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Critical Success Factors for Peer-to-Peer
platforms in the Sharing Economy
Thesis
MSc. Business Administration
Entrepreneurship & Innovation
Author Tim de Jong
Student number 10599185
Date 04-11-2015
Version Final
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With the limited resources we have on the earth,
the next step for conservation is instead of just buying stuff, sharing stuff
Zilok CEO
On the whole, you find wealth much more in use than in ownership
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Statement of originality
This document is written by Student Tim de Jong who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
4 Contents Acknowledgements ... 6 Abstract ... 7 1. Introduction ... 8 1.1 Environmental degradation ... 8
1.2 Sharing Economy - The Resource saving economy ... 8
1.3 Theoretical relevance ... 10 1.4 Managerial relevance ... 11 1.5 Structure ... 11 2. Theoretical background ... 12 2.1 Collaborative economy ... 12 2.2 Collaborative Consumption ... 13 2.3 Sharing Economy ... 14 2.3.1 Sharing ... 15
2.3.2 The rise of the sharing economy ... 15
2.4 The critical success factors ... 16
2.4.2 Trust between strangers ... 18
2.4.3 Idling capacity ... 19
2.4.4 Critical mass ... 20
3. Conceptual model ... 22
3.1 Literature findings ... 23
3.2 The conceptual model ... 24
4. Methods ... 27 4.1 Research approach ... 27 4.2 Research design ... 27 4.3 Research method ... 28 4.4 Research strategy ... 28 4.5 Data collection ... 29 4.5.1 Research sample ... 29 4.5.2 Interview ... 30 4.5.3 Interview guide ... 31 4.5.4 Location ... 31 4.6 Data analysis... 31 4.6.1 Transcribing ... 31 4.6.2 Coding ... 31 5. Interview results ... 32
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5.1 The Critical Success Factors ... 33
5.1.1 Belief in Commons ... 33
5.1.2 Trust between strangers ... 34
5.1.3 Idling capacity ... 35 5.1.4 Critical mass ... 36 5.1.5 Additional CSF’s ... 38 5.2 Relation between CSF’s ... 40 5.3 Extra results ... 40 6. Discussion ... 42
6.1 The Critical Success Factors ... 42
6.1.1 The four CSF’s ... 43
6.1.2 Additional CSF’s ... 47
6.2 The relation between the CSF’s and revision of the conceptual model ... 49
7. Limitations and implications ... 51
7.1 Limitations... 51
7.2 Theoretical and managerial implications ... 52
7.2.1 Theoretical implications ... 52
7.2.2 Managerial implications ... 52
8. Conclusion & future research ... 54
8.1 Further research ... 55
9. References ... 58
10. Appendices ... 64
Appendix A – E-mail to potential interviewees ... 64
Appendix B – Interview guide ... 65
Appendix C - Coding scheme ... 67
Figures Figure one: Conceptual model ...26
Figure two: The printed cards ...30
Figure three: The revised model ...50
Tables Table one: The research sample ...29
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Sharing the appreciation
Acknowledgements
My thanks go to everybody who helped me in the process of writing this thesis. First of all I would like to thank my supervisor Wietze van der Aa for his guidance throughout the process. He supported me in giving direction to the research and providing valuable feedback where needed. Furthermore I would like to thank all the interviewees that were willing to participate in this study, without them my research would not have been possible. Lastly I would like to thank my family for their endless support and encouragement.
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Sharing the study
Abstract
The sharing economy is changing the way we do business. Instead of buying everything we need, we share and use assets from others. The sharing economy is the peer-to-peer sharing of goods, service, transportation, space and money at speed and scale that were unimaginable a decade ago. The last couple of years it experiences a rapid growth and will continue to grow even more the next decade, and thereby create enormous entrepreneurial opportunities. The goal of this study is to determine the critical success factors for peer to peer sharing platforms in the sharing economy to provide start-up organizations that want to start in the sharing economy with crucial information of the factors they should focus on. The critical success factors are first derived from the literature and thereafter tested during a qualitative research. Supplementary additional critical success factors are tried to be found during the research. The research consisted of ten semi-structured interviews with managers and owners of peer to peer sharing platforms. Results shows that the platforms are facing five critical success factors: critical mass; trust in the platform; potential idling capacity; price/value ratio; and convenience. The analysis of the qualitative data revealed that if the platform reaches its critical mass, it is successful in that specific region. However, it can only reach the critical mass if it has fulfilled all other critical success factors. This research can be used as a guideline for peer to peer startups in the sharing economy.
8 1. Introduction
1.1 Environmental degradation
Our consumption has major impact on the environment and its resources. Since 1980 one third of the planets resources have been consumed and every year a tropical rain forest of the size of Greece, more than 250 million acres, gets destroyed. 35 % of all mangroves in the world have been destroyed and 20 % of the coral reef has been lost. Water withdrawals from lakes and rivers have been doubled the last 40 years (Radford 2005). Probably the best example of the harm we cause to the environment due to our consumption is the Great Pacific Garbage Patch. Between Japan and Hawaii the biggest landfill in the world has formed, except that it is not on land. Three and a half tons of garbage is formed in a floating stew which 90 % is plastic waste. (Casey 2010).
This is the result of the era of hyper-consumption were we have lived in (Botsman & Rogers 2012). The consumption of people is expanding in a hyperbolic rate. These days’ people consume everywhere: metro, airport or railway station. (Lipovetsky 2011). Annie Leonard (2007) explains that only one percent of products sold in North America are used more than six months indicating that 99 percent of items bought are thrown away within six months. If we continue this way of consumption, it could not be guaranteed that the future generations will have the resources they need (IPCC 2007). Therefore we have to change. Theodore Roosevelt former president of the U.S. once said in his speech "I recognize the right
and duty of this generation to develop and use our natural resources, but I do not recognize the right to waste them, or to rob by wasteful use, the generations that come after us." (Roosevelt 1910).
1.2 Sharing Economy - The Resource saving economy
A new movement has risen that supports the new emerging phenome calling the Collaborative Consumption with Rachel Botsman as global thought leader (Currency Fair 2015). This new phenome is one of the ten ideas that will change the world according to Time Magazine. The collaborative consumption is changing the way people consume. Instead of buying solo the things people need to use, the collaborative consumption is based on sharing, renting, swapping, and trading, enabling usage and access over ownership (Botsman 2013).
