Digital Entrepreneurship and the Sharing Economy 2021002122, 2021002123, 9780367472405, 9781003036821

Table of contents :
Cover
Half Title
Series Information
Title Page
Copyright Page
Dedication
Table of Contents
Figures
Tables
Contributors
Foreword
Introduction
Definitions of the Sharing Economy in this Book
The Transition to Digital Entrepreneurship
Digital Entrepreneurship in the Sharing Economy: A Paradigmatic Shift
Entrepreneurship with Big Platforms and Reduced Transaction Costs: Challenges and Opportunities
The Structure of this Book
Summary of the Aims and Approach of the Present Book
References
Part I Conceptualisation of Digital Entrepreneurship and Sharing Economy
1 Regional Sharing-Economy Entrepreneurs and the Diversity of Their Business Models
Introduction
Literature Review
Business Models in the Platform-Based Sharing Economy
Entrepreneurship in the Platform-Based Sharing Economy
Regional Sharing-Economy Entrepreneurs in the Existent empirical Research
Methodology and Research Design
Research Design and Sampling Process
Methodology and Data Analysis
Empirical Analysis
The Entrepreneurship and Business Venture of Regional sharing-Economy Entrepreneurs
The Business Model and Its Digital Platform
The Regional-National-Global Scales for the Regional-National-Global-Sharing-Economy Entrepreneurs
Discussion
Conclusions and Managerial Implications
Acknowledgement
References
2 Digital Subsistence Entrepreneurs in Developed Countries: Opportunities and Limitations of Peer-To-Peer Platforms
Introduction
The Resurgence of Subsistence Entrepreneurship in Developed Countries
A Historical Perspective
How Did P2P Platforms Allow Subsistence Entrepreneurs to Reappear in Developed Countries?
Benefits of P2P Platforms for Subsistence Entrepreneurs
Economic Benefits
Relational and Symbolic Benefits
Increase in Life Satisfaction
A Transition Status Towards Entrepreneurship
Limitations of P2P Platforms for Subsistence Entrepreneurs
Do P2P Platforms Really Improve Deprived People’s Lives or Exploit Them?
Do P2P Platforms Mitigate All Barriers Impeding Access to Entrepreneurship?
Are People Operating On P2P Platforms Real Entrepreneurs?
Discussion
Defining and Acknowledging the Heterogeneity of Digital subsistence Entrepreneurs
Recommendations to Support Subsistence Digital Entrepreneurship On Buy-And-Sell Platforms
Notes
References
3 Digital Entrepreneurship Across P2P, B2C and B2B Contexts: A Bibliometric Analysis Deconstructing Extant Research On Sharing Economy Business Models
Introduction
Theoretical Underpinnings of the Main Concepts
Digital Business Models
Sharing Economy
Methodology
Search Procedure and Sample
Three-Phase Analysis
Findings
Descriptive and Bibliometric Analysis
Content Analysis
The P2P Sharing Economy Business Model
The B2C Sharing Economy Business Model
The B2B Sharing Economy Business Model
Discussion
Conclusion
References
4 The Sharing Economy as an Entrepreneurial Evolution of Electronic Commerce
Introduction
Sharing Economy as Commerce
The Evolution of the Sharing Economy
E-commerce, Social Commerce and Sharing Commerce
Research Design
Data Collection
Data Analysis
Findings
Analysis and Discussion
Concluding Remarks, Limitations and Future Research
Bibliography
Part II Digital Entrepreneurship and Sharing Economy: Various Cases and Contexts
5 Asymmetries of Local Economic Impacts of Digital Entrepreneurship in Denmark: The Case of Airbnb
Introduction
Theoretical Framework of Digital Entrepreneurship and the Sharing Economy
Collection and Processing of Data
Airbnb Data Source
Variables in Airbnb Dataset
Method of Data Transformation and Stylised Facts
Methodology for Evaluating Airbnb Impacts On Regional Economies
Economic Effects From Airbnb Tourists: City Versus Peripheral Regions
Conclusion
References
6 How Can Digital Entrepreneurship Address Social Issues?: The Case of Ekoharita in Fighting Ecological Disruption
Introduction
Literature Review
Sharing Economy Platforms
Digital Entrepreneurship
Methodology
Data and Collection Procedures
The Research Setting: The Digital Entrepreneurial Ecosystem in Turkey
Findings
Identifying the Problem and Developing Aims
Driving Values
Motivation; If Not Monetary, Then What?
Coverage
Work, Organisation and Governance
Discussion and Conclusion
Notes
References
7 Fostering Open Innovation in Digital Startups: An Explorative Study of Norwegian Coworking Spaces
Introduction
Related Work
Coworking Spaces
Open Innovation
Open Innovation and Coworking Spaces
Theoretical Framework
Research Methodology
Data Collection
Data Analysis
Results
RQ1: To What Extent Does Open Innovation Occur for Digital Startups in the Context of Coworking Space?
Pillar 1: Knowledge and Technology Sourcing Activities
Pillar 2: Sources of Innovation
Pillar 3: Human Capital
Pillar 4: Intellectual Property Protection
Taking Away
RQ2: What Is the Role of Coworking Spaces in Fostering open Innovation in Digital Startups?
Pillar 1: Knowledge and Technology Sourcing
Pillar 2: Sources of Knowledge
Pillar 3: Human Capital
Taking Away – the Importance of Events
Discussions
The Refined Model of Open Innovation in Coworking Spaces
Implications for Sharing Economy
Conclusions
Notes
References
8 Gigging with An MBA: When Elite Workers Join the “Gig Economy for Finance People”
Gigging with An MBA: When Elite Workers Join the “Gig Economy for Finance People”
The Future of Work and Push/Pull of Entrepreneurship
Exclusive Platforms and Defining Elite Gig Workers
Research Methodology
Findings
New Money: “A Gig Economy for Finance People”
Needed and Necessary: “Why Am I Putting Up with This?”
Networking: “Expand at Least the Reach of What We’re Doing…. Put Our Profiles Out There”
New Career/Pivot: “It Wasn’t as Easy as Changing Roles in My 20s”
Potential Entrepreneurship: “one Foot Out the Door”
Conclusion
References
9 Coworking Spaces in the Sharing Economy: Examples From an Emerging Country
Introduction
Literature Review
Coworking Spaces: A New Model in the Sharing Economy
Benefits of Coworking Spaces
Coworking Spaces in Turkey
Research Method
Research Design and Sampling
Data Collection Method, Data Collection Instrument, and Analysis
Findings
Benefits of the Coworking Spaces
Conclusions
References
Part III Governance and Legal Structure
10 The EU Legal-Regulatory Framework for Digital Entrepreneurs in the Sharing Economy
Introduction
The Sharing Economy
Digital Entrepreneurship and the Law: Terminology and Methodology
Governance of the Sharing Economy
Governance of the Platform ‘Per Se’
Regulation and the Service Provider
Gig Economy Issues
Contract and the P2B Regulation
Consumer Acquis and Other Applicable Rules
Conclusion
Notes
References
11 U.S. Securities Crowdfunding: A Way to Economic Inclusion for Low-Income Entrepreneurs?
Introduction
Research Method
Theoretical Framework and Analysis
The Contextual Economic Role of the Financially Disadvantaged Entrepreneur
The Promise of Crowdfunding for Financially Disadvantaged entrepreneurs
Discussion
Barriers to the Success of U.S. Securities Crowdfunding for Low-Income Entrepreneurs
Expense of Regulatory Compliance
Offering Risk
Regulatory Complexity
Potential Federal Legislative and Regulatory Solutions
Potential State Regulatory Solutions
Potential Market-Based Solutions
Conclusion
References
Index

Citation preview

i

Digital Entrepreneurship and the Sharing Economy

The digital and increasingly digitised world is shaped by the interplay of new technological opportunities and ubiquitous societal trends. Both lead to drastic changes facing artificial intelligence (AI), cryptocurrencies and block-​chain technologies, internet of things, technology-​based surveillance, and other disruptive innovations. These developments facilitate the rise of the sharing economy and open for a variety of new entrepreneurial opportunities that businesses can take up. The novel entrepreneurial opportunities, however, imply a paradigmatic shift in the understanding of entrepreneurship. This book combines digital entrepreneurship with the sharing economy. It presents cutting-​edge research for scholars and practitioners interested in either one of the topics –​digital entrepreneurship or sharing economy –​or their connection. The book addresses three major ways to become entrepreneurial in the sharing economy: digital entrepreneurship through creating novel sharing-​ economy platforms; technology entrepreneurship through the exploitation of sharing-​ economy platforms; and business model innovation or business model change influenced by the sharing economy. The book also highlights governance questions on digital entrepreneurship in the sharing economy, which are highly relevant for businesses, the economy, and society. The book will be of interest to researchers, academics, and students in the field of business and entrepreneurship, with a special focus on digital entrepreneurship. Evgueni Vinogradov is a senior researcher and former research director at Nordland Research Institute, Norway. Birgit Leick is an associate professor in Innovation and Entrepreneurship in the School of Business at University of South-​Eastern Norway, Norway. Djamchid Assadi is a professor of Digital and Sharing Economy and Strategy at Burgundy School of Business (BSB), France.

ii

Routledge Studies in Entrepreneurship

This series extends the meaning and scope of entrepreneurship by capturing new research and enquiry on economic, social, cultural and personal value creation. Entrepreneurship as value creation represents the endeavours of innovative people and organisations in creative environments that open up opportunities for developing new products, new services, new firms and new forms of policy making in different environments seeking sustainable economic growth and social development. In setting this objective the series includes books which cover a diverse range of conceptual, empirical and scholarly topics that both inform the field and push the boundaries of entrepreneurship. Contextualizing Entrepreneurship Theory Ted Baker and Friederike Welter Entrepreneurial Marketing and International New Ventures Antecedents, Elements and Outcomes Edited by Izabela Kowalik Entrepreneurship, Dyslexia, and Education Research, Principles and Practice Edited by Dr Barbara Pavey, Dr Neil Alexander-​Passe, and Dr Margaret Meehan Entrepreneurship in Spain A History Edited by Juan Manuel Matés-​Barco and Leonardo Caruana de las Cagigas Women and Global Entrepreneurship Contextualising Everyday Experiences Edited by Maura McAdam and James A. Cunningham Digital Entrepreneurship and the Sharing Economy Edited by Evgueni Vinogradov, Birgit Leick, and Djamchid Assadi

iii

Digital Entrepreneurship and the Sharing Economy Edited by Evgueni Vinogradov, Birgit Leick, and Djamchid Assadi

iv

First published 2022 by Routledge 605 Third Avenue, New York, NY 10158 and by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Routledge is an imprint of the Taylor & Francis Group, an informa business © 2022 Taylor & Francis The right of Evgueni Vinogradov, Birgit Leick, and Djamchid Assadi to be identified as the authors of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. Library of Congress Cataloging-​in-​Publication Data Names: Vinogradov, Evgueni, editor. | Leick, Birgit, 1975– editor. | Assadi, Djamchid editor. Title: Digital entrepreneurship and the sharing economy / edited by Evgueni Vinogradov, Birgit Leick, and Djamchid Assadi. Description: 1 Edition. | New York : Routledge, 2021. | Series: Routledge studies in entrepreneurship | Includes bibliographical references and index. Identifiers: LCCN 2021002122 (print) | LCCN 2021002123 (ebook) | ISBN 9780367472405 (hardback) | ISBN 9781003036821 (ebook) Subjects: LCSH: Information technology–Economic aspects. | Entrepreneurship. | Cooperation. Classification: LCC HC79.I55 D546 2021 (print) | LCC HC79.I55 (ebook) | DDC 303.48/33–dc23 LC record available at https://lccn.loc.gov/2021002122 LC ebook record available at https://lccn.loc.gov/2021002123 ISBN: 978-​0-​367-​47240-​5 (hbk) ISBN: 978-​1-​032-​03814-​8 (pbk) ISBN: 978-​1-​003-​03682-​1 (ebk) Typeset in Sabon by Newgen Publishing UK

v

Dedicated to my uncle Igor who has inspired and enabled me to follow the research career. Evgueni Vinogradov To my family: Edith and Wolfgang, Annette and Roland, Michael, Rosa and Carla. In honor of my mentor Anke. Birgit Leick To my supportive family, Goli, Anahita and Cyrus. To my students who support my edited and written books and to my institution, BSB, who supports my interest in books. Djamchid Assadi

vi

vi

Contents

List of Figures  List of Tables  Notes on Contributors  Foreword 

x xi xii xvii

N O R R I S K R UE GE R

Introduction 

1

E V G U E N I V I NO GRA DO V, B IRGIT L E ICK, A N D DJAMC HID ASSADI

PART I

Conceptualisation of Digital Entrepreneurship and Sharing Economy 

13

1 Regional Sharing-​Economy Entrepreneurs and the Diversity of Their Business Models 

15

B I R G I T L E I C K, ME H TA P A L DO GAN E KL UN D, S U S A N N E G RE TZIN GE R, AN D A N N A MARIE DY HR U LR IC H

2 Digital Subsistence Entrepreneurs in Developed Countries: Opportunities and Limitations of Peer-​to-​Peer Platforms 

34

E VA D E L A C RO IX, FL O RE N CE B E N O IT- ​M O RE AU , AND B É ATR I C E PARGUE L

3 Digital Entrepreneurship across P2P, B2C and B2B Contexts: A Bibliometric Analysis Deconstructing Extant Research on Sharing Economy Business Models  52 K A R L J O A C H IM B RE UN IG, H E N RIK JO H A N SEN, AND J Ø R G E N R Ø STE KRISTIAN SE N

vi

viii Contents

4 The Sharing Economy as an Entrepreneurial Evolution of Electronic Commerce 

72

A N D R E A G E ISSIN GE R, CH RISTO FE R L AURE LL, C H R I S TI N A Ö B E RG, AN D CH RISTIAN SAN DS T R ÖM

PART II

Digital Entrepreneurship and Sharing Economy: Various Cases and Contexts 

89

5 Asymmetries of Local Economic Impacts of Digital Entrepreneurship in Denmark: The Case of Airbnb 

91

J I E Z H A N G A N D N IN O JAVAKH ISH VIL I- ​L ARS EN

6 How Can Digital Entrepreneurship Address Social Issues? The Case of EkoHarita in Fighting Ecological Disruption 

109

Z E Y N E P Ö Z S O Y AN D B E YZA O B A

7 Fostering Open Innovation in Digital Startups: An Explorative Study of Norwegian Coworking Spaces  127 A N H N G U Y E N DUC AN D SIMO DE SP E RIN DÈ

8 Gigging with an MBA: When Elite Workers Join the “Gig Economy for Finance People” 

145

A L E X A N D R EA J. RAVE N E L L E , E RICA JAN KO , AND K E N C A I K O WAL SKI

9 Coworking Spaces in the Sharing Economy: Examples from an Emerging Country 

160

O Z G E K I R E Z L I AN D M.G. SE RA P ATAKAN

PART III

Governance and Legal Structure 

179

10 The EU Legal-​Regulatory Framework for Digital Entrepreneurs in the Sharing Economy 

181

E M I LY M . W E ITZE N B O E CK

xi

Contents  ix

11 U.S. Securities Crowdfunding: A Way to Economic Inclusion for Low-​Income Entrepreneurs? 

195

J O A N M A C L EO D H E MIN WAY

Index 

214

x

Figures

.1 The theoretical dimensions of the concepts 1 3.1 Development of publications per year for the period 1997–​2019 3.2 VOSviewer map with co-​occurrence analysis 3.3 VOSviewer map with co-​citation analysis 3.4 VOSviewer map with bibliographic coupling analysis 4.1 Aggregated frequency of user-​generated posts published referring to sharing, social and e-​commerce platforms between April 2016 and March 2018 4.2 Data flow over the studied time period by sector and commerce 5.1 Total socioeconomic effects of Airbnb per listing by type of region (2017) 7.1 The OICS model on open innovation in coworking spaces

22 60 60 61 61 80 83 105 141

xi

Tables

1.1 The four sharing-​economy entrepreneurs and their business models –​overview 3.1 Compilation of findings according to the business model dimensions of P2P, B2C and B2B 4.1 Definitions and characterising traits of e-​commerce, social commerce and sharing commerce 4.2 Collected published user-​generated posts per social media platform 4.3 Identified platforms in sharing, social and e-​commerce and their associated frequency of user-​generated posts 4.4 Distribution of identified sectors and their associated user-​generated posts for sharing, social and e-​commerce 5.1 Number of listings, prices, length of stay, party size and estimated bed nights of Airbnb 5.2 Number of overnight stays at Airbnb in 2017 by cities and regions 5.3 Tourism revenue at Airbnb in 2017 by cities and regions 5.4 Airbnb employment effects in cities and the regions 5.5 Airbnb income effects in cities and the regions 5.6 Airbnb effect on income taxes and value-​added taxes (VAT) in cities and the regions 6.1 Interviews and interviewees 7.1 Investigated coworking spaces 7.2 Survey responses to the four pillars of open innovation in digital startups 7.3 The impact of coworking spaces on different indicators of open innovation 7.4 The coworking space elements that matters 8.1 Key categories of worker interest in elite gig work 9.1 General corporate information about the coworking spaces 9.2 Benefits of the coworking spaces

26 67 76 77 79 81 98 99 99 102 103 104 113 132 134 136 139 154 167 169

xi

Contributors

Editors Evgueni Vinogradov, Nordland Research Institute, 8049 Bodø, Norway. Evgueni Vinogradov, PhD, is a senior researcher and former research director at Nordland Research Institute. Evgueni’s research focuses on entrepreneurship, innovation, sharing economy, and regional development. The most important theoretical publications are devoted to sharing economy, immigrant-​owned businesses, the role of national culture in entrepreneurship, and survival of newly established businesses. He has participated and leaded several empirical research projects and evaluation studies. Evgueni Vinogradov has been involved in teaching entrepreneurship both in Norway and in Norwegian educational programs conducted in Ukraine and Russia. Most of his research is based on quantitative methods including agent-​based modelling. Birgit Leick, University of South-​Eastern Norway, School of Business, 3800 Bø, Norway. Birgit Leick is a business economist and economic geographer. Birgit received a PhD in business economics from University of Technology Freiberg in Germany in 2006 and a habilitation degree in economic geography from the University of Bayreuth in 2018. She is also professor for innovation and regional development in Norway. Currently, Birgit works as Associate Professor in Innovation and Entrepreneurship in the School of Business of University of South-​ Eastern Norway. Her most important research foci are the nexus between enterprises and regional development; she has been working and publishing part of this research on the sharing economy and regional economic development. Besides, Birgit is interested in institutional entrepreneurship and rural entrepreneurs in creative industries. Birgit will be organising a large track session on the sharing economy and entrepreneurship for EURAM Annual Conference 2020 in Dublin, Ireland. Djamchid Assadi, Burgundy School of Business (BSB), France. Djamchid teaches and researches at Group Burgundy School of Business (BSB) in Dijon, France. He authored several books in French and published many scholarly papers and professional articles in English and French.

xi

Notes on Contributors  xiii He is also member of several editorial boards publishing journal in English and French and has delivered many lectures on business and marketing strategies. His research concerns the impact of technological and social innovations on the reduction of transaction costs and the formation of the spontaneous order among peer without intermediation of the political organs. He widely works on the P2P Sharing Economy, e.g., studying crowdfunding, FinTechs, mobile telephony, and the information system. Djamchid Assadi is no less interested in the impact of non-​economic factors such as music, religion, and storytelling on buying behaviour and strategic behaviour. With ten colleagues from five countries, Djamchid will be chairing a large track session on the sharing economy and entrepreneurship for EURAM Annual Conference 2020 in Dublin, Ireland.

Contributors M.G. Serap Atakan, Istanbul Bilgi University, Faculty of Business, Turkey. Serap Atakan serves as an associate professor of marketing at the Faculty of Business of Istanbul Bilgi University in Istanbul, Turkey. Her current research interests are coworking spaces in the sharing economy, crowdfunding, and global marketing. Florence Benoit-​Moreau, Université Dauphine-​ PSL (Paris Sciences et Lettres), France. Florence Benoit-​Moreau currently serves as Associate Professor in marketing in the Marketing & Strategy department. Her current research interests address the impact of marketing strategies on society, through topics such as sustainable and collaborative consumption or gender stereotypes. Karl Joachim Breunig, Oslo Business School, Oslo Metropolitan University –​OsloMet, Norway, is a full professor of Strategic Management, and heads the research group on Digital Innovation and Strategic Competence in Organizations (DISCO). Prof. Breunig’s research concentrates on the interception of strategy-​and innovation theory, involving topics such as service and business model innovation, as well as digitalisation in knowledge intensive firms. Eva Delacroix, Université Dauphine-​ PSL (Paris Sciences et Lettres), France. Eva Delacroix currently serves as Associate Professor in marketing in the Marketing & Strategy department. Her current research deals with vulnerable consumers, low-​income entrepreneurs, and gender stereotypes in the market. Anh Nguyen Duc, University of South Eastern Norway (USN), Business School, Department of Business and IT, Norway. Anh Nguyen-​Duc is an associate professor in Information Technology and Science at USN. His current research interests are software startups, empirical software engineering, and open source software.

vxi

xiv  Notes on Contributors Mehtap Aldogan Eklund, University of Wisconsin-​La Crosse, Department of Accountancy, USA. Her research interests are corporate governance, executive compensation, accounting, auditing, sustainability, and entrepreneurship. Andrea Geissinger, Örebro University School of Business, Sweden, and The Ratio Institute, Sweden. Andrea Geissinger is a PhD student at Örebro University and also associated with The Ratio Institute. Her research focuses on the specific societal challenges and opportunities that arise out of the sharing economy for individuals and organisations alike. Susanne Gretzinger is an associate professor (PhD) in the Department of Entrepreneurship and Relationship Management at the University of Southern Denmark. Her research interest is in the area of Business Marketing and Entrepreneurship. Her current research projects are brokerage and its impact on the development of regional networks and firm performance; how digital entrepreneurship and IoT (internet of things) are re-​shaping the networked environment of the firm and the enabler/​driver of firm performance. Joan MacLeod Heminway, The University of Tennessee College of Law, USA. Joan MacLeod Heminway is the Rick Rose Distinguished Professor of Law and Interim Director of the Institute for Professional Leadership at The University of Tennessee College of Law in Knoxville, Tennessee, USA. Her research primarily focuses on questions at the intersection of business governance and finance, with a special emphasis on disclosure regulation impacting entrepreneurial and small business finance (including crowdfunding), securities fraud, and insider trading. Erica Janko, University of North Carolina at Chapel Hill, Department of Sociology, USA. Erica Janko is a graduate student in the Department of Sociology at the University of Carolina at Chapel Hill. Her current research interests include collective action and consciousness formation among precarious workers and structures of inequality in the creative industries. Nino Javakhishvili-​Larsen is a senior researcher at Centre for Regional and Tourism Research (CRT), in Denmark. She is a socio-​economic geographer, specialising in local economic development of urban, rural, and peripheral regions, local labour markets, and human capital, as well as developing quantitative methods and models within the area of her research. Henrik Johansen, Oslo Business School, Oslo Metropolitan University –​ OsloMet, Norway, is currently working as an associate at the Norway office in the consulting firm KPMG. Mr. Johansen graduated with a MSc in Business Administration from Oslo Business School, Oslo, Metropolitan University –​OsloMet in 2020.

v x

Notes on Contributors  xv Ozge Kirezli, Yeditepe University, Faculty of Economy and Administrative Sciences, Turkey. Ozge Kirezli currently serves as an assistant professor in Marketing at the Business Administration Department, Yeditepe University, Turkey. Her current research interests are value creation in the sharing economy, coworking spaces, and abnormal consumer behaviour. Ken Cai Kowalski, University of North Carolina at Chapel Hill, Department of Sociology, USA. Ken Cai Kowalski is currently a PhD student in the Department of Sociology at the University of North Carolina at Chapel Hill. His research interests include political culture and its intersections with the futures of work. Jørgen Røste Kristiansen, Oslo Business School, Oslo Metropolitan University –​OsloMet, Norway, is currently working as an associate at the Norway office in the consulting firm KPMG. Mr Kristiansen graduated with a MSc in Business Administration from Oslo Business School, Oslo, Metropolitan University –​OsloMet in 2020. Christofer Laurell, KTH Royal Institute of Technology, Department of Industrial Economics and Management Sustainability, Industrial Dynamics and Entrepreneurship (SIDE) Division, Sweden. Christofer Laurell is Associate Professor in Industrial Economics and Management with specialisation in Technological Innovation at KTH Royal Institute of Technology and the Department of Industrial Economics and Management. His research interests are focused on institutional pressures created by digitalisation and their implications for a broad range of sectors of the economy. Birgit Leick, University of South-​ Eastern Norway, Business School, Department of Business and IT, Norway. Birgit Leick currently serves as Associate Professor in Innovation and Entrepreneurship in the School of Business, University of South-​Eastern Norway. Her current research interests are entrepreneurship in the creative industries, digital entrepreneurs and the sharing economy, and regional economic development. Beyza Oba, Istanbul Bilgi University, Business Administration Faculty, Department of Business, Turkey. Beyza Oba currently serves as Professor in Organization Studies in the Faculty of Business Administration, Istanbul Bilgi University. Her current research interests are alternative organisations, the sharing economy, and gender diversity. Christina Öberg, Örebro University School of Business, Sweden, and The Ratio Institute, Sweden. Christina Öberg is a professor/​chair in marketing at Örebro University and also associated with The Ratio Institute and Leeds University. Her research interests include digitalisation and new ways to pursue business, mergers and acquisitions, and contextual change and its impact on firm strategising.

xvi

xvi  Notes on Contributors Zeynep Özsoy, currently serves as Associate Professor in the Business Administration Department, Istanbul Bilgi University, Faculty of Business, Turkey. Her current research interests include social entrepreneurship, diverse economies, and diversity management. Béatrice Parguel, Université Dauphine-​PSL (Paris Sciences et Lettres), France. Béatrice Parguel currently serves as a full CNRS researcher in marketing and innovation management. Her current research interests include pro-​environmental behaviours consumption, individual creativity, and entrepreneurship. Alexandrea J. Ravenelle, University of North Carolina at Chapel Hill, Department of Sociology, USA. Alexandrea J. Ravenelle is Assistant Professor of Sociology at the University of North Carolina at Chapel Hill. Her research interests include the long-​term effects of the COVID-​ 19 pandemic on precarious workers, and the impact of high-​status gig work and sudden platform closings on gig economy entrepreneurs. Christian Sandström, Jönköping International Business School, Sweden, and The Ratio Institute, Sweden. Christian Sandström is Senior Associate Professor at Jönköping International Business School and affiliated with the Ratio Institute. His research concerns the interplay between digitalisation, institutional change, and firm strategies. Simode Sperinde, NOI Techpark, Italy. Simode Sperindè is an innovation management consultant at the innovation centre and technology transfer. His current research interests are innovation management and sharing economy. Anna Marie Dyhr Ulrich, University of Southern Denmark (SDU), Department of Entrepreneurship and Relationship Management, Denmark. Anna Marie Dyhr Ulrich attends a position as Associate Professor in BtB Marketing in the Department of Entrepreneurship and Relationship Management at the SDU campus in Sønderborg, Denmark. Her research interests are within B2B Marketing, International Marketing, IOT, and Relationship Marketing. Emily M. Weitzenboeck, Oslo Business School, Faculty of Social Sciences, Oslo Metropolitan University –​OsloMet, Norway. Emily Weitzenboeck is Associate Professor of law at the Oslo Business School, OsloMet. Her current research interests are electronic commerce law and legal issues related to new business models, digitalisation, Big Data, machine learning, algorithms, as well as privacy and data protection law. Jie Zhang, Centre for Regional and Tourism Research (CRT), Denmark. Jie Zhang is a senior researcher at CRT. Her current research interests are development of tourism satellite accounts, assessment of tourism impact on regional economies, method development on tourism destination and economic and environmental effects of tourism.

