Towards a better understanding of value distribution between stakeholders of sharing economy platforms

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Towards a better understanding of value

distribution between stakeholders of

sharing economy platforms

| Master Thesis | MSc. Small business & Entrepreneurship |

| Faculty of Economics and Business | University of Groningen |

Author:

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Mike P.J. Mensink

S3032256

M.J. Brand

S. Murtinu

16-3-2018

11588

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Abstract

This study aims to explore the sharing economy and the value distribution between its stakeholders. From the existing literature it became clear that a research gap existed on this topic, and this research gap is translated into a research question. Value distribution between stakeholders of the sharing economy is an interesting debate, because the literature suggests significant differences with traditional economy. In order to answer the research question, a case study approach and primary and secondary data analyses are being used. Two different cases are selected for an interview, and four other cases are analyzed using secondary data like online news articles. The result of this study is that low income consumers benefit from the existence of sharing economy platforms, and that sharing economy has negative effects on incumbent firms in an industry.

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4. Results ... 24 4.1. Primary data ... 24 4.2. Secondary data ... 26 4.3. Within-case analysis ... 29 4.4. Cross-case analysis ... 34 5. Discussion... 37 6. Conclusion ... 38 6.1. General conclusion ... 38 6.2. Managerial implications ... 38 6.3. Limitations ... 38 6.4. Recommendations ... 39 References ... 40 Appendices ... 43

Appendix A – Development of interview questions ... 43

Appendix B – Interview guide ... 45

Appendix C – Summary interview Motoshare ... 46

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1. Introduction

The rise of the sharing economy has been among the most significant economic developments over the past 10 years (Frenken, 2017). Sharing is as old as human history, but the sharing economy is still quite a new phenomenon. Before the sharing economy emerged, sharing assets was also possible, but was limited to the people you trust like family, friends and neighbours. The scale of the market was limited by high transaction cost such as the need to take payments, insure against potential risks, screen those who might want to use your assets, and to market your assets to those who might wish to hire them (Sinclair, 2016). However, with the advent of online platforms, a lot of customers have started renting or borrowing goods from other consumers. Users of the platforms can share homes, cars, labour, intellectual property, and other assets. This means; people who need an asset have greater availability and lower quality-adjusted price, and those who own an underutilized asset can enjoy financial return on it (Sinclair, 2016). The often quite large for-profit platforms, have attracted lots of attention, partly because they could yield economic benefits by replacing conventional business models by new, innovative business models. The popularity of the sharing economy platforms and high recent valuations of for-profit companies also made investors optimistic about the sector. Lyft for example, a ride sharing service and competitor of Uber, recently raised 1 billion dollar from a venture capitalist (Carson, 2017). However, the sharing economy can also be contentious and has become subject of heated controversy around the world (Schor, 2017).

Positive effects of the sharing economy

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5 factors is that the fraction of below-median consumers who were excluded from participation, can now participate through the platform. Another fraction used to own a car but now shift to being non-owner renters because they realize the cost savings from better usage efficiency and higher quality consumption. A relative small fraction have switched from being non-owners to being non-owners because they realize the surplus gains by supplying their assets on the platform. This study concludes that peer-to-peer rental marketplaces have a disproportionately positive effect on lower-income consumers.

Negative effects of the sharing economy

At the same time, critics of the sharing economy argue that it increases income inequality by shifting more income and opportunity to better-off households and providers. Sharing economy platforms are characterized by strong network externalities (Frenken & Schor, 2017). Network externalities describe the effect of a firm benefitting from an increasing user base, so the more users a platform has, the more successful it will be. This creates the tendency towards natural monopoly and allowing for high margins to be charged by the platform. Even though the ratings that account for a significant part of the value of the platform are the products of the platform users, the value generated is appropriated by the platform itself.

Another group of people that are believed to profit from the sharing economy and amplify income inequality are owners of valuable assets. On-demand platforms seem to be leading to increased inequality within the bottom 80% of the income distribution. According to Frenken (2017), on-demand platforms match freelancers with consumers. The increase in inequality is believed to be induced by highly educated providers that capture market opportunities like driving, cleaning and household tasks that were once executed by lower-educated workers. This only adds to the incomes of high earners (Schor, 2017). Another argument against the sharing economy, and particularly on-demand platforms, is that it is shifting larger risk onto workers by classifying providers as independent contractors rather than employees. Overall, while it is safe to say that participants in the sharing economy are experiencing increases in consumer welfare from lower prices and more variety, economic inequality driven by provider side dynamics is likely to increase as well (Frenken & Schor, 2017).

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6 the sharing economy significantly changes consumption patterns, as opposed to generating purely incremental economic activity. They argue that the entry of AirBnB into the Texas market has had a quantifiable negative impact on local hotel room revenue. As mentioned above, it is likely that the rise of sharing economy platforms affect incumbent firms in a particular industry. However, there is no clear theory of which firms will benefit, and which will not. For example, one could argue that small firms benefit more from the sharing economy because it becomes easier to overcome a lack of resources. On the other hand, one could argue that small firms will be harmed by the sharing economy because of the rise of large corporations like Uber or AirBnB aggressively taking over market share of local businesses.

Focus of the study

From the former mentioned issues in existing theory, it becomes clear that the effect of sharing economy platforms on its stakeholders is still unclear. The discussion about whether workers in sharing economy platforms are better off than their colleagues in traditional firms, whether existing small businesses are significant negatively affected by the rise of sharing economy platforms, and whether the sharing economy has a disproportionately positive effect to lower or higher income consumers, craves for a better understanding in this topic.