In this paper the focus will be on the Sharing Economy, a specific part of the Collaborative Economy. The Sharing Economy is an economic model that is based on the sharing of underutilized assets for monetary or non-monetary benefits (Botsman 2013). It
9 changes the focus from owning assets to just the usage of the assets (Botsman and Rogers 2012). For instance let’s look in the car industry. Census estimated that on average one household in the U.S. owned 1.8 vehicles (US Government). Why do people buy and own a car? Do they just want to own it or did they buy it because they need to use a car to get from point A to point B? The enhancers of the Sharing Economy enhance that it is the second. Research showed that on average a car is used one hour a day. This means that it is not used 23 hours a day, indicating that the idling capacity of the car can be shared with others for the remaining 23 hours (Hodges 2013).
New technologies enable to unlock and share the idling capacity of resources. Social, mobile, and location-based technologies enable us to efficiently and safely connect the people who have an idling capacity with those who want to use it (Botsman 2013, Owyang 2013). Therefore the Sharing Economy is growing rapidly. Today the sharing economy already generates a revenue around 15 billion $. However, PWC predicts that the five main sharing economy sectors of the sharing economy will generate 335 billion $ by 2025 (PWC 2014). Geron (2013) appoints that people generating revenue by participating in the Sharing Economy will surpass 3.5 billion $ in 2013, with growth exceeding 25%. Investors admits the new trend, proven that Sharing Economy start-ups have already received 15 billion $ in funding’s.
Despite the growing practical importance, not much academic literature has been written and empirical research has been done regarding the collaborative consumption and sharing economy. Especially concerning the Critical Success Factors (CSF) of the accessibility based business models. The CSF’s are the things that must go well to make the operation a success for the organization (Boyton & Zmut 1986). Therefore they are of major concern for all the start-ups and organizations in the Sharing Economy.
Concerning academic literature, one groundbreaking book is written by Rachel Botsman and Roo Rogers (2012). In their book they identify four principles that can be named the CSF’s for companies participating in the collaborative consumption: belief in commons;
trust; idling capacity; and the critical mass. These principles are critical for all business
operating in the sharing economy. The principles are all evenly weighted, but some can be more crucial than others depending on what is being shared and who is participating at the platform. These principles count for all the business models that are based on the collaborative consumption. Therefore the principles count for all three different markets
10 mentioned by Botsman & Rogers (2010): product-service systems; redistribution markets; and collaborative consumption. In addition the four principles should count for business-to-consumer (B2C) as well as for business-to-consumer-to-business-to-consumer, mostly known as peer-to-peer (P2P) businesses.
No empirical research has been done to investigate the impact of these CSF’s, and the difference within markets and between P2P and B2C on the platforms. It could be that one principle affects the other and vice versa. In addition there could be a difference in importance between the markets, as well difference between B2B and P2P businesses. Supplementary to the four named CSF’s by Botsman and Rogers there could be more CSF for specific parts of the collaborative consumption. This research focusses on a specific area of the collaborative consumption, the P2P platforms that perform in the Sharing Economy. At first, the importance and influences of the four CSF’s named by Botsman and Rogers (2012) on the Sharing Economy platforms are tested. Secondly, when the CSF’s are validated, the next step is to look for the existence of additional CSF’s. These two steps are firstly done by performing a critical literature review. Afterwards, the theory will be further investigated by conducting interviews with owners and managers of organizations with an accessibility based P2P business model. In addition to the research of the CSF’s supplementary information on how companies control and manage the CSF’s are tried to be found during the interviews and in the literature. However the main focus of this study will be on the determination of the CSF’s. Thereupon, this study tries to answer to following research question:
What are the Critical Success Factors for Peer-to-Peer platforms in the Sharing Economy?
1.3 Theoretical relevance
Academic (Hamari, Sjöklint, & Ukkonen 2015; Lamberton and Rose 2012, Bardhi and Eckhard 2012, Botsman and Rogers 2010, 2012; Belk 2014) and non-academic literature (Burnett 2015, Owyang 2013, Sizemore 2013) acknowledges the importance of the sharing economy. At macro level, empirical and non-empirical research has been done investigating the rise of the sharing economy; the elements that caused the enormous growth of the sharing economy the last couple of years. At micro level more in depth psychological research has been done regarding the motivations and deterrents for consumers to participate in the sharing economy. Limited academic literature has been done looking at the management/company perspectives of the sharing economy. This study focuses on the management perspective via conducting interviews with the management of the platforms. Botsman and Rogers (2013)
11 argue the existence of four critical success factors that are needed for sharing economy platforms. However, they do not mention how they developed these CSF’s, how the CSF’s specifically influence the business, and what drives these CSF’s. No additional academic or non-academic research has been done to test the CSF’s, look for additional CSF’s and look how these CSF’s can be managed and controlled. This paper tries firstly to validate or reject the CSF’s that are argued by Botsman and Rogers (2012). Secondly, it tries to find the existence of additional CSF’s for P2P sharing platform. And at last, to provide the paper more practical insight it will look at how the CSF’s will be managed and controlled.
1.4 Managerial relevance
By applying and exploratory research design, this study tries to determine the critical success factors for P2P sharing platforms. According to Botsman and Rogers (2012) four critical success factors are the basis for successful collaborative consumption businesses. This paper will define the influence of these CSF’s and tries to find additional CSF’s for P2P sharing platform. Defining the influence of these CSF’s and conceivable find additional principles will provide the management a clear indication where they should focus on. In this paper we try to give the management an extra step forward by looking at the how these CSF’s can be managed and controlled by the organization. This paper will give the management crucial information how they can successfully start and manage a P2P platform based in the sharing economy. It will set guidelines that enhance the success of P2P sharing platforms.