xvi

Foreword

There has been digital entrepreneurship since the birth of the web. There has been a sharing economy since humans began. Their intersection seems an obvious and immediate phenomenon but as this volume shows, it is not quite that simple. While digital entrepreneurship has in many ways accelerated the sharing economy, it has also complicated matters in perhaps surprising ways. This volume does a nice job of introducing us to some of those surprises. The editors provide a good introduction and overview of the disparate chapters on this very important topic. The diverse case studies are particularly welcome. If you are interested in this topic, you will find at least one chapter of particular interest. In fact, I hope that readers will find at least one chapter to cite in their own work. I am pleased that the editors grounded the introduction in my two favourite definitions in this arena: Sussan and Acs (2017) and Giones and Brem (also 2017). With all the different (and occasionally odd) definitions in the field, the editors definitely got off on the right foot. Entrepreneurs of any stripe operate in a world of ecosystems and digital entrepreneurs in the sharing economy are no different. While the term ‘ecosystem’ is much-​ overworked (and much under-​ defined) it is absolutely essential to understand the phenomena under study here and these chapters reflect that consistently. For example, an under-​studied element of entrepreneurial ecosystems is ecosystem governance. While too often neglected, governance of ecosystems is critical for participants so I was pleased to see implicit, even explicit consideration provided across these chapters as well as the focus for the last set of chapters. When I read a book of chapters such as this, I am sometimes hard pressed to understand the flow of the chapters. I had no such problem here. It is a simple thing but I am nonetheless pleased that Professors Vinogradov, Leick, and Assadi have done so.

xvii

1

newgenprepdf

xviii Foreword I suspect that multiple chapters in this volume will be cited. In several, I also suspect that the authors have only just begun their inquiries and I look forward to future work from them. I also look forward to future edited volumes from these editors. Norris Krueger, PhD; Boise, Idaho USA, December 2020

1

Introduction Evgueni Vinogradov, Birgit Leick, and Djamchid Assadi

The concept of the sharing economy has become increasingly popular in the past few decades in response to major technology and societal shifts. As the digital revolution progresses, a dynamic change associated with the sharing economy is altering the way how transactions between individuals, businesses and organisations are shaped and delivered. In fact, the rising importance of digitisation-​associated tools, products, and services is linked to a revolution in that new socio-​technical opportunities for shared transactions are enabled that did not exist before. Conversely, this shift also poses potentially drastic changes for the society to grapple with, as the new innovative technologies permeate products and services as well as entire business models through, e.g., artificial intelligence (AI), cryptocurrencies, block-​chain technologies, internet of things, and technology-​based surveillance. There is an ongoing academic and political debate regarding the origins, development, functionality, and contributions of the sharing economy in such a rapidly digitising world, particularly about sustainable consumption and waste management issues. Shared transactions and the sharing economy, respectively, are not a new phenomenon because previous sharing activities were observed between peer-​to-​peer (P2P) groups such as families and friends (Frenken & Schor, 2017). However, what is new and adds to the contemporary debate is the disruptive ‘renaissance’ of shared transactions resulting from the use of Web 2.0-​based social media. In this regard, new models of the sharing economy are emerging which close distance-​related gaps between actors and allow more and other actors, who may otherwise have been distanced by conventional communication modes (such as simple digital exchanges, telecommunication, retail transaction, road or air transportation), to interact. Hence, the more complex digitisation further reduces transaction costs and thereby increases the efficacy of sharing-​economy transactions among peers where distance-​related costs become less important (Surowiecki, 2004; McAfee, 2006; Tapscott & Williams, 2007; Ashta & Assadi, 2009). Possibly the most significant impact of this development is the fact that the digitalisation of the sharing economy enables a wider circle of actors a bigger reach of and access to both local and global markets.

2

2  Evgueni Vinogradov et al. In this respect, digitisation brings about a different meaning to ‘local’. Whereas shared transactions among peers in the original understanding (Frenken & Schor, 2017) took place through a physical and local face-​to-​ face meeting platform, the digitised sharing economy allows borderless transaction-​based activities on P2P digitised platforms on various levels, ranging from the local to the national and international-​global level. The border in this context moves beyond land-​based and physical curtilages towards digital-​ based limitations, introducing multiple and varying contextual factors to the connectivity and accessibility of the sharing economy.

Definitions of the Sharing Economy in This Book This book follows the idea that the sharing economy relies in today’s digital and digitised world on multi-​sided platform-​based intermediation (and monetisation) of assets and service provision. In this respect, we identify two key streams of individuals related to the assets and services provided through the platform-​based sharing economy: those who have an asset, that is, commodity or service, to offer which can be exploited through sharing via the platforms (asset owners or providers, representing the supply side); and those who use the underutilised assets from the asset owners and providers (asset users, representing the demand side). This perspective is derived from the definition by Botsman and Rogers (2010, pp. 159–​160) of the sharing economy, as “traditional sharing, bartering, lending, trading, renting, gifting, and swapping, redefined through technology and peer communities”. In addition, we draw from the view expressed by de Rivera et al. (2017, p.12) that the sharing economy involves providers and consumers of goods and services as well as platforms defined as websites and apps that “enable, facilitate and mediate exchanges and sharing between peers to create alternate and stable marketplaces”. The latter definition embraces the criterion that the platform-​based sharing economy is a multi-​sided market. No matter how it is defined, it is a matter-​of-​fact nowadays that the sharing economy represents a large and growing economic sector, which is expected to grow from 4 billion in 2015 to 80 billion Euro by 2025 (PricewaterhouseCoopers, 2016). The sharing economy encompasses a continuum of activities such as accommodation, lodging, and properties (Airbnb, HomeAway, Love Home Swap), car-​sharing (Turo, Getaround), ride-​sharing (BlaBlaCar), ride-​hailing (Lyft), crowd-​shipping (PiggyBee), tutorials (Superprof), multi-​ services (TaskRabbit), and crowd-​ funding (Kickstarter and Kiva). These platforms and the associated business models involve different types of actors, businesses, and organisations, ranging from profit-​oriented multinationals, for instance, Airbnb and Uber, and cooperatives such as Couchsharing and Makerspace, to not-​ for-​profit organisations (for example, Kiva).

3

Introduction  3

The Transition to Digital Entrepreneurship It is commonly acknowledged in academic research and managerial practice that entrepreneurship is an essential aspect of greater economic development and societal progression. The impact of rapid digitisation in contemporary society adds a new dimension to this activity –​one that is moving beyond the pace of the everyday reality of economic relationships and entrepreneurial activities. Hence, the potential and dynamism of the digitally driven sharing economy through platforms enables both the entrepreneurial expansion and new forms of entrepreneurship, which is shifting the frontier in entrepreneurship and calls for the empirical integration of this new development. More precisely, in this book, it is argued that it is time to bring the new ideas and connections between digital entrepreneurship and the sharing economy to the fore. Digital entrepreneurship is defined here in line with the literature that emphasises two related, yet different, concepts that originate from the multiple combinations of technology and entrepreneurship emerging in the digital age with an important socio-​economic impact. Digital technology entrepreneurship comprises entrepreneurship that is concerned with activities that imply that new commodities and services are brought to the market which are based on ICTs only; entrepreneurial activities with digital entrepreneurship are related to the creation of ICT-​based smart devices with the help of the internet, for example, smartphones (Giones and Brem, 2017). By contrast, digital entrepreneurship is the broader term that refers to the introduction of new commodities and services, which are based on the internet, e.g., apps, and where technology is one input factor among others. Hereby, the innovative commodity, product, or service is typically running in a cloud and uses big data or AI (Giones and Brem, 2017). Airbnb, Snapchat, and Uber are common examples of digital entrepreneurship. Following this distinction, we refer in this book to the broad definition of digital entrepreneurship given by Sussan and Acs (2017, p. 66), who define a digital entrepreneur as “any agent that is engaged in any venture be it commercial, social, government, or corporate that uses digital technologies”. Another definition, based on the literature, argues that digital entrepreneurship substitutes some or all physical elements of a conventional organisation by means of internet-​based technologies (Hull et al., 2007; Hair et al., 2012; Belk, 2014; Le Dinh et al., 2018). According to this perspective, Hull et al. (2007) propose and categorise digital entrepreneurs into three types: the first one is a ‘click and mortar’ entrepreneur where digital products and services form a complement to a conventional business venture. The second type relies on a significant integration of digital technologies into the value chain. The third entrepreneur refers to an entire digital venture. In the initial era of e-​commerce, this type was named a ‘pure play’ entrepreneur. In this book, we acknowledge that

4

4  Evgueni Vinogradov et al. all three types are relevant to the sharing economy. With this variety of different activities observed, it can be argued moreover that digitisation implies a democratisation of entrepreneurship (Aldrich, 2014).

Digital Entrepreneurship in the Sharing Economy: A Paradigmatic Shift In practice, the number of sharing-​economy platforms and their users has recently reached the point where it clearly challenges the traditional businesses (Barnes & Mattsson, 2016; Belk, 2014). In this book, we relate this disruption to a shift in paradigms for entrepreneurship research and practice. Given the multiplicity and complexity across the value chains due to the sharing economy in areas of ICT-​based technology and emerging contemporary digital-​related entrepreneurship activities, we suggest that at least three major approaches exist which contextualise the entrepreneurial potential of the sharing economy:

• First, entrepreneurship in the digital age incorporates various elem-

•

•

ents of entrepreneurship including the creation of new digital business ventures in the sharing economy. Digital entrepreneurship in the sharing economy is, thus, primarily associated with entrepreneurship through creating novel sharing-​economy platforms. This emerging type of entrepreneurship occurs across industries but is most commonly related to the high-​technology enterprises or sectors of an economy. Hence, digital entrepreneurship in the sharing economy represents a new form of technology entrepreneurship. Second, digital entrepreneurship is, moreover, taking place through the exploitation of existing sharing-​economy platforms. In this case, platforms that are already established represent a key element of a novel business. In this sense, digital entrepreneurship in the sharing economy includes not only the creation of new platforms but also the use of existing platforms for new business ventures, based on the platforms. Third, the new digital entrepreneurship opportunities are most likely to embrace disruptive activities in existing business models and practices along with the creation of new ventures. Established businesses are challenged through the advent of the platform-​based sharing economy and will be increasingly pressurised to adapt their existing business models in order to prevent them from becoming obsolete. These activities could either collectively or singularly capitalise upon the sharing-​economy platforms. Our definition of digital entrepreneurship in the sharing economy, thus, includes the entrepreneurial products, processes and innovations occurring across the value chains of existing and new business models, where sharing-​ economy platforms are used as, for example, marketing channels to reach to new types of users and customers, or for the financing of

5

Introduction  5 new activities when the core business activity may not be directly related to the sharing economy itself. In this book, we posit that the processes associated with these three perspectives of entrepreneurial activity and the sharing economy are determined by the same generic elements that apply for ‘traditional’ entrepreneurship outside the platform-​based sharing economy (Standing and Mattsson, 2018; Hull et al., 2007; Kraus et al., 2019). In this sense, we draw from the existing literature in establishing a broader concept perspective of digital entrepreneurship in the sharing economy, which is based on Giones and Brem (2017). We present the various entrepreneurial activities associated with collaborative consumption and the use of digital technologies in the sharing economy as part of a broader understanding of digital entrepreneurship.

Entrepreneurship with Big Platforms and Reduced Transaction Costs: Challenges and Opportunities The nature of ‘digital entrepreneurs’ and ‘digital entrepreneurship’ is commonly associated with large, global players such as Google, Facebook, Apple, Airbnb, Uber, and their platform-​based global business models. Some of these companies came to life in a segment of the economy that enjoyed a zero marginal cost structure, which means that the cost of producing one extra unit of product/​service was almost zero when they started a global expansion. Such globally expanding companies began to realise that the digitalisation process brought about the disintermediation (that is, selling directly to customers through online shops and getting rid of the middlemen in the value chains), which represented an important enabler and acted as the medium to connect independent groups of individuals via digital media and platforms. As a result, those companies benefitted from network effects (which happen when one more user will increase the utility for other users of the product, and, through this effect, with a rising number of users, the utility for individual users increases as well). Networked systems based on digital platforms, media, and systems, thus, generate advantages to companies by reducing the transaction costs such as the costs of searching, identifying, and communicating, negotiating and dealing with customers, and opening up new interaction modes or market opportunities with global customers. On the basis of these advantages, the big players in the digital marketplace benefit enormously from network effects effective on a global scale. For instance, the Google search engine relies on the users to refine its searches, and the better the search result is, the more people will use it. Hence, the more users apply this specific engine for their searches, the higher will be the advertising revenue for Google. In a similar vein, Microsoft’s Windows, Apple’s IOS, Google’s Android, Fitbit’s app, or Facebook are platforms that are attractive because of the network effect.

6

6  Evgueni Vinogradov et al. This matter-​of-​fact influences our perspective on digital entrepreneurship as well. Hence, our perspective on this issue is platform based, which defines the technical side and basis of the business model for digital entrepreneurship in the sharing economy. While the network effects facilitate early scaling and expansion of new digital businesses, such expansion is also dependent on ‘first-​mover’ advantages, which can be optimised by the use of P2P platforms. Entrepreneurs, that is, new business ventures as well as social enterprises entering a non-​profit market are prototypical ‘first movers’. The Web 2.0-​ based platforms with their two-​ sided markets, thus, give lieu to the aforementioned entrepreneurial opportunities. On the one hand, becoming entrepreneurial is facilitated as the businesses can experiment with new ideas, applications and technologies and, thereby, generate innovative solutions whilst realising low operating costs and overcoming market-​entry barriers. Conversely, the move of businesses to a more digitised business model and markets such as platform-​based two-​sided markets is also a result of pressures placed upon them by the global markets and the rapid digitisation. As the Web 2.0 is associated with both emerging opportunities and challenges for businesses, new business models emerge. Their study requires new concepts, insights, and paradigms from scholars. Because transaction costs are reduced to nearly zero between the peers with idling assets and those peers in need of assets and this facilitates the collective (re)utilisation of underutilised assets across various scales, the sharing economy provides a potential for massive entrepreneurship with digital media, platforms and systems. In fact, such sharing-​economy and platform-​based entrepreneurship are now developing in virtually all sectors around the world.

The Structure of This Book This book is organised in three parts. Part I will present the conceptualisation of digital entrepreneurship in the context of the sharing economy. It lays the theoretical ground to understand digital entrepreneurship in the sharing economy, based on the aforementioned approaches. After this introductory chapter, Chapter 1 explores entrepreneurship in the sharing economy as a regional-​national phenomenon, which seems to stand in contrast to the global and fast-​ growing sharing-​economy players such as Airbnb, Uber, and others. To shed light on the regional-​national dimension of digital entrepreneurship in the sharing economy, Birgit Leick, Mehtap Aldogan Eklund, Susanne Gretzinger, and Anna Marie Dyhr Ulrich explore the question of which diversity of business models exists with regional sharing-​economy entrepreneurs. The authors argue that all entrepreneurs, including sharing-​ economy entrepreneurs starting locally, tend to spread any technological and organisational innovation to new geographical areas

7

Introduction  7 and thus follow a path of geographical market expansion and internationalisation. However, regional sharing-​economy entrepreneurs need to tackle specific challenges, notably scalability issues and the need to accelerate fast growth regarding the number of customers or users. To understand the specific entrepreneurial characteristics of such business models with platform-​based sharing-​economy players and the challenges attached, the authors present an exploratory case study of four Norwegian sharing-​economy start-​up businesses. Hence, this first chapter introduces a core approach to turn entrepreneurial in the digital sharing economy through creating and establishing own sharing-​economy platforms using digital tools. Chapter 2 by Eva Delacroix, Florence Benoit-​Moreau, and Béatrice Parguel explores a different type of digital entrepreneurs in the sharing economy, that is, necessity-​driven subsistence entrepreneurs in the context of P2P platforms. The authors acknowledge that the phenomenon of subsistence entrepreneurship exists outside developed countries, and it is evident with marginalised and poverty-​ struck individuals from industrialised countries, who use on-​demand platforms in the P2P sharing economy to improve their household incomes. The authors study the case of French women and migrants in France and Belgium and conceptualise digital subsistence entrepreneurs by describing both their opportunities as entrepreneurial individuals and the challenges they meet. In contrast to Chapter 1, Chapter 2 rather emphasises on the opportunities of using existing sharing-​economy platforms in the digital economy as tools to become a micro-​entrepreneur. The subsequent chapter takes on a different perspective that is devoted to the types of business models in different P2P platform contexts according to the B2C and B2B markets. Karl Joachim Breunig, Henrik Johansen, and Jørgen Røste Kristiansen conduct a bibliometric analysis of the extant research publications on sharing-​economy business models. By this token, the authors are able to establish a conceptual framework that distinguishes constituent elements of three business models in the sharing economy: P2P models with a triadic structure, models in the business-​to-​business sector with dyadic structures and the business-​to-​ consumer sector with co-​creation. The three types of business models show distinct value-​capture mechanisms and differ in terms of the value proposition communicated. Hence, in the context of this book, Chapter 3 summarises the core elements of various business models found with P2P sharing-​economy platforms and thereby describes another way of turning entrepreneurial in the sharing economy, that is, through developing novel business models and altering existing models through digital platforms and sharing-​economy transactions. Since the literature addressing the sharing economy and digital business models appears complex and unstructured, the literature review conducted by Karl Joachim Breunig (Chapter 3) makes a valuable contribution to wards highlighting the main lines of thought related to these entrepreneurial activities.

8

8  Evgueni Vinogradov et al. The final chapter in Part I (Chapter 4) is written by Andrea Geissinger, Christofer Laurell, Christina Öberg, and Christian Sandström. It provides a systematic empirical account on the impact of the sharing economy on the evolution of electronic commerce. Hence, this chapter conceptually explains why the sharing economy gives rise to a relatively wide plethora of e-​commerce initiatives. The authors conclude that the conceptualisation of entrepreneurship in the context of the sharing economy needs to be updated by considering the evolution of commerce. For instance, the authors underline that social values and goals should be considered more when dealing with digital entrepreneurship in the sharing economy. This would back up the existing pluralities and dynamics of sharing economy applications and push the frontiers in entrepreneurship research ahead. Together, Chapters 1–​ 4 summarise the conceptual underpinnings of the various approaches to digital entrepreneurship in the sharing economy. They illustrate different theoretical perspectives, ranging from traditional entrepreneurship theories to concepts of business models and business model change, motivational factors of enterprising individuals in contextualised settings, and e-​commerce as a precursor of the platform-​ based, digital sharing economy as we know it today. In essence, they add conceptual rigour to the three approaches of turning entrepreneurial in the sharing economy, as described earlier in this chapter. Part II of the book is devoted to the cases and contexts for digital entrepreneurship in the sharing economy. Its first chapter, Chapter 5 by Jie Zhang and Nino Javakhishvili-​Larsen, explores the regional differences of the economic impact, which the company Airbnb, as one of the biggest sharing-​economy players in the tourism sector, has on urban and peripheral regions of Denmark. The authors show the asymmetric impact of this big player on different types of regions and find that a regionally adapted regulatory policy is necessary that pays attention to regional differences. In essence, their contribution highlights why policies and regulatory initiatives can be applied to diversify economic gains from digital entrepreneurship such as Airbnb-​ based tourism activities and render such activities favourable for various tourist destinations –​not only those located in urban centres and metropolitan regions but also in the more remote and peripheral areas. Given that digitisation also disrupts societies, not only businesses and industries, social entrepreneurs with non-​commercial business goals and strategies are another important aspect of the novel approaches to digital entrepreneurship in the sharing economy that are addressed in this book. Chapter 6, written by Zeynep Özsoy and Beyza Oba, provides an inspiring example of how a non-​profit, P2P knowledge-​sharing platform has emerged as an ‘entrepreneurial’ reaction to the ecological disruption and inequalities in the agricultural sector in Turkey. The platform originated from social activism and voluntarism when it was founded, and it represented a reaction to the strict restrictions on digital media in Turkey. The platform provides reliable and impartial content on

9

Introduction  9 eco-​farming and their ecological products, which represents an important social value. In addition, the platform extends the network boundaries and thereby enhances its social impact by drawing in a rising number of users. Simultaneously, the case study highlights core challenges for social and non-​profit entrepreneurship with digital entrepreneurship in the sharing economy, for instance, the wish of the social entrepreneurs for continuous decentralisation of the platform in spite of its growing professionalisation and commercialisation as well as sustainability issues. Digital entrepreneurs related to the sharing economy are, moreover, gradually changing the way in which labour markets are organised and function. New modes of organisation can be observed for individuals using digital tools and the sharing economy for entrepreneurial activities. In Chapter 7, Anh Nguyen-​Duc and Simode Sperinde present a model that explains how open innovation occurs in coworking spaces. The authors explore the connection between open innovation and coworking spaces as two trends that have emerged in the early 2000s and place the trends in the context of the sharing economy. They use empirical data from interviews with digital entrepreneurs and managers of software companies operating Norwegian coworking spaces. The authors find that such coworking spaces represent a large potential to foster open innovation among early stage start-​up companies and involve open innovation processes. These findings are valuable to guide potential start-​up entrepreneurs that wish to use platforms in the digital economy and join open innovation projects. In Chapter 8 of the book, Alexandrea J. Ravenelle, Erica Janko and Ken Cai Kowalski present a study of high-​skilled workers with digital platforms in the sharing economy. The authors explore the question of why well-​educated workers with prestigious work experiences are turning to platform-​based, so-​called gig economy work and whether exclusive gig work might represent a stepping-​stone to turn into entrepreneurs. Drawing on theories of pull/​push entrepreneurship, the authors study these questions for the U.S., the biggest market for gig economy work, and conclude that many of the gig workers represent individuals with entrepreneurial aspirations, but entrepreneurship itself represents only a secondary interest for them related to the platform work. The case study, thus, highlights the ambiguous motivations of individuals using platforms for entrepreneurial activities. The final chapter in Part II, Chapter 9, is written by Ozge Kirezli and M.G. Serap Atakan, who present a Turkish case study on coworking spaces that illuminates the benefits offered to the users in an emerging-​ market context. The authors posit that advances in ICT technologies and the increase of the self-​employed workforce give rise to the emergence of coworking as a specific type of entrepreneurship; it connects corporations with unused office space and individuals such as freelancers and remote workers. The authors describe the benefits of the selected coworking spaces as a factor that facilitates the work of individuals operating in

01

10  Evgueni Vinogradov et al. the sharing economy. One major effect identified is networking and community-​ building advantages that encourage individual users to interact in coworking spaces and cooperate with other users. Moreover, the authors emphasise that the digitisation itself is a valuable asset for enterprising individuals notably in an emerging-​market economy such as Turkey by showing the functional, special and digital benefits that are provided through the use of coworking opportunities. Altogether, the case studies presented in Chapters 6–​9 show various aspects related to digital entrepreneurship in the sharing economy across different sectors and contexts. Some chapters illuminate the opportunities and challenges of social and non-​profit entrepreneurship with sharing-​economy platforms. Social and non-​profit entrepreneurship is often an under-​studied aspect of the entrepreneurial potential through the sharing economy. Other chapters are devoted to new approaches to organise labour and workforces, for instance, through coworking spaces, which can be considered as an extended notion of digital entrepreneurship and a potential element of an ecosystem for digital entrepreneurship in the sharing economy. In addition, regional differences of the impact of sharing-​economy companies and organisations are demonstrated for the tourism industry. Notably the latter application points at regulatory issues and policies as an important factor in the external environment where digital entrepreneurs in the sharing economy operate. The final part of this book, Part III, sheds light on governance and legal frameworks for digital entrepreneurship in the sharing economy. Chapter 10 by Emily M. Weitzenboeck analyses how digital entrepreneurship in the sharing economy is regulated in the European Union. It starts by exploring from a legal perspective the regulatory framework of the sharing-​economy platforms and the position of service providers who share goods and services via platforms in the European Union. The chapter sheds particular light on the governance mechanisms available to policy-​making. It identifies what rules are applicable and the extent to which they are mandatory, or not, and which issues may be left to contractual negotiation between parties operating in the provision of goods and services through the sharing economy. The chapter provides a comprehensive overview of legal aspects and notably challenges emerging for potential entrepreneurs located or operating in a large Common Market such as the European Union. For the Northern American grand region, regulatory frameworks are different, compared to the European Union. To shed specific light on this particular legal context, Joan MacLeod Heminway studies the dynamism of U.S. crowdfunding for entrepreneurship in Chapter 11. She asks whether U.S. securities crowdfunding is a promising avenue to raise capital for low-​income entrepreneurs and small businesses. By providing a tempting perspective for entrepreneurs, notably those in subsistence entrepreneurship conditions and precarious circumstances, the author

1

Introduction  11 explores the obvious and less obvious costs as well as the more uncertain benefits that the U.S. laws and regulatory frameworks provide. The lessons learnt from this discussion can be used to generate insights into legal measures in other countries, notably concerning the question of how such frameworks may support, or not, the longer-​term prospects of precarious entrepreneurship using the sharing economy. Chapters 10 and 11 illustrate key opportunities and challenges related to the regulatory and legal aspects and governance issues with digital entrepreneurship in the sharing economy. Despite the differing legal-​ institutional backgrounds in the case studies, some important overarching lessons can be derived from the studies, which illuminate how digital entrepreneurs deal with the complexity of legal-​juridical frameworks. Although these two chapters in this volume provide only snapshots of the wealth of knowledge available in this research area, the insights gathered are valuable in informing policy-​makers on regulatory-​legal aspects and governance, which affects digital entrepreneurship in the shared economy.

