic and contextual (Lusch and Vargo, 2014; Vargo and Lusch, 2017; Peters, 2018). The fundamental preconditions for resourceness are the possession by actors of the ability to integrate resources together with access to such resources (Lusch and Vargo, 2014). A pattern of resource usage in context with specific traits emerges from this BOP sample. Actor appraisal processes resulted in a bias in favour of the integration of private resources, as opposed to market-facing or public resources, in the fulfilment of household needs in all four categories of consumption (Figure 1).

4.2 Antecedents of resourceness

Five categories of antecedents of resourceness emerge from the analysis of actor appraisal and action towards resource integration in this sample. This grounded system of antecedents confirms the notion that resource integration at the BOP is contextually influenced (Helkkula et al., 2018; Koskela-Huotari and Vargo, 2016; Pels and Mele, 2018; Peters, 2018). The following discussion uses samples of interview data for illustration purposes.

4.3 Does resourceness potentially drive passive innovation resistance in the base of the pyramid sample?

A comparison is made between resourceness and its antecedents that emerge from the analysis of data in the sample and the concept of passive innovation resistance. Resourceness, the outcome of the way that BOP consumers in this sample assess and integrate resources towards a purpose in hand, in their established, status-quo behaviour, means that innovative services are possibly not evaluated for adoption. This leads to postponement or rejection of that innovation adoption decision before a cognitive assessment of the functional or psychological benefit of the given service innovation (Figure 2).

The factors that drive resourceness in this BOP sample indicate that a fear of loss of control, lack of ability to cope with change as an emotional stressor, forfeit of long-term benefit to gain short-term security and preference for tried and trusted solutions influence patterns of behaviour daily. These relate to established conceptualisations of an individual inclination to resist change (Heidenreich and Handrich, 2015; Talke and Heidenreich, 2014; Oreg, 2003; Van Tonder, 2017). Whilst the literature refers to “personality-related inclination” (Talke and Heidenreich, 2014, p. 897), the sample data indicate that this personal-level inclination is affected by the circumstances of the context in which the consumer takes their consumption decisions and which has been argued as inseparable from the individual (Behailu et al., 2017).

According to the literature, the current state of consumption provides an important reference point for the innovation-decision process. As an element that drives passive innovation resistance, it is conceptualised as the level of satisfaction with existing products and services and the general prevailing level of innovation (Talke and Heidenreich, 2014). The notion of satisfaction, with the positive connotation of a favourable post-purchase/post-consumption evaluation (Giese and Cote, 2000) is difficult to relate to the narrative data. Rather than expressing a level of cognitively evaluated satisfaction, interviewees expressed a desire for more sophisticated equipment or foodstuffs, which were considered out of their reach; for example, where a lack of household infrastructure such as electricity leads to an inability to use a stove, electric light or media such as radio. Forfeiting new ideas, in this case, is indeed based on an evaluation of the functional and psychological benefit, however, due to restrictions in operand resources, with a non-adoption decision. Interviewees report a preference for tried and trusted approaches based on traditional methods and private resources, for example, boiling water rather than buying bottled water. On the one hand, this pattern of consumption is driven by trust in the transaction and on the other hand by the inability to pay for market resources. Neither of these “purposes in hand” motives can be related to a level of satisfaction with existing products. Thus, it can be concluded that whilst the patterns of behaviour displayed in this sample indicate stable patterns of status quo, these are not related to a correspondingly strong degree of “satisfaction”. Rather, it reflects the individual perception of limitations in the ability to access or integrate certain resources. This can be an important source of passive innovation resistance.

5.1 Theoretical implications

The context of BOP is largely unconsidered in theories mainly based on studies in developed market contexts (Burgess and Steenkamp, 2006; Ingenbleek, 2014). The application of SDL principles and concepts in this study of consumers/actors at BOP furthers theoretical development. Through zooming in on how actors appraise and integrate resources in context, this study contributes to a deeper understanding of behaviour and motivation of actors in this specific context, as well as the availability of resources and the way in which resources are appraised and prioritized for the purpose of resource integration (Kleinaltenkamp et al., 2012). Equally, the findings related to reasons why actors behave as they do deliver important insights into the perception of value at BOP, which is an important design parameter for successful service innovation. This supports the further development of the SDL discourse and the development of a richer understanding of service ecosystems in context (Brodie and Peters, 2020). Whilst this study has focussed on BOP contexts, it highlights a broader topic, namely, the contextual nature of resources and processes of resources-in-context “becoming”, meaning gaining their resourceness. Consumers/actors must have access to and be able to recognise the resourceness of potential resources to enable resource integration (Koskela-Huotari and Vargo, 2016). Failing this, potential resources cannot be realised in context.

Most studies of diffusion of innovation at BOP have focussed on investigating factors that may increase the likelihood of adoption under the assumption that innovation is evaluated for adoption equally in BOP contexts as in non-BOP contexts (Hasan et al., 2020). This study is both novel and valuable in establishing the existence of passive innovation resistance, largely driven by antecedents in context, which prevents the evaluation of innovation. Current conceptualisations of the drivers of passive innovation resistance do not, however, match the drivers that were identified in this study. Further research to develop a robust, BOP specific, conceptualisation of the elements that drive passive innovation resistance is needed; for example, to differentiate between personality-based traits that drive a disposition towards innovation and situational factors that limit individual-level behaviour under the assumption that actor agency is restricted (Pels and Mele, 2018). The continued application of SDL for the study of the BOP phenomenon as a market enables BOP-specific conceptualisations and needs to be encouraged.

5.2 Managerial implications

This study offers a clear indication that a process of service innovation must be based on an in-depth understanding of the target context in which the process of resource integration is intended to take place. Specifically, service ecosystems at BOP are composed of transactions in informal, close social networks that adhere to social norms and display risk-avoidant conservative patterns of behaviour. This preference for status quo reflects a lack of trust in broader market mechanisms and leads to a lack of motivation towards change. Service innovations are likely to be ignored initially, meaning that an objective comparison based on functional or psychological benefits will not happen. Thus, the findings of this study indicate that the starting point for a process of service innovation and the development of new service concepts for the benefit of BOP actors must consider the existence of passive innovation resistance.

A first step in the process of service innovation must be to engage deeply with target consumers to generate motivation towards the change which is embedded in that service innovation. On the one hand, to generate an understanding of the potential benefits and on the other hand, to foster an orientation towards market resources and the institutionalisation of new patterns of consumption. For example, creating the conditions for adopting health insurance requires consumer education towards grasping the intangibility of the benefits first and then the creation of demand through aspirational marketing.

Service innovation and the introduction of new service concepts for BOP require business practitioners to extend their processes upstream to include a phase of marketing education and demand generation. The practicalities of this approach imply the necessity to design innovative services in collaboration with target groups and to find ways to truly understand the meaning of affordability, access and availability (Prahalad, 2009) for target groups at the BOP.

5.3 Limitations and avenues for further investigation

The sample characteristics in this study are specific to urban Zambia and contain different levels of self-reported poverty. Whilst some findings may relate to generalisable context factors, not all findings are applicable to all BOP contexts. Initial indications of important dimensions of actor practice/consumer behaviour, their antecedents and the influences on processes of adoption of service innovations emerge nonetheless. There is a clear requirement to deepen and broaden the future investigation of resourceness and passive innovation resistance at the BOP to inform both the theory and practice of service innovation adoption and diffusion by including studies of further contexts. This can include further qualitative research in a greater diversity of BOP contexts, as well as the quantitative study of specific concepts at BOP such as resourceness and passive innovation resistance.