August 13th, 2020
By ‘capacities’ we mean the prior experience entrepreneurs bring to their businesses, and the key lessons they have learned along the way. Both of these inform business strategy, and influence the entrepreneur’s effectiveness in overcoming barriers to diffusion. In the case of solar, we identified the core barriers to diffusion as the lack of consumer finance and the lack of a market infrastructure. Entrepreneurs had to learn the hard way how to tackle these barriers, and each brought different sets of capacities to the task. In India and Sri Lanka, for example, both entrepreneurs tried to finance customers themselves, but neither of them had experience in this activity, and learned that this was difficult to do. Ultimately, they learned it was better to focus on building a market infrastructure and let the banks or microfinance institutions take on the role of financing customers. This lesson proved key to their being able to stay in business and drive forward the diffusion process in their respective countries.