Summary of the Aims and Approach of the Present Book Although there are many recent and forthcoming books on the topics of digital entrepreneurship and sharing economy, most of them emphasise one of the two topics in isolation. The present book, however, aims to connect these hitherto unconnected strands in the literature on digital entrepreneurship and the sharing economy. With the collection of 11 chapters on various aspects, ranging from the conceptualisation of the phenomenon, cases and contexts to legal and governance-​related issues, the volume presents a unique collection of relevant and cutting-​ edge research topics for scholars and practitioners who are interested in either one of the topics or their connection. The chapters collected in this volume, thus, lay the ground for studying some of the key elements of an ecosystem for digital entrepreneurship in the sharing economy.

References Aldrich, H 2014, ‘The democratization of entrepreneurship? Hackers, makerspaces and crowdfunding’, Annual Meeting of the Academy of Management, Philadelphia, August 2014. Ashta, A & Assadi, D 2009, ‘Do social cause and social technology meet? Impact of web 2.0 technologies on peer-​to-​peer lending transactions’, Cahiers du CEREN, vol. 29, pp. 177–​192. Barnes, SJ & Mattsson, J 2016, ‘Understanding current and future issues in collaborative consumption: A four-​stage Delphi study’, Technology Forecasting and Social Change, vol. 104, pp. 200–​211. Belk, R 2014, ‘You are what you can access. Sharing and collaborative consumption online’, Journal of Business Research, vol. 67, no. 8, pp. 1595–​1600. Botsman, R & Rogers, R 2010, What’s mine is yours: The rise of collaborative consumption. Harper Collins, New York.

21

12  Evgueni Vinogradov et al. Frenken, K & Schor, J 2017, ‘Putting the sharing economy into perspective’, Environmental Innovation and Societal Transitions, vol. 23, pp. 3–​10. Giones, F & Brem, A 2017, ‘Digital Technology Entrepreneurship: A Definition and Research Agenda’, Technology Innovation Management Review, vol. 7, no. 5, pp. 44–​51. Hair, N, Wetsch, LR, Hull, CE, Perotti, V & Hung, YTC 2012, ‘Market orientation in digital entrepreneurship: Advantages and challenges in a Web 2.0 networked world’, International Journal of Innovation and Technology Management, vol. 9, no. 6, p. 1250045. Hull, CEK, Hung, YTC, Hair, N, Perotti, V & DeMartino, R 2007, ‘Taking advantage of digital opportunities: a typology of digital entrepreneurship’, International Journal of Networking and Virtual Organisations, vol. 4, no. 3, pp. 290–​303. Kraus, S, Roig-​ Tierno, N & Bouncken, RB 2019, ‘Digital Innovation and Venturing: An Introduction into the Digitalization of Entrepreneurship’, Review of Managerial Science, vol. 13, no. 3, pp. 519–​528. Le Dinh, T. Vu, MC & Ayayi, A 2018, ‘Towards a living lab for promoting the digital entrepreneurship process’, International Journal of Entrepreneurship, vol. 22, no. 1, pp. 1–​17. McAfee, AP 2006, ‘Enterprise 2.0: The dawn of emergent collaboration’, Enterprise, vol. 2, pp. 15–​26. PriceWaterhouseCoopers 2016, The future of work–​A journey to 2022, viewed 01 November 2020, www.pwc.com/​ee/​et/​publications/​pub/​future-​of-​work-​ report.pdf. Rivera, J. Gordo, A. Cassidy, P & Apesteguía A 2017, ‘A netnographic study of P2P collaborative consumption platforms’ user interface and design’, Environmental Innovation and Societal Transitions, vol. 23, no. 1, pp. 11–​27. Standing, C & Mattsson, J 2018, ‘“Fake it until you make it”: business model conceptualization in digital entrepreneurship’, Journal of Strategic Marketing, vol. 26, no. 5, pp. 385–​399. Surowiecki, J 2004, The wisdom of crowds: Why the many are smarter than the few and how collective wisdom shapes business, economies, societies and nations. Garden City, NY: Doubleday. Sussan, F & Acs, ZJ 2017, ‘The Digital Entrepreneurial Ecosystem’, Small Business Economics, vol. 49, no. 1, pp. 55–​73. Tapscott, D & Williams, AD 2007, Wikinomics: How Mass Collaboration Changes Everything. New York: Penguin.

31

Part I

Conceptualisation of Digital Entrepreneurship and Sharing Economy

41

51

1  Regional Sharing-​Economy Entrepreneurs and the Diversity of Their Business Models Birgit Leick, Mehtap Aldogan Eklund, Susanne Gretzinger, and Anna Marie Dyhr Ulrich

Introduction Parker et al. (2016, p. ix) write about entrepreneurs in the digital, platform-​based age as follows: ‘The platform model underlies the success of many of today’s biggest fastest-​growing, and most powerfully disruptive companies’. In fact, entrepreneurs in the sharing-​economy are typically innovative business start-​ ups that rapidly grow into large, international players, some of them even from the earliest days of their inception (Kathan et al., 2015; Wang and Nicolau, 2017). The reasons behind their growth and internationalisation model are that the advent of a platform-​based, and often global, online market with its digital infrastructure allows start-​up entrepreneurs to perform entrepreneurial activities in a fast and smart way (Standing and Mattsson, 2018). However, such platform-​based entrepreneurs in the sharing economy are simultaneously strongly dependent upon the existence of sufficient demand-​side network effects (cf. Apte and Davis, 2019; Parker et al., 2016), which requires them to quickly spread their services or content among a steadily rising number of users. Since this enterprise development path exposes business start-​ups in the platform-​based sharing economy to a global hyper-​competition in the online world, many do not survive and leave the market. Altogether, this picture of entrepreneurship in the sharing economy is dominated by global players and national champions (such as the Swedish fintech Klarna) that develop a viable business model based upon the network effects enabling fast growth and expansion to global markets (Parker et al., 2016) and have sufficient resources from the national or global ecosystems. By contrast, the exploding literature on the sharing economy pays less attention to sharing-​ economy entrepreneurs with regional markets and the question of whether they can persist despite the importance of network effects on the global level. Regionally anchored sectors offer abundant opportunities for innovative start-​ups to pitch their ideas by means of digital environments, for instance, in retail trade,

61

16  Birgit Leick et al. the tourism and hospitality industries, farming and food economies, and the cultural and creative sector. For entrepreneurs in the sharing economy that operate in such rather regional than globalised sectors, several challenges emerge for the creation of a viable business model because they might find it harder to exploit network effects for their firm growth, compared to those platform-​based sharing-​economy ventures that grow and internationalise rapidly (Vadana et al., 2019; Wentrup and Ström, 2019). By regional sharing-​ economy entrepreneurs, we define start-​ ups and early stage business ventures in the platform-​ based sharing economy that operate in a specific regional-​national market area and are not internationalised from the outset. Regional sharing-​ economy entrepreneurs, thus, differ from their ‘born global’ and ‘born digital’ counterparts (Monaghan et al., 2020) in various respects: They supposedly have distinct characteristics of their business model with regard to the start-​up stage, the opportunities for revenue generation and scalability (which both depend upon a growing number of users), and their overall viability as a new business venture in a global, and generally, hyper-​competitive, market. Given the variety of business models existing with sharing-​economy providers (Acquier et al., 2019; Assadi, 2020), we argue that there will be a diversity of business models and business development paths with regional sharing-​ economy entrepreneurs that will need to be explored to understand this phenomenon. To date, there is no evidence available pointing to how the distinct business models of regional sharing-​ economy entrepreneurs might be described and if there exists at all a business model of such entrepreneurs with specific and common features. Hence, this chapter explores two central questions relating to this topic: (a) What are the entrepreneurial characteristics of applied business models in the platform-​based sharing economy on the regional level? and (b) Which diversity of business models exists with such regional sharing-​economy entrepreneurs? We present a concise literature review, which will be followed by an exploratory case study of the applied business models with four Norwegian start-​up entrepreneurs in the sharing economy. The focus of this chapter is, thus, not to explain the technological side of digital entrepreneurship with the platform-​based sharing economy, but illustrate the variety of business models on a regional scale and describe how these entrepreneurs, starting off regionally, are connected with national or global scales. The rest of this chapter is organised as follows: The next section presents the related literature, followed by a section on the methodology and research design, including short profiles of the entrepreneurs. Subsequently, the empirical analysis is, first, presented and then discussed. The final section concludes the core ideas and findings and provides implications for practice and research.

71

Regional Sharing-Economy Entrepreneurs  17

Literature Review Business Models in the Platform-​Based Sharing Economy Business start-​ups in the platform-​based sharing economy benefit from low transaction costs associated with the creation of a digital business and their immediate exposure to and visibility in a global community. However, not all sharing-​economy entrepreneurs survive the early stage period, given the hyper-​competition in the platform-​based economy, a lack of scalability and substance. Therefore, a viable business model is a core pillar that business ventures in the platform-​based sharing economy need to rely upon (Kumar et al., 2018; Muñoz and Cohen, 2017). Business models with sharing-​economy entrepreneurs are positioned in so-​called two-​sided markets (Eisenmann et al., 2006). They are closely related to an entrepreneur’s strategy in the market (Assadi, 2020) and ‘describe the link between a company’s resources and skills to create value for both target markets and business owners’ (Assadi, 2020, p. 2). Several criteria are used to characterise sharing-​economy business models such as the use of network effects and switching costs, the logics concerning value creation and distribution, and transaction-​cost considerations with the model (Apte and Davis, 2019). Acquier et al. (2019) emphasise the value-​creation and value-​distribution dimensions as two critical characteristics to assess business models in the sharing economy; they also provide different managerial implications for various models concerning the scalability, value creation and distribution with the model. In fact, the value creation and co-​creation mechanisms for stakeholders involved as well as revenue generation for the entrepreneur are two key features to determine the financial side of the model (Acquier et al., 2019; Cohen and Kietzmann, 2014), both of which are important to exploit the entrepreneurial opportunities and manage the expansions of operations to a rising number of users, regionally, nationally and internationally (Acquier et al., 2019). Therefore, a key criterion to determine regional sharing-​ economy entrepreneurs is whether their business model is scalable enough to exploit network effects (Acquier et al., 2019). As Holzweber et al. (2015), and Standing and Mattson (2018) stress, in the early stage period of the start-​up, entrepreneurs in the sharing economy need to rely on a core community of users and consumers to help them expand their business operations and promote their product or service. In later stages of enterprise development, however, the management of firm growth towards a scalable business becomes a critical task for the sharing-​economy entrepreneur (Apte and Davis, 2019). Depending upon the specific model, network effects can accelerate this firm growth and expansion (as is the case with the so-​called ‘shared infrastructure providers’, for instance, big car-​sharing providers; Acquier et al. 2019) or threaten the entrepreneur’s

81

18  Birgit Leick et al. viability. In the latter case, no significant effects can be generated and companies stay beyond a limited number of users required for their growth, for instance, because of the social orientation of the entrepreneur and the social, non-​profit character of the entire business model (as with ‘mission-​driven platforms’, which typically have not only for-​profit goals, cf. Acquier et al. 2019). Besides, the sustainability of the business model is another key criterion (Acquier et al., 2019). Sustainability in this context refers to both environmental-​ societal concerns and the long-​ term persistence of the business model in the market. Sustainability concerns have been a key incentive for consumers and entrepreneurs to engage in collaborative and shared consumption (Schor and Fitzmaurice, 2015) and influence the thinking of some sharing-​economy start-​ups still today (cf. Plewnia and Guenther, 2018). Finally, Assadi (2020) addresses the governance of the business model as another relevant category. Altogether, we argue in this chapter that the persistence, or viability, of the business model is a specifically important criterion for regional sharing-​economy entrepreneurs to survive in a global market. Besides scalability considerations, the revenue generation is, thus, paramount to the entrepreneur because ideally revenues should come from multiple parties such as buyers, sellers, or both, which implies that the revenue models applied might be diverse (Täuscher and Laudien, 2018). Hence, the variation of business models with regional sharing-​economy entrepreneurs is expected to be large, which calls for their conceptual integration. Entrepreneurship in the Platform-​Based Sharing Economy Richter et al. (2015) acknowledge that entrepreneurship in the digital age such as with the platform-​based sharing economy is driven by the emergence of new business opportunities through rapid technological progress (Hull et al., 2007; Kraus et al., 2019). Despite the presence of technology as a strong driver, the same basic tenets apply for entrepreneurship in the digital age, as compared to the pre-​digital times (cf. Standing and Mattson, 2018). Entrepreneurs need to be risk-​taking, forward-​looking and opportunity-​seeking individuals, who take various decisions about the evaluation and exploitation of opportunities as well as operational, growth and exit steps. Moreover, they typically develop a vision about a marketable product or service, which is supposed to represent an innovation to the market (cf. Davidsson, 2016). In addition, a key difference between digital and non-​digital entrepreneurial activities and the innovation generated is that part is always a digitised product or service, which is not provided physically (Hull et al., 2007; Richter et al., 2017). Finally, because entrepreneurship in the sharing economy is taking new ways outside the ‘conventional ownership-​based economy’ (Richter et al., 2015, p. 27), it is a cost-​effective way to turn into an entrepreneur with a business idea and embark on a ‘trial-​and-​error’ path at low cost.

91

Regional Sharing-Economy Entrepreneurs  19 This latter argument is reflected in the motivational factors of entrepreneurs in general, which are often distinguished into opportunity versus necessity-​driven entrepreneurship. Van der Zwan et al. (2016) associate opportunity entrepreneurship with pull factors that drive start-​ up entrepreneurs to seek and exploit business opportunities in the market which they identify, while necessity entrepreneurship happens through push factors such as previous unemployment or a lack of job opportunities (cf. Giacomin et al., 2011). These arguments refer well to the sharing economy, and, indeed, there is an ongoing discussion in academia about whether individual persons using platforms for entrepreneurial activities are income-​increasing consumers, formally self-​employed, but dependent workers or true entrepreneurs. While Ravenelle (2017) and Webster and Zhang (2020) find evidence that self-​employed individuals use platforms such as Airbnb, Uber, and others to start a low-​level business through the platform, the consensual opinion is rather that the use of the platforms to create entrepreneurial opportunities is more about de iure independent, but platform-​dependent work employment than actual entrepreneurship. By focusing on individuals creating digital platforms in the sharing economy for their business idea, the focus of the present chapter is clearly on entrepreneurs. Still, they might be motivated by opportunities, necessities or both (Giacomin et al., 2011). Concerning entrepreneurship in the sharing economy, it is also important to note that both commercial (for-​profit) and non-​profit business start-​ups can be enabled through platforms. Social entrepreneurship is another important type of entrepreneurial activity facilitated by digital opportunities, for instance, to support projects with social or environmental goals (cf. Acquier and Carbone, 2018). Regional Sharing-​Economy Entrepreneurs in the Existent Empirical Research The point of departure for regional entrepreneurship is rooted in Feldman’s (2001) argument that a business start-​up is both embedded in and influenced by the regional context. With the idea of regional sharing-​ economy entrepreneurs, we conceptualise a distinct type of regionally anchored business start-​up that adopts elements from business models known for the platform-​based sharing economy (Acquier et al., 2019), respectively entrepreneurship in digital environments (Standing and Mattsson, 2018). Despite the burgeoning literature on digital entrepreneurship and business models in the sharing economy, there are only a few case studies shedding light on their regional dimension: Paulauskaite et al. (2017) demonstrate the importance of the sharing economy for the regional economies, for instance, Airbnb connected to regional tourism. Grèzes et al. (2016) and Gyimóthy and Meged (2018) highlight the specific business models for tourism-​based sharing-​economy initiatives in a specific case region. Other examples presented for the sharing economy in

02

20  Birgit Leick et al. its regional context illustrate urban phenomena such as fashion libraries in Nordic capital cities (Pedersen and Netter, 2015). Jointly, these few empirical cases illustrate the opportunities for non-​profit business models of regional entrepreneurship in the sharing economy, which matches our understanding of this phenomenon in the present chapter. However, this literature does not answer the questions of how for-​profit, corporate start-​up entrepreneurs with various goals and motivations in the sharing economy may persist without going global very swiftly and which business models might be characteristic of such regional entrepreneurship with digital technologies.

Methodology and Research Design Research Design and Sampling Process In 2019, the authors identified ten sharing-​ economy entrepreneurs located in Norway through leads from experts as well as a structured search on the internet. Two research associates searched in Norwegian newspapers, magazines and databases for leads that would hint at start-​ up companies fulfilling the following criteria: (i) The companies needed to be located and operate in Norway. (ii) All industries and sectors of the Norwegian economy were considered, including social enterprises and the public sector. As examples, the companies contacted were in bicycle and car-​sharing, meal-​sharing and dining, crowdfunding, business incubation services, social and community services, and energy and environmental services. (iii) The companies needed to be recent start-​ups with peer-​to-​peer platforms and not just exploiting social media or web-​based applications for their business ventures. Between July and September 2019, the ten selected entrepreneurs were contacted initially, and the requests were followed up over the winter 2019/​2020. Since four of the entrepreneurs agreed to talk with the author team already after the first contact, they were interviewed between August and October 2019, either in personal, face-​to-​face interviews or through phone calls. All four interviews were based upon structured questionnaires containing four overarching blocs of questions with between four to ten questions each. The questions were a mix of closed and open questions, focusing on the background of the business start-​up, the business model, the role of the location for the company and its future development. These questions were aligned to relevant theories, for example, entrepreneurial motivation and general entrepreneurship theory, business models with digital entrepreneurs in the platform economy and internationalisation models. Given that the start-​ups included were heterogeneous in several of these characteristics, the questionnaires were customised to the individual company interviewed, which allowed for a case-​specific investigation. With this setting, the research design is exploratory in that it seeks to understand the characteristics of business models with

12

Regional Sharing-Economy Entrepreneurs  21 local sharing-​economy entrepreneurs without any pre-​requisite knowledge from theories, which is in line with grounded theory (Strauss and Corbin, 1998). The four sharing-​ economy entrepreneurs have the following short profiles: The first entrepreneur –​entrepreneur A –​is a car-​sharing provider, quite similar to big international ones such as Zipcar. Entrepreneur A applied this common business model for the peer-​to-​peer platform-​ based sharing economy to the Norwegian market. Their headquarters is Oslo, and they are using their own-​programmed platform. The next sharing-​ economy entrepreneur B is a crowdfunding company, which was founded and is headquartered in Oslo. It is a national crowdfunding provider, again, using an own-​ programmed peer-​ to-​ peer platform for the Norwegian market. The third entrepreneur C is a peer-​to-​peer platform-​based provider of welfare, employment and social services to public employers and municipalities; the company was founded and is headquartered in Oslo. The final company, sharing-​economy entrepreneur D, is a social network based in Stavanger that uses a peer-​to-​peer platform to bring together neighbourhoods, social communities, for dining, eating and cooking experiences. Like A, B and C, this entrepreneur offers an own-​programmed platform. Hence, all four sharing-​economy entrepreneurs represent true business start-​ups, which have created an own digital peer-​to-​peer platform. Moreover, all of them were founded regionally in Norway (Oslo, Stavanger). In this respect, they represent regional sharing-​economy entrepreneurs, as portrayed in this chapter. Methodology and Data Analysis For the data analysis, a multiple-​step coding approach in line with Saldaña (2016) and grounded theory thinking (Strauss and Corbin, 1998) was used. As a first-​cycle coding, an open macro-​level coding technique was applied for code mapping and landscaping to identify the basic themes and issues that make up the phenomenon of interest (Dey, 2003). The aim of using macro-​level coding in the first cycle is to grasp the topics inherent in the data, which matches contexts when scholars have already gained a general idea of the various dimensions of the phenomena under investigation. The general idea concerning the phenomena investigated in this chapter is that ‘regional sharing-​economy entrepreneurship’ will contain four basic elements, i.e., entrepreneurship, the business venture, business model and future development (Figure 1.1). In this process, a central assumption was that, in order to understand regional entrepreneurship in the sharing economy, the relation of the global dimension to the regional dimension needs to be illuminated. The first-​cycle, macro-​level coding represented preparatory groundwork for a more detailed and subsequent coding of data in the second cycle (Saldaña, 2016), which aimed at identifying first-​order and second-​ order concepts underlying the final aggregation of analytical dimensions.

2

22  Birgit Leick et al.

Aggregate analycal dimension (axial coding)

Second-order themes (first-cycle coding)

Entrepreneurship

Business venture

Business model including digital plaorm

Future-related approach

Movaon: Necessity/opportunity Extrinsic/intrinsic

Start-up phase

Financial structure

Future orientaon

Funding

Customer value

Relaonships

Customers

Technology

Stepwise internaonalizaon

IT experts

Firm growth (crical mass) Boƒlenecks

First-order (informant) concepts

Informaon based upon the process a er coding and interpretaon

Figure 1.1 The theoretical dimensions of the concepts.

Here, the software programme Atlas.ti was used, which provided a list of codes to derive the first-​order concept. Moreover, so-​called ‘after first-​ cycle coding’ tools of Atlas.ti were used for code mapping and landscaping to deduce a system of general dimensions with first-​order and second-​order concepts. Subsequently, second-​cycle coding was applied as an advanced way of reorganising and re-​ analysing data coded in the first cycle. While the first-​cycle coding resulted in a draft of general dimensions, the second-​cycle axial coding was about (re-​)sorting and linking the concepts from the first cycle (Boeije, 2009; Saldaña, 2016). Based upon this structure, finally, the theoretical dimensions were derived (Figure 1.1), which are referred to in the empirical analysis. Finally, the empirical analysis uses the case-​study approach (Siggelkow, 2000) to explore the topic and relationships studied and add to the scarce theory on these topics in the extant literature (Eisenhardt and Graebner, 2007).

Empirical Analysis The Entrepreneurship and Business Venture of Regional Sharing-​Economy Entrepreneurs The entrepreneurs investigated have different motivations for starting up their business venture in the sharing economy. The founding person behind entrepreneur D was confronted with a relocation to a new city in Norway, which she experienced as follows: I felt that I was alone and it was difficult for me to go to some place. Every time it would get difficult for me to get the occasions to meet. So I wanted to fast-​track this.

32

Regional Sharing-Economy Entrepreneurs  23 Based upon her own needs and creativity, she derived the business idea; in addition, the entrepreneurial venture was driven by necessities, as she says: ‘I was scared that I could not get a job. So I wanted to keep myself busy and wanted to do what I knew I could do’. By contrast, the motivation was different for the former business start-​up A because they saw the market opportunity of adapting an existing car-​sharing business idea from the global market to the Norwegian market. Both entrepreneurs, however, express their desire to build a scalable business for a growing, and perhaps, international market. For entrepreneur C, the motivation was driven by market opportunities in crowdfunding services for the Norwegian market rather than by necessities. In this case, the venture is influenced by the social charity background of the founder, who has been working in church-​owned charity projects before. In a similar vein, entrepreneur D shows an opportunity-​driven mindset with a social goal. In other words, all four entrepreneurs do not only have a business-​centric, extrinsic motivations to develop a market, but also intrinsic goals such as environmentally friendly alternatives (A), solving social challenges (B and C) and enabling social contacts through joint experiences (D). Some of the founders are serial entrepreneurs (Plehn-​Dujowich, 2010) with experience in founding and running a business (C and D). For example, entrepreneur C states that this facilitated his business: I think that is also the reason why I got all the trust from the municipalities for this venture. Because they have seen that we have hold on to something before. In the case of A, the founder has worked as manager in the sharing economy before. Relationships were important resources for the entrepreneurs’ start-​up period and the subsequent business development, as all four entrepreneurs state. In the case of C, the business developed in an incremental fashion, guided by the use of relationships of the founding person through social (friends and socially motivated students) and business networks (professional contacts from previous charity work). Professional relationships from the founder’s previous experience as an established sharing-​economy manager in Norway facilitated the process of getting established with entrepreneur A. Public relations to press agents in Norway were another important resource for A and D. For the start-​up period, it was also a benefit to integrate close contacts from both social and business networks into a founding team (A, B, C) in order to issue shares instead of paying salaries and thereby starting up in a cost-​effective way. While the former business start-​ups A, C and D were inspired by other platforms in Norway or abroad, this was different for B, because their inspiration stemmed mostly from the personal charity orientation of the founder. For the business venture, all four founders needed abundant resources despite the relatively low-​cost use of technologies; funding was

42

24  Birgit Leick et al. expressed as a key to getting the business venture started. The entrepreneur C envisaged international funding, while B and D targeted national funding by the Norwegian innovation agency ‘Innovasjon Norge’. Regarding the timing of the business venture and its kick-​start, there were abundant funding opportunities in the 2010s in Norway, together with an increased awareness of policy and society for digital platforms. Diversification among potential customer target groups was recognised by the four sharing-​economy entrepreneurs as a must. However, while C, for example, started with local-​regional customers as a first step, the other three entrepreneurs (A, B, D) targeted national and even international customers from the start. The Business Model and Its Digital Platform The business models identified with the four sharing-​ economy entrepreneurs are different but show similarities. The business model that the entrepreneur behind business venture C defines: C is not a marketplace like Uber or Airbnb … it is actually a collaboration tool for local governments focusing on making it easy to mobilise idle resources for important welfare tasks. seems different from what the car-​sharing platform A summarises as follows: We are a two-​sided platform where we let the ones that have a car to rent it out to people in need of a car. And the business model is that, as a platform, we are sitting right in the middle of the two parties. To describe these business models more closely, the financial structure and customer value proposition are two important components from the literature (Acquier et al., 2019). As to the financial issue, the four sharing-​ economy entrepreneurs express that they value the fact that a platform-​ based, digital business model runs at low costs. Only with case D, high costs are incurring due to the recruitment of IT experts to program and establish the platform. All entrepreneurs operate on a fixed fee, paid by the customers, as their main revenue stream. Hence, they are, indeed, dependent on the generation of network effects. Notably entrepreneurs A and C, however, see themselves and their business model as an orchestrator based on the platform that connects the supply of the service provided with the customers. For the customer value, all entrepreneurs acknowledge the importance of placing customer value at the centre of their business model and using the platform to generate customer value, which seems as a unifying characteristic for them. Apart from this, the technological side with the platform is another key element of the business models investigated. All four entrepreneurs