First of all there is a need to identify who are (relevant) stakeholders in sharing economy platforms, and how they are affected by the emergence of these platforms. This study will dive deeper into the research gaps by means of a literature review, and a case study within two sharing economy platforms, which will lead to a detailed model in which value transaction between stakeholders in sharing economy platforms will become evident. This model can be used by policy makers and researchers to gain insights and map interests between certain stakeholders. From the conclusion of this research, especially small businesses can determine how to deal with the rise of the sharing economy in such a way that generated value will end up working in their advantage.

1.1. Research question

Based on the knowledge gap identified earlier, the following main research question is formulated:

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7 factors influence this process. The second perspective focuses on how value is actually distributed in practice, and why this is the case. This study will clarify both perspectives by means of a literature review, secondary data analysis of practical examples, and in-depth interviews with owners/ managers of two sharing economy platforms.

The following propositions are made based on existing literature: PROPOSITIONS

1. Lower income consumers benefit from the sharing economy. 2. Higher income consumers benefit from the sharing economy.

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2. Literature

2.1. Defining the sharing economy

One of the rare points scholars agree on is how hard it is to define the sharing economy and to draw clear conceptual and empirical boundaries (Acquier, Daudigeos, & Pinkse, 2017). It is extremely challenging to offer a definition of the „sharing economy‟ which retains clarity considering the variety of ways in which the term is used in practice (Schor, 2014). Acquier et al. (2017) argue that the sharing economy is an umbrella construct, i.e. a „broad concept or idea used loosely to encompass and account for a set of diverse phenomena‟ (Hirsch and Levin, 1999: 200). Some see umbrella constructs as attractive because of their broad scope and usefulness to connect new phenomena, to keep track of empirical innovations, to build academic communities, and to be of practical relevance for managerial audiences. Others find these kind of umbrella constructs unattractive because a broad scope limits academic rigour. Martin (2016) says that perhaps central to these definitional challenges is the meaning of the word sharing. For example, some critics have argued that sharing by definition does not include financial remuneration (Belk, 2007), and hence innovations based on peer-to-peer asset rental (e.g. Airbnb) could be excluded from the sharing economy. However, if one considers that access to an asset can be shared (rather than the asset itself), the transaction of money becomes irrelevant and peer-to-peer asset rental are included within the sharing economy.

Further complicating factors to define the sharing economy are the use of different terms, each used to a greater or lesser extent interchangeably, including collaborative consumption and the collaborative economy. These terms appear to be introduced around 2010, probably following the publication of “What's Mine is Yours: How collaborative consumption is changing the world”(Botsman and Rogers, 2010). This book played a central role in framing a diverse group of online platforms. These platforms all facilitated peer-to-peer forms of doing business, differentiating it from the existing traditional business. The book organized the thousands of examples of collaborative consumption into three types of systems:

Product-service systems: companies offering „goods as a service‟ rather than a product. Redistribution markets: used or pre-owned goods are moved from somewhere they are not needed anymore to somewhere they are needed.

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9 In their book, Botsman & Rogers (2010) describe collaborative consumption as a new, emerging economy made possible by online social networks and fuelled by increasing cost consciousness and environmental necessity. Collaborative consumption occurs when people participate in organized sharing, bartering, trading, renting, swapping, and collectives to get the same pleasures of ownership with reduced personal cost and burden, and lower environmental impact. However, this phenomenon is also often referred to as „sharing economy‟ or „collaborative economy‟. Martin (2016) tried to identify what term is dominant by counting the number of times the terms are used in newspaper articles. As shown in the figure below, references to collaborative consumption have been subsequently surpassed by references to the sharing economy, emphasizing that the sharing economy has become the predominant concept.

Figure 1. Number of newspaper articles referring to the ‘sharing economy’, ‘collaborative consumption’, and the ‘collaborative economy’ (Martin, 2016).

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10 Frenken (2017) offers a clear framework to separate the definitions of sharing economy and collaborative consumption. He first recognizes three trends in the economy:

 Consumer-to-consumer (c2c) interaction. Consumers act as a small rental agency by offering others access to their consumption goods. Economists speak of peer-to-peer economy when such c2c rental services are transacted through a market, with the provider asking money in return. In such markets the platform acts as intermediary, matching supply and demand. The platform also offers auxiliary services such as automatic payment, ratings, and insurances.

 Access rather than ownership. The access economy describes the phenomenon of consumers increasingly opting for access over ownership. A good example is the decline of car ownership among younger people because access alternatives are increasing rapidly in numbers. Car drivers cannot only make use of sharing economy platforms, but also of cheap and convenient ride-hailing services or car rental services.  Better use of under-utilized physical assets. This is also referred to as circular

economy, which is a business models that makes efficient use of resources. Fewer goods may be needed to fulfil the same level of demand if more people make use of a single good.

Frenken argues that the sharing economy exists where the three trends mentioned above overlap, with each trend in itself being more inclusive than just the sharing economy (figure 2).

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11 Once it is understood that the sharing economy category exists at the exact intersection of the three types of economic trends, one can also derive the types of economies occurring at the intersection of two of the three trends:

 Product-service economy: the consumer obtaining access to a product while the company retains ownership.

 Second-hand economy: selling or giving away goods to others, which is distinct from sharing goods on a temporary basis, as ownership changes hands.

 On-demand economy: platforms matching freelancers with consumers, also called „gig economy‟. Gig economy is not considered circular, and therefore is not seen as part of the sharing economy.