1.5 Structure
The next chapter consists of a literature review first giving an introduction to the sharing economy and providing clear definitions. Thereafter the critical success factors founded in the literature are explained and critically examined. Chapter three provides a summary of the findings in the literature and ends with this study’s research question, sub questions, and conceptual model. Chapter four contains a description of the used methodology, including the research sample, method of data collection and method of data analysis. The results of this research are given in chapter five followed by a discussion of the results in chapter six. Chapter seven examines the limitations of the research and the theoretical and managerial implications. At last, this paper finalizes with the conclusion that is drawn on based on findings of this study, and recommendations for further research
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Sharing the literature
2. Theoretical background
The goal in this paper is to provide a new insight in the critical success factors for peer to peer platform in the sharing economy. The terms sharing economy, collaborative economy, and collaborative economy have been used in literature for the mixed meanings and sometimes overlap (Botsman 2013). This happens because this movement is very new and not one clear definition has been developed. Additionally due to the fact that the topic of this paper: the
sharing economy is relatively new, limited academic research concerning this topic has been
written. For this reason non-academic literature is also been taken into consideration in this paper. Obviously this literature is critically analyzed. In this chapter, first the terms are given one clear meaning; secondly the drivers and barriers of the sharing economy are discussed, providing a clearer insight into the background of the new economy. After examining the literature concerning sharing economy, a vision on the CSF’s for the P2P sharing platform is given that connects previous literature with the CSF’s of Botsman and Rogers (2012). At last the relationship between the CSF’s is investigated.
2.1 Collaborative economy
The collaborative economy is the economic model where access and ownership are shared between people, corporations and startups (Owyang 2013). Rachel Botsman provides a more detailed description of the term. The collaborative economy is “An economy built on
distributed networks of connected individuals and communities versus centralized institutions, transforming how we can produce, consume, finance, and learn” (Botsman 2013). The
collaborative economy can be divided into four parts (Botsman and Rogers 2012): collaborative consumption; production; education; and finance. Collaborative production is the production, design and distribution of goods via collaborative networks (example Quirky).
Collaborative Education indicates the new way of education: open education and
person-to-person learning models (example: Coursera). Collaborative Finance, the new style of banking, person-to-person banking where the big banks in the middle are absent (Example Zopa). Collaborative consumption ensures to maximize the usage of assets through redistribution and/or shared access (example Peerby). In this paper the collaborative economy is seen as an economic model focusing on connecting individuals or organizations to collaborative produce, consume, finance, and learn. During this study the focus will be on the
13 usage of assets section of the economy; the collaborative consumption. The next paragraph will provide a deeper understanding of the collaborative consumption.
2.2 Collaborative Consumption
Felson and Spaeth were the first that used the term collaborative consumption in their paper in 1978. They used the term to describe the occurrence of sharing of consumers, for example drinking beer together, eating meals or driving together to a friend. (Felson and Spaeth 1978). According to Belk the definition that Felson and Spaeth use is too broad, they merely talk about coordinated consumption. Collaborative consumption is indeed related to joint activities involving consumption like coordinated consumption (Belk 2014). In addition the collaborative consumption it is more focused on the acquisition and distribution of the resource (Belk 2014). Lamberton and Rose (2012) define it as systems that provide costumer the opportunity to enjoy the asset benefits without owning the asset. Hamari, Sköklint, and Ukkonen (2015) define the collaborative consumption as the peer-to-peer based activity of giving, sharing and obtaining access to goods and services via community based online platforms. Hamari et al only mention the peer-to-peer and forget that businesses are also part of the collaborative consumption. Botsman and Rogers define collaborative consumption as the economic model based on sharing, swapping, trading, lending, renting resources that enables the access and usage of the resource despite the ownership. (Botsman and Rogers 2010). Belk provides a definition of collaborative consumption that is marginally different from Botsman and Rogers. Belk states: “Collaborative consumption is people coordinating
the acquisition and distribution of a resource for a fee or other compensation” (Belk 2014,
p1597). He excludes the sharing activities were no compensation is involved like at CouchSurfing and Peerby.
Despite the slightly different definitions of the collaborative consumption, the classifications are not commonly agreed. Bardhi and Eckhardt (2012) distinguish six classifications between the ranges of access-based consumption: temporality, anonymity, market mediation, consumer involvement, type of accessed object, and political consumerism. Contrasting Lamberton and Rose (2012) used a classification framework that distinguishes the sharing system based on their rivalry and exclusivity. Botsman and Rogers (2010) define three types of collaborative consumption namely product-service systems; redistribution markets; collaborative lifestyles. Product-service systems change the mindset to using instead of owning. You pay for the benefit for the product and not the ownership. It enables companies or persons to offer goods as a service instead of selling the product. A good
14 example is Spotify, instead of buying and owning CD’s, consumers are subscribed to Spotify a library of million songs which they can listen. Recent study showed that the environmental impact was decreased from 40 to 80% via sharing music online compared to buying CD’s (Weber, Koomey & Matthews 2010). Redistribution markets are used or pre-owned goods sold to someone else for monetary or non-monetary benefits. The goods move from somewhere they are not needed to somewhere they are. The most known platform is eBay and in the Netherlands Marktplaats. Collaborative lifestyle is the sharing, swapping or bartering of less tangible goods like spaces, time, skills, and money.
In this paper the collaborative consumption is seen as the activity of acquisition and
distribution of goods used and or shared together or in succession. This paper focusses in
specific on the sharing section of the collaborative consumption whereby more people or organizations use and share resources together, the sharing economy. The next section will provide an insight into the sharing economy.
2.3 Sharing Economy
The term sharing economy and collaborative consumption are frequently confused with each other. However the sharing economy is part of the collaborative consumption. It is the part of the collaborative consumption where access is preferred above ownership (Botsman and Rogers 2012). As before mentioned, Lamberton and Rose (2012) define the collaborative consumptions as systems that provide costumer the opportunity to enjoy the asset benefits without owning the asset. This is indeed part of the collaborative consumption, the part that is called the sharing economy. Dervojeda (2013) argues that limited scientific publications have been published on the sharing economy. She defines the sharing economy as companies that execute accessibility based business models for peer-to-peer markets and its user community. In addition, Botsman (2013) state that in the sharing economy transactions happen between consumer (B2C) as well as peer-to-peer (P2P) and eventually business-to-business (B2B). The sharing economy is “an economic model based on sharing underutilized
assets from spaces to skills to stuff for monetary or non-monetary profits” (Botsman 2013). A
great example of the sharing economy is in the car industry. Instead of owning a car for the need of usage, consumers can now subscribe and make use of Car2Go cars, a flexible car renting service (B2C) or rent the car from other people like at RelayRides (P2P)
This study focusses on the Peer-to-peer sharing platforms like Relayride. The next section will give a better understanding of why the collaborative- and sharing economy is
15 emerging at the moment by giving a clear view of sharing, and the rise of the sharing economy. The rise of the sharing economy creates opportunities for the entrepreneurs (Zwilling 2015). Entrepreneurs have to consider some key factors before starting in this new economy. Literature describes four CSF’s that are needed to be successful in the collaborative consumption. These CSF’s will be examined in the last section.