52

Regional Sharing-Economy Entrepreneurs  25 have programmed the platforms themselves by employing IT software engineers, either with their integration in the founding/​management team (A and C) or buying their expertise externally in for project work (B and D). None of the entrepreneurs interviewed uses pre-​programmed platforms, and therefore, the platform itself adds significant value to the business model. To prevent them from being stuck into a lack of such effects, entrepreneurs B and C have established a business model that does not only operate as a platform orchestrator between supply and demand side, but also sells the entire platform-​based business model to corporate customers. In the case of B, the entrepreneur actively develops the market by selling the platform to banks through a licencing model such that the banks buy in their programmed platform for crowdfunding. The same model applies to entrepreneur C with municipalities. This is a smart way for the entrepreneurs to create greater revenue and secure the firm growth envisaged. The technology is furthermore important because the entrepreneurs, who are no IT programmers and software developers, learn about the platform, its usage and the customer value it adds to the other elements of the business model. This, in turn, enables them to develop it further. For instance, A started with a limited functionality that was gradually extended. However, it may happen that the technology use, which is based upon the platform, is limited by regulation and laws, as the entrepreneur behind D acknowledges: Due to the introduction of strict data protection legislation by the European Union, they could no longer exploit the personal customer profiles to customise and develop the business model. The Regional-​National-​Global Scales for the Sharing-​Economy Entrepreneurs All four entrepreneurs started regionally, mostly in the capital city of Oslo in Norway. However, their business development paths evolved differently. For D, a lack of scalability and committed supporters (such as colleagues in the founding team, collaborators) led to their failure of the sharing-​economy venture after some time, and the platform was put on ice. Quite differently, B incrementally developed into a national crowdfunding player that, however, remained limited to the Norwegian market. As the interviewee stresses, to finance international expansion, they would need an English website and extended functionality with more internationally accepted payment methods. Both A and C have specific expansion plans abroad. The entrepreneur behind C is applying for international grants to start pilot projects in several EU countries after having already expanded to neighbouring Sweden. They are applying a step-​by-​step approach to achieve this international market penetration. A has been benefitting from an investment by an U.S. based car-​sharing company that bought shares of the company, which allows them to

62

26  Birgit Leick et al. Table 1.1 The four sharing-​economy entrepreneurs and their business models –​overview Case

Entrepreneurship Motivation

Business venture Relationships

Start period

Funding

Customers

A

•  Opportunity-​ •  Professional •   Local start-​up No funding driven relationships •  Inspiration for through •  Intrinsic and •  Prior sharing-​ start-​up from public extrinsic economy other sharing-​ sources manager economy companies •  Better use of idle resources served as the core idea for business idea and customer value

Customer diversification acknowledged as goal

B

•  Opportunity-​ •  Personal and •  National National driven professional start-​up funding •  Intrinsic and relationships •  Need for extrinsic •  Charity-​ funding in the committed start-​up period personality in society

•  Customer diversification acknowledged as goal •  Mix of local, regional and international customers needed

C

•  Opportunity-​ •  Professional •  National International •  Customer driven relationships start-​up funding diversification •  Intrinsic and •  Serial •  Inspiration for acknowledged extrinsic entrepreneur start-​up from as goal other sharing-​ •  Local customers economy in the beginning companies •  Mix of local, •  Need for regional and funding international acknowledged customers in the start-​ needed up period •  Better use of idle resources served as the core idea for business idea and customer value

72

Regional Sharing-Economy Entrepreneurs  27

Business model Financial structure

Digital platform Customer value

Technology

Future-​related approach IT experts

Geographical expansion-​ internationalisation

•  Sharing-​ •  Easy handling •  Platform Entrepreneur Expansion and economy of the orchestrates learns internationalisation platform as a platform as between about the speeded up through cost-​efficient customer value supply platform foreign direct solution •  Trust as an and demand through investment •  Fixed important •   Peer-​to-​peer experts (%) revenue customer value platform is knowledge based on •  Services to an important acquired transactions customers element of externally over the designed the product/​ platform according to service •  Platform inspiration from offered used to other platforms •  Platforms orchestrate allows supply and access for all demand customers, irrespective of their location Fixed •  Easy handling Peer-​to-​peer Entrepreneur •  Incremental, stepwise (%) revenue of the platform is learns expansion and based on platform as an important about the internationalisation transactions customer value element of platform •  Bottlenecks (language over the •  Trust as an the product/​ through barriers) and resource platform important service experts (human resources customer value offered knowledge and financial capital) •  Platform as a acquired scarcity as barriers to tool to create externally quicker expansion customer value •  Fixed •  Easy handling of •  Platform Entrepreneur •  Incremental, stepwise (%) revenue the platform as orchestrates learns expansion and based on customer value between about the internationalisation transactions •  Services to supply platform •  Priority on market over the customers and demand through penetration and platform designed •   Peer-​to-​peer experts expansion based •  Platform according to platform is knowledge upon existing used to inspiration from an important acquired platform orchestrate other platforms element of externally •  Expansion secured supply and •  Platform as a the product/​ through funding demand tool to create service customer value offered •  Platforms allows access for all customers, irrespective of their location

82

28  Birgit Leick et al. Table 1.1 Cont. Case

Entrepreneurship Motivation

D

Business venture Relationships

Start period

Funding

•   Opportunity-​ •  Professional •   Local start-​up National and necessity-​ relationships •  Inspiration for funding driven •  Serial start-​up from •  Intrinsic and entrepreneur other sharing-​ extrinsic economy companies

Customers

•  Customer diversification as goal •  Local customers in the beginning •  Mix of local, regional and international customers needed

perform further investments and speed up their international expansion as well as the penetration of the Norwegian market.

Discussion The kick-​start of the business ventures was in all four cases characterised by the ideas of the founding persons, on the one hand, and the available resources, including relationships and funding, on the other hand. Moreover, we find both necessity-​and opportunity-​driven entrepreneurial motivations, backed by a mix of extrinsic (market oriented) and intrinsic intentions (environmental and social goals) with regional sharing-​ economy business ventures. This is supported by the personality of the founders, who bring along a vision about introducing specific sharing-​ economy business models they get inspired with to the Norwegian market or create a platform that suits the specific national market. To this aim, the sharing-​economy entrepreneurs both use and develop the platforms as a tool to establish and expand their business. The technology and software in a peer-​to-​peer digital environment constitutes a unique selling point for their expansion, irrespective of the geographical scale, because it offers significant customer value and, in some cases, additionally serves as an independent pillar to generate a stable revenue stream. A comparison between these business models reveals that a certain level of professionalisation after the start-​ up period and in the later stages of their business development, when expansion and internationalisation considerations become more important, is a crucial pre-​requisite for a regional sharing-​economy entrepreneur to achieve scalability, avoid common pitfalls such as a lack of network effects, and manage the expansion to other geographical markets, either incrementally due to resource limitations, or faster through investments. These components are, indeed,

92

Regional Sharing-Economy Entrepreneurs  29

Business model Financial structure

Digital platform Customer value

Technology

Future-​related approach IT experts

Geographical expansion-​ internationalisation

•  High costs •  Easy handling Platforms High costs Local market due to of the allows of hiring penetration (big cities recruitment platform as access for all experts to with critical mass of experts to customer value customers, provide of people interested program the •  Services to irrespective knowledge in meal-​sharing) platform customers of their about the prioritised over other •  Fixed designed location platform expansion (%) revenue according to based on inspiration from transactions other platforms over the platform

necessary to benefit from the positive network effects and safeguard the viability of the business model. Hence, the case analysis illustrates that there exists a variety of business models with regional sharing-​economy entrepreneurs (Table 1.1) with some striking similarities (for instance, about the motivation and intentions of entrepreneurs) along with important dissimilarities in the specific ingredients of the business model and the entrepreneurs’ expansion plans.

Conclusions and Managerial Implications This chapter provides an initial and exploratory study into regional sharing-​ economy entrepreneurs and the diversity of their business models. It is motivated by an evident gap in the literature on this aspect of the sharing economy and entrepreneurship. As an overarching finding, we conclude that the four cases represent different variants of regional sharing-​ economy entrepreneurs with complementarities between their business models. These complementarities, in turn, create the diversity of regional entrepreneurship in the platform-​based sharing economy, which echoes Muñoz and Cohen (2017, p. 30) about that ‘sharing economy business models are grey and not black and white’. With an exploratory empirical case study, the chapter contributes to a better understanding of the complexity of sharing-​ economy entrepreneurs, notably on the regional and national level. Furthermore, the empirical study illustrated that the platform itself adds significant value to the business model of digital entrepreneurs. Hence, the internet-​ of-​ things (IoT)-​and the platform-​ based sharing economy has far-​reaching managerial implications beyond what has been presented here. In most entrepreneurial companies, the current state of IoT and peer-​to-​peer platform development/​usage is at a very low stage

03

30  Birgit Leick et al. and the internet and other technologies are primarily used to transfer data to and from each sector’s cloud service. Consequently, the full potential of the IoT era has not yet materialised, so the future opportunities in internet-​related industries are unlimited. As an example of this, two entrepreneurs in the case study saw themselves as platform owners and orchestrators of the customers and the suppliers. As a platform owner, they gain more knowledge about customers’ preferences and behaviour, and they can personalise the offer to specific customers. This will motivate to stick with the platform because leaving the platform in favour of another platform would also mean leaving the value that the platform can create to the customer though learning effects over time (Hollensen et al., 2020). As a first managerial implication, one way for the platform owner to increase switching costs is to make the platform incompatible with rival platforms. Hence, the level of compatibility with competitive platforms is a strategic choice, sometimes desirable and sometimes undesirable from the platform owner’s perspective (Tiwana, 2014). However, it might be a self-​reinforcing process, providing extra benefits and value: More attractive customers make it more attractive for suppliers to enter the platform and offer their digital services to the customers through the platform. If the entrepreneurs use the platform to expand their business from a regional to an international level, it could be expected that more customers and suppliers will be involved on the platform, which needs more coordination and implies an increasing ‘complexity’. Consequently, a higher level of orchestration from the entrepreneur is needed for the coordination of the different stakeholders’ contributions to value creation. As a second managerial implication, a way to compensate for high complexity is by setting up specific requirements for the contribution to the platform, and only those that will fulfil the specific requirements for the solution will be chosen as a kind of ‘pick-​and-​choose’ selection strategy with relatively low transaction costs (Hollensen et al., 2020). Platform orchestration with sharing-​economy entrepreneurs can be seen as an important aspect of platform capabilities, where the entrepreneur (orchestrator) must take advantage of the external resources and not only focus on own resource ownership. Apte and Davis (2019) stated that the scalability of the business model is a critical task for the sharing-​economy entrepreneurs. Further research is needed to understand how companies extend their existing business model, introduce additional business models and/​or replace elements of the existing business model (Ramdani et al., 2019). The entrepreneurs need to be aware of the necessity of developing the business model in parallel with the expansion of their business from both an early stage period of the start-​up to the later stages of enterprise development, firm growth and the expansion of the business from a regional to an international level. From a marketing perspective, a platform-​based business model

13

Regional Sharing-Economy Entrepreneurs  31 may enable entrepreneurs to balance off potential barriers to market penetration when managing the platform as a key resource.

Acknowledgement This project benefitted from funding opportunities provided by the Research group ‘Business Development and Governance’ of Østfold University College, Norway, during 2019. The research group was established in December 2017 by Birgit Leick and Mehtap Aldogan Eklund, and between 2018 and 2019, they were leaders of the group.

References Acquier, A, & Carbone, V 2018, ‘Sharing economy and social innovation’ in Davidson, N.M., Finck, M. and Infranca, J.J. (eds.) The Cambridge Handbook of the law of the sharing economy. Cambridge: Cambridge University Press, pp. 51–​64. Acquier, A, Carbone, V & Massé, D 2019, ‘How to create value(s) in the sharing economy: Business models, scalability, and sustainability’, Technology Innovation Management Review, 9(2), pp. 5–​24. Apte, U M, & Davis, M M 2019, ‘Sharing economy services: Business model generation’, California Management Review, 61(2), pp. 104–​131. Assadi, D 2020, ‘What is a P2P business model?’ in Khosrow-​Pour, M. (ed.) Encyclopedia of organizational knowledge, administration and technologies. Hershey: IGI Global, pp. 758–​774. Boeije, H 2009, Analysis in qualitative research. Thousand Oaks: Sage. Cohen, B, & Kietzmann, J 2014, ‘Ride on! Mobility business models for the sharing economy’, Organization & Environment, 27(3), pp. 279–​296. Davidsson, P 2016, Researching entrepreneurship. Heidelberg: Springer. Dey, I 2003, Qualitative data analysis: A user friendly guide for social scientists. London: Routledge. Eisenhardt, K M, & Graebner, M E 2007, ‘Theory Building from cases: opportunities and challenges’, The Academy of Management Journal, 50(1), pp. 25–​32. Eisenmann, T, Parker, G, & van Alstyne, M 2006, ‘Strategies for two-​sided markets’, Harvard Business Review, 84(10), pp. 92–​101. Feldman, M P 2001, ‘The entrepreneurial event revisited: Firm formation in a regional context’, Industrial and Corporate Change, 10(4), pp. 861–​891. Giacomin, O., Janssen, F, Guyot, J L, & Lohest, O 2011, Opportunity and/​or necessity entrepreneurship? The impact of the socio-​economic characteristics of entrepreneurs. München: University München. Grèzes, V, Girod Lehmann, B, Schnyder, M, & Perruchoud, A 2016, ‘A process for co-​creating shared value with the crowd: Tourism case studies from a regional innovation system in Western Switzerland’, Technology Innovation Management Review, 6(11), pp. 32–​39. Gyimóthy, S, & Meged, J W 2018, ‘The Camøno: A communitarian walking trail in the sharing economy’, Tourism Planning & Development, 15(5), pp. 496–​515.

23

32  Birgit Leick et al. Hollensen, S, Eskerod, P, & Dyhr Ulrich, A M 2020, ‘Relationship building in IoT platform models. The case of the Danfoss Group’, Journal of Business Models, 8(2), pp. 73–​91. Holzweber, M, Mattsson, J, & Standing, J 2015, ‘Entrepreneurial business development through building tribes’, Journal of Strategic Marketing, 23(7), pp. 563–​578. Hull, C E., Hung, C Y T, Hair, N, Perotti, V, & Demartino, R 2007, ‘Taking advantage of digital opportunities: A typology of digital entrepreneurship’ International Journal of Networking and Virtual Organisations, 4(3), pp. 290–​303. Kathan, W, Matzler, K, & Veider, V 2015, ‘The sharing economy: Your business model’s friend or foe?’ Business Horizons, 59(6), pp. 663–​672. Kraus, S, Palmer, C, Kailer, N, Kallinger, F L, & Spitzer, J 2019, ‘Digital entrepreneurship’, International Journal of Entrepreneurial Behavior & Research, 25(2), pp. 353–​375. Kumar, V, Lahiri, A, & Dogan, O B 2018, ‘A strategic framework for a profitable business model in the sharing economy’, Industrial Marketing Management, 69, pp. 147–​160. Monaghan, S, Tippmann, E, & Coviello, N 2020, ‘Born digitals: Thoughts on their internationalization and a research agenda’, Journal of International Business Studies, 51, pp. 11–​22. Muñoz, B, & Cohen, B 2017, ‘Mapping out the sharing economy: A configurational approach to sharing business models’, Technological Forecasting and Social Change, 125, pp. 21–​37. Parker, G G, Van Alstyne, M W, & Choudary, S P 2016, Platform revolution. How networked markets are transforming the economy and how to make them work for you. New York: Norton. Paulauskaite, D, Powell, R, Coca-​ Stefaniak, J A, & Morrison, A M 2017, ‘Living like a local: Authentic tourism experiences and the sharing economy’, International Journal of Tourism Research, 19, pp. 619–​628. Pedersen, E R G, & Netter, S 2015, ‘Collaborative consumption: business model opportunities and barriers for fashion libraries’, Journal of Fashion Marketing and Management, 19(3), pp. 258–​273. Plehn-​Dujowich, J 2010, ‘A theory of serial entrepreneurship’, Small Business Economics, 35, pp. 377–​398. Plewnia, F, & Guenther, E 2018, ‘Mapping the sharing economy for sustainability research’, Management Decision, 56(3), pp. 570–​583. Ramdani, B, Binsaif, A, & Boukrami, E 2019, ‘Business model innovation: A review and research agenda’, New England Journal of Entrepreneurship, 22(2), pp. 89–​108. Ravenelle, A J 2017, ‘Sharing economy workers: selling, not sharing’, Cambridge Journal of Regions, Economy and Society, 10(2), pp. 281–​295. Richter, C, Kraus, S, Brem, A, Durst, S, & Giselbrecht, C 2017, ‘Digital entrepreneurship: Innovative business models for the sharing economy’, Creativity and Innovation Management, 26(3), pp. 300–​310. Richter, C, Kraus, S, & Syrjä, P 2015, ‘The shareconomy as a precursor for digital entrepreneurship business models’, International Journal of Entrepreneurship and Small Business, 25(1), pp. 18–​25. Saldaña, J 2016, The coding manual for qualitative researchers. London: Sage.

3

Regional Sharing-Economy Entrepreneurs  33 Schor, J B, & Fitzmaurice, C J 2015, ‘Collaborating and connecting: the emergence of the sharing economy’ in Reisch, L.A. and Thøgersen, J. (eds.) Handbook of research on sustainable consumption. Cheltenham: Edward Elgar, pp. 410–​425. Siggelkow, N 2000, ‘Persuasion with case studies’, The Academy of Management Journal, 50(1), pp. 20–​24. Standing, C, & Mattson, J 2018, ‘ “Fake it until you make it”: Business model conceptualization in digital entrepreneurship’, Journal of Strategic Marketing, 26(5), pp. 385–​399. Strauss, A, & Corbin, J 1998, Basics of qualitative research: Techniques and procedures for developing grounded theory (2nd ed.). Thousand Oaks: Sage. Täuscher, K, & Laudien, S M 2018, ‘Understanding platform business models: A mixed methods study of marketplaces’, European Management Journal, 36(3), pp. 319–​329. Tiwana, A 2014, Platform ecosystems –​Aligning architecture, governance and strategy. Waltham: Elsevier, Morgan Kaufmann. Vadana, I I, Torkkeli, L, Kuivalainen, O, & Saarenketo, S 2019, ‘The internationalization of born-​digital companies’ in Chidlow, A., Ghauri, P.N., Buckley, T., Gardner, E.C., Qamar, A. and Pickering, E. (eds.) The changing strategies of international business. How MNEs manage in a changing commercial and political landscape. Cham: Palgrave MacMillan, pp. 199–​220. van der Zwan, P, Thurik, R, Verheul, I, & Hessels, J 2016, ‘Factors influencing the entrepreneurial engagement of opportunity and necessity entrepreneurs’, Eurasian Business Review, 6, pp. 273–​295. Wang, D, & Nicolau, J 2017, ‘Price determinants of sharing economy based accommodation rental: A study of listings from 33 cities on Airbnb.com.’, International Journal of Hospitality Management, 62, pp. 120–​131. Webster, N A, & Zhang, Q 2020, ‘Careers delivered from the kitchen? Immigrant women small-​scale entrepreneurs working in the growing Nordic platform economy’, NORA –​Nordic Journal of Feminist and Gender Research, 28(2), pp. 113–​125. Wentrup, R, & Ström, P 2019, ‘Service markets: Digital business models and international expansion’ in Aagaard, A. (ed.) Digital business models: Driving transformation and innovation. Cham: Palgrave MacMillan, pp. 169–​199.

43

2  Digital Subsistence Entrepreneurs in Developed Countries Opportunities and Limitations of Peer-​to-​Peer Platforms Eva Delacroix, Florence Benoit-​Moreau, and Béatrice Parguel

Introduction Digital entrepreneurs are generally described as young, urban and well-​ trained entrepreneurs, displaying influential social networks and a combination of up-​ to-​ date technical and business capacities (Arvidsson, 2019). Far from this stereotyped portrait, a new type of entrepreneur has recently appeared in developed countries: the digital subsistence entrepreneur. Bridging the gap between digital and subsistence entrepreneurs may appear a little daring as the latter generally trigger the contrasting image of poor micro-​entrepreneurs selling rice cakes in India. Yet, by encouraging informal digital markets that closely resemble the livelihood markets described in developing countries (Viswanathan et al., 2010; Viswanathan et al., 2012), peer-​to-​peer (P2P) platforms have become places where anyone can find subsistence opportunities. Indeed, the promoters of the P2P economy praise its ability to empower the precarious by offering self-​employment opportunities. In contrast, its detractors refer to it as the “gig economy” to highlight exploitation, poor social security benefits and no real efficacy as a solution to exclusion. Considering this heated debate, this chapter explores the potential of P2P platforms to cope with poverty in developed countries. This question is of the utmost importance given the growing number of people currently facing financial hardship in developed countries (e.g. students, unemployed, undocumented migrants), especially in a Covid-​19 crisis period. More precisely, this chapter investigates how P2P platforms digitally enable subsistence entrepreneurs and raises questions about the benefits and limitations of P2P platforms in terms of helping them cope with poverty. As such, it describes a new figure of the sharing economy: the digital subsistence entrepreneur. To fill the gap in the literature, the first section documents how P2P platforms are allowing subsistence entrepreneurs to reappear in developed countries. The second and third sections then propose a balanced review of their benefits for deprived populations, but also of the criticism they

53

Digital Subsistence Entrepreneurs  35 fuel. To do this, we mainly rely on a literature review on subsistence entrepreneurship in the sharing economy, based on a search using self-​ employment /​micro-​ entrepreneurship /​subsistence entrepreneurship X sharing /​collaborative /​peer-​to-​peer /​on-​demand /​gig economy as keywords. We also rely on qualitative field data collected among women living below the poverty threshold in France, who have developed a business on Facebook buy-​and-​sell groups and/​or have themselves bought items from other impoverished female micro-​entrepreneurs (see Delacroix et al., 2019).1 Additionally, we gained insight from unpublished qualitative data collected from African and Syrian refugees living in France and Belgium.2 To go further and reconcile opposing views about the potential of P2P platforms to digitally enable micro-​entrepreneurs, the discussion section finally distinguishes between different types of P2P platforms and concludes with recommendations for public policy makers.

The Resurgence of Subsistence Entrepreneurship in Developed Countries A Historical Perspective Running a small business was for a long time part of the survival strategies used by impoverished families between the 17th and 19th centuries in Europe. It was very easy for anyone to sell all kinds of items, from farming, hunting and fishing products to small crafts and services (Fontaine, 2014). However, beginning in the 18th century, the poorer members of society gradually became excluded from most of the markets to which they previously had access as vendors. The introduction of safety and hygiene standards for the trade of second-​hand goods and foodstuffs, combined with urban restructuring (e.g. the disappearance in England of open-​air markets, which were replaced by covered markets where stalls now had to be rented), the rise in taxation (e.g. the introduction of a business tax in France in 1791) and competition from formal traders, steadily chased away the weakest (e.g. women and migrants) and poorest members of society. Those unable to come up with the necessary increase in capital to remain in business and meet the new standards were squeezed out. Their eviction from institutionalized market spaces did not however prevent the poor from continuing to engage in small-​scale lucrative activities within their neighbourhood communities. In industrial Europe, working-​class housing estates placed great importance on domestic links and unneighbourly relationships. As described by Hoggart (1957), in England’s working-​class neighbourhoods, almost every street displayed small ads pinned to a noticeboard designed for that purpose, allowing residents to engage in all kinds of transactions. During the 20th century, several factors contributed to the disappearance of the informal economy. The urban planning policies which, from the 1950s to the 1970s, led to the relocation of the working classes in

63

36  Eva Delacroix et al. large housing units replaced unneighbourly relationships with anonymity. Residents of impoverished areas socialize very little with one another and do not develop the social networks that would be necessary for the survival of their “home-​based businesses” (Saatcioglu & Corus, 2014). With the erosion of social links in poorer areas, the informal economic activities from which these areas once benefited are left impoverished. Europe’s small-​ scale street sellers have clearly been unsuccessful in having their right to work recognized. After disappearing from the urban landscape, effectively marking the destruction of Europe’s subsistence markets in the 20th century (Bennholdt-​Thomsen & Mies, 1999), subsistence entrepreneurs have recently re-​emerged along with the rise in self-​employment. Self-​employment in developed countries has increased significantly in the last decade. The ratio of self-​employed to employed workers changed from 1:8.3 in 1997 to 1:6 in 2019 in the U.S. (Fortune, 2018). According to the McKinsey Global Institute (Manyika et al., 2016), in 2016, 20%–​ 30% of the European and U.S. working-​age population was engaged in some form of self-​employed activities, whether a primary versus supplemental source of income or chosen versus accepted out of necessity. Among those engaged in self-​employment out of necessity, the “reluctant” (14%) make it their primary source of income as they cannot find any proper job, while the “financially strapped” (16%) aim to earn extra money to make ends meet. With the 2008 economic crisis, P2P platforms largely contributed to this tremendous increase in self-​ employment in developed countries in the last decade, especially amongst deprived populations. By connecting people, P2P platforms create a range of opportunities for giving, lending, bartering and selling goods and services, making it possible for anyone to set up a small business. As such, they provide the poorest members of society with opportunities to re-​appropriate the market. They allow users to earn money in a range of ways, such as performing various types of online tasks, driving for ride-​hailing services, cleaning someone’s home, sharing their possessions with others or selling their used goods or personal creations. Ride-​hailing platforms like Uber or Lyft benefit people lacking other job opportunities or in need of supplementary income (Rosenblat, 2016). We also observe that Facebook buy-​and-​sell groups allow people at the margins to start their own micro-​entrepreneurial activity. P2P platforms gave birth to digital subsistence entrepreneurs, a new type of entrepreneur similar to micro-​ entrepreneurs or “necessity-​ driven” entrepreneurs, i.e. those that are pushed into starting a business due to unfavourable circumstances (e.g. losing a job, juggling work with family responsibilities, living in poverty) (Viswanathan et al., 2010; Viswanathan et al., 2014). Subsistence entrepreneurship dynamics have been well described for developing countries, where it represents an active and visible part of the economy (e.g. Mai et al., 2014; Viswanathan et al., 2014), and where billions of poor people

73

Digital Subsistence Entrepreneurs  37 are entrepreneurs (Khanna, 2007).3 However, little is known about subsistence entrepreneurship in more developed countries today. How Did P2P Platforms Allow Subsistence Entrepreneurs to Reappear in Developed Countries? P2P platforms have restored the conditions conducive to the re-​emergence of subsistence markets in developed countries in different ways. First, they reduce costs and mitigate some barriers to entry that especially challenge micro-​entrepreneurship (Martin, 2004; Millman et al., 2009; Morris et al., 2020). Among these barriers are limited social networks and access to solvent clients, but also lack of money, lack of time from taking on multiple jobs or childcare and lack of business literacy regarding business development, pricing, marketing or bookkeeping. P2P platforms also mitigate institutional and legal barriers as they are governed either by informal rules inspired by non-​market logics, or by the platforms themselves, which are accountable for legal or fiscal matters (Laurell & Sandström, 2017). Moreover, by allowing supply and demand to meet at zero marginal cost (Rifkin, 2014) and achieve critical mass (Botsman & Rogers, 2011) with minimal intermediary costs, P2P platforms create a market for skills and services undervalued in the formal job market, or the existence of very small niche markets that would otherwise be unprofitable (e.g. offering to fix a broken toilet). Consequently, these platforms currently host millions of entrepreneurial ventures (Chandna & Salimath, 2018) and specifically benefit deprived people who lack sufficient financial, technical, relational or institutional resources to start a more traditional business. Second, by creating the possibility of digitally intermediated exchanges in horizontal social relationships (Barnes & Mattsson, 2016), P2P platforms underpin the rebirth of subsistence entrepreneurship because they recreate three forms of social capital (Delacroix et al., 2019). From a structural perspective, they often operate on a local basis, providing entrepreneurs with the resources of geographical proximity. From a cognitive perspective, they fuel a sense of belonging to the same community and the perception of common expectations, norms and obligations. From a relational perspective, they display specific features to manage trust such as scores or word-​of-​mouth recommendations. Restoring these three forms of social capital, P2P platforms facilitate social interactions, make transactions more productive and provide deprived populations with an access to the market. As such, social capital is as critical to subsistence entrepreneurship in developed countries as it is in developing ones (Viswanathan et al., 2010; Viswanathan et al., 2014). In sum, P2P platforms relax some of the constraints micro-​entrepreneurs face when starting a business, especially if deprived, explaining the emergence of digital subsistence entrepreneurs in developed countries. In the next section, we explore the benefits that these new entrepreneurs can derive from their micro-​entrepreneurial experience.