The four modes of consumption, (sharing, product-service, second-hand, and on-demand) are considered a subset of what has become known as „collaborative consumption‟. To highlight this, the four sections that fall under „collaborative consumption‟ are shaded in figure 2. The „collaborative‟ aspect among consumers is always different. In the sharing economy one gives someone temporary access to already owned goods or skills, for example borrow or rent a car from an individual. In the second-hand economy one gives someone permanent access to goods, for example buying a car on Ebay. In the on-demand economy one delivers a service to someone, for example ordering a taxi via Uber to bring you to your destination. In the b2c product-service economy, a company provides a good to multiple consumers and consumers collaborate indirectly, for example renting a car from a company. As recent literature of sharing economy has shown, scholars will probably never agree on a definition (Acquier et al., 2017). For the sake of clarity, the definition and framework of Frenken (2017) will be used in this study to define the boundaries of sharing economy and collaborative consumption. This definition is found to be most comprehensive by including both sharing economy and collaborative consumption, and giving a clear distinction between these two terms.

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Table 2. Determining what is part of the sharing economy

As becomes clear from table 2, true sharing economy only exists where private individuals provide goods or services to private users (to-peer). Furthermore, in a situation of peer-to-peer goods exchange, there exist two different forms. One form is giving temporary access to goods (sharing economy) and the other is a form in which ownership changes hands (second-hand economy). So only type 1 and type 3 from this table are considered part of the true sharing economy.

2.2. Stakeholders

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13 them define stakeholders as “claimants” who have “contracts”. In addition, Langry (1994) put the emphasis on the stakeholders that do not have contracts, but that have a moral or legal claim: “The firm is significantly responsible for their well-being, or they hold a moral or legal claim on the firm.” (p. 433). Stakeholder theorists differ considerably about whether they take a broad or narrow view of a firm's stakeholder universe (Mitchel et al., 1997). Numerous attempt have been made to define stakeholders in a broad or narrow sense, albeit with limited success. In short, according to Mitchel et al. narrow views attempt to define relevant groups in terms of their direct relevance to the firm's core economic interest, and broad views, like the definition of Freeman, are based on firms that can indeed be affected by, or can affect almost anyone. This being said, it is concluded that there exists no one widely accepted definition of a stakeholder.

Because this study is focussed at value distribution among stakeholder groups, a narrow view is needed to avoid making a list of, for this study, irrelevant stakeholders. The list (see table 1) is narrowed down by only considering the most relevant stakeholder groups that have direct relevance to the firm‟s core economic interest. This includes parties that exchange monetary value with sharing economy platforms, or are lose monetary value through the existence of sharing economy platforms. An explanation of the term „monetary value‟ is given in paragraph 2.3 of this paper.

This approach leads to 6 main stakeholder groups for sharing economy platforms. The first stakeholder group exists of the product/service providers of the platform. This group gives access to their assets or skills through the use of online platforms, and obtains a certain fee for this (Thorne & Quinn, 2017).

The second stakeholder group are the end users of the products provided by the platform. This group pays a certain price, often service fee + renting fee, to make use of the platform and the providers of assets/services.

The third stakeholder group exists of the owner(s) of the platform. This individual or group obtains the profits made by the platform (Frenken & Schor, 2016).

The fourth stakeholder group are tax authorities. There have been discussions about whether sharing economy platforms are undermining the existing tax laws by seeing their providers not as employees but as independent entrepreneurs (Frenken, 2017) (Thorne & Quinn, 2017). This is possibly affecting tax authorities by missing out on employee taxes.

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14 The sixth stakeholder group exists of investors and other capital providers of sharing economy platforms, they can possibly obtain large returns on their investments because of the explosive growth of some sharing economy platforms (Richardson, 2015).

STAKEHOLDER GROUP REASONING Product/service providers Obtain renting fee.

Product/service users Pay a price for making use of the mediator (platform), and the goods/services of the provider. Owner(s) of the platform Obtain service fee.

Tax authorities Employee taxes.

Traditional market Market share and turnover.

Investors/capital providers Obtain possibly large returns on their capital through fast growing platforms.

Table 3. Stakeholders in sharing economy platforms

2.3. Value

Any individual who attempts to posit a precise and comprehensive definition of value or value creation will quickly realize that the subject of study is elusive and complex (Badinelli, 2015). Today, the concept of value is of increasing interest to both academics and practitioners in different fields such as economics, operations management, marketing, construction management and so on (Walters and Rainbird, 2004).

Aristotle (1897) was the first to suggest that value is expressed in „value in use‟ and „value in exchange‟. Bowman and Ambrosini (2000) have tried to explain these terms by describing use value as specific qualities of the product perceived by customers in relation to their needs: e.g. the shape and texture of the sweater, the styling and colour of the motorcycle etc. Thus, very subjective judgements about the value. They also argue that exchange value, on the other hand, refers merely to price. Exchange value is defined as “the monetary amount realized at a single point in time when the exchange of the good takes place (Bowman and Ambrosini, 2000, p.3).

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15 customers are willing to pay (value in exchange equals total monetary value). The difference between customer‟s valuation of the product and the actual price paid, so the difference between value in use and value in exchange, is called the „consumer surplus‟, or in other words „value for money‟ (Bach, Flanagan, Howell, Levy and Lima, 1987). Therefore, the total monetary value of a product is equal to its exchange price + consumer surplus. It is very difficult to estimate the customer‟s valuation of the product, because markets are never static. One could say here that any firm that is able to sell something is, in the eyes of its customer at that particular time, offering a product with higher consumer surplus than that of competitors.