2.3.1 Sharing
Sharing is “the act and process of distributing what is ours to others for their use and/or the
act and process of receiving or taking something from others for our use” (Belk 2007, p 126).
Sharing has been in the humans system since they are born (Tomaselo 2009). It has been the most basic form of economic trade in the society for hundred thousand of years (Price 1975). There are both functional, like survival and altruistic reasons, like convenience and kindness, why people share (Fine 1980). Today most people are already sharing stuff like their home, food, resources with other household members (Belk 2007). Internet and in specific Web 2.0 has made sharing more easy and convenient than before, especially in a larger scale (Belk 2014). Start-ups have recognized the opportunity of sharing in combination with the web 2.0 and more companies are starting that are the mediator between the sharer and the renter like Share hood (Belk 2014).
2.3.2 The rise of the sharing economy
As mentioned in the introduction the sharing economy is rapidly growing. Zervas, Proserpio & Byers (2014) conducted a study regarding the impact of Airbnb on the hotel sector in Texas. They concluded that a 1% increase in market of Airbnb comes along with a 0.05% decrease of the overall hotels revenue. This indicates that the sharing economy is substituting the traditional economy. But what are the drivers for this substitution and why is it starting this era? Owyang (2013) proposes three types of drivers for the collaborative economy, societal; economic and technology drivers. Societal drivers are the increasing population density, the drive for sustainability, desire for community and general altruism. Economic
drivers are monetizing excess inventory, increase financial flexibility, access over ownership
and influence of VC. Technological drivers are social networking, mobile devices and platforms and payment systems. Botsman and Rogers (2012) acknowledge that new technology enables us to unlock the idling capacity of resources. Social, mobile and location-based technologies enable to efficiently and increasingly safely connect the people who have this idling capacity (goods, services or skills) with those who want it. Besides technology Botsman and Rogers name three other drivers for the sharing economy: value shift, economic
16 realities and environmental pressures. Value shift, changes the mindset of the society of the preference of ownership above sharing. Economic realities, due to the crisis the consumers have less money and consider cost saving access above ownership. Environmental pressures, the world is facing degradation. Gansky (2010) also admits that the economic crisis has let consumers to rethink their values. The sharing economy is observed as the usage of assets with more value for less cost (Botsman & Rogers 2012; Gansky 2010, Lamberton & Rose, 2012). The increase in awareness of the environmental degradation drives people to find solutions to use resources more efficient to endeavor a more sustainable society (Gansky 2010). Leismann, Schmitt, Rohn and Baedeker (2013) emphasize the resource savings potentials from the collaborative consumption. The collaborative consumption reduces the negative impacts of consumption on the environment (Botsman & Rogers, 2012). The collaborative consumption also increases the social interaction in the society. Peer-to-peer sharing platforms provide the opportunity to meet other participants and develop new connections (Botsman & Rogers 2012).
2.4 The critical success factors
Looking at examples of businesses in the collaborative consumption it can be concluded that at the core they all share four critical underlying principles (Botsman & Rogers 2012). According to Botsman and Rogers these principles are crucial for any business started in the collaborative consumption. A factor is a circumstance, fact, or influence that contributes to a result. A critical success factor is a factor that is needed to achieve a positive result. Without the compliance of the critical success factors the organization will not be successful. The CSF’s are the critical principles for organizations to achieve success. Therefore these principles can be seen as the critical success factors for companies participating in the collaborative consumption. Previous academic literature acknowledges the importance of CSF’s (Rockart 1978). The CSF’s are the things that must go well to make the operation a success for the organization (Boyton & Zmut 1986; Belassi & Tukel 1996). They are the factors that make the difference between winning and losing at new products (Cooper & Kleinschmidt 1995). Product innovation does not happen as well as it should when the critical success factors are noticeably absent (Cooper 1999). All these authors mention that the CSF’s are extremely important for the organization and especially in the innovation process. Despite the importance, limited research has been done regarding CSF’s for organizations in the collaborative consumption. Only Botsman and Rogers mention in their book what’s mine is
17 yours four critical success factors needed for collaborative consumption. This book is seen as
the current norm as it is most referenced by others writings on the sharing economy. There are four critical success factors that are needed for the collaborative
consumption: belief in commons; trust; idling capacity; and the critical mass (Botsman & Rogers 2012). The factors are all evenly weighted, but some can be more crucial than others depending on what is being shared and who is participating at the platform. The CSF’s count for all three distinct systems: product service systems; redistribution markets; and collaborative lifestyles. In addition the four principles count for business-to-consumer (B2C) as well as for consumer-to-consumer, mostly named as peer-to-peer (P2P) businesses (Botsman & Rogers 2012).
In this part all four CSF’s are described and examined by linking existing academic and non-academic literature with the CSF’s. An in depth review of all four CSF’s is given and tools regarding the management and control of the CSF’s are taken into consideration.
2.4.1 Belief in commons
By providing value to the community, you improve your own value. People have to believe that by participating in these platforms, sharing and or consuming, they add value to the community and support the system (Botsman & Rogers 2012). They want to participate for the common good and need to have the intrinsic motivation to help other participants by participating. Previous research showed that the perception of helping others is one of the top motivations to participate in the sharing economy (Sizelove 2013). Sizelove distributed a survey between 2103 adults in the U.S. Ipsos’ U.S. online panel on April 16-19 that showed a weighted sample of the American population. The top motivation for people to share was the ability to help others, argued by 36% of the panel. Tomaselo (2009) showed in his research that helping others is in every person’s nature. Study showed that when you drop something in front of a two year old baby, he or she is most likely to help and pick it up for you as reflex. Tomaselo argues that children are sociable and cooperative by nature and that by the age of three, children start to enhance and behave to social norms that are shaped by culture. Hence the platform has to underline the ability to help others by helping yourself.