83

38  Eva Delacroix et al.

Benefits of P2P Platforms for Subsistence Entrepreneurs As research on subsistence entrepreneurship has focused on developing countries (Bruton et al., 2013), the potential for poor people from developed countries to create their own jobs has been underestimated in most discussions about poverty (Morris et al., 2020). Still, entrepreneurship has been shown in recent field studies to reduce poverty in developed countries. In a ground study conducted over a six-​year period in the U.S., Slivinski (2015) shows that higher rates of entrepreneurship among the poor are associated with the largest reductions in poverty. Considering over 400 individuals running micro-​business for five years in the U.S., Clark et al. (1999) also show that 72% of micro-​entrepreneurs increased their household income over the period, with 53% of them moving out of poverty. Seen in this light, the multiple sources of micro-​entrepreneurship that have accompanied the development of P2P platforms provide new opportunities for the poor. Observing low-​income U.S. residents and communities in 2009, Thompson Jackson had already noted that “increasingly those at the margins of our economy and society are seeing digital entrepreneurship as a means of improving their livelihoods” (2009: 198). In this section, we focus on the specific opportunities derived from the emergence of P2P platforms. Economic Benefits In a context where working opportunities are scarce, deprived people are often left with part-​time, low-​paid jobs with fragmented hours that are “not worth it” from an economic point of view, especially if the costs of transportation and childcare are taken into consideration. Rosenblat (2016) shows that a significant proportion of Uber and Lyft drivers, especially among the least educated, had no other economic opportunity in their geographic area. We also met low-​income mothers who had no other choice but to create small businesses on the internet, selling second-​hand items, arts-​and-​crafts or services such as gardening or sewing. The primary benefit derived from independent work on digital P2P platforms is therefore economic in nature. Such earnings represent a secondary income for 56% of gig workers (Manyika et al. 2016). We observed that this income is often used to improve the family’s quality of life with purchases like better quality food, a vacation or day trips for the children, or items that facilitate social integration (e.g. clothes) or improve health (e.g. glasses). Furthermore, the P2P economy promotes individual economic empowerment, as it constitutes a shift from capitalism, where access is more important than possession (Botsman & Rogers, 2011). It allows anyone to monetize idle assets, and it makes things more affordable for people on lower incomes. This suggests it also allows a fairer and more sustainable redistribution of resources by reducing the cost of accessing products and services.

93

Digital Subsistence Entrepreneurs  39 Relational and Symbolic Benefits Beyond economic benefits, relational and symbolic benefits appear to be important motivations among digital subsistence entrepreneurs. Regarding relational benefits, Rosenblat (2016) observes that driving is a pleasant activity for a significant proportion of Uber and Lyft drivers, especially for the elderly and retired, because they can converse with clients. Meeting new people is also a positive consequence of small commercial activities on Facebook buy-​and-​sell groups (Delacroix et al., 2019): the relationships between sellers and buyers can remain virtual, but when transactions require a physical meeting, they sometimes turn into long-​ lasting real-​life friendships. On P2P platforms, entrepreneurs can socialize and visualize themselves as belonging to a real community (Lemaitre & de Barnier, 2015). Deprived populations are often poorly socialized, and the relational benefits they derive from their small businesses contribute to their psychological well-​being. This might be especially relevant to an ageing population facing both loneliness and low pensions. Running a small business also demonstrates one’s capacities and enhances self-​confidence for deprived people, often damned by a lack of academic success. As an illustration, deprived mothers operating on Facebook buy-​and-​sell groups value the recognition of skills unrelated to motherhood, often for the first time in their life (Delacroix et al., 2019): the positive comments received on Facebook reinforce their self-​ confidence and make them feel they are worth something. Ultimately, running a small business improves self-​esteem, which, in turn, gives subsistence entrepreneurs an opportunity to enhance roles in the household, especially among women, who turn out to be more than “just” mothers. Increase in Life Satisfaction Earning one’s own money and demonstrating one’s capacity to create a business is a source of satisfaction in itself. Beyond this, digital independent work allows more flexibility in choosing when and where to work than any other employment opportunities for deprived people. Icham, a Syrian refugee, quit his job as a waiter in a restaurant to become a driver for UberEats, the only job that, according to him, gives him enough flexibility to take intensive French lessons. For mothers with small children, self-​ employment is motivated by the ability to work from home with a flexible schedule (Jeon & Ostrovsky, 2019). We met Cécile, who left her job at a chip shop where she worked from 11am to 2pm, then 5pm to 11pm including weekends, to earn the minimum wage. As well as the low wage, this inconvenient schedule was incompatible with her situation as a single mother, and Cécile finally decided to live on welfare and earn money from her small-​scale activities in the informal market. Beaumont (2016) also reports that the sharing economy

04

40  Eva Delacroix et al. has boosted female employment in Poland, where the employment rate among women was below the European average. It should also be noted that paid employment for deprived people usually takes place in hierarchical organizations where employees need to obey the orders of their superiors. As such, gaining control over one’s life increases independent workers’ life satisfaction (Boeri et al., 2020), which is perhaps even more true for millennials entering the workplace, as they reject the traditional 9-​to-​5 job model. So self-​employed people are generally more satisfied with their lives than paid employees, to the point that self-​employment can even help overcome the low life satisfaction scores associated with low-​skilled, blue-​collar work (Hessels et al., 2018). Low-​skilled self-​employed workers are actually more likely than paid employees to consider their work meaningful and challenging, in contrast to unpleasant jobs, which are usually the only ones open to them (e.g. house cleaning, personal care for old people or night work). A Transition Status towards Entrepreneurship As explained above, P2P platforms give deprived people access to markets. This is the promise of Uber, which presents itself as a marketplace where independent drivers can find their clients. According to Sundararajan (2014: 5), these platforms are the “new engines for innovation by creating micro-​ entrepreneurship opportunities that empower individuals previously constrained by employment at traditional corporations”. They can be a springboard for more sustainable businesses as they make it possible for anyone to start a small business at very low expense. For example, Etsy allows small vendors to open an online store instantly and gives them access to a market where they can test their entrepreneurial ideas. We met Melinda, 32, a mother of two young children who started her clothing business on Facebook before developing it on another scale by becoming a street vendor at open-​air markets. Three years later, she has three employees and a good income. Managing a business on P2P platforms, whatever its future, increases commercial skills. We observed how poorly educated women develop marketplace skills while running their business. On Facebook, they can create a page for their business with a brand name and other features that make it look like a real store. They use advertising claims, promotional discounts and client relationship management techniques in a very professional way, and also adjust their production to expected sales (e.g. events such as Mothers’ Day). Juge et al. (2019) also point out that women operating on wardrobe sales P2P platforms develop all the professional skills usually found in a traditional business (e.g. purchasing, marketing/​ sales, finance/​accounting, information systems and logistics). Ultimately, by developing new marketplace skills and enhancing self-​ confidence, self-​employment can be the initial step towards a real entrepreneurial activity that goes onto be successful or a more interesting paid job for

14

Digital Subsistence Entrepreneurs  41 deprived people, though Boeri et al. (2020) consider this to be a limited phenomenon.

Limitations of P2P Platforms for Subsistence Entrepreneurs Criticisms of P2P platforms raise key questions about their ability to alleviate poverty and unemployment. Do P2P Platforms Really Improve Deprived People’s Lives or Exploit Them? P2P platforms portray themselves as providing opportunities for micro-​ entrepreneurs to run their own small business with minimal start-​up costs, but tenants of the opposite view claim that participants operating on some of these platforms are disempowered people, lacking the benefit of both entrepreneurship and traditional employment (Kuhn & Maleki, 2017). Most of them earn less than their peers in traditional work, are vulnerable to workplace abuse, have a heightened sense of job insecurity and experience stress (Davis, 2015; Friedman, 2014; Tran & Sokas, 2017). Many would like to have better working conditions: they admit a strong distaste for irregular and short-​notice scheduling (Mas & Pallais, 2017), express a strong demand for social protection and are willing to pay in order to get better insurance coverage (Boeri et al., 2020). Additionally, a significant proportion of them would prefer a stable working environment over the uncertainty of gig employment (Ahsan, 2020). Uber for instance does not follow regulations on workplace safety, minimum wage, or overtime, nor does it offer benefits such as healthcare or paid leave. Its drivers earn less money than 90% of their peers in traditional work (Mishel, 2018). Pursuing something more than just survival, a few P2P workers may develop a more lasting project, in which platforms can play a facilitating role. But the majority of people will never go on to expand their business beyond the few euros that allow them to improve their daily living conditions, and would gladly exchange these “improvised” activities for a long-​term salaried position compatible with the constraints of domestic life. Their activities are more about survival than any real entrepreneurial objectives. Do P2P Platforms Mitigate All Barriers Impeding Access to Entrepreneurship? As mentioned earlier, P2P platforms mitigate different obstacles to successful micro-​entrepreneurship: difficulties accessing the market, the lack of digital literacy, legal and fiscal knowledge and, above all, the lack of social capital. However, if we take a closer look at the barriers identified by Morris et al.(2020), we notice that many of them are significant. Financial resources remain scarce and impede even minimal investments

24

42  Eva Delacroix et al. such as tools or equipment. We met Isabelle, who had started a lucrative business of selling jewellery on Etsy but had to stop because she could no longer afford to invest in stock. A narrow skillset can also limit venture types and reduce opportunities to stand out from other micro-​ entrepreneurs within the same community. In the community of migrants from Mali, it is commonplace for women to run a business importing African fabrics, and for men to sell second-​hand computer equipment, and with so many people offering the same products, it is almost impossible to differentiate from each other and reach profitability. Other limitations include the lack of transportation to reach solvent clients living in wealthier neighbourhoods. P2P platforms alleviate part of the geographical barriers between providers and consumers, but not all of them when it is about physical services such as house cleaning or home improvements. Even if P2P platforms restore social capital and trust through evaluation or rating devices, deficits in literacy or understanding social codes are not magically solved and limit the strength of social ties. More interestingly, poor micro-​entrepreneurs lack entrepreneurial role models or mentors, guidance and direction when it comes to business decisions, making it difficult for them to set ambitions for their business even if it has true potential. Again, P2P platforms offer limited help as regards these obstacles. Are People Operating on P2P Platforms Real Entrepreneurs? Finally, the crucial question raised by the activities driven by P2P platforms is the following: can we consider them to constitute entrepreneurship? Are all forms of self-​employment entrepreneurship? Skrzek-​Lubasińska and Szaban (2019) provide the OECD’s definition of self-​employment: “a survival strategy for those who cannot find any other means of earning an income or as evidence of entrepreneurial spirit and a desire to be one’s own boss”. This definition echoes the dichotomy between necessity entrepreneurship and opportunity entrepreneurship. Does this imply a complete rift between the digital subsistence worker and the happy digital entrepreneur? Is there a possibility to switch from one to another to cope with poverty and exclusion? Is it a binary categorization or a continuum? This requires further consideration of what we mean by entrepreneurship. Autonomy characterizes entrepreneurship. However, certain platforms have complete control in defining the service and setting the timing and price, taking a significant commission on each job. For example, Uber sets its quality standards (e.g. type of car, minimum rating of 4.6 stars) and prices and scrutinizes each driver’s actions with algorithms. Thus, autonomy is an illusion since workers operate under surveillance and control: workers in the sharing economy, particularly those at the low end of the skilled spectrum, aren’t entrepreneurs in some grand and heroic

34

Digital Subsistence Entrepreneurs  43 sense, but are in fact vulnerable and marginalised workers who not only have to labor long hours for relatively low pay, but being independent contractors also have to take on the risk of work. (Ahsan 2020, p. 24) The lack of autonomy is reinforced when micro-​entrepreneurs are fully dependent on one specific platform instead of having the choice between several tasks via different platforms. Lyft, Uber and Deliveroo also retain total control over business relationships, with limited opportunities for drivers to leverage their client portfolio for future business opportunities. In contrast, buy-​and-​sell activities on Facebook or Etsy leave more room to build real and direct relationships and capitalize on them. Following Schumpeter’s view (1934), Skrzek-​Lubasińska and Szaban (2019) introduce another dimension to characterize entrepreneurship: the degree of innovativeness. Schumpeter distinguishes between two types of businesses: (1) innovative and (2) replicative, the former being associated with real entrepreneurship. Innovativeness can be found in the introduction of a new product or service, the opening of a new market for existing products or the application of new methods. In our field study involving deprived mothers, we met Sylvie, who came up with the idea of selling affordable home-​made take-​away meals for people going fishing on Sundays, or Patricia, a self-​made seamstress who makes customized cushions for caravans, a very popular vehicle among low-​income families. Innovativeness means differentiation and opportunities to create value, which, in turn, is the key to transforming a trial into a sustainable small business. Again, platforms such as Facebook, Etsy or Craigslist allow for more innovativeness in the way people frame their offer. On Facebook buy-​and-​sell groups, poor women particularly enjoy reflecting on and deciding how to present their offer, choosing as many pictures as they want, setting the prices and leaving no or little commission to the platform (Delacroix, Parguel & Benoît-​Moreau, 2019). Considering different criteria that define entrepreneurship in this way departs from a binary vision of opportunity versus necessity-​driven entrepreneurship and instead points to a continuum and thus a dynamic trajectory for the digital subsistence entrepreneur towards lasting entrepreneurship. In this respect, different types of platforms may lead to different contexts in which to develop autonomy and innovativeness.

Discussion As we have seen, in times of economic crisis micro-​entrepreneurship projects are sometimes the only available option to make a living, especially for low-​ skilled workers, and provide interesting relational and symbolic benefits beyond economic benefits. P2P platforms have recently enabled deprived people to engage in such projects on an unprecedented scale. This results in many developed countries that face structural

4

44  Eva Delacroix et al. unemployment problems for decades envisaging entrepreneurship as a means to alleviate the hardship of unemployed and financially constrained citizens. As Danson et al. (2020, in press) point out: “A key strategic economic development approach of successive UK governments, reflecting policies and practices in other countries at the EU level, has been to promote independent business or self-​employment where there is a lack of employment opportunities”. In a recent article, Morris et al. (2020) also examine entrepreneurship as a solution to poverty in developed countries. Considering how poverty conditions negatively impact venture creation, they propose a complete and supportive framework to overcome these challenges. From this perspective, governments might support public policy programs that provide specific assistance to digital subsistence entrepreneurs. However, such support might not be blind: the platform economy has now gained maturity. Digital entrepreneurship encompasses many different situations that are not always synonymous with emancipation and requires different approaches. Defining and Acknowledging the Heterogeneity of Digital Subsistence Entrepreneurs Though Delacroix et al. (2019) identified digital subsistence entrepreneurs as a new type of entrepreneur that has recently emerged in developed countries, they did not provide any proper definition. In the present chapter, and based on a distinction between different types of P2P platforms, we propose to fill this gap and define them as follows: poor individuals engaging in emancipating activities with the aim of exploiting the business opportunities made available by digital technologies. Contrary to Di Domenico et al.’s (2014) recommendation, this definition includes those who would not define themselves as “entrepreneurs”, a term not necessarily widely used among deprived populations. Furthermore, this definition does not consider the motivation for self-​employment, whether pull factors such as independence, satisfaction or flexibility, or push factors such as lack of a regular job (Skrzek-​Lubasińska & Szaban, 2019). However, this definition is in line with the common notion of individuals exploiting market opportunities through innovation, which has been generally recognized since the seminal work of Schumpeter (1934) on entrepreneurs. In this vein, we recommend a distinction between P2P platforms. Three types of platforms should be distinguished from one another in line with Frenken and Schor (2017). On-​demand platforms relate to P2P service provision, such as a ride, a handyman, a house cleaner or a cooked meal. Typical on-​demand platforms are Uber, Lyft or Task Rabbit. Most of the criticisms made against the P2P economy refer to such platforms, but as we have demonstrated, working on P2P platforms, even on-​demand ones, also comes with benefits for the deprived, who, in certain cases, would not have had other options. Sharing platforms result in “consumers granting each other temporary access to under-​utilized

54

Digital Subsistence Entrepreneurs  45 physical assets (‘idle capacity’), possibly for money” (Frenken & Schor, 2017, p. 5). Examples of goods shared are cars, homes and boats. People with less “idle capacity” derive less in absolute terms from the sharing economy than the most affluent consumers, but can still benefit from marginal earnings (for example, an old lady renting a room in her flat in order to make ends meet). Buy-​and-​sell platforms are platforms where goods are being exchanged for permanent access (e.g. Etsy, Craigslist, Facebook) and services are also sometimes proposed (e.g. cooking, nailing, gardening). Such platforms are mere intermediaries between sellers and buyers, do not impose prices or quality and only take a reasonable share of sales (e.g. 10% approximately on Etsy). We contend that some offerors operating on these P2P platforms can barely be labelled “entrepreneurs”, including those operating on on-​ demand platforms, who lack autonomy and do not capture the value being created, and those operating on sharing platforms, who simply monetize under-​utilized assets (e.g. an unused spare bedroom in their apartment, a ride they would have done anyway). On the contrary, those operating on buy-​and-​sell platforms can be called entrepreneurs since they can display both autonomy and innovativeness in relation to offers, prices, quality, client relationship management, visual presentation, etc. We advocate that such platforms deserve the attention of all actors engaged in poverty alleviation programs. Recommendations to Support Subsistence Digital Entrepreneurship on Buy-​and-​Sell Platforms Subsistence entrepreneurship on buy-​ and-​ sell platforms should be encouraged by public policy initiatives and social welfare programs because it empowers unemployed and financially constrained citizens. We discuss three challenges that need to be addressed in order to improve the creation and survival of these ventures. The main challenge for subsistence entrepreneurs is their lack of financial resources. The poor have difficulties accessing primary sources of start-​up money (personal savings, family and friends, debt financing and equity investments) (Morris et al., 2020). Their low credit score makes it almost impossible to obtain a loan from a financial institution or an angel investor. As mentioned by Morris et al. (2020), the solution rests in initiatives that facilitate the expansion of microcredit,4 crowdfunding5 and Rotating Savings Credit Associations (ROSCAs).6 However, since a significant part of their activity is informal, there is a strong reluctance from subsistence entrepreneurs to turn to institutional actors such as microcredit banks. As a matter of consequence, an overly punitive approach to this kind of “under-​the-​radar venture” would ultimately destroy the first manifestations of their entrepreneurial culture (Williams, 2009) and deter promising initiatives. Policy makers planning to tax the substantial revenue generated by P2P platforms must consider that such taxation

64

46  Eva Delacroix et al. could deter digital subsistence entrepreneurs for at least two reasons. First, these usually non-​taxable entrepreneurs may fear the burden of reporting the small amounts they derive from their sharing activities. Second, as declaring these amounts could carry the risk of receiving lower unemployment or other state benefits, they could give up their subsistence micro-​businesses. To avoid that, interesting options could include a reduced tax rate up to a specific threshold for informal earnings (e.g. 10% up to €5,100 in Belgium) or setting an income threshold below which informal earnings are explicitly tolerated (e.g. £1,000 for trading income, the same tax-​free allowance for property income in the U.K.). This would also make it possible to tax digital subsistence entrepreneurs differently from those operating on on-​demand platforms or from the wealthy entrepreneurs operating on sharing platforms. For example, those using Airbnb as a real estate business should pay regular taxes and not be allowed to engage in unfair competition with traditional players from the hospitality industry, whereas those occasionally sharing idle space in their home to make ends meet should enjoy certain advantages. Furthermore, a deduction at source would simplify taxation for both digital subsistence entrepreneurs and the tax authorities. The poor are excluded from the existing entrepreneurial ecosystems (incubators, coworking spaces, business angels, Fab Labs) and creating inclusive entrepreneurial ecosystems with supportive communities and infrastructure should be a priority. In the first place, rather than fighting subsistence entrepreneurs’ initiatives, the public authorities should adopt the right tools to identify and support the most promising small businesses. From this perspective, unemployment advisers may be relevant potential levers. They could help identify individual initiatives and offer subsistence entrepreneurs the chance to enrol in specific training programs to develop business literacy (e.g. business development, pricing, marketing, bookkeeping), along with technical, legal and fiscal knowledge. Public policy makers should also develop a support ecosystem providing the structures and legal mechanisms that can turn subsistence entrepreneurship into something more. This might include supporting specific ad hoc organizations, such as “do it yourself laboratories” that would not only provide technical skills but above all managerial skills and where successful entrepreneurs could mentor and help subsistence entrepreneurs in specific incubators offering resources and help. Role models and knowledge are important (Morris et al., 2020). Other ad hoc organizations would be needed to provide microcredit solutions or bank guarantees, along with dedicated tools (e.g. legal self-​employment status, toolbox to launch a micro-​business) or specific solutions to access storage spaces or means of transportation. In France, Kedge Business School recently launched an entrepreneurial school dedicated to deprived young people, in partnership with the public authorities, NGOs and economic stakeholders. Helping digital subsistence entrepreneurs access broader and more profitable markets deserves public policy attention. As developed

74

Digital Subsistence Entrepreneurs  47 previously, buy-​and-​sell platforms facilitate access to small markets in order to sell one’s products and services. However, several challenges remain and once a business has been launched, it must reach an economy of scale to be profitable. Public procurement could be a way to facilitate access to broader markets, especially at the local level. For example, subsistence entrepreneurs could be considered as providers of products, gifts or goods for local citizens for Christmas or in specific events. Recently some French municipalities ordered protective fabric against the coronavirus from local seamstresses to address the challenge of limited stocks. We interviewed one such seamstress who mentioned on Facebook both the satisfaction and pride she felt in having sewn 440 masks. Microfranchising is another way to develop and promote small businesses that the poor can afford to enter and operate. Microfranchising is an adaptation of the franchise business model that provides a replicable business-​in-​a-​box project by following mentoring, marketing and operational concepts. It reduces risk, and enables the microentrepreneur to access established networks and markets (Jones Christensen et al., 2010). It is also an alternative to on-​demand platforms, where the parent organization is a social company or an NGO, and where profits are fairly redistributed. The French microcredit company ADIE has created several microfranchises in the gardening, personal care, handiwork assistance or driving sectors. Regarding subsistence entrepreneurs specifically using P2P platforms in the on-​demand economy, such as Uber and Lyft drivers, public policy makers should be more cautious. While early forms of P2P platforms operating on the accommodation, transportation, venture financing, lending and labor provision markets emerged as small grassroots initiatives, today the growth of the P2P economy is driven by platforms that are owned by shareholder corporations and funded by significant venture capital (Cohen & Sundararajan, 2015). Companies operating in the P2P on-​demand economy should perhaps be required to respect a number of rights more strictly than those who actually work for them, especially given that they mostly rely on self-​employed workers from deprived populations. Workers need protection (Kuhn & Maleki, 2017), which means going beyond self-​regulation. While some, such as Edelman (2017), have made radical recommendations (“Uber can’t be fixed, it’s time for regulators to shut it down”), others are calling for the creation of a new status or of specific social protection funds. Finally, we recommend that academics extend research on digital subsistence entrepreneurship. We particularly call for longitudinal studies to further explore the processes by which the experience of ad hoc micro-​ entrepreneurship can turn into a real sustainable venture or salaried long-​term work. What are the characteristics of the digital subsistence entrepreneurs who succeed? What are the obstacles they have to overcome and what are the best public policy instruments to help them? Whatever the policies to be considered for implementation, they should

84

48  Eva Delacroix et al. consider the viewpoint of digital subsistence entrepreneurs so that appropriate decisions can be taken.

Notes 1 This research was conducted in the heart of the Hénin-​Beaumont-​Lens former mining area, which had some of the highest unemployment and poverty rates in France (INSEE, 2016). We focused on women because of their central position in subsistence entrepreneurship activities (Duflo, 2012). Since our goal was to understand how poor families made sense of their experience on Facebook buy-​and-​sell groups, we used an interpretative phenomenological approach based on mixed methods (Smith et al.,, 2009). Data collection included 10 in-​ depth interviews, an 18-​month netnography in relevant Facebook groups and the completion of ten transactions in the role of an anonymous buyer (see the original article for more details). 2 The referenced material is still in the data collection phase and is therefore used only to further illustrate arguments from the literature. 3 Forty-​four percent of the people living in urban areas across 18 poor countries operate their own small-​scale business (Banerjee & Duflo, 2011). For example, 47%–​69% of households living on less than two dollars a day in Peru, Indonesia, Pakistan and Nicaragua run a nonagricultural “business” (Banerjee & Duflo, 2007). 4 See Adie as an example https://​www.adie.org/​ 5 See Kiva as an example https://​www.kiva.org/​ 6 ROSCAs, often called tontines, are associations where members monthly pool a certain amount of money into a common fund, and a single member withdraws the money from it when needed (for example, to finance an equipment).

