Businesspeople tend to prefer predictable business environments to work in. However, in developing countries, business environments tend to be more unstable than in Western markets because of various unpredictable social, economic and political changes.

Since business plans depend on predictions about the future and the certainty of that prediction, the financial equation by which BOP firms decide where and how to invest will change fundamentally with respect to OECD markets. In this post I want to explore the dichotomy between market growth and innovation in relatively large BOP firms.

Thanks to scalable business models, pursuing market growth strategies is a short- term decision (1-3 years approximately).  On the other hand, devoting resources to innovation efforts or research and development, is a more long term decision (3-5 years depending on the industry).  Additionally, most BOP firms are especially constrained in capital due to illiquid capital markets.  Inefficient and corrupt bureaucracies and unpredictable law regimes do not help either.  How do they make a decision when assigning resources to innovation and growth strategies?

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