Literature also indicated that one of the top drivers for people to participate in the collaborative economy is sustainability (Tussyadiah 2015; Hamari et al 2013; Burnett 2015). With sustainability is meant that the activity of the platform “optimizes the environmental,
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and future generations” (Luchs et al., 2011, p.2). Current needs are met as fully as possible
while at the same time the life opportunities for the next generations are undiminished (Weiss 1992; Howarth & Norgaard 1992). By choosing for participation at the platform instead of renting and or buying at traditional shops participants help the future generations. Leo Burnett (2015) investigated the psychology behind the sharing economy. He sent three surveys with a total of 4.000 respondents with the age between 18 and 69 in the U.S. in July and September 2014. Burnett argues that people are not only motivated to participate in the sharing economy by self-interest like practical needs, convenience, the save or make money but also motivated primarily by altruism, community and the environment (35% of the respondents). Peer to peer platforms are used to foster sustainable marketplaces (Phipps et al., 2013).
2.4.2 Trust between strangers
Mayer et al provide a clear definition of trust: 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 (Mayer et al., 1995, p. 712). Luhman (1979) simplifies stating that trust is the belief that
other people will react in predictable ways. This CSF focusses on the trust between the two peers at the transaction, the user and the sharer. This transaction is done via the platform using an online app or website. Online trust is an important determinant for online marketplaces (Mc Knight & Chervany, 2001). Online trust is the attitude of confident expectation in an online situation of risk that vulnerability will not be exploited (Corritore et al, 2003). Peer-to-Peer sharing economy platforms are online platforms on the internet or with an application on the smartphone. Previous academic research has been done investigating the influence of trust for online shops. Chen & Barnes (2007) proved that at e-commerce, online trust has a significant influence on the purchasing intensions of the consumers. They let Taiwanese participants visit an unfamiliar Taiwanese e-bookshop web site for the first time, and search for a particular product. Thereafter, they had to gather some details about the book and become familiar with the website. After the searching activities the participants need to complete a questionnaire that indicated the responses on a seven point Likert scale. Results showed that online initial trust of the consumer regarding the e-shop has a significant influence on their purchase intensions.
Pavlou (2003) showed that a high degree of trust eliminates the perceived risks, uncertainty and interdependences and also stimulates the expectations of satisfaction of the transactions online. Additional to this Gefen and Straub (2003) found that a higher degree of
19 consumers trust comes along with a higher degree of purchasing behaviors. The P2P transactions on the sharing platform are also executed via the internet. Therefore just as normal online e-commerce, P2P sharing platforms also require a high level of trust (Wu, Wang, Huang 2011). Furthermore at P2P platforms the middle man, the firm, is removed. The participant of the platform has to trust somebody which most of the times he or she has never seen before. Therefore the platform has to enable decentralized and transparent community to form and build trust between strangers (Botsman and Rogers 2012). Tussyadiah (2015) collected questionnaires from 754 adult travelers in the US. Results showed that trust was the biggest deterrent for people to participate in the collaborative consumption, 32.4% of the respondents of his survey admitted that trust was their biggest deterrent. Olson (2013) and Burnett (2015) also admitted that trust is one of the biggest barriers to enter the sharing economy. Dervojeda states: the public’s trust in online activities and transactions play a
crucial role for the uptake of innovations in the sharing economy” (Dervojeda, 2013, p10)
indicating that trust has a crucial role in the sharing economy.
New technology enables to build interpersonal trust systems based on reputation (Keymolen 2013). Platforms can implement rating & review systems to create a reputation trail of the person. Every seller or lender will get rated; spammers will get flagged; and there will be comments on transactions (Botsman and Rogers 2012). The idea of a reputation system is to let people rate each other after the completion of the transaction. It will provide the other side with a reputation score which will influence if people are willing to do business with him or her in the future (Josang, Ismail and Boyd 2007). Botsman (2012) even takes it one step further. She states that trust will be the new currency. By participating and making transactions at online P2P platforms people create a reputation trail by receiving review and ratings of the other party. The reputation trail reflects their trustworthiness. Gathering a positive reputation trail provides the people reputation capital. Given the right tools, people are able to take ownership of their reputation capital and use it to gain access, power and influence (Botsman and Rogers 2012; Botsman 2012).
2.4.3 Idling capacity
The idling capacity is the untapped social, economic, and environmental value of underutilized assets (Botsman 2013). The capacity left over after the deduction of the productive capacity. The asset has to have idling capacity to have the possibility to be rented out (Botsman and Rogers 2012). An example is the power drill. Half of the US households have a power drill. Research showed that a power drill is only used six to thirteen minutes in
20 its entire lifetime (Botsman and Rogers 2012). Thus the power drill has very high idling capacity.
People possess the asset but not need to use it all the time. Otherwise there is no idling capacity (Botsman and Rogers 2012). Therefore the ownership and usage specifications of the product on average have to be taken consideration before starting a platform. A critical note for the idling capacity is that when this is the case for an asset it does not immediately mean that it will be shared (Salinto 2014). “People will have to want to share: to give out their free
capacity and/or receive it from others” (Salinto 2014). Highly personal or very hygienic items
are usually less willing to shared or be shared. 2.4.4 Critical mass
The last CSF named by Botsman and Rogers (2012) is the critical mass. The critical mass is describes the existence of sufficient momentum in the system to make it self-sustainable (Ball 2004). This indicates the need to offer enough products or services on the platform as well as the need for people demanding the product or service at the platform. (Botsman and Rogers 2012). The critical mass is reached when it offers enough content and active users to attract new users and provide them with the product and or service that they are looking for. Botsman and Rogers state “the system will be successful if users are satisfied with the choice
and the convenience available to them. If not, the system will probably be poorly utilized and short lived” (Botsman and Rogers 2012, p 81). Furthermore the critical mass creates a core
group of loyal and frequent users. These users create a social acceptance for using the platform which will attract new users, it makes it ‘social proof’ (Botsman & Rogers 2011).