In the context of sharing economy platforms, price is typically divided into a service fee and a renting fee (see figure 3). The service fee is obtained by the platform owner, the renting fee is obtained by the provider of the asset or service, and the consumer surplus is enjoyed by the consumer. Because existing literature has not yet made the distinction between renting fee and service fee in exchange value, figure 3 is composed to visualize the forms of value in a sharing economy context. This differs from traditional markets where companies often pay their employees a fixed wage, and then obtain the full exchange value from the customer.

Figure 3. Visual representation of use value and exchange value in a sharing economy context.

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3. Method

3.1. Sampling

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17 following businesses are found: Uber, AirBnB, BlaBlaCar and Peerby. These cases are all internationally operating and relatively large-scale, in contrast to the cases which are analyzed using primary data. This adds to polarity of the cases, which is useful in this case study because it is likely to replicate or extent emergent theory, according to Eisenhardt (1989). The cases selected for primary data collection and the cases selected for secondary data collection are presented the next section.

3.2. Description of the cases

Motoshare (primary data)

MotoShare (www.motoshare.nl) is a sharing platform, where individuals can rent motorbikes via an easy and secure platform. The company is a start-up in the sharing economy that aims to radically change the motorcycle sector with a peer-to-peer motorcycle sharing platform. On the platform it is possible to enjoy each other's motorcycle in an easy and safe way by means of temporary rental. Motorcycle owners earn back part of the annual costs in this way and motorcycle enthusiasts can rent any type of motorcycle for an attractive price, which enables them to enjoy riding a motorcycle that they otherwise possibly could not afford.

Motorcycle owners can offer their motorcycle on the online platform for a chosen daily price and availability. The motorcycle enthusiast chooses his or her preferred motorcycle and rents it directly from the owner, but pays via the platform. Motoshare then pays the rental sum to the motorcycle owner afterwards. Motoshare also provides all-risk insurance, breakdown service, and screens users and providers for reliability. The screening takes place manually by employees of the platform, by checking personal data on correctness and looking at any previous reviews on this user.

HiHiGuide (primary data)

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18 People that want to guide others around the highlights and hotspots of their city can advertise their services via hihiguide.com, and people that want to visit a city and have a guided tour, can get in contact with them via this platform. The travellers can pay HiHiGuide for this service, and HiHiGuide will pay the guides after taking their share of 20% of the transaction. Screening takes place on the basis of profile picture and user data provided by the guides.

Uber (secondary data)

Uber (www.uber.com) is a global taxi technology company operating in more than 600 cities worldwide with its headquarter in San Fransisco, California, United states. The company offers different services of which the best known service is called UberX, a platform on which people who are looking for a taxi ride can order a private car driven by a private person (peer-to-peer). This service is not considered part of the sharing economy according to Frenken (2017). Although it is „peer-to-peer‟ and „access‟ rather than ownership, it doesn‟t meet the requirement of being „circular‟. However, another service called UberPOOL matches riders with another rider who is travelling in the same direction, and therefore meets all three requirements for being part of the sharing economy.

Users of the platform can pay their ride via the mobile application. Uber will then pay the driver after taking their financial share for providing the platform.

AirBnB (secondary data)

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19 The payments are made through the website or mobile application. AirBnB charges 5-15% service fee for the renter (user) on top of the renting price, and AirBnB pays the providers their renting price minus 3-5% service fee.

BlaBlaCar (secondary data)

BlaBlaCar (www.blablacar.nl) is a ridesharing platform that connects drivers and passengers willing to travel together between cities. The idea is that cars are often driving under-utilized because not all seats are taken. By putting a planned trip on the platform, people who are planning on travelling the same direction can fill up these empty seats and share the cost of the journey. Members can register and create a personal online profile which includes social network verification, ratings and reviews by other members, and rate of response.

Drivers can set their own price for the rides, and service fees obtained by the platform are set fees and calculated based on the amount the driver sets for the ride. The service fees are added to the price of the ride, so the driver gets the exact amount they set for the ride, and the user pays the service fees for using the platform.

Peerby (secondary data)

Peerby (www.peerby.com) is a goods sharing platform that connects goods owners with people that want to borrow a good. A lot of user goods are underutilized and therefore suitable for lending out. When people can borrow goods cheaper and more easily instead of buying them, the utilization is likely to increase, and therefore less goods will have to be produced.

The provider can choose if he or she wants to get a fee for lending out his or her goods, and the user can choose if he or she wants an insurance for using the good. Both options are beneficial for the platform, because it obtains a certain percentage of the transaction. However, the platform will only get a service fee when a transaction takes place through the website or mobile application, so when the provider doesn‟t want a fee, and the user doesn‟t want an insurance, there will not be any revenue for the platform.

3.3. Variables

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3.3.1. Identification of stakeholders

Six distinct stakeholder groups have been recognized in the theory section, based on existing literature. The groups are collected in table 4, and in the right column the operationalization of the different groups is proposed for this study. The stakeholder groups are determined earlier in this report.

STAKEHOLDER GROUP

OPERATIONALIZATION

Product/service providers People who put their assets or services on the platform in order to obtain value from it.

Product/service users People who use the platform to get access to products or services.

Owner(s) of the platform Individuals or firms with legal ownership of the firm.

Tax authorities Any government entity that is authorized by law to assess, levy and collect taxes.

Traditional market Competitors that existed before the emergence of sharing economy platforms.

Investors/capital providers

Individuals or firms who invest capital in the business, and expect profit from that.

Table 4. Stakeholder identification.

3.3.2. Identification of value creation

Three forms of value have been distinguished in the theory section. This includes renting fee, service fee and consumer surplus. Renting fee and service fee can be measured by looking at the monetary transaction between users, providers, and the platform. The non-monetary value of consumer surplus is not quantifiable, but is believed to be present when a customer is willing to buy a given product/service from a given party, instead of buying the competitor‟s product/service. Table 5 gives an overview of these types of value and their operationalization.