References Ahsan, M 2020, ‘Entrepreneurship and ethics in the sharing economy: A critical perspective’, Journal of Business Ethics, vol. 161, no. 1, pp. 19–​33. Arvidsson, A 2019, Changemakers: The industrious future of the digital economy, Polity, Cambridge. Banerjee, AV & Duflo, E 2007, ‘The economic lives of the poor’, Journal of Economic Perspectives, vol. 21, no. 1, pp. 141–​168. Banerjee, AV & Duflo, E 2011, Poor economics: A radical rethinking of the way to fight global poverty, Public Affairs, New York. Barnes, SJ & Mattsson, J 2016, ‘Understanding current and future issues in collaborative consumption: A four-​stage Delphi study’, Technological Forecasting and Social Change, vol. 104, pp. 200–​211. Beaumont, K 2016, ‘The collaborative economy in Poland and Europe: A tool for boosting female employment?’, CASE Research Paper, vol. 2, no. 126, ISBN978-​83-​7178-​639-​6, Center for Social and Economic Research (CASE), Warsaw. Bennholdt-​Thomsen, V & Mies, M 1999, The subsistence perspective: Beyond the globalized economy, Spinifex Press, Australia. Boeri, T, Giupponi, G, Krueger, AB & Machin, S 2020, ‘Solo self-​employment and alternative work arrangements: A cross-​country perspective on the changing

94

Digital Subsistence Entrepreneurs  49 composition of jobs’, Journal of Economic Perspectives, vol. 34, no. 1, pp. 170–​95. Botsman, R & Rogers, R 2011, What’s mine is yours. How collaborative consumption is changing the way we live, Harper Collins Business, London. Bruton, GD, Ketchen, Jr DJ & Ireland, RD 2013, ‘Entrepreneurship as a solution to poverty’, Journal of Business Venturing, vol. 28, no. 6, pp. 683–​689. Chandna, V & Salimath, MS 2018, ‘Peer-​to-​peer selling in online platforms: A salient business model for virtual entrepreneurship’, Journal of Business Research, vol. 84, pp. 162–​174. Clark, P, Kays, A, Zandniapour, L, Montoya, ES & Doyle, K 1999, Microenterprise and the poor: Findings from the Self-​Employment Learning Project five-​year study of microentrepreneurs, The Aspen Institute, Washington, DC. Cohen, M & Sundararajan, A 2015, ‘Self-​regulation and innovation in the peer-​ to-​peer sharing economy’, University of Chicago Law Review Online, vol. 82, no. 1, pp. 116–​133. Danson, M, Galloway, L & Sherif, M 2020, ‘From unemployment to self-​ employment: Can enterprise policy intensify the risks of poverty?’, Critical Perspectives on Accounting, Available online 12 March 2020, 102164. https://​ doi.org/​10.1016/​j.cpa.2020.102164 Davis, GF 2015, ‘What might replace the modern corporation: Uberization and the web page enterprise’, Seattle University Law Review, vol. 39, pp. 501–​515. Delacroix, E, Parguel, B & Benoit-​ Moreau, F 2019, ‘Digital subsistence entrepreneurs on Facebook’, Technological Forecasting and Social Change, vol. 146, pp. 887–​899. Di Domenico, M., Daniel, E., & Nunan, D. 2014, ‘Mental mobility’in the digital age: entrepreneurs and the online home-​based business’. New Technology, Work and Employment, vol. 29, no. 3, pp. 266–​281. Duflo, E 2012, ‘Women empowerment and economic development’, Journal of Economic Literature, vol. 50, no. 4, pp. 1051–​1079. Edelman, BG 2017, ‘Uber can’t be fixed—​ It’s time for regulators to shut it down’, 21 June, viewed 21 August 2020, https://​hbr.org/​2017/​06/​ uber-​cant-​be-​fixed-​its-​time-​for-​regulators-​to-​shut-​it-​down. Fontaine, L 2014, Le marché. Histoire et usages d’une conquête sociale, Gallimard, Paris. Fortune 2018, ‘The shrinking middle class: How we got here, and why’, 24 December, viewed 21 August 2020, https://​fortune.com/​longform/​ shrinking-​middle-​class-​why. Frenken, K. & Schor, J 2017, ‘Putting the sharing economy into perspective’, Environmental Innovation and Societal Transitions, vol. 23, pp. 3–​10. Friedman, G 2014, ‘Workers without employers: shadow corporations and the rise of the gig economy’, Review of Keynesian Economics, vol. 2, no. 2, pp. 171–​188. Hessels, J, Arampatzi, E, van der Zwan, P & Burger, M 2018, ‘Life satisfaction and self-​employment in different types of occupations’, Applied Economics Letters, vol. 25, no. 11, pp. 734–​740. Hoggart, R 1957, The uses of literacy: Aspects of working-​class life, Chatto and Windus, London. INSEE 2016, Un portrait du Pas-​de-​Calais, viewed 21 August 2020, www.insee. fr/​fr/​statistiques/​2537441.

05

50  Eva Delacroix et al. Jeon, SH & Ostrovsky, Y 2019, ‘Balancing family and work: Transition to self-​ employment among new mothers’, Oxford Economic Papers, vol. 71, no. 1, pp. 47–​72. Jones Christensen, L, Parsons, H & Fairbourne, J 2010, ‘Building entrepreneurship in subsistence markets: Microfranchising as an employment incubator’, Journal of Business Research, vol. 63, pp. 595–​601. Juge, É, Collin-​ Lachaud, I & Roux, D 2019, ‘Extension du domaine de l’entrepreneurialité dans la pratique du vide-​dressing’, Revue Française de Gestion, vol. 45, no. 284, pp. 31–​49. Khanna, T 2007, Billions of entrepreneurs: How China and India are reshaping their futures and yours, Harvard Business School Press, Boston, MA. Kuhn, KM & Maleki, A 2017, ‘Micro-​entrepreneurs, dependent contractors, and instaserfs: Understanding online labor platform workforces’, Academy of Management Perspectives, vol. 31, no. 3, pp. 183–​200. Laurell, C & Sandström, C 2017, ‘The sharing economy in social media: Analyzing tensions between market and non-​market logics’, Technological Forecasting and Social Change, vol. 125, pp. 58–​65. Lemaitre, N & De Barnier, V 2015, ‘Quand le consommateur devient commerçant: motivations, production d’expérience et perspectives’, Décisions Marketing, vol. 78, pp. 11–​28. Mai, NTT, Rahtz, DR & Shultz, CJ 2014, ‘Tourism as catalyst for quality of life in transitioning subsistence marketplaces: Perspectives from Ha Long, Vietnam’, Journal of Macromarketing, vol. 34, no. 1, pp. 28–​44. Manyika, J, Lund, S, Bughin, J, Robinson, K, Mischke, J & Mahajan, D 2016, Independent work: Choice, necessity, and the gig economy, McKinsey Global Institute, viewed 21 August 2020, http://​dln.jaipuria.ac.in:8080/​jspui/​bitstream/​123456789/​2851/​1/​Independent-​Work-​Choice-​necessity-​and-​the-​gig-​ economy-​Full-​report.pdf. Martin, LM 2004, ‘E-​innovation: Internet impacts on small UK hospitality firms’, International Journal of Contemporary Hospitality Management, vol. 16, no. 2, pp. 82–​90. Mas, A & Pallais, A 2017, ‘Valuing alternative work arrangements’, American Economic Review, vol. 107, no. 12, pp. 3722–​59. Millman, C, Wong, WC, Li, Z & Matlay, H 2009, ‘Educating students for e-​ entrepreneurship in the UK, the USA and China’, Industry and Higher Education, vol. 23, no. 3, pp. 243–​252. Mishel, L 2018, Uber and the labor market, Economic Policy Institute, 15, viewed 21 August 2020, www.epi.org/​publication/​uber-​and-​the-​labor-​market-​uber-​ drivers-​compensation-​wages-​and-​the-​scale-​of-​uber-​and-​the-​gig-​economy/​. Morris, MH, Santos, SC & Neumeyer, X 2020, ‘Entrepreneurship as a solution to poverty in developed economies’, Business Horizons, vol. 63, no. 3, pp. 377–​390. Rifkin, J 2014, The zero marginal cost society: The internet of things, the collaborative commons, and the eclipse of capitalism, Palgrave Macmillan, New York. Rosenblat, A 2016, ‘What motivates gig economy workers’, Harvard Business Review, vol. 17, 17 November 2016, pp. 2–​5. Saatcioglu, B & Corus, C 2014, ‘Poverty and intersectionality: A multidimensional look into the lives of the impoverished’, Journal of Macromarketing, vol. 34, no. 2, pp. 122–​132.

15

Digital Subsistence Entrepreneurs  51 Schumpeter, JA 1934, The theory of economic development, Harvard University Press, Cambridge, MA. Skrzek-​Lubasińska, M & Szaban, JM 2019, ‘Nomenclature and harmonised criteria for the self-​employment categorisation. An approach pursuant to a systematic review of the literature’, European Management Journal, vol. 37, no. 3, pp. 376–​386. Slivinski, S 2015, ‘Bootstraps tangled in red tape: How state occupational licensing hinders low-​income entrepreneurship’, Goldwater Institute, Policy Report, Phoenix, USA, vol. 272. Smith, J, Flowers, P & Larkin, M 2009, Interpretative phenomenological analysis: Theory, method and research, Sage, London. Sundararajan, A 2014, Peer-​to-​Peer businesses and the sharing (collaborative) economy: Overview, economic effects and regulatory issues, Written testimony for the hearing titled, The Power of Connection: Peer-​to-​Peer Businesses, held by the Committee on Small Business of the United States House of Representatives, 15 January, viewed 8 October 2020, https://​docs.house.gov/​meetings/​SM/​ SM00/​20140115/​101613/​HHRG-​113-​SM00-​20140115-​SD003-​U1.pdf. Thompson Jackson, J 2009, ‘Capitalizing on digital entrepreneurship for low-​ income residents and communities’, West Virginia Law Review, vol. 112, pp. 187–​198. Tran, M, & Sokas, RK 2017, ‘The gig economy and contingent work: An occupational health assessment’, Journal of Occupational and Environmental Medicine, vol. 59, no. 4, pp. 63–​66. Viswanathan, M, Echambadi, R, Venugopal, S & Sridharan, S 2014, ‘Subsistence entrepreneurship, value creation, and community exchange systems: A social capital explanation’, Journal of Macromarketing, vol. 34, no. 2, pp. 213–​226. Viswanathan, M, Sridharan, S & Ritchie, R 2010, ‘Understanding consumption and entrepreneurship in subsistence marketplaces’, Journal of Business Research, vol. 63, no. 6, pp. 570–​581. Viswanathan, M, Sridharan, S, Ritchie, R, Venugopal, S & Jung, K 2012, ‘Marketing interactions in subsistence marketplaces: A bottom-​up approach to designing public policy’, Journal of Public Policy & Marketing, vol. 31, no. 2, pp. 159–​177. Williams, CC 2009, ‘The hidden enterprise culture: Entrepreneurs in the underground economy in England, Ukraine, and Russia’, Journal of Applied Management and Entrepreneurship, vol. 14, no. 2, pp. 44–​60.

25

3  Digital Entrepreneurship across P2P, B2C and B2B Contexts A Bibliometric Analysis Deconstructing Extant Research on Sharing Economy Business Models Karl Joachim Breunig, Henrik Johansen, and Jørgen Røste Kristiansen

Introduction Digital transformation requires businesses to rethink and innovate their business models. Li et al. (2018) claim that the internet and big data are currently making an impact on all industries; therefore, businesses need to reconsider their business models in order to adapt to the environment. As new forms of businesses evolve, there is an emerging growth of practices of a sharing economy. A recent search on Google Scholar indicates an astonishing amount of published research articles for search phrases such as “digital business models”, 3,080; “digitalization”, 61,800; and “sharing economy”, 28,000—​only since 2016! Another illustration of the increasing interest in the sharing economy is the recent number of special issues addressing the phenomenon (Maurer et al., 2020). In practice, within Europe’s five most prominent sharing economy sectors, the total value of transactions is expected to reach €335bn in 2025, from €28bn in 2015 (Vaughan and Daverio, 2016). This indicates increased attention to the phenomenon of a sharing economy, for research and practice alike. Despite an overwhelmingly growing interest in the emerging phenomenon of the sharing economy, it is referred to as an umbrella concept with an inherent variety and unclear dynamics (Trenz et al., 2018; Wilhelms et al., 2017). To date, there exists no unified definition (Schor, 2014) and the phenomenon remains debated (Martin, 2016). However, the idea of sharing instead of owning is not new (Belk, 2010; Botsman & Rogers, 2010; Schor, 2014). Extant research refers to the same phenomenon with terms such as access economy, circular economy, collaborative consumption, collaborative economy, gig economy and peer economy (Bellotti et al., 2015; Strømmen-​Bakhtiar & Vinogradov, 2020). Despite the vast number of interchangeable terms, extant research seems to agree on some core properties of the phenomenon, including (1) peer platforms that coordinate, (2) peer providers and (3) peer consumers

35

Digital Entrepreneurship  53 (Botsman & Rogers, 2010; Hamari et al., 2015; OECD, 2016; Schor, 2014). After analysing 125 definitions, Schlagwein et al. (2020) suggest that commonly addressed core properties of the sharing economy relate to peer activities of coordinating the sharing of goods or services through a digital technology platform, without the transfer of ownership. Consequently, existing research regarding the sharing economy primarily focuses on issues related to peer-​to-​peer (P2P) activities of obtaining, giving or sharing access to goods and services, which are coordinated through community-​ based online services (Maurer et al., 2020), and also concentrates on the P2P business models underpinning the sharing economy phenomenon (Apte & Davis, 2019; Assadi, 2020; Mosmann & Klutt, 2020). Although established business model research (Baden-​ Fuller & Haefliger, 2013; Osterwalder & Pigneur, 2010; Teece, 2010; Zott et al., 2011) emphasizes the distinction between business-​to-​consumer (B2C) and business-​to-​business (B2B) business models, how these established business model distinctions are related to the P2P patterns described in the sharing economy literature remains unexplored. A business model “defines how the enterprise creates and delivers value to customers, and then converts payments received to profits” (Teece, 2010, p. 173). Mosmann and Klutt (2020) argue that the sharing can be of a commercial or non-​commercial nature; hence, understanding the phenomenon of the sharing economy could be extended beyond the P2P, B2C and B2B business models. Therefore, the aim of this study was to assess the extant research addressing sharing economy business models in order to synthesize a foundation upon which subsequent empirical research can be built. In particular, more research is necessary to address unresolved issues regarding B2B relations (Grondys, 2019) and placing an emphasis on commercial aspects (OECD, 2016). Furthermore, Agarwal and Steinmetz (2019) call for additional research on B2B business models and their engagement in the sharing economy (Kathan et al., 2016). Moreover, the lack of theorization of the business model variations underpinning the sharing economy in general, and in relation to distinctions between P2P, B2C and B2B in particular, warrants taking stock of extant research to establish a unified foundation for subsequent research (Maurer et al., 2020). Therefore, the goal of this study was to address the following research question: How can the sharing economy business model variations and similarities be conceptualized beyond P2P and thus encompass the traditional business model perspectives of B2C and B2B? In order to address this research ambition, we initiated our study on February 5, 2020 by examining the extant published academic research for the timeframe of 1997–​2020 through a structured literature search. Our initial sample contained 1,266 documents. After excluding irrelevant categories, we had a total of 184 articles for our bibliometric analysis. Bibliometric analysis refers to “the collection, the handling, and the analysis of quantitative bibliometric data, derived from scientific publications”

45

54  Karl Joachim Breunig et al. (Verbeek et al., p. 181 cited in Holand et al., 2019), and it makes it possible to identify similarities and patterns as well to provide insight into specific fields of academic research. Bibliometric analysis may be an appropriate tool for examining study areas, assessing outputs and outcomes of investigations and providing objective evaluations of the rapidly growing research literature (Narin et al., 1994). To conduct the bibliometric analysis, we applied VOSviewer and identified 19 highly relevant interrelated sharing economy articles upon which we conducted a content analysis. This study identified core articles addressing the constituent elements of the sharing economy business model and illuminated variations and similarities across the P2P, B2C and B2B business models as these are reported in the extant literature. Discussing these findings against the underlying theory, we suggest a framework that distinguishes between the P2P, B2C and B2B sharing economy business models. The proposed framework extends the theory on the sharing economy by adding further clarification of the sharing economy business models, thus guiding future research. Moreover, the framework has implications for practitioners as it can serve as an important contributor and basis for discussions related to strategic decisions, thus providing useful information for various structures as well as value creation and value-​capturing activities. This chapter is structured as follows. First, we present the theoretical underpinnings of digital business models and the sharing economy concepts. Second, we describe the bibliometric method applied and the steps taken in the analysis. Third, we reveal the findings from our analysis and subsequently discuss these findings towards the initial theoretical underpinnings. Finally, we present a framework distinguishing between the P2P, B2C and B2B sharing economy business models and conclude with the implications of the distinctions provided in this framework.

Theoretical Underpinnings of the Main Concepts The purpose of this chapter is to explain the concept of business models and how it relates to the sharing economy, thereby illustrating the gaps in the current theory. The prior theory on business models will be presented before introducing the current theory on the transition of the sharing economy as well as business model variations. Digital Business Models Recently, “digitalization has been identified as one of the major trends changing society and business in general” (Parviainen et al., 2017, p. 63; Veit et al., 2014). Since digitalization has influenced various business activities, including companies’ business models, “digitalization has put pressure on companies to reflect on their current strategy and explore new business opportunities, by transforming their existing business models” (Rachinger et al., 2019, p. 1143).

5

Digital Entrepreneurship  55 Hence, digital transformation is a driver for changes in companies’ business models related to changes in their products or services, the organizational structure and automation of processes (Hess et al., 2016). Furthermore, the fundamental change in the way businesses operate and generate value is referred to as a shift towards a digital business model, which is the missing link between business strategy, processes and information technology (Veit et al., 2014). Technology facilitates easy access to information and customer solutions at a lower cost; hence, it is argued that businesses need to be more customer-​centric (Teece, 2010, p. 172). In terms of digital transformation, businesses need to re-​evaluate their value propositions in terms of understanding the business model design options as well as the customer needs and technological trajectories (Teece, 2010, p. 173). Sharing Economy Driven by the financial collapse in 2008, several firms searched for new ways to create value and reduce costs (Habibi et al., 2017). Re-​creating value by using existing resources, either for monetary or non-​monetary benefits, contributed to the more efficient use of resources (Botsman & Rogers, 2010). As a result, the term “sharing economy” was introduced and opened new ways to deal with capitalism and consumerism (Agarwal & Steinmetz, 2019). The increased attention regarding the sharing economy is causing disruption in well-​established and mature industries because consumers are provided with convenient and cost-​efficient access to resources, without the responsibility of ownership (Schor, 2014, p. 4; Trabucchi et al., 2019). Defining the sharing economy in a way that reflects common usage has proven to be difficult due to the wide range of perspectives (Schor, 2014, p. 3). One recent attempt at a unified definition has been provided by Plewnia and Guenther (2018, p. 576), who define the sharing economy as “activities or platforms which facilitate the sharing of material, products, product services, space, money, workforce, knowledge, or information based on for-​profit or non-​profit transactions in a variety of different market structures”. However, Mosmann and Klutt (2020, p. 40) have found that the sharing economy is identified across P2P, B2C and B2B relational patterns. Hence, the literature indicates a shift towards a new set of business models that emphasize resource exchange rather than offering new ones (Laamanen et al., 2018, p. 213). Access to new technology and its potential benefits has been an interesting topic within the sharing economy as it allows for interaction between individuals, who do not necessarily know each other, to get in touch for resource exchange (Schor, 2014, p. 12). Both products and services are described in the digital business strategy literature as they both can take advantage of the possibilities within digital resources (Bharadwaj et al., 2013, p. 474). More user-​friendly solutions as a result of digital improvements is facilitating more comfortable users, which,

65

56  Karl Joachim Breunig et al. in turn, can open new business opportunities as a result of increased quality and quantity of generated data (Bharadwaj et al., 2013, p. 474; Laamanen et al., 2018, p. 213; Schor, 2014). Digital infrastructure that is well embedded in the business strategy is seen as a strategic dynamic capability as it enables the company to scale up or down their infrastructure in line with the market (Bharadwaj et al., 2013, p. 475). A sharing platform, consisting of all involved parts, is referred to as a community where control and coordination are of high importance for attracting and retaining participants (Mosmann & Klutt, 2020, pp. 40–​ 41). The decisions regarding market orientation and market structure are fundamental when shaping the platform’s business model. In terms of market orientation, sharing economy platforms are either for-​profit, which strive to optimize generated revenue and asset maximization, or non-​profit, in which the primary goal is to serve a community’s needs rather than seeking growth or revenue maximization (Schor, 2014, pp. 4–​ 5). A company’s market structure reflects its market orientation, and the sharing economy literature distinguishes between P2P and B2C. Within P2P platforms, value capturing is generated through commissions, i.e., revenue growth rises with the number of transactions, whereas for B2C platforms, value capturing occurs through maximizing revenue per transaction (Schor, 2014, p. 5). The sharing economy in terms of P2P has received a lot of attention. P2P is referred to as a multisided platform, consisting of intermediaries who bring together distinct groups of users where network effects are said to be a key differentiator when it comes to value creation (Bharadwaj et al., 2013, p. 475; Jabłoński, 2018). Communities as the source of value creation indicate a shift in value creation drivers (Stabell & Fjeldstad, 1998). Analysis conducted by Lang et al. (2015, p. 787) reveals that the co-​creation mechanism within these communities can minimize the risk of revenue loss and will benefit the consumers as well as the producers. Based on the underlying theory related to digital business models and the sharing economy, we recognize the need for a better overview of the sharing economy field. We note that much of the literature is based on the sharing economy as a whole, and it does not differentiate between P2P, B2C and B2B. Agarwal and Steinmetz (2019, p. 12) suggest that the P2P and B2C business models within the sharing economy can be variations of each other but that B2B is rather excluded in the existing literature. This missing link is also recognized by Grondys (2019) and Kathan et al. (2016) as they argue that the existing literature, to a large extent, focuses on private sharing and provides less emphasis on issues related to B2B interactions.

Methodology In order to clarify the understanding of the ambiguous umbrella-​term “sharing economy” and to identify the P2P, B2C and B2B business model variations, we conducted a broad and structured search of prior

75

Digital Entrepreneurship  57 published research. We subsequently conducted a bibliometric analysis on the retrieved articles in order to distil our search further. There has been a significant increase in the quantification of science, especially in the use of bibliographic analysis for evaluation and monitoring of scientific outputs (Verbeek et al., 2002). Fahimnia et al. (2015) promote some of the strengths associated with bibliometrics. For example, network analysis through bibliometric tools can prove powerful for identifying established and emerging topical areas. It can also help to identify the clusters of research and researchers showing how the various areas of thought may have emerged based on author and institutional characteristics. Identifying the more influential researchers within the clusters sets the stage for determining additional emergent study fields through capturing more recent topics covered by these researchers (p. 102). The current study applied this method to identify if, and how, prior research has addressed variations in the B2B, B2C and P2P business model configurations in order to provide a foundation for future research and practice. Levy and Ellis (2006, pp. 172–​173) support our choice of a literature review to (1) understand the existing body of knowledge, (2) provide us with a solid theoretical foundation, (3) substantiate the presence of the research problem, (4) justify the proposed study as one that contributes something new and (5) frame the valid research methodologies, approach, goals and research question for the proposed study. Search Procedure and Sample The structured search and subsequent refinement were performed by using a database of relevant research articles, and it progressed in several stages. Initially, we experimented with several different search phrase combinations. By using the search string Topic = ((Business-​model) AND Topic = (Digit* OR Sharing-​ econom*)), without any limitations, we identified 1,266 documents in an exhaustive search for the period 1997–​ 2020, enabling us to understand the development of research focusing on the sharing economy. Then, we limited our search to only include documents written in English from articles, proceedings, papers, reviews, editorial material, book chapters and book reviews. Excluding irrelevant categories and keeping those with 50 or more contributions, our database was reduced to 809 articles. In the next stage, we selected all articles with ten or more citations within the timeframe 1997–​2017, resulting in a total of 170 articles; we read the abstracts of all of these articles. In addition, we selected 397 articles within the timeframe 2018–​2020, with no requirement regarding the number of citations as not much time has passed to be referenced. With the new sample of 567 articles published between 1997 and 2020, we then conducted a first-​order categorization of these articles by colour coding, based on the relevance for our research question, thus reducing the sample to 190 relevant articles. We subsequently omitted the

85

58  Karl Joachim Breunig et al. most recent articles of 2020 as this year had just started, and bibliometric analyses of that year would be skewed by the lack of a full year’s publication. The 2020 articles were read and utilized in the positioning of our research question. Considering the final limitations and exclusions, our final literature search sample was 184 articles, which were downloaded from the Web of Science database. Three-​Phase Analysis The analysis of the 184 research articles included in our final search also progressed in three distinct phases. First, we conducted a descriptive analysis of the overall characteristics of the sample. Subsequently, we conducted a bibliometric analysis. Finally, we utilized bibliometric analysis to further distil our sample and identify 19 core research articles included in a content analysis. After downloading our final search from the Web of Science database to Excel, we had the basis for the descriptive analysis. We cleaned up all data in Excel so that the analytical tool Microsoft Power BI could read the data and create visualizations. Next, all articles were represented with their title, author(s), journal, discipline category(s) and publication year. The descriptive analysis revealed the development within the sharing economy field as well as the journals that have emphasized the topic and discipline categories. The purpose of the timeframe was to map out the development of published articles over the last 22 years, whereas the categorization overview aimed to identify the categories to which the articles are allocated. We also constructed a summary of the top ten journals in terms of published articles. Subsequently, we utilized basic functions in Excel to make sense of the data, identifying the core scientific disciplines that had contributed, the journal type, the ranking of the journals as well as the influence on sharing economy research by country, year and individual researcher. In the next stage, we applied the software VOSviewer to the 184 articles downloaded from the Web of Science database, enabling us to conduct bibliometric analysis. Bibliometric analysis is the use of statistical methods to analyse books, articles and other publications. Vosviewer is one of several available software tools that enables analysis by visualizing several different relations between downloaded articles, e.g., co-​citations or co-​occurrence of key terms. To obtain a visual overview in terms of keyword relevance and citations, we conducted co-​occurrence, co-​citation and bibliographic coupling analyses (Van Eck & Waltman, 2009). These analyses are the most common to study these types of relations (Ding et al., 2016, p. 285), enabling us to identify four different clusters and narrowing our dataset down to a core of highly relevant interrelated sharing economy articles. By calculating network centrality for individual articles related to each of these clusters, we were able to identify central articles for each cluster. When conducting the co-​occurrence analysis, we saw that both the terms “business model” and “business models” were represented. In order to obtain a more trustworthy analysis,

95

Digital Entrepreneurship  59 we created a VOSviewer thesaurus file in addition to the file including all 184 articles to combine those two terms represented as “business model”. However, we did not combine terms like “digitization” and “digitalization” as these terms cover different aspects of the digital concept. The bibliometric analysis was supported by the bibliographic coupling and the analysis of cluster belongingness, total link strength and citations identifying the most influential articles. Based on these relationships, the articles were grouped into clusters. One of the clusters (see the green cluster in Figure 3.4) revealed 39 articles addressing different sharing economy concepts and related terms describing industry-​specific cases or conceptual frameworks, and the 19 most influential articles were selected. Finally, the bibliometric analysis identified the most influential articles. Furthermore, the abstracts of all 184 articles were read to ensure high thematic relevance as well as to reduce the risk that we had omitted relevant articles addressing important distinctions between the P2P, B2C and B2B sharing economy business models. When we were confident that our sample of 19 articles was sufficient in terms of influence and relevance, we conducted a content analysis by closely reading the articles and coding them according to their reference of the P2P, B2C and B2B sharing economy business models.