However, before the firm has to ensure that their customers stay loyal it has to generate the customers to the platform. It has to ensure that potential participants are willing and will participate at the platform. The potential participants have to be motivated to participate. Several academic (Hamari et al 2013, Tussyadiah 2015 and non-academic literature (Burnett 2015; Sizelove 2013; Owyang 2013) investigated the motivations and deterrents for people to participate in the sharing economy
2.4.4.1 Motivations to participate
Research has been done investigating the motivational factors for consumers to participate in the sharing economy. Three academic papers studied the motivational factors (Hamari et al 2013, Tussyadiah 2015, Bardhi and Eckhardt 2012). Hamari et al (2013) conceptualized and tested four motivational factors that could influence the attitude towards and behavioral
21 intention for collaborative consumption. They obtained a completed survey from 168 users of Sharetribe, a service were you can create a peer to peer marketplace in just a few minutes (Sharetribe). Results showed that motivational factors sustainability and enjoyment significantly affected the attitude towards collaborative consumption while enjoyment and
economic benefits significantly affected the behavioral intentions. Tussyadiah (2015) investigated the motivational factors that drive and hinder the collaborative consumption in the travel and tourism marketplace. Her research showed that there are three drivers for consumers: sustainability, community and economic benefits. Bardhi and Eckhardt (2012) conducted 40 semi structured interviews with users of Zipcar in Boston. Their research showed that the users were largely motivated by self-interest and utilitarianism.
In addition, non-academic but notable studies were conducted. Burnett (2015) argues that people are not only motivated to participate in the sharing economy by self-interest like practical needs, convenience, to save or make money but primarily motivated by altruism, community and the environment. His research showed that the most frequent motivation for people to participate is to help the less fortunate. Ipsos, an independent market research company investigated the difference in motivations between people that had participated in the sharing economy and that did not participate yet. The top motivation for people participated is the ability to help others while the top motivation to participate for the non-participators would be the economic gains (Sizelove 2013).
I noticed that there are some conflicts and similarities in the literature. Hamari et al (2013) find that people have intrinsic; sustainability and enjoyment, and extrinsic, economic, motivations to participate in the sharing economy. This is enhanced by Tussyadiah (2015), her research indicated sustainability, community and economic benefits as top motivations. In contrast Bardhi and Eckhardt (2012) argue that people only participate out of self-interest and do not want to be part of a community. This contrast could occur because Bardhi and Eckhardt specifically focused on the car sharing platform Zipcar while the others did not have focus on a specific market. Other reasons can be that due to the time of the research the results were contrasting and that it became more socially accepted during the last few years. However this reason is refuted by Sizelove (2013) which research showed that people that already participate in the sharing economy mainly did it because they wanted to help others while people that did not participate at the moment main reason was to gain economic benefits. This shows that later in time more people will participate in the sharing economy with economic gains as main motivation.
22
2.4.4.2 Deterrents to participate
Olson (2013) investigated the main deterrents why people did not want to participate in the sharing economy. He maintained 383 online interviews with participants in the U.S. His research showed that trust is the biggest barrier for people to participate, including the mistrust among strangers and their trust of privacy argued by 67% of his respondents. Burnett (2014) also investigates the reason why people were withholding participation in the sharing economy. The biggest deterrent that the people experienced was the perceived risk. People were afraid that it would not be safe or hygienic. The second deterrent was the joys of ownership. People still possessed emotional attachment to owning the assets indicating that the mindset of using instead of owning (Botsman & Rogers 2012) was not adapted by all respondents. Botsman and Rogers (2012) admit that the collaborative consumption implies trusting strangers to a varying degree. In addition, Keymolen (2013) states that the mediation of the ICT comes along with new challenges of trust, the trust trough technology. New technology enables to build interpersonal trust systems built on reputation. Olson (2013) argues that consumers are concerned that the products or services received in the sharing economy have a lower quality due to lack of supervision. In addition Tussyadiah (2015) argues that there are three deterrents to participate in the sharing economy: lack of trust, lack of efficiency and lack of economic benefits. Bardhi and Eckhardt (2012) showed that people do not like to be associated with the accessed asset and are deterrent to the community.
Trust seems to be the biggest deterrent shown in all researches. Burnett (2015) argues that perceived risk is the highest deterrent. Risk can be linked to trust. When people trust each other at the platform the perceived risk is lower. Economic disadvantage also seems to be a big deterrent for participation. This is in line with that one of the top motivations for participating is the economic benefit.
3. Conceptual model
This chapter demonstrates the conceptual model that is developed after a critical literature review. First a clear delamination of the sharing economy is given. Second it summarizes the conflicts and similarities in the literature regarding the critical success factors of Botsman and Rogers (2012) and cognizance the relation between. The findings of the literature resulted in a conceptual model. Furthermore this chapter provides the research question with sub-questions. The conceptual model and sub-questions are used as sensitizing concepts during the execution of the research.
23 3.1 Literature findings
The terms collaborative economy, sharing economy and collaborative consumption are often confused with each other. In this paper the following definitions are given to the terms: The
collaborative economy is the economic model focusing on connecting individuals or
organizations to collaborative produce, consume, finance, and learn. The collaborative consumption is part of the collaborative economy specified on the consumption section. The
collaborative consumption is the activity of acquisition and distribution of goods used and or
shared together or in succession. Part of the collaborative consumption is the sharing economy. The sharing economy is the economic model that is based on the sharing of underutilized resources. It prefers usage above ownership. The sharing of resources can occur between organizations and persons. In this paper the focus is on the sharing between persons, the peer-to-peer sharing platforms. Sharing is the act and process of distributing belongings to other for their use and or receiving or taking others belonging for our use.
The sharing economy is growing rapidly, in 2013 the top five sector generate a revenue of 15 billion $ while in 2025 the PWC forecast that the sharing economy will generate 335 $ revenue (PWC 2013). Literature provides several drivers for the rise of the sharing economy. Three are commonly mentioned by most researchers (Owyang 2013; Botsman and Rogers 2012). (1) New technology enables to efficiently match the people who want to use with the persons that want to share or rent. (2) The economy went bad, which made people seek for extra income and cost savings. (3) The demand for sustainability, the world population is increasing, which increases the environmental degradation. Botsman and Rogers (2012) also mention an extra driver: value shift of the people, but this is the occurrence of the three before mentioned drivers.
The rise of the new innovative economy, the sharing economy, provides major entrepreneurial opportunities. Entrepreneurs that want to start a business in the sharing economy face critical principles that must be fulfilled to succeed in the sharing economy. These are the critical success factors for sharing economy companies. Botsman and Rogers (2012) name four critical success factors: belief in commons, trust between strangers, idling
capacity, and critical mass.
To reach the critical mass people have to be willing to participate in the platform. Literature showed that the top motivation to participate in the sharing economy are economic benefits, helping others, sustainability and convenience (Hamari et al, 2015; Bardhi and
24 Eckhardt, 2012; Tussyadiah, 2015; Sizelove 2013). Empirical evidence also showed that trust was the biggest deterrent for organizations (Olson 2013).