TYPE OF VALUE OPERATIONALIZATION

Consumer surplus The non-monetary value that is obtained by the user of the sharing economy.

Service Fee The monetary value that is obtained by the platform (owner). Renting Fee The monetary value that is obtained by the provider of goods or

services. Table 5. Value identification

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21 As stated earlier in this report, there are two value creating mechanisms in real sharing economy markets. The first mechanism is peer-to-peer goods exchange, and the second is peer-to-peer service exchange.

VALUE CREATING MECHANISM OPERATIONALIZATION

Peer-to-peer goods exchange Where private individuals provide goods to private individuals through the use of an online platform.

Peer-to-peer service exchange Where private individuals provide services to private individuals through the use of an online platform.

Table 6. Value creating mechanism

3.4. Data collection

Primary data is gathered through a literature review and in-depth interviews with owners/managers of sharing economy platforms, and secondary data is collected through analysing the companies‟ online information, such as websites, fora and social media. (Strauss & Corbin, 1990). Both primary and secondary data collection methods are focussed purely on true sharing economy as proposed by Frenken (2017). This means the companies that are being discussed have to meet three requirements: Access, Circular and Peer-to-Peer.

Primary data is collected by conducting interviews (approx. 1,5 hour) with the owners or managers of two different businesses. To increase external validity, the results must be generalizable. By interviewing two different sharing economy businesses, the generalizability of the results will increase. The first step in data collection is to gather general information about the company, like the business plan and contact information. The website www.deeleconomieinnederland.nl provided most of the necessary data, and two companies were contacted using the contact information from this website. Insights from existent literature and the developed propositions were used to come to an relevant interview guide, that includes the right questions to get the information needed from the company. In appendix A there is a specification of what questions are developed for specific propositions. With these questions a semi-structured questionnaire was developed, which is presented in Appendix B. The interviews were recorded and later summarized (see Appendix B & C). The outcome of the interviews can also be used to validate the propositions that are developed earlier on ground of existing literature (paragraph 1).

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22 selected for secondary data analysis. The publications that somehow have a connection with the research question or the propositions are checked for reliability, collected, and sorted case by case. The collected validated publications are then presented in the results section, where this data will be analyzed.

3.5. Data analysis

Different methods are used in this research to analyse the gathered data. A within-case analysis is conducted for both of the aforementioned primary data cases. All the data gathered from desk research is analysed by reading and linking to the earlier operationalized variables. The outcomes are used as input for setting up the interviews. The interviews are analysed by reading the summarized written answers, and a cross-case analysis is conducted by comparing the outcomes of the individual within-case analyses to find any similarities or contradictions. Furthermore, research has being done through secondary data collection on the aforementioned secondary data cases. Relevant publications are found that have a relation with the propositions mentioned earlier. This data is collected and analyzed, and results are put in a cross table to find any patterns that can lead to conclusions.

3.6. Quality of the study

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4. Results

4.1. Primary data

This section contains the primary data that is gathered by means of in-depth face-to-face interviews with owners/managers of companies that are involved in sharing economy. The summary of the interviews are presented in appendix C and appendix D. The outcome of the interviews is interpreted and summarized. This data is analyzed in paragraph 4.3 and 4.4.

Motoshare

Thomas Jacobs is the owner and founder of Motoshare. He founded the company in 2015 together with Jos Huisman, because they both wanted to start their own business. They became interested in sharing economy by seeing the fast rise of sharing economy initiatives like AirBnB. The idea of starting a motorcycle renting business came into their minds because they saw all kinds of initiatives like renting houses, boats and cars, all things with high value that is typically underutilized. There was not yet such thing for motorcycles. The company first wants to grow in the Netherlands, and after that wants to grow internationally.

The owner indicates that they see their users and providers as their main stakeholders because they form the foundation of the business. Also the insurance company is an important stakeholder, because it enables to eliminate all financial risk to anyone involved, which they think is a huge deal in peer-to-peer goods exchange. The last stakeholder group they mention are the investors. For starting a sharing economy platform, the most important thing to accomplish is to attract providers and users. This needs huge marketing budgets, which are facilitated by the investors. To sum up, according to Motoshare, their main stakeholders are: users, providers, insurance companies and investors.

With respect to their user base the owner indicates that more than half of all customers are between 25 and 35 years old, and live in big cities like Amsterdam. The main reason for renting a motorcycle is for recreation and getting in touch with riding a motorcycle. A select group of users is only interested in using the platform to make a test drive before buying a specific type of motorcycle.

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25 increasing amount of people wanting to make money out of the unused capacity of their motorcycle.

For every transaction the company takes a fixed 15% commission. The renting price is determined by the providers themselves, but Motoshare advices them sometimes because people often find it difficult to come up with a suitable price. As soon as the rent is paid by the customer, the money is divided among the platform (15%), the insurance company (approx. 25%), and the provider of the motorcycle (60%). This is not seen as salary but as extra income that is not taxed. As soon as the providers makes more money than the tax-free threshold in their country, it is their own responsibility to report it to the tax authorities.

According to Motoshare, the traditional market for motorcycle renting and motorcycle stores will be negatively affected by the success of their business, because less motorcycles will be needed if people increase sharing them. The younger generation motorcycle drivers are expected to profit most from the rise of sharing economy platforms like Motoshare, because driving nice (expensive) motorcycles will become more accessible for less fortunate people.