Findings Descriptive and Bibliometric Analysis Recently, there has been a significant increase in the number of articles dealing with business and management published in journals related to sustainability and technology. Due to the exponential increase in publishing, 75% of the articles included in our analysis were published between 2017 and 2019. The remaining 25% of the articles published prior to 2017 were distributed evenly over a fairly flat and stable period between 1997 and 2011, followed by a gentle increase in 2012, before the development really gained momentum in 2017 (Figure 3.1). The co-​occurrence analysis (Figure 3.2) was generated in VOSviewer, by which several analyses were conducted to ensure high thematic relevance of keywords. Cluster two (red) has “sharing economy” as the most influential keyword, but other closely related terms that were identified in the theory chapter like “collaborate consumption”, “access-​ based consumption”, and “collaborate economy” are represented as well. The keyword “peer-​to-​peer” indicates a large amount of sharing economy articles related to P2P, whereas keywords for B2C and B2B are not present. Cluster one (green) contains keywords related to business models and strategy, whereas cluster three (blue) consists of keywords related to digi* concepts like “digital transformation” and “industry 4.0”. Cluster four (yellow) contains three keywords representing the business model elements “value creation”, “value capture”, and “value proposition”.

06

60  Karl Joachim Breunig et al. 80 69

70 60 50

Arcles

50 40 30 19

20 10 0 0

0

1

0

2

0

0

1

1

0

0

2

2

2

2

4

6

9

7

7

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Year

Figure 3.1 Development of publications per year for the period 1997–​ 2019 (N = 184).

Figure 3.2 VOSviewer map with co-​occurrence analysis.

From the co-​citation analysis (Figure 3.3), only the article by Cohen and Kietzmann (2014) is included in our core articles as the other articles do not contribute to our research question. The fact that we only managed to identify one of our core articles in this analysis may be explained by the point that business models have been studied for a long time, but the sharing economy is relatively new; hence, there are fewer citations. Another explanation related to the green cluster may be that much has been done in the

16

Digital Entrepreneurship  61

Figure 3.3 VOSviewer map with co-​citation analysis.

Figure 3.4 VOSviewer map with bibliographic coupling analysis.

field of the sharing economy, but there is limited research related to business models. We also conducted a bibliographic coupling analysis in VOSviewer (Figure 3.4). This method is used to identify the most central articles by separating clusters by colour-​coding. Analysis of the green cluster in Figure 3.4 indicates articles related to different sharing economy concepts, e.g., industry-​specific cases, frameworks and related concepts that overlap with the sharing economy concept. Content Analysis Within the sharing economy, P2P business models consist of a triadic structure whereby value creation takes place through decentralized transactions and co-​ creation, and review systems are applied. Value

26

62  Karl Joachim Breunig et al. capturing occurs through commissions, and emphasis is placed on flexibility and safety for the consumer. Meanwhile, B2C business models consist of a dyadic structure whereby value creation takes place in a centralized resource pool. Value capturing occurs through commissions, membership fees and public subsidies, and emphasis is placed on flexibility and safety for the consumer. Finally, B2B business models consist of a polyadic structure whereby co-​creation is the basis for value creation. Value capturing occurs through membership fees and commissions, and emphasis is placed on flexibility through coopetition. To a large extent, prior research has studied the phenomenon of the sharing economy without separating P2P, B2C and B2B. The content analysis revealed that there are some quite unclear boundaries in the literature and that the terms have been used interchangeably. Based on the approach that has been used for the content analysis, we chose to divide the chapter into the sub-​groups P2P, B2C and B2B, whereby the identified business model elements “value creation”, “value capture” and “value propositions” are presented within. Structural differences were observed, which, in turn, influence the way companies create value, capture value and create added value for consumers. In addition, we chose to include other useful literature that has been identified, which can help influence the research question of this study. The P2P Sharing Economy Business Model The identification of underutilized assets is the basis for value creation within the sharing economy and occurs through “P2P intermediation”, with a focus on decentralized P2P transactions (e.g., Airbnb) (Acquier et al., 2019, p. 9). P2P business models are described as a triadic relationship in the literature, consisting of providers, intermediaries and consumers, whereby value creation control is decentralized (Ritter & Schanz, 2019). This triadic business model, applied by companies like Airbnb and Uber, is also referred to as a multisided platform (Piscicelli et al., 2018), and the consumer can be either a business or an individual (Kumar et al., 2018, p. 147). The business model that is applied by Airbnb and Uber, for example, is characterized as a “matchmaker” as it is an economic value creator focusing on decentralized for-​profit transactions, whereas “mission-​driven platforms” that promote a social cause are seen as an extended value creator (Acquier et al., 2019, pp. 13–​15). Underutilized assets form the foundation for value creation (Acquier et al., 2019; Münoz & Cohen, 2017), but P2P services can be extended and “serve as an attractive and profitable option for households and private individuals” (Apte & Davis, 2019, p. 106). Value creation in P2P services has moved beyond Porter’s value chain and now requires co-​creation with several entities, simultaneously (Apte & Davis, 2019, p. 110). Initially, Apte and Davis (2019) developed a business model that is based on that of Osterwalder and Pigneur (2010), whereby value creation reflects the

36

Digital Entrepreneurship  63 company’s ability to link customers and the easy-​to-​use platform. As service platforms like Airbnb and Uber do not offer any products or services of their own, they are generating value through “collecting, aggregating, and presenting information to potential customers and service providers” (Apte & Davis, 2019, p. 119; Cohen & Kietzmann, 2014). Value capturing within the P2P sharing economy is based on the two extremes: economic value creation and for-​profit initiatives on the one hand, and extended value creation and non-​profit or limited-​profit initiatives on the other hand (Acquier et al., 2019, p. 10). “Mission-​driven platforms” focusing on extended value creation are based on either non-​ profit or limited-​profit models, by which voluntary contributions are crucial for staying operational (Acquier et al., 2019, p. 14; Šiuškaitė et al., 2019, p. 375). Value capturing may also occur through advertisements or commissions that are compatible with their mission (Acquier et al., 2019, p. 12). On the other hand, “matchmakers” focus on economic value creation through for-​profit platforms that capture value through commissions generated from market transactions between peers (Acquier et al., 2019, p. 12), “aiming to maximize their revenue stream” (Šiuškaitė et al., 2019, p. 375). Täuscher and Laudien’s (2018, pp. 321–​323) analysis on key revenue streams indicates that commissions are the most preferred option for marketplaces within the P2P sharing economy, comprising 79%. Value proposition is included as one of the nine business model building blocks developed by Apte and Davis (2019, p. 117), who point out the importance of “being able to quickly link customers with suitable suppliers to cover customer needs”. Other significant elements related to value proposition include response speed and variety of offerings, e.g., locations and standards related to properties or skill levels related to labour (Apte & Davis, 2019, p. 117). In the case of the P2P mobility firm GoMore, the value propositions are based on “the intention to offer financial compensation for car ownership and travel costs to peer providers” (Guyader & Piscicelli, 2019, p. 1066). Sharing and redeploying their resources and capabilities across the different business models made them more competitive in terms of quality, growth and profits, but more participants were gained through their initial P2P business model (Guyader & Piscicelli, 2019). The increased focus on cost savings and efficiency in the case of GoMore is supported by Täuscher and Laudien (2018, p. 323), who found that 75% of their sample firms provide additional value by increasing cost savings or efficiency. The B2C Sharing Economy Business Model To a large extent, the B2C sharing economy business model has been concentrated to the field of carsharing (Acquier et al., 2019; Cohen & Kietzmann, 2014; Münzel et al., 2019; Vaskelainen & Münzel, 2018). In contrast to P2P and the triadic approach, value creation in terms of B2C is described as a relationship between provider and consumer and is

46

64  Karl Joachim Breunig et al. referred to as a dyadic relationship (Ritter & Schanz, 2019). This dyadic business model has a governance structure that is characterized by centralization, in which the primary focus is to possess unique and hard-​ to-​imitate resources (Ritter & Schanz, 2019, p. 324). The centralized governance structure is reflected in the B2C value creation mechanism of Acquier et al. (2019, p. 9), whereby car rental companies (e.g., Zipcar) and databases for stored contributions (e.g., Wikipedia) are thought to create value through “centralized resource pooling”. Within carsharing, station-​based and free-​floating models have been identified as two alternative business models that differ in terms of their asset availability to consumers (Vaskelainen & Münzel, 2018, p. 275). Station-​ based business models use the same location for pick-​up and delivery, whereas the free-​floating model gives the consumer more flexibility in terms of pick-​up and delivery and primarily operates in large cities (Vaskelainen & Münzel, 2018, p. 275). These carsharing business models, operating with monetized access to a centralized resource pool, are further described in the literature as “shared infrastructure providers” and are characterized as economic value creators. However, databases like Wikipedia are said to operate as a “commoners” business model that is characterized as an extended value creator in which primary access is free; therefore, it is a non-​profit or limited-​profit model (Acquier et al., 2019, pp. 10–​13). The “commoners” business model is based on non-​profit or limited-​ profit intentions and strives to capture value by combining different indirect approaches and keeping costs at a low level by receiving voluntary work (Acquier et al., 2019, pp. 11–​13). These indirect approaches can take the form of support from third parties, such as public authorities and private donors, to receive financial or physical resources (Acquier et al., 2019, p. 13). Another approach consists of running a “complementary for-​profit activity to financially support the main mission” (Acquier et al., 2019, p. 13) such as introducing an online shop or imposing a monthly fee. Another configuration, “shared infrastructure providers”, is categorized as a for-​profit initiative whereby consumers can use the service for a fee, either as paying members or on a pay-​per-​use basis (Acquier et al., 2019, p. 10). In terms of value propositions, the station-​based business model is based on market and community logic, whereas the free-​floating model is based on corporation logic (Vaskelainen & Münzel, 2018, p. 287). The free-​ floating business model is a flexible solution for consumers as they can, to a larger extent, pick up and deliver the car at different locations in contrast to the station-​based business model. Station-​based and free-​floating business models contribute to the reduction of emissions and congestion as people, especially Generation Y, prefer renting a car when they need it rather than having their own car (Cohen & Kietzmann, 2014; Ferrell et al., 2017). The value proposition of the case firm GoMore is based on offering car subscriptions to consumers for them to replace

56

Digital Entrepreneurship  65 car ownership, and it is financed through P2P car rentals (Guyader & Piscicelli, 2019, p. 1064). The B2B Sharing Economy Business Model The sharing economy within the B2B sector operates with the aim of optimizing the use of resources and thereby creating value for society (Grondys, 2019, p. 1). Implementing the sharing economy concept in the B2B sector facilitates (1) reduced production costs, (2) flexible response to customer needs and expectations, (3) faster rebranding through effective liquidation of assets, (4) more flexibility in fulfilling more complex orders cheaper than before and (5) inclusion of both suppliers and customers in the production process, sales and distribution (Grondys, 2019, p. 4). Facilitating the interaction between these actors will enable value co-​ creation among all stakeholders within the business’ network (Laczko et al., 2019, p. 214). To be able to co-​create value, Laczko et al. (2019, p. 216) point out the importance of providing a significant number of users and being attractive for new people to join in, which, in turn, leads to increased platform stickiness. On the other hand, it is imperative that the central actor is able to capture value from its stakeholders, described as stakeholder profitability by Laczko et al. (2019). Capturing the value a company creates is crucial to its survival, and the literature has concentrated on the synergies between value creation and appropriation from the central actor’s perspective (Laczko et al., 2019). The simultaneous occurrence of value creation and value capture has been put forward by Apte and Davis (2019) for the P2P sector and has been extended to the B2B sector by Laczko et al. (2019). Contributing to the literature of the B2B sharing economy, the missing link between this simultaneous occurrence has been established by promoting eight value-​driving mechanisms for the central actor to create value for its stakeholders, simultaneously increasing its own value capture opportunities (Laczko et al., 2019, p. 227). Collecting and analysing data in terms of value capture is highlighted as one of these mechanisms as “this information can be used to create value by discovering stakeholder needs” (Laczko et al., 2019, p. 225). Furthermore, in terms of value capture, analysis reveals that the use of membership fees (66%) is a more frequently applied revenue stream within B2B marketplaces than commissions (33%) (Täuscher & Laudien, 2018, p. 323). Resource sharing within the B2B sharing economy has created the coopetition market model, leading to reduced costs as a result of cooperation between competitors with the aim of operating for the benefit of consumers (Grondys, 2019, p. 3).

Discussion Based on analyses of the findings and the ensuing discussion, there are some clear patterns. For the purpose of a better overview, we have

6

66  Karl Joachim Breunig et al. separated P2P, B2C and B2B, respectively, and each of the business model elements. There are several obvious similarities between them, but there are also some distinguishing characteristics that make them different in several ways. We have compiled these findings into a framework presented in Table 3.1. Within the value creation dimension, two distinct structures have been identified for P2P and B2C, respectively. The triadic structure, whereby the interaction between two (or more) distinct types of users is facilitated by intermediaries, is strongly associated with P2P platforms, while the dyadic structure, whereby the interaction between owner and user occurs without the use of intermediaries, is associated with B2C platforms. Within triadic structures, value creation takes place at a decentralized level, while within dyadic structures, it occurs through a centralized resource pool. The ownership of resources is a part of the basis to separate the approaches: in P2P platforms, companies typically do not own any resources, while in B2C platforms, the companies own these resources. The literature does not relate B2B platforms to any specific type of structure; however, we argue that B2B platforms can take the form of triadic or dyadic structures, depending on the platform’s purpose and thus ownership of the resources. We characterized this as a polyadic approach in this ecosystem. Nevertheless, value co-​creation within the P2P and B2B platforms has been put forward as a crucial activity and takes the form of review systems in P2P. There are several similarities within the value capture mechanism. The use of commissions is put forward as a source of value capture for P2P, B2C and B2B. For P2P platforms, commissions are the only mentioned source for value capturing, while they are the primary revenue stream for B2C platforms. However, it is also recognized that membership fees and public subsidies are other sources of value capture for B2C platforms. In terms of B2B platforms, membership fees are the most preferred revenue stream, but commissions are also frequently used. In terms of value propositions, flexibility in relation to their consumers is put forward within P2P and B2C, which can be achieved through operating different business models, leading to cost savings and efficiency. For the B2B platforms, flexibility for both the consumers and the company itself is achieved through the network of suppliers, referred to as the coopetition model. Technological developments that facilitate better coordination and safety in terms of fraud and theft will, in turn, make the users feel more comfortable and hence serve as an important value extender.

Conclusion This study addressed sharing economy business model variations based on an exhaustive structured literature search and subsequent bibliometric analysis that identified 19 core articles to synthesize the current state in the sharing economy related to the P2P, B2C and B2B business models.

newgenrtpdf

76

Table 3.1 Compilation of findings according to the business model dimensions of P2P, B2C and B2B P2P Value creation

Value capture

Value propositions

•  Triadic structure (Ritter & •  Dyadic structure (Ritter & Schanz, 2019) Schanz, 2019) •  Decentralized transactions (Acquier •  Centralized resource pool (Ritter et al., 2019) & Schanz, 2019; Acquier et al., •  Co-​creation (Apte & Davis, 2019) 2019; Vaskelainen & Münzel, •  Review system (Täuscher & 2018) Laudien, 2018) •  Commissions (Acquier et al., 2019; •  Commissions, membership fees Täuscher & Laudien, 2018; Guyader and public subsidies (Acquier et al., & Piscicelli, 2019) 2019; Täuscher & Laudien, 2018; Guyader & Piscicelli; Vaskelainen & Münzel, 2018) •  Flexibility (Apte & Davis, 2019) •  Flexibility (Vaskelainen & Münzel, and safety 2018) and safety Airbnb, Uber, GoMore Zipcar, Wikipedia Consists of a triadic structure, Consists of a dyadic structure, whereby value creation takes place whereby value creation takes place through decentralized transactions, in a centralized resource pool. and co-​creation, whereby review Value capturing occurs through systems are applied. Value capturing commissions, membership fees and occurs through commissions, and public subsidies, and emphasis is emphasis is placed on flexibility and placed on flexibility and safety for safety for the consumer. the consumer.

B2B •  Co-​creation (Laczko et al., 2019; Grondys, 2019)

•  Membership fees and commissions (Täuscher & Laudien, 2018) •  Flexibility, “Coopetition” (Grondys, 2019) WeWork, HeadBox Consists of a polyadic structure, whereby co-​creation is the basis for value creation. Value capturing occurs through membership fees and commissions, and emphasis is placed on flexibility through coopetition.

Digital Entrepreneurship  67

Examples Distinguishing characteristics

B2C

86

68  Karl Joachim Breunig et al. To answer the research question of this study, we mapped the similarities and differences in the P2P, B2C and B2B sharing economy business models for the following established business model dimensions: “value creation”, “value capture” and “value propositions”. Our study revealed that the business model structures are varied when it comes to value capturing and that technological developments and value networks are the basis of the value propositions. The framework distinguishes important characteristics between P2P, B2C and B2B for each of the business model dimensions. The implication of this study for managers and public policy makers is the extension of awareness of a new set of business models, whereby the emphasis is shifted towards resource exchange driven by digitalization. This shift puts pressure on business leaders to transform their existing business models so that the company can perform competitively. The proposed framework provides an ability to distinguish between underpinning structures as well as value creation and value-​ capturing activities for each of the P2P, B2C and B2B business model types identified within the extant sharing economy literature. Moreover, this study confirms most research related to P2P sharing economy business models. Consequently, further empirical research is necessary, especially that addressing B2B sharing economy business models and the contingencies experienced within different industries and business sectors to better inform sharing economy business model variation.

References Acquier, A, Carbone, V & Massé, D 2019, How to Create Value(s) in the Sharing Economy: Business Models, Scalability, and Sustainability. Technology Innovation Management Review, 9(2), 5–​24. Agarwal, N, & Steinmetz, R 2019, Sharing Economy: A Systematic Literature Review. International Journal of Innovation and Technology Management, 16(6), 1930002. Apte, U, & Davis, M 2019, Sharing Economy Services: Business Model Generation. California Management Review, 61(2), 104–​131. Assadi, D 2020, What Is a P2P Business Model? In Khosrow-​Pour, M (ed.), Encyclopedia of Organizational Knowledge, Administration, and Technology: Vol. 5. Hershey: IGI Global, pp. 758–​774. Baden-​ Fuller, C & Haefliger, S 2013, Business Models and Technological Innovation. Long Range Planning, 46(6), 419–​ 426. doi: 10.1016/​ j.lrp.2013.08.023 Belk, R 2010, Sharing. Journal of Consumer Research, 36(5), 715–​734. Bellotti, V, Ambard, A, Turner, D, Gossmann, C, Demkova, K & Carroll, J 2015, A Muddle of Models of Motivation for Using Peer-​to-​Peer Economy Systems. In CHI’15: Proceedings of the 33rd Annual ACM Conference on Human Factors in Computing Systems, pp. 1085–​1094. Bharadwaj, A, El Sawy, O, Pavlou, P & Venkatraman, N 2013, Digital Business Strategy: Toward a Next Generation of Insights. MIS Quarterly, 37(2), 471–​482.

96

Digital Entrepreneurship  69 Botsman, R & Rogers, R 2010, What’s Mine Is Yours. London: Collins. Cohen, B, & Kietzmann, J 2014, Ride On! Mobility Business Models for the Sharing Economy. Organization & Environment, 27(3), 279–​296. Ding, Y, Rousseau, R & Wolfram, D 2016, Measuring Scholarly Impact. New York: Springer International Publishing. Fahimnia, B, Sarkis, J & Davarzani, H 2015, Green Supply Chain Management: A Review and Bibliometric Analysis. International Journal of Production Economics, 162, 101–​114. Ferrell, OC, Ferrell, L & Huggins, K 2017, Seismic Shifts in the Sharing Economy: Shaking up Marketing Channels and Supply Chains, Journal of Marketing Channels, 24, 1–​2, 3–​12. Grondys, K 2019, Implementation of the Sharing Economy in the B2B Sector. Sustainability, 11(14), 39–​76. Guyader, H & Piscicelli, L 2019, Business Model Diversification in the Sharing Economy: The Case of GoMore. Journal of Cleaner Production, 215, 1059–​1069. Habibi, M, Davidson, A & Laroche, M 2017, What Managers Should Know about the Sharing Economy. Business Horizons, 60(1), 113–​121. Hamari, J, Sjöklint, M & Ukkonen, A 2015, The Sharing Economy: Why People Participate in Collaborative Consumption. Journal of the Association for Information Science and Technology, 67(9), 2047–​2059. Hess, T, Matt, C, Benlian, A & Wiesböck, F 2016, Options for Formulating a Digital Transformation Strategy. MIS Quarterly Executive, 15(2), 123–​139. Holand, A, Svadberg, S & Breunig, KJ 2019, Beyond the Hype: A Bibliometric Analysis Deconstructing Research on Digitalization. Technology Innovation Management Review, 9(10), 38–​50. Jabłoński, M 2018, Value Migration to the Sustainable Business Models of Digital Economy Companies on the Capital Market. Sustainability, 10(9), 3113. Kathan, W, Matzler, K & Veider, V 2016, The Sharing Economy: Your Business Model’s Friend or Foe? Business Horizons, 59(6), 663–​672. Laamanen, T, Pfeffer, J, Rong, K & Van de Ven, A 2018, Editors’ Introduction: Business Models, Ecosystems, and Society in the Sharing Economy. Academy of Management Discoveries, 4(3), 213–​219. Laczko, P, Hullova, D, Needham, A, Rossiter, A & Battisti, M 2019, The Role of a Central Actor in Increasing Platform Stickiness and Stakeholder Profitability: Bridging the Gap Between Value Creation and Value Capture in the Sharing Economy. Industrial Marketing Management, 76, 214–​230. Lang, K, Shang, R & Vragov, R 2015, Consumer Co-​creation of Digital Culture Products: Business Threat or New Opportunity? Journal of the Association for Information Systems, 16(9), 766–​798. Levy, Y & Ellis, TJ 2006, A Systems Approach to Conduct an Effective Literature Review in Support of Information Systems Research. Informing Science: The International Journal of an Emerging Transdiscipline, 9, 181–​212. Li, J, Brass, DJ, Hitt, MA, Wang, H & Li, Y 2018, Effects of Second-​Hand Brokerage on Business Model Innovation and Network Evolution. In Academy of Management Annual Meeting Proceedings, 2018(1), 13563. Martin, C, 2016, The Sharing Economy: A Pathway to Sustainability or a Nightmarish Form of Neoliberal Capitalism? Ecological Economics, 121, 149–​159.

07

70  Karl Joachim Breunig et al. Maurer, I, Mair, J & Oberg, A 2020, Variety and Trajectories of New Forms of Organizing in the Sharing Economy: A Research Agenda. In Maurer, I., Mair, J. & Oberg, A. (ed.), Theorizing the sharing economy: Variety and Trajectories of New Forms of Organizing: Vol. 66. Research in the Sociology of Organizations, Bingley: Emerald Publishing, pp. 16–​38. Mosmann, PC & Klutt, J 2020, Market, Hierarchy, or Clan? Types of Governance in the Sharing Economy. In Maurer, I, Mair, J & Oberg, A (ed.), Theorizing the sharing economy: Variety and Trajectories of New Forms of Organizing: Vol. 66. Research in the Sociology of Organizations, Bingley: Emerald Publishing, pp. 39–​68. Muñoz, B, & Cohen, B 2017, Mapping Out the Sharing Economy: A Configurational Approach to Sharing Business Models, Technological Forecasting and Social Change, 125, 21–​37. Münzel, K, Piscicelli, L, Boon, W & Frenken, K 2019, Different Business Models –​ Different Users? Uncovering the Motives and Characteristics of Business-​To-​ Consumer and Peer-​ To-​ Peer Carsharing Adopters in The Netherlands. Transportation Research Part D: Transport and Environment, 73(Aug), 276–​306. Narin, F, Olivastro, D & Stevens, KA 1994, Bibliometrics/​Theory, Practice and Problems. Evaluation Review, 18(1), 65–​76. OECD 2016, Protecting Consumers in Peer Platform Markets –​Exploring the Issues (No. 253). OECD (Organisation for Economic Cooperation and development), Paris. Osterwalder, A & Pigneur, Y 2010, Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. New Jersey: John Wiley. Parviainen, P, Tihinen, M, Kääriäinen, J & Teppola, S 2017, Tackling the Digitalization Challenge: How to Benefit from Digitalization in Practice. International Journal of Information Systems and Project Management, 5(1), 63–​77. Piscicelli, L, Geke DS & Ludden, TC 2018, What makes a sustainable business model successful? An empirical comparison of two peer-​to-​peer goods-​sharing platforms. Journal of Cleaner Production, 172(1), 4580–​4591. Plewnia, F & Guenther, E 2018, Mapping the Sharing Economy for Sustainability Research. Management Decision, 56(3), 570–​583. Vaughan, R. and Daverio, R 2016, Assessing the Size and Presence of the Collaborative Economy in Europe. London: PWC. Rachinger, M Rauter, R Müller, C Vorraber, W & Schirgi, E 2019, Digitalization and its Influence on Business Model Innovation. Journal of Manufacturing Technology Management, 30(8), 1143–​1160. Ritter, M & Schanz, H 2019, The Sharing Economy: A Comprehensive Business Model Framework. Journal of Cleaner Production, 213, 320–​331. Schlagwein, D, Schoder, D & Spindeldreher, K 2020, Consolidated, Systemic Conceptualization, and Definition of the “Sharing Economy”. Journal of the Association for Information Science and Technology, 71(7), 817–​838. Schor, J 2014, Debating the Sharing Economy. Great Transition Initiative. Cambridge, MA: Tellus Institute. Šiuškaitė, D, Pilinkienė, V, & Žvirdauskas, D 2019, The Conceptualization of the Sharing Economy as a Business Model. Engineering Economics, 30(3), 373–​381.

17

Digital Entrepreneurship  71 Stabell, C & Fjeldstad, Ø 1998, Configuring Value for Competitive Advantage: On Chains, Shops, and Networks. Strategic Management Journal, 19(5), 413–​437. Strømmen-​ Bakhtiar, A & Vinogradov, E 2020, The Impact of the Sharing Economy on Business and Society. Milton Park: Routledge. Täuscher, K & Laudien, S 2018, Understanding Platform Business Models: A Mixed Methods Study of Marketplaces. European Management Journal, 36(3), 319–​329. Teece, D 2010, Business Models, Business Strategy and Innovation. Long Range Planning, 43(2–​3), 172–​194. Trabucchi, D, Muzellec, L & Ronteau, S 2019, Sharing Economy: Seeing Through the Fog. Internet Research, 29(5), 996–​1013. Trenz, M, Frey, A & Veit, D 2018, Disentangling the Facets of Sharing. Internet Research, 28(4), 888–​925. Van Eck, N & Waltman, L 2009, Software Survey: VOSviewer, A Computer Program for Bibliometric Mapping. Scientometrics, 84(2), 523–​538. Vaskelainen, T & Münzel, K 2018, The Effect of Institutional Logics on Business Model Development in the Sharing Economy: The Case of German Carsharing Services. Academy of Management Discoveries, 4(3), 273–​293. Veit, D, Clemons, E, Benlian, A, Buxmann, P, Hess, T, Kundisch, D, Leimeister, JM, Loos, P & Spann, M 2014, Business Models, An Information Systems Research Agenda. Business & Information Systems Engineering, 6(1), 45–​53. Verbeek, A, Debackere, K, Luwel, M & Zimmermann, E 2002, Measuring Progress and Evolution in Science and Technology –​I: The Multiple Uses of Bibliometric Indicators. International Journal of Management Reviews, 4(2), 179–​211. Wilhelms, M, Merfeld, K & Henkel, S 2017, Yours, Mine, and Ours: A User-​ Centric Analysis of Opportunities and Challenges in Peer-​ To-​ Peer Asset Sharing. Business Horizons, 60(6), 771–​781. Zott, C, Amit, R & Massa, L 2011, The Business Model: Recent Developments and Future Research. Journal of Management, 37(4), 1019–​1042.

27

4  The Sharing Economy as an Entrepreneurial Evolution of Electronic Commerce Andrea Geissinger, Christofer Laurell, Christina Öberg, and Christian Sandström,

Introduction Entrepreneurship could be defined as the process of creating business and scaling its operations (Shane & Venkataraman, 2000). New types of operations driven by digitalisation, such as the sharing economy, challenge existing definitions of entrepreneurship both in the type of value created and in the scaling efforts. There are thereby both social and technological components, which, when taken together, construct a link to different forms of commerce: e-​commerce (electronic commerce), social commerce and sharing commerce. E-​commerce refers to ‘the seamless application of information and communication technology from its point of origin to its endpoint along the entire value chain of business processes conducted electronically’ (Wigand, 1997, p.5). Social commerce denotes ‘the delivery of e-​ commerce activities and transactions via the social media environment, mostly in social networks and by using Web 2.0 software’ (Liang & Turban, 2011, p.6), while sharing commerce refers to ways in which consumers share excess resources and benefits with other consumers through easy-​to-​use cloud-​based technology platforms such as Airbnb (Hajli & Featherman, 2018). Social commerce, in contrast to e-​commerce, manifests as combinations of commercial and social activities, often with quite indirect commercial activities, such as individuals’ recommendations to others on social platforms (Liang et al., 2011), while the sharing commerce puts focus on the more commercial interaction, broadening the aspect of exchange and increasingly associating with consumer-​to-​consumer activities. Using these various types of commerce, the purpose of the chapter is to assess the impact of the sharing economy on how entrepreneurship has evolved. While e-​commerce, social commerce and sharing commerce could be regarded as distinct development steps linked to new and increasingly democratised and interactive digital solutions, there are overlapping understandings of the various forms of commerce. They would, thereby, help to grasp entrepreneurship in new ways. The following research question is addressed: How does the conceptualisation of entrepreneurship

37

Entrepreneurial Evolution of Electronic Commerce  73 need to be updated based on the evolution of commerce? In the chapter, we link various types of commerce to different industry sectors to see whether and how they indicate variances in the definition of entrepreneurship based on sector characteristics or if the need for a revised definition of entrepreneurship is universal in that regard. The chapter contributes to previous literature by providing a systematic empirical account of the evolvement of the sharing economy vis-​à-​vis electronic, social and sharing commerce and by conceptually explaining why the sharing economy gives rise to a relatively wide plethora of entrepreneurship initiatives. The literature on the sharing economy has explored such issues as consumers’ motives (Hamari et al., 2016), the impact of the sharing economy on specific industry sectors (Zervas et al., 2017) and characterising features of sharing economy business models (Cohen & Kietzmann, 2014). Much, though, remains in assessing the sharing economy’s impact on the transformation of entrepreneurship. The chapter illustrates the diversity of the sharing economy while pointing to how e-​commerce, social commerce and sharing commerce help to grasp diversities that run across the sharing economy and the various sectors in which it is presently represented. This again helps to question established definitions of entrepreneurship (Shane & Venkataraman, 2000) and introduce dimensions that a future revised definition needs to consider. The remainder of the chapter is organised as follows. Next, we address the character of the sharing economy and thereafter review current literature on e-​commerce, social commerce and sharing commerce. The following section describes the employed method, and subsequently, findings are presented, analysed and discussed. Finally, some concluding remarks are provided.

Sharing Economy as Commerce The Evolution of the Sharing Economy The sharing economy has developed in response to the lessening social stigma associated with sharing rather than owning assets. According to Belk (2017), the dominant social norms favouring ownership have partly changed to being free of possessions and ‘renting’ what is needed, when it is needed. Customers become more open to sharing their resources (and often personal) possessions with others, such as their house or car, enabled also as sharing platforms create the trust in strangers (Javenpaa & Teigland, 2017; Möhlmann & Geissinger, 2018). Botsman and Rogers (2010) highlight three broad characteristics of the sharing economy, encompassing access to products or services without owning those assets, the re-​allocation of goods and the exchange of intangible assets. Essentially, the three characteristics facilitate the ‘renting’ or sharing of a product or service (e.g., Uber), redistribution of markets (e.g., Craigslist) and collaborative lifestyles (e.g., Airbnb).

47

74  Andrea Geissinger et al. There are several alternative terms for the sharing economy, including the collaborative consumption economy (e.g., Hamari et al., 2016; Möhlmann, 2015), on-​demand economy (The Economist, 2015), peer economy (or peer-​to-​peer economy; e.g., Weber 2016), and gig economy (e.g., Greenwood et al. 2017). Combined, these terms point at (1) digital peer-​to-​peer (i.e., consumer-​to-​consumer) and/​or business-​to-​consumer transactions (Acquier et al., 2017); (2) underused assets shared for free or for a fee (Botsman, 2015); (3) intermediated, decentralised exchanges (Acquier Daudigeos & Pinkse, 2017); and (4) temporality of access (Botsman & Rogers, 2010; Frenken & Schor, 2017). These specifying characteristics represent some opposing ideas, including what parties take part (consumers and/​ or businesses), the monetary/​ non-​ monetary arrangement, intermediaries that are disintermediated and decentralised (Edelman & Geradin, 2015), and once looking into the verbs of the sharing economy (cf. Belk, 2014): whether goods or services are transferred, rented, swapped or shared (e.g., Laurell & Sandström, 2017). Even though research devoted to the sharing economy has gained considerable traction, how the sharing economy impacts the development of entrepreneurship is an issue where more knowledge is needed. This is not the least so since the sharing economy carries characteristics that may be interpreted as commercial, but also those being entirely non-​commercial as well as with a very limited social scope and hence links while also disassociating from electronic commerce and social commerce. It is also so based on how the sharing economy expands into new sectors, affecting how business is conducted in them. In the next section, we continue by addressing various developments of commerce as a means to understand evolutionary steps guiding towards a revised definition of entrepreneurship, including both social and technological components. E-​commerce, Social Commerce and Sharing Commerce E-​ commerce thus refers to how exchanges occur through online marketplaces. As such, e-​commerce takes the vendor’s perspective on marketing offerings to customers (Wigand, 1997) and highlights the use of digital technology as shopping windows and shops. Meanwhile, social commerce denotes how transactions and other activities occur with social media as a facilitating tool (Liang & Turban, 2011). Zhang, Zhou and Zimmermann (2013) define and situate social commerce in a framework of business, technology, information and people in which the following components are central: commerce activities including marketing, selling or sharing; social media; people as community members, buyers and sellers; and information about products and services. Social commerce considers how social media helps a company understand its customers, spread information about products and services, and do so with the help of consumers’ social networks. Compared to e-​commerce, it adds consumers’ social media communication to the ability to communicate

57

Entrepreneurial Evolution of Electronic Commerce  75 products and services and links heavily to the general social media adaptation in society. The transaction –​the commerce –​and its communication are thereby divided between the supplier firm selling and the consumer communicating (cf. Yadav et al., 2013). Here there are researchers turning these activities around: pointing at the consumer selling service (Stephen & Toubia, 2010) or the supplier firm using social platforms to communicate. The social network of parties is central and expects to positively affect commerce, and the division of tasks and the social component are different to how e-​commerce places selling and communicating tasks at the supplier while suppressing any social component. Sharing commerce, which reflects how individuals utilise each other’s resources on an accessing basis (cf. Acquier et al., 2017), may well connect individuals that have no previous social history. In fact, connecting unconnected parties is one of the characteristics of it, underpinned by transactional exchanges and platforms as coordinators. Given a fuzziness of the borders between social commerce and e-​commerce (Huang & Benyoucef, 2013), the emerging sharing commerce is not easily separated from these. If the consumer is the party to sell the product or service, social commerce would run across both e-​commerce and sharing commerce, as would be the case if the company is the one to operate social media platforms and use these as sales channels. The spectrum from e-​commerce to social commerce becomes a means to understand the for-​payment/​non-​payment orientation of exchanges in the sharing economy as well as the transactional/​social way of interacting. Table 4.1 presents definitions of e-​ commerce, social commerce and sharing commerce and illustrates how their respective characterising traits differ. The sharing economy is currently exhibiting a highly diverse and pluralistic character (cf. Mair & Reischauer, 2017) as it has come to include several interrelated economies idealised in the cores of the access economy, platform economy and community-​based economy (Acquier et al., 2017). It has also been described in terms of varieties in motives (Hamari et al., 2016), for-​payment/​not-​for-​payment arrangements (Laurell & Sandström, 2017), social/​ transactional characteristics of exchanges and the accessing/​transferring as means of exchanges. It is pluralised in how the peer-​to-​peer exchanges have become complemented by company-​to-​company, consumer-​to-​company and company-​to-​ consumer exchanges, together with practicing forms of professionalisation and more temporal, amateur-​based transactions (Öberg, 2018). The diverse and pluralistic character of the sharing economy, therefore, is likely to fuel various expressions of commerce: not only sharing commerce but also social commerce and e-​commerce. In light of how the electronic and social commerce as well as the sharing economy literature have gained traction, a clear gap in the existing literature concerns the impact of the sharing economy on the evolvement of entrepreneurship, and how our view on and definition of entrepreneurship changes due to these developments.

67

76  Andrea Geissinger et al. Table 4.1 Definitions and characterising traits of e-​commerce, social commerce and sharing commerce Concept

E-​commerce

Social commerce

Sharing commerce

Definition

The seamless application The delivery of The ways in which of information and e-​commerce activities consumers share communication and transactions excess resources technology from its via the social media and benefits with point of origin to environment, mostly other consumers its endpoint along in social networks through easy-​to-​ the entire value and by using Web use cloud-​based chain of business 2.0 software (Liang social commerce processes conducted & Turban, 2011, technology electronically p. 6) platforms such as (Wigand, 1997, p. 5) Airbnb (cf. Hajli & Featherman, 2018) Parties in focus The selling company The consumer’s social The platform network Role of central Sell Communicate Share/​access party Motives of Financial (revenues) Social/​hedonic Hedonic to financial central party Business/​ Companies in focus Consumers in focus Consumer to consumer consumer exchanges Central devices Company website Facebook, Twitter, Web-​based platform blogs Role of web Channel of sales Network of Coordination trust Pre-​purchase trust in individuals mechanism between selling company Trust created based on user and provider in the social network the platform. (knowing the party Evaluations of peers recommending in to reduce perceived beforehand) risk

Research Design To address the purpose of this chapter, social media analytics and content analysis of sharing economy platform websites were conducted. The former was used to track and identify sharing economy platforms, the latter to decide how these platforms related to electronic, social or sharing commerce. Data Collection Collecting data from social media was considered suitable based on how social media and the sharing economy has many overlaps in terms of users (Dahlin & Öberg, 2017), the digital solution underpinning both (Felländer et al. 2015) and since social media allows for the analysis of up-​to-​date communication about recent developments. Data collection in social media has become popular in recent years, resulting in the emergence of social media analytics (Jung et al., 2017; Stieglitz et al. 2014),

7

Entrepreneurial Evolution of Electronic Commerce  77 which allows for systematic data capturing and analysis of a broad array of social media posts. As a means to deal with the deficiencies of social media in terms of a fragmented social media landscape and the lack of standardised ways to gain access to content across social media platforms, a data analytics tool named Notified was used to track user-​generated posts published on dominating social media platforms (see, e.g., Geissinger et al., 2020; Geissinger et al., 2019). To use the tool, the researcher first enters a keyword or a set of keywords. After the keyword or the set of keywords are entered, all publicly accessible posts on Twitter, Instagram, Facebook, blogs, forums, and YouTube are collected in real time. A primary benefit of using services like Notified is to gain access to data from all major social media platforms directly. Another benefit relates to the possibility of collecting data with the help of specific filters, which, for instance, enable the researcher to focus on specific geographical areas of interest. Filtering data collection to a specific language and user origin allowed for a more focused approach. This is important because certain keywords can have several connotations in different languages as well as be rare or common in the everyday vocabulary across languages. During the last two decades, Sweden has demonstrated high levels of internet penetration and the use of digital technology among its ten million inhabitants. Airbnb and Uber early became dominant platforms, while new platforms emerged, making the Swedish sharing economy particularly vibrant (Felländer et al., 2015). In this chapter, a data set from social media was collected covering all public posts published on the dominant social media outlets available that included the keyword ‘delningsekonomi(n)’ (the direct translation of ‘(the) sharing economy’ in Swedish) between April 1, 2016 and March 31, 2018. The usage of ‘delningsekonomi(n)’ in the Swedish language is strongly limited outside of the scope of its meaning as the sharing economy. Therefore, user-​ generated posts including this keyword were assumed to have high relevance for the phenomenon under study. The social media data collection generated a data set amounting to 8,755 social media posts. Table 4.2 presents the distribution of collected posts per social media platform. Table 4.2 Collected published user-​generated posts per social media platform Social media

n

%

Blog Facebook Forum Instagram Twitter Total

610 893 32 1,122 6,098 8,755

7.0 10.2 0.4 12.8 69.6 100.0

87

78  Andrea Geissinger et al. Data Analysis Following the data collection, qualitative content analysis (Silverman, 2006) was applied by analysing each user-​generated post published during the first of the two years. This material was coded according to whether individual user-​generated posts included references to any sharing economy platform, and in such instances, to which platform (or platforms) was referred. This resulted in 1,872 identified posts (the remaining posts did not mention any named platform(s)) referring to 66 unique platforms that constructed the baseline for the study. This baseline was thereafter used for the second year to analyse posts and platforms mentioned that year. To decide the commerce orientation, the communication on the identified platforms’ websites was analysed for statements specifying whether it referred to what could be interpreted as e-​commerce, social or sharing commerce. The definitions and descriptions in Table 4.1 were applied in this step and guided the analysis. A clear indication for sharing commerce (Hajli & Featherman, 2018) was assumed when website statements encouraged consumers to share their possessions with other consumers through their platforms. In cases where no such or related attributes were presented, but the platforms’ websites stated social platform interaction (Liang & Turban, 2011), these platforms were coded as social commerce oriented. Clear indications of social commerce were statements encouraging consumers to engage with each other or with the platform provider even though no sharing related encouragements were present. In cases where neither sharing commerce nor social commerce-​related aspects were to be found, and descriptions included the sheer transfer of products or services with companies potentially involved (cf. Wigand, 1997), these platforms were coded as e-​commerce oriented. As a means to explore a possible connection between the type of commerce and the industry sector in which the platform operated, the next step of analysis focused on mapping sectors in which the identified sharing economy platforms operate. This step included the iterative definitions of industry sectors from the data material to capture potential intra-​ sector variances in sharing social and general e-​ commerce orientations and helped us to cross-​check and validate consistency of data. This part of the analysis also included finding explanations to the various orientations anchored towards the industry sectors and using a backward tracing of such explanations from the outcome of the analysis (cf. Jessop, 2005). The platform and sector analyses were followed by quantitative content analysis (Silverman, 2006). This was carried out by analysing the frequency and share of sharing commerce, social commerce and e-​commerce sharing economy platforms as well as their associated sectors throughout the total 24-​month period. The analysis thereby focused on the number of platforms in each sector and assessed individual platform’s impact measured through the relative number of posts, including each platform.

97

Entrepreneurial Evolution of Electronic Commerce  79

Findings Table 4.3 presents identified sharing economy platforms in the sharing commerce, social commerce and e-​ commerce categories and their associated frequency of social media posts. As the table illustrates, a total of 20 general e-​commerce platforms were identified that together generated 215 user-​generated posts or 11.5% of the total posts. In terms of social commerce, 15 platforms were identified that together generated 787 user-​generated posts, equivalent to 42.0% of the total posts. A total of 31 platforms were identified in the sharing commerce category that Table 4.3 Identified platforms in sharing, social and e-​ commerce and their associated frequency of user-​generated posts Sharing commerce Platform

Social commerce

Frequency Platform

Swopshop 300 Airbnb 122 Uberpop 83 Fritidsbanken 64 Skjutsgruppen 39 Hygglo 39 Buddler 34 Snappcar 31 Airdine 27 RentAway 24 Cykelkök 19 Rentl 18 Lendify 11 Airpnp 9 Delbar 8 Growgbg 8 Swingabazaar 4 GoMore 3 Sportotek 3 RentATrend 3 Retoy 3 Grannsaker 3 Homii 3 WayWay 2 Boodla 2 Homeexchange 2 Rentez-​Vous 2 Youple 1 Gumbuddy 1 Hoffice 1 Shareit Blox 1 Car Total 870

E-​commerce Frequency Platform

Uber 512 Hoodifood 82 Taskrunner 62 Yepstr 40 Freelway 28 Citorent 19 Addcreators 13 Baghitch 10 Klädoteket 8 Selectcook 4 Antlos 3 CycleWithoutAGe 2 Lånegarderob 2 Eyeoda 1 GetAround 1

787

Frequency

Sunfleet 50 Meetrd 43 Bundling 24 Palaver Place 18 Bonsai 17 Kollektiva 16 Car2Go 6 Cirqs 6 Moveabout 5 Drive Back 5 Cool Company 4 Elbnb 4 Ramirent 3 Cramo 3 Lynk & Co 3 DriveNow 3 Sporthyra 2 Keypit 1 Cargospace24 1 GigRove 1

215

08

80  Andrea Geissinger et al. 180 160 140 120 100 80 60 40

0

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

20

2016 E-commerce

2017 Social commerce

2018 Sharing commerce

Figure 4.1 Aggregated frequency of user-​generated posts published referring to sharing, social and e-​commerce platforms between April 2016 and March 2018.

generated 870 user-​generated posts over the measured period, equivalent to 46.5% of all posts. Figure 4.1 presents the aggregated frequency of user-​generated posts referring to sharing, social and e-​ commerce platforms between April 2016 and March 2018. As illustrated in the figure, the aggregated number of posts about all three categories of platforms decreased from the first to the second year. During the first year, posts about sharing commerce platforms and social commerce platforms dominated, while the engagement for e-​commerce platforms spiked in November 2016. During the second year, posts about sharing commerce platforms as well as social commerce platforms dominated, despite a lower level of interest among social media users, and posts about e-​commerce platforms almost disappeared towards the end of the second year. Table 4.4 presents the distribution of identified sectors and the associated frequency of social media posts for sharing, social and e-​ commerce. As illustrated in the table, e-​ commerce platforms were distributed among nine sectors, social commerce platforms operated in seven sectors and sharing commerce platforms were present in 11 sectors. Figure 4.2 visualises the degree to which the identified sectors related

18

Entrepreneurial Evolution of Electronic Commerce  81 Table 4.4 Distribution of identified sectors and their associated user-​ generated posts for sharing, social and e-​commerce Sharing commerce

Social commerce

E-​commerce

Sector

Frequency

Sector

Sector

Fashion Mobility Services Hospitality Leisure Food Finance Housing Kids and Children Work Miscellaneous Total

305 159 158 124 77 27 11 4 3

Mobility 515 Services 89 Food 86 Work 54 Logistics 38 Leisure 3 Fashion 2

1 1 870

Frequency

787

Work Mobility Kids Children Finance Energy Construction Leisure Services Logistics

Frequency 86 72 30 16 4 3 2 1 1

215

to sharing commerce, social commerce and e-​commerce. As can be read from the figure, the mobility sector dominated and included the sharing commerce, social commerce and e-​commerce platforms. While mobility runs across all types of commerce, other sectors are more oriented to one category: fashion and clothing, with various forms of clothes-​swapping platforms, would be expressions of sharing commerce. Leisure similarly describes a sharing commerce. Yet, other sectors divide between two categories, then often including sharing commerce and e-​commerce, or social and e-​commerce, while less often expanding between social and sharing commerce.

Analysis and Discussion The findings point out that the sharing economy includes traces of various types of commerce, which broadly would not fit into prevailing definitions of entrepreneurship. More precisely, our assessment shows that the sharing economy fuels sharing commerce, and by doing so, enables consumers to share excess resources and benefits with other consumers through easy-​to-​use platforms (Hajli & Featherman, 2018), again expressing how the sharing economy adds to what we previously know about entrepreneurship, and also emphasising that it is neither fully about entrepreneurship going digital (as in e-​commerce) or going social (as in social commerce). E-​commerce can be regarded as quite incompatible with the early notion of the sharing economy, due to that the sharing economy developed in response to the lessening of social stigma associated with sharing rather than owning an asset (Belk, 2014). Meanwhile, sharing

28

82  Andrea Geissinger et al. economy platforms such as Uber and Airbnb become more and more professionalised, with companies as delivering parties (Dahlin & Öberg, 2017) and as more and more exchanges seem to be for-​payment ones (Laurell & Sandström, 2017). E-​ commerce as part of the sharing economy can, in one sense, indicate the presence of sharing economy platforms taking part in ‘share washing’, that is, the pro-​social labelling of for-​profit monetary exchange (cf. Belk, 2017; Troncoso, 2014), or it can be considered to have generated market opportunities for actors that may have grounded their business in activities of sharing, while grasped scaling opportunities, the latter in line with present definitions of entrepreneurship (cf. Shane & Venkataraman, 2000). Social commerce, as part of the sharing economy, would emphasise how any exchange or sharing is only social and potentially not based on any actual uses, hence stressing the social dimension at the expense of the business orientation, and thereby indicating characteristics that are external to what traditionally defines entrepreneurship. With the sharing economy in mind, though, social commerce may need to be integrated in a revised definition of entrepreneurship. Meanwhile, the sharing commerce takes away the actual transfer of goods or services, and potentially also the social dimension, from exchanges. While entrepreneurship may not explicitly refer to exchanges of goods and services, these ‘verbs of the sharing economy’ (cf. Belk, 2014) indeed add to what traditionally would be thought of as entrepreneurship. As Figure 4.2 illustrates, the distribution of categories occurs among sectors, with many sectors representing at least two categories, often with e-​commerce as one of them. This implies that the sharing economy is not a by-​sector phenomenon –​neither in terms of its presence as such, nor in its e-​commerce, social or sharing commerce orientation. This strengthens the case about how the definition of entrepreneurship would need to be revised. The phenomenon at hand is not one of a single sector and it is not a one-​type-​of-​commerce per sector phenomenon. Rather it runs across sectors with platforms making their own interpretations of how to make themselves part of the sharing economy or how they see themselves affected by it. It also illustrates how platforms are developed to either niche them towards other platforms in the sector or based on other fundamental motives –​hedonic or financial (cf. Hamari et al., 2016) –​than those already in the sector. When taken together, our assessment of the sharing economy related to sharing, social and electronic commerce illustrates how the sharing economy has multiple impacts on entrepreneurship. This is the case in light of the three respective forms of commerce present in the sharing economy and because the three types are present across industry sectors. As such, the sharing economy’s overall impact can be understood to fuel the three types of commerce, but also introduce potential turbulence within the industry sectors where several forms of commerce co-​exist. Given that the sharing economy continues to expand and encompass additional industry

38

Entrepreneurial Evolution of Electronic Commerce  83

Figure 4.2 Data flow over the studied time period by sector and commerce.

sectors, increased turbulence in other sectors is a likely future scenario where studies within the intersection between the sharing economy literature and the commerce literature arguably will become essential to understand this interplay’s consequences for the evolving structure of the sharing economy but also the future of entrepreneurship.

Concluding Remarks, Limitations and Future Research This chapter assesses the impact of the sharing economy on how entrepreneurship has evolved. The introduction raised the following question: How does the conceptualisation of entrepreneurship need to be updated based on the evolution of commerce? Based on a data set of social media posts reporting on the sharing economy and our categorisation of platforms into electronic, social and sharing commerce, the chapter indeed points at how entrepreneurship as the process of creating business and scaling its operations (Shane & Venkataraman 2000) does not manage to capture everything that goes on in the sharing economy. Meanwhile, pluralities and dynamics related to the sharing economy expanding from e-​commerce to sharing commerce within and among sectors would mean that times may presently not allow for a redefinition that stands the test of time.

48

84  Andrea Geissinger et al. With that said, entrepreneurship would need to include options for social exchanges as expressed in social commerce, yet also non-​social ones. It would also need to include the digital component as an enabler to growth –​as expressed in e-​commerce –​or as an intermediator in the sharing commerce. To think about entrepreneurship as something not containing business growth but rather social growth, non-​ exchange rather than business transactions, and expansion not being at the heart of operations but rather decentralised, helps to challenge existing definitions. This chapter contributes to previous literature by providing a systematic empirical account on the evolvement of the sharing economy vis-​ à-​vis entrepreneurship and by conceptually explaining why the sharing economy gives rise to a relatively wide plethora of commerce initiatives, along with the mutual impact between the forms of commerce and the sharing economy. To studies on entrepreneurship specifically, the chapter illustrates an expansion of approaches to operate, which is affected not only by the technological development but also by trends of online socialising and sharing as opposed to owning (cf. Belk, 2017). These latter aspects indicate how changing social norms affect entrepreneurship, not only in the construct of new operations and transformation of present ones (as illustrated by the expansion of the sharing economy) but also in the orientation of commerce (as sharing, social and electronic commerce) sharply creating pluralism, yet also expectedly affecting operations beyond the sharing economy. Methodologically, our chapter provides illustrations of how current phenomena and developments may benefit from current and developing research methods, not least when they link data methods to researched phenomena as in social media analytics and digitalised operations. As for practical and policy implications, the chapter points at how the sharing economy challenges entrepreneurship definitions, which in practice would mean questioning present interpretations and understandings of entrepreneