We can and should apply digital sharing to tough development challenges.
We call on funders to support the growth of digital sharing models using three approaches: advance incentives, author insights, and advocate for light-touch regulatory approaches.
Advance incentives for entrepreneurs, incubators, and accelerators in developing countries to experiment with digital sharing.
Though not perfect, prize models can be effective in entrepreneur-rich environments like digital sharing where “solution creators” are willing to accept risk. Prizes for technological breakthroughs have a storied history of stimulating entrepreneurial investment by creating competition. Prize models could include “exemplar” prizes that crown a single winner with the aim of defining excellence, and “showcase” prize models, which allocate funds to a handful of innovative winners to stimulate private investor interest in the space as a whole.
Development actors that eschew a prize model could of course consider more traditional investment approaches to digital sharing, such as technical assistance. A benefit of technical assistance is that it can be closely tailored to the needs of individual digital sharing organizations. It can also infuse software development expertise - provided the right partners are selected - helping to overcome the shortage of developer talent that stymie some tech initiatives.
Advocate for light-touch, bespoke regulatory approaches that support the growth of digital sharing.
The digital sharing economy is a different way to exchange goods and services and therefore requires different regulatory approaches. Sofia Ranchordás – Resident Fellow at Yale Law School’s Information Society Project and Professor of Law at Tilburg Law School – argues that lack of regulatory frameworks in developing countries is the largest barrier facing digital sharing economy firms. She says that limited, light-touch regulation will help generate innovation by building user trust in digital sharing platforms.
Of course, not all regulations are created equal. Regulations designed for industry incumbents are generally detrimental to the growth of digital sharing initiatives. For example, regulations that force every individual who wishes to share their living space on Airbnb to go through a lengthy and costly hotel permitting process would quickly halt the platform’s growth. Applying these types of legacy regulations to digital sharing in developing countries in order to protect the privileges of market leaders would threaten the growth of promising models – and the income-generation possibilities they provide.
Author in-depth research.
Right now we have only a vague sense of what people want to share -- we need much better data on the supply and demand in each market to help companies and entrepreneurs spot and pilot new digital sharing models. New research could fill three information gaps:
- The digital sharing marketplace: including market size and segmentation, barriers to growth, and relevant policies and regulations;
- Business models: common challenges and solutions across the developing world, keys to success and major pitfalls, and an understanding of which business models gain traction;
- User needs: contexts and motivations for sharing, sharing behaviors, and user wants and needs to design better sharing solutions
Traveling Spoon was the winner of a showcase prize, from University of California, Berkeley's Venture Lab; gaining recognition helped them to establish credibility and push their model forward.
A knowledge aggregation hub with valuable data from market research, business surveys, and human-centered ethnographic research would go far and could be an opportunity for someone to gain “first-mover advantage” by building this platform.
Uber requires all of its drivers to pass polygraph tests in Mexico because the company can’t access criminal background information there. A regulatory framework mandating the sharing of criminal background checks with all ride-sharing initiatives in Mexico would help to increase public trust in ride-sharing initiatives, and establish a level playing field between competitors.