The owner of Motoshare thinks the sharing economy will steadily grow bigger, and more regulations will be introduced to separate real sharing initiatives from the people that take advantage of these platforms.

HiHiGuide

Hubert Nijmeijer is the owner and founder of HiHiGuide. The idea of for this business started in 2014, when he was on a vacation in Bali and booked a private guide. He found out good local guides were hard to find and often quite disappointing. There was little opportunity to leave a rating or review, so he thought that could be done better. He set up a platform on which local people can offer a tour guiding service, and travellers can make use of. The intention is that real local people use their experiences and knowledge to really „tell a story‟ instead of just giving a standard presentation.

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26 are students (40-50%). The others are mostly people who are in between jobs or guides that were previously working independently and now join the platform to get orders.

The company does not make any revenue yet because payment is not yet arranged through the website. Once this is arranged, the company will take a 20% service fee for every transaction. The guides can decide their prices themselves, although the company set a bandwidth between 10-50 euro. The minimum price is there to prevent a „race to the bottom‟, and the maximum price is there to distinguish them from traditional, often expensive, guides. The guides will be paid the remaining 80% of the set hourly price.

Instead of negatively affecting incumbent firms in the tour guiding business, HiHiGuide believes to offer a complementary service. The company is focussing on the people that otherwise maybe not take a tour because it is too expensive, hard to find a good guide, or impersonal. They think that both users, providers, and platform owners profit from sharing economy. Customers will have easier access to goods and services, providers will be able to get more value out of their assets or skills, and platform owners will enjoy the profits the platform makes.

The owner of HiHiGuide thinks on the short term the sharing economy will keep increasing in popularity, and more people will participate. Eventually though, it is likely that in peer-to-peer goods exchange markets manufacturers will take over the role of private providers. For example, BMW directly offering their cars on a platform like Snappcar.

4.2. Secondary data

This section contains the secondary data that is gathered by means of online research. For every case online publications are tried to be found that provide implications about the aforementioned propositions. In this paragraph the publications are sorted by the proposition they have a relation with. This data is analyzed in paragraph 4.3 and 4.4.

Uber

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27 could not afford the more traditional market options for transportation and lodging (Woody, 2017).

A news article about Uber drivers on www.nytimes.com reports that Uber drivers are much more likely to have a college degree than regular taxi drivers or chauffeurs (Cowen, 2015). This indicates that higher income consumer gain more income from Uber than lower income consumers, and therefore benefit more.

Another news article on www.usnews.com says the same thing about Uber drivers. Furthermore, they also state that for those who have assets to offer, it's pretty easy to join the sharing economy and make a profit. If you have a car that meets certain standards and some spare time, you can become an Uber driver and chauffeur people around without having to meet taxi requirements (Leins, 2015). This advantage however only seems to apply in jobs where expensive assets are needed for being a provider in the platform. For example, anyone who is a good handyman or organizer, can become „tasker‟ for TaskRabbit and earn money working on projects for those who need help, without any financial requirements.

A news article about Uber drivers in the Guardian on December 9th, 2016 reported that Uber is treating its drivers very poorly. Their earnings are often less than the minimum wage, and barely enough to sustain existence. Workers are pushed into low-paid, insecure self-employment (Lawrence, 2016).

In an article about protecting workers in the sharing economy on www.theguardian.com, it is argued that the workplace in the sharing economy is not what it used to be in the traditional economy. Workers were once protected by unions and employee rights, are increasingly signing up for jobs as independent contractors, and finding themselves harnessed with high levels of risk and ever-diminishing benefits (Blackburn, 2016).

A news article about Uber on www.economist.com states that there is ample circumstantial evidence of the damage Uber has wrought on New York‟s yellow-cab industry. The average price of one of the city‟s 13,771 medallions (licenses to drive taxis) has fallen from an average of $1m during the summer of 2014 to $690,000 over the past three months, an aggregate loss of some $4 billion of value (The Economist, 2015)

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28 In a news article about low income groups on www.ft.com it is argued that sharing economy benefits lower income groups. They take as example a car that is now accessible to use by lower income consumer, who previously could not. It is stated that consumers on below median income benefit, though there is no significant economic benefit to those on higher incomes (Bradshaw, 2015) This implies that in peer-to-peer goods exchange, like AirBnBN, lower income consumers benefit.

A study by Zervas et al. (2016) explored the economic impact of the sharing economy on incumbent firms by studying the case of Airbnb, a prominent platform for short-term accommodations. They analyzed Airbnb's entry into the state of Texas, and quantified its impact on the Texas hotel industry over the subsequent decade. They estimate that in Austin, where Airbnb supply is highest, the causal impact on hotel revenue is in the 8-10% range; moreover, the impact is non-uniform, with lower-priced hotels and those hotels not catering to business travellers being the most affected.

BlaBlaCar

An news article on www.ntu.org covers the peer-to-peer service exchange platforms like Uber, Lyft, Rover and Instacart by stating that they are beneficial to lower income individuals. In the article it is stated that thanks to the sharing economy and the competition it creates in certain markets, vacation and travel options become more plentiful and cheaper than ever, thus making trips to different places accessible to individuals who could not afford the more traditional market options for transportation and lodging (Woody, 2017).

In an online publication of Matthew Tukaki, the founder of EntreHub, on LinkedIn about BlaBlaCar it is argued that this platform is disruptive because if one considers the implications to traditional industries such as transport (and in particular the taxi industry) then it could be seen that incumbent firms need to reform. The author thinks that these initiatives will have a huge effect on the incumbent firms and the transport sector will be unrecognizable in 10 years (Tukaki, 2014).