This overlaps with two other critical success factors of Botsman and Rogers (2012) namely trust between strangers and belief in commons. Literature showed that two of the top motivations why people participate were sustainability and helping others (Tussyadiah 2015; Sizelove 2013). These two factors are connected to the CSF belief in commons. In addition, literature indicated that the biggest deterrent to participate was trust. People did not trust the system and in specific the other person, the stranger. Trust between strangers is the second CSF named by Botsman and Rogers (2012). Therefore, it could be seen that the two CSF’s:
trust between strangers and belief in commons have influence on the other CSF: reaching the critical mass. Only the link of motivations and deterrents to reaching the critical mass has
never been empirically tested and therefore the assuming relationships cannot be presumed based on academic literature.
The idling capacity stands on its own. A product has an average usage time and average ownership per household. Companies have to consider these two specifications before starting a peer to peer sharing platform.
3.2 The conceptual model
Until this point I have general sense about the collaborative- and sharing economy, the drivers and deterrents that achieve the rise of this new economy, and the relationship of the four critical success factors that are crucial for all businesses in the sharing economy. Linking literature reveals that two CSF’s; trust between strangers and belief in commons, are driving factors for reaching the critical mass. However this link has never been empirically tested and therefore requires further investigation. Besides due to the limited academic literature available, additional non- academic literature is also used to link the CSF’s. Burnett (2015), Olson (2013) and Sizelove (2013) all did research into the motivations and deterrents for people to participate in the sharing economy. All three researches were commissioned by Market Research Companies which can lead to that the original purpose of their research could differ from this study. Furthermore, all three used web-based questionnaires that inevitably constrain those who participate (Saunders and Lewis 2012). Therefore their results cannot be directly adopted, but they are used as a basis to test for this study. For this reason the conceptual theory is used as a sensitizing concept, a starting point for this qualitative study. This study will not only focus on the conceptual model but uses it as a guideline to for
25 the research. The sensitizing concepts will set the direction of the study and lay the foundation for the analysis of obtained data (Bowen 2008). The sensitizing concepts can be tested, improved and refined (Brumer 1954).
Thereby the following main question is elaborated:
What are the Critical Success Factors for peer-to-peer platform in the sharing economy?
To answer the main question the following sub-questions are elaborated
(1) What are the CSF’s for peer-to-peer platforms in the sharing economy?
a. Are their additional CSF’s besides the four mentioned by Botsman and Rogers
b. Are all four CSF’s mentioned by Botsman and Rogers critical for peer-to-peer sharing platforms
(2) What is the relation between the CSF’s?
a. Do trust between strangers and belief in commons influence the critical mass
The results of these questions help me defining the CSF’s and examine the relationship between. During the research will be also investigated how the organizations try to control these CSF’s. The sensitizing relationships will be tested in the research. Despite their deductive character, exploratory characteristics will have the lead in the research. The combination of the literature review and the findings of the research will result in an empirical tested framework of the critical success factors.
The research objective is not only to present the data and findings but in addition translate the theoretical findings into practical recommendations for entrepreneurs that want to start a peer-to-peer sharing platform or for firms that participate in the sharing economy.
Looking at the gathered data found in the literature review the following conceptual model shown on the next page is elaborated:
26 Figure one: Conceptual model
Success of the peer-to-peer sharing platform Critical Mass Idling capacity Trust between strangers Belief in Commons
27
Sharing the research
4. Methods
The purpose of this chapter is to explain and reason the methodical choices of this research. It starts with a paragraph concerning the research approach, followed by a description of the research design and thereupon the research method. Fourth, the research strategy is explained. Fifth, a description of the data collection including the sampling frame, interview guide, and context and execution is provided. At last the process of data analysis is described.
4.1 Research approach
There are two different research approaches: deductive and inductive (Saunders and Lewis 2012). The study presented in this paper uses an inductive approach. The main reason for this choice is because the existing academic literature on the sharing economy is scare, especially regarding the CSF’s that are examined in this paper. It would be counterproductive to base theory on relationships that are not empirical tested and might not be the case for the Dutch market. Using the inductive approach provides the study an open mind set which will results in interesting relationships. The literature review was used to provide a foundation for the conceptual building and analysis of the results of the research. It also gave the researcher a close understanding of the subject and research context.
4.2 Research design
The research design focuses on changing the research objective and question into a research project (Saunders and Lewis 2012). The different research designs are used for different purposes and are categorized into: exploratory, descriptive, and explanatory. This study has an exploratory research design. “The exploratory research aims to seek new insights, ask new
questions and to asses topics in a new light” (Saunders and Lewis p110). Exploratory
research is the best option when there is limited academic literature and research is available regarding the subject (Saunders & Lewis 2012).
The aim of this study is to explore the relationship between the four CSF’s, find additional CSF’s, and discover their relationship. The purpose of this study is exploratory, designed to investigate and elaborate new insights on the four principles and generates a better understanding about the sharing economy.
28 4.3 Research method
The research method indicates how the data is approached and gathered and the relation to the research question (Saunders and Lewis 2012). The research methods are categorized into quantitative and qualitative (Strauss and Corbin 1998). Straus and Corbin argue that qualitative methods can be used to discover and understand what lies behind the phenomenon about little is known. In addition it can provide with complex details that are difficult to convey with qualitative data. The newness of the phenome suggests that not much is already known about the subject. Furthermore the open research question emphasize the essence of complex information, in specific to answer the underlying drivers, in-depth data is needed.
Because of the following reasons a qualitative research method is chosen. 4.4 Research strategy
The main types of research strategy are experiment, survey, case study, action research, grounded theory, ethnography, and archival. This research uses the case study strategy. According to Saunders and Lewis (2012) case studies are specifically good at “enabling the
researcher to get a detailed understanding of the context of the research and the activity taking place within that context” (Saunders and Lewis 2012, p 117). The case study involves
the investigation of a particular contemporary topic within its real-life context, using multiple sources of evidence. There are four ways of conducting descriptive studies: questionnaire surveys; sampling; interviews; and reanalysis of secondary data.
For this study, the primary data was gathered trough semi-structured interviews with owners and employees of firms that have peer-to-peer accessibility based business model. According to Denzin & Lincoln: “Qualitative research often studies phenomena in the
environments in which they naturally occur and uses social actors' meanings to understand the phenomena” (Denzin & Lincoln, 1994 p, 2). The owners and employees of these
companies should face and experience the critical success factors. By interviewing the people that faced these factors and experienced the impact provides this study clear in-depth information and insight data that could validate, adjust, and or expand the elaborated framework. According to Saunders and Lewis (2012) conducting an exploratory research can be done in three ways: (1) searching the academic literature, (2) interviewing experts in the subject, (3) and conducting interviews. This study combines all three methods by conducting interviews with owners (the experts) of peer to peer platforms testing supplementary relationships based on academic literature.
29 Secondary data consists of academic and non-academic literature review that was obtained before the interviews. This data allowed the researcher to have a better and more in-depth understanding of the subject. And thereby could better ask critical questions to acquire a good answer to the research question.
4.5 Data collection 4.5.1 Research sample
The focal population of this study consisted of owners and employees of firms that provide peer to peer platforms in the sharing economy that have their home base in The Netherlands. Because of the sharing economy trend just emerged, only a selection of firms have started peer to peer sharing platforms.
The crucial number of observations is linked to the number of interviews that the research needs till it reaches data saturation, the stage when additional data only provides few new insights into answering the research question (Saunders and Lewis 2012). According to Saunders and Lewis for homogeneous populations it is likely that the stage is reached at about ten interviews. Therefore for this study ten managers and or owners of P2P sharing platforms were selected to be interviewed. The interviewees were recruited trough the following steps. First contact was made by telephone or e-mail explaining the research and asked their willingness to participate. The contact e-mail can be seen in appendix A. If the first contact was made by telephone, an e-mail was sent afterwards providing more information on the interview. Secondly, a selection of ten was made between all the people that were willing to participate. This was done by purposive sampling used to gather a wide variety of types of assets sharing. Table 1 shows the research sample of this study.
Table one – the research sample
Function Company Activity
Chief Product Officer Peer to peer product sharing
Boardmember Peer to peer jobs / tasks
Co-founder & CFO Peer to peer bicycle rental
Co-founder Peer to peer boat rental
Product manager Peer to peer camper and caravan rental
Co-founder & CEO Peer to peer summaries
User Aquisition Specialist Peer to peer 3D Printing
Assistant branch manager Peer to peer car rental
Community support agent & insurance specialist Peer to peer car rental
30 4.5.2 Interview
There are three types of interviews: structured interview; unstructured interview; and semi-structured interview (Saunders and Lewis 2012). In the semi-semi-structured interview the researcher has a list of topics and questions that have to be asked and covered but the interviewer can vary the order. The interviewer may also choose to skip some predetermined questions and ask additional questions if necessary (Saunders and Lewis 2012).
This study uses the semi-structured interviews. A semi-structured interview provides the interviewer the opportunity to tell everything they can and want to say but ensures that the interview will stay on the subject.
The interview always started with a short introduction to the research. Afterwards the researcher asks for the background of the interviewee and a description of the business of their company. Asking personal and back-ground questions will make the interviewee feel ease and will subsequently bee more easy to interview. Thereafter an introduction of the specific subject of the research, the sharing economy and a clear definition of the critical success factor were given. Consequently the first question was if they could explain which critical success factors they knew for peer to peer sharing platforms and which they had experienced.
The next step of the interview was to test the model based on the literature. All four critical success factors drawn from the literature were printed on cards and given to the interviewee. An extra card was printed that stated P2P sharing platform. The purpose of including printed cards to the interview was that it would give the interviewee a more visual look of the CSF’s. The cards could also be used to rank the CSF’s and visualize the relationships between the CSF’s. Figure 2 shows the printed cards.
31 4.5.3 Interview guide
Before the interviews the interview guide was conducted. The interview guide can be seen in appendix B. The interview guide includes the introduction to the research and to the specific subject. Furthermore it had clear definitions of the four critical success factors. Therefore all interviewees received exact the same definition of the four critical success factors which prevented bias.
4.5.4 Location
I asked the interviewee where he/or she would like to have the interview. They could choose the location. Seven times the location of the interview was at their head office. Three times the interview took place in a bar which they had chosen. The sessions were scheduled to last half an hour.
4.6 Data analysis
4.6.1 Transcribing
An important part of the analysis was transcribing the interviews. Transcribing the data is a secure process were the transcription as to give an exact written representation of the spoken interview without being influenced by researchers’ interpretation (Saunders and Lewis 2012). The interviews were transcribed as soon as possible after the interview. Thereby the researcher still had a good recall of the interview.
4.6.2 Coding
The software program NVivo version 10 was used during the coding process. The starting codes were the factors found in the literature plus some additional elements. Extra nodes were added when they appeared during the interviews. The additional added nodes were more in depth nodes focusing on the CSF’s.
The complete coding scheme resulting after the coding process and therefor used during the process is added in appendix C.
32
Sharing the Results
5. Interview results
In chapter two, the literature review, four critical success factors for peer to peer sharing platforms were found. Using additional literature a model was developed that showed the relationships between the CSF’s in chapter three. With the use of interviews first all CSF’s are tested and thereafter validated. Secondly the existences of additional CSF’s are inspected and at last the relationships between the CSF’s are considered. Interviewing the managers of peer to peer platforms gave me the opportunity to use their knowledge and experience to critically review the information composed at the literature review. In the process of coding and categorization I found that besides the four CSF’s of Botsman and Rogers, two others possible CSF were frequently mentioned. Therefore, an extra category, additional CSF’s was included in the process. The data collected at the interviews are anonymous processed. For this reason all participants have been given code names. Table 2 provides code names and characteristics about each participant.
Table two: Codenames of the participants
Code name Type of Business
Part_1_PS Peer to peer product sharing
Part_2_JT Peer to peer jobs / tasks
Part_3_CR Peer to peer bicycle rental
Part_4_BR Peer to peer boat rental
Part_5_CCR Peer to peer camper and caravan rental
Part_6_S Peer to peer summaries
Part_7_P Peer to peer 3D Printing
Part_8_CR Peer to peer car rental
Part_9_CR Peer to peer car rental
Part_10_HR Peer to peer housing rental
The next section will provide a detailed description of the results of the interviews.
* The citations from the interviews were translated from Dutch to English because the interviews were held in Dutch.