Peerby

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29 higher incomes (Bradshaw, 2015) This implies that in peer-to-peer goods exchange, like Peerby, lower income consumers benefit.

An article from Wharton University of Pennsilvania (2016) describes Peerby as a business model that takes underutilized assets and puts them to use. According to this article, in the end, sharing economy will bring more benefits to everyone. This implies that Peerby would not only be beneficial for lower income consumers, but also for higher income consumers. A good explanation for why high income consumers would be the fact that high income consumers often own a lot of valuable assets, which can be rented out through the Peerby platform.

4.3. Within-case analysis

This section contains within-case analyses of all involved independent cases. The results from primary and secondary data collection in paragraph 4.1 and 4.2 are interpreted and discussed. With this information the propositions are given a score from -1 (not supporting), 0 (no judgment), or 1 (supporting).

Motoshare

As becomes clear from the interview with the founder of Motoshare, the platform users are typically young. It is expected that they are attracted to the platform because they can ride a motorcycle with relatively little financial resources. Therefore, one could conclude that this platform benefits low income consumers. This supports the first proposition.

The platform providers, however, are described as typically older people. People that have enough financial resources to afford owning an expensive motorcycle. This indicates that the providers enjoy a relatively high income, and now can make money with their underutilized asset (the motorcycle). Therefore, one could conclude that this platform also benefits high income consumers. This supports the second proposition.

In the case of Motoshare one could not really speak of workers, because providers of the platform often just rent out their motorcycle as additional income. This means that in the case of Motoshare, there is no judgement about the third proposition.

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30 needed when drivers start sharing their vehicles. This means that in the case of Motoshare the fourth proposition is supported.

MOTOSHARE

Lower income consumers benefit from the sharing

economy. 1

Higher income consumers benefit from the sharing

economy. 1

Sharing economy workers are exposed to higher risks

than regular employees. 0

The sharing economy has negative effects on incumbent

firms in an industry. 1

Table 7. Propositions Motoshare. HiHiGuide

From the interview with HiHiGuide it becomes clear that both providers and users of the platform are very diverse, and not be categorized in a specific high or low income group. This implies that both income groups are believed to benefit from this sharing economy platform, which results in support for the first two propositions.

In the case of HiHiGuide, the workers are not exposed to higher risks than regular employees, because from the interview it becomes clear that most regular tour guides work independently, and therefore do not have less risk than the alternative that HiHiGuide offers. Therefore, the third proposition is not supported.

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31 HiHiGuide

economy. 1

than regular employees. -1

Table 8. Propositions HiHiGuide. Uber

In the case of Uber, publications about the positive effects of Uber cover both low income and high income consumers. This means the first two propositions are supported.

Multiple articles about Uber employees describe that they are treated bad, have high job insecurity, and are paid less than regular taxi drivers. This supports the third proposition.

Another article describes how Uber damages the existing taxi industry in New York. The rise of Uber clearly has negative effects on incumbent firms in the taxi industry, and therefore the fourth proposition is supported.

Uber

economy. 1

Table 9. Propositions Uber. AirBnB

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32 have easier access to valuable goods (like housing) and therefore benefit. This supports the first proposition.

Although it is likely that higher income consumers benefit from AirBnB too, because they can rent out their valuable asset, there is no (news)article found during this research that endorses this assumption. There could be good reasons for higher income consumers to not participate on the home-sharing platform, and therefore it is not possible to make a judgement about the second proposition.

In the case of AirBnB one could not really speak of workers, because providers of the platform often just rent out their house as additional income. There are people that live out of fulltime AirBnB room rental, but this is not considered part of the sharing economy anymore, because it does not meet the requirement of being „circular‟ anymore. This means that in the case of AirBnB, there is no judgement about the third proposition.

An article about AirBnB in the state of Texas found that the arrival of AirBnB caused considerable impact on the existing Texas hotel industry. This supports the fourth proposition.

AirBnB

economy. 1

economy. 0

Table 10. Propositions AirBnB. BlaBlaCar

According to an article about peer-to-peer service exchange platforms, low income consumers are believed to profit from these platforms. This supports the first proposit ion.

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33 As with the case of AirBnB, in this case, no judgement can be made about the third proposition because people that use BlaBlaCar can‟t really be seen as workers. The essence of BlaBlaCar is that someone can offer another to ride along when he or she is travelling in the same direction. Therefore this can‟t be compared with regular employees.

In an article about BlaBlaCar describes that is expected that BlaBlaCar has a great impact on the existing industry, especially the taxi industry. It is expected that the transport sector will be unrecognizable within 10 years due to the rise of initiatives like BlaBlaCar. This expectation might be unrealistic, but it indicates that it has at least some negative impact on incumbent firms. The fourth proposition is therefore supported.

BlaBlaCar

economy. 1

economy. 0

Table 11. Propositions BlaBlaCar. Peerby

According to an article about low income consumers in the sharing economy, low income consumers benefit from peer-to-peer goods exchange platforms like Peerby. They have easier access to valuable goods and therefore benefit. This supports the first proposition.

.During this research there is found no indication that higher income consumers benefit from this platform, neither is there an indication found that they would not benefit from this platform. Therefore, no judgement can be made about the second proposition.

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34 Although no specific articles or publications are found on the fact that Peerby is negatively affecting incumbent firms in the industry, this is almost inevitably going to happen. With the success and growth of Peerby, less goods will be needed because existing goods will be better utilized. This will have a negative effect on existing goods selling or renting companies. Therefore the fourth proposition is supported.

Peerby

economy. 1

economy. 0

Table 12. Propositions Peerby.

4.4. Cross-case analysis

This section contains cross-case analyses of all involved cases. The cases are split up into a group that represents goods exchange and a group that represents services exchange. In previous chapter 2.1 described as „type 1‟ and „type 3‟ companies. Both groups are first independently analyzed by looking for within-group similarities and differences (table 13 and 14). After that, both groups are analyzed by looking at across-group similarities and differences between them. The results are discussed in the next chapter.

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35

Goods exchange platforms

M ot os h ar e A ir B n B Pe er b y T O T A A L Propositions

economy. 1 1 1 3

economy. 1 0 0 1

than regular employees. 0 0 0 0

firms in an industry. 1 1 1 3

Table 13. Cross-table goods exchange platforms.

As becomes clear from table 13, the first proposition scores highest, with all cases supporting the proposition. The second proposition is only supported by Motoshare, with as reason that motorcycles are mostly considered luxury products. No case could make a judgement about the third case, and the fourth proposition is supported by all cases.

Hereafter the outcome of chapter 4.3 is collected for the companies that are marked as service exchange platforms; HiHiGuide, Uber and BlaBlaCar. The scores are again put together in a table and added to come to a total score per proposition. This score indicates the level of relevance for the propositions observed in the cases.

Service exchange platforms

H iH iG u id e U b er B laB laC ar T O T A A L Propositions

economy. 1 1 1 3

economy. 1 1 0 2

than regular employees. -1 1 0 0

firms in an industry. 1 1 1 3

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36 As becomes clear from table 14, the first proposition scores highest, with all cases supporting the proposition. The second proposition is supported by HiHiGuide and Uber, but not for BlaBlaCar. The third proposition is not supported by HiHiGuide, supported by Uber, and in the case of BlaBlaCar no judgement could be made. The fourth proposition is supported by all cases.

Across-case similarities and differences

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37

5. Discussion

As becomes clear from the results section, the first proposition is supported by all cases in both groups. This gives good reason to believe that the sharing economy in most cases is benefitting low income consumers.

There is less support for the second proposition, which suggests that high income consumers are less benefitting from sharing economy. An explanation for this could be that high income consumers are not as much helped by the benefits of easier access to expensive consumer goods and services because this was not seen as a problem in the first place. Another explanation could be that high income consumers are not so much attracted to getting more value out of their underutilized assets, because they already have good financial resources.

The third proposition is least supported, because for most sharing economy platforms, the providers are not seen as real workers. One condition for a business to be part of the real sharing economy is that the goods or services should be „circular‟. In practice this means that it should make use of underutilized potential. As soon as the providers spend fulltime working for the platform, it is not seen as underutilized potential anymore, and therefore not part of the sharing economy. Therefore, for most providers of sharing economy platforms it is just an additional income, next to their regular jobs, which makes it impossible to compare them with regular employees when it comes to risk.

The fourth proposition is supported in all cases, which can be possibly explained by the fact that successful businesses almost always take a share in existing markets, instead of being complementary to existing markets.

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38

6. Conclusion

6.1. General conclusion

As stated in the discussion, it can be concluded that low income consumers (which can be both providers and users of the platform) benefit from the sharing economy, and incumbent firms experience negative effects because of the rise of the sharing economy. For the other two propositions there is no clear evidence found in the discussed cases to come to a conclusion.

6.2. Managerial implications

The results of this research can be used in practice in different perspectives. From the result that the sharing economy benefits lower income consumers, starting and existing sharing economy initiatives can conclude that they would have to focus on lower income consumers, for example by keeping costs low. From the result that the sharing economy has negative effects on incumbent firms in an industry, these incumbent firms could conclude that they have to undertake action to reduce this negative effect. An example could be to change the business plan and copy success factors of sharing economy platforms, for example, taxi companies developing apps for ordering a taxi online.

6.3. Limitations

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39 literature part, less time was left for the empirical part of this study, which has affected the quality of the results section.

.

6.4. Recommendations

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40

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Appendices

Appendix A – Development of interview questions

This section explains how the interview questions are linked to the propositions, and how they contribute to answering the main research question.

Before the interview starts, the interviewer will first briefly introduce himself and the topic of his study. Then there will be made an attempt to get a clear image of the company and its background by asking the manager/owner to introduce himself and the company, how the company started, and what the mission, vision, and goals of the company are. This part is also meant to get the conversation starting, create an informal and open atmosphere, and check the previously gathered information about the company. The questions that are developed for this purpose are:

- Could you introduce yourself and your company by describing your background and the company‟s journey so far?

- How did you come up with the idea for this business? - What are the mission, vision and goals of the company?

To assess the six types of stakeholders that have been identified in the theory section, and to get an idea how the customer base of the company is structured the following questions are developed:

- Who are, in your opinion, stakeholders of the company? - How would you describe your customers/users?

- How would you describe your providers?

These questions can help to identify which type of people (high income or low income) benefit from the company‟s service, and therefore can either support the first two propositions or not.

To test the third proposition about workers risk, the following questions are developed: - How is your revenue model structured?

- How is salary/fee paying structured and managed in your company?

These questions are aimed at how the created revenue is distributed among the platform and the product/service provider, and whether they get seen as independent workers or employees of the company.

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44 - Do you think anyone is negatively affected by your business being successful? If yes,

who?

- Who do you think will profit from sharing economy, and who will not?

And finally to determine the business owner or manager‟s vision on the future developments of the sharing economy, the following questions are asked:

- How do you imagine the future of sharing economy? - What is the future direction of your company and why?

Towards a better understanding of value distribution between stakeholders of sharing economy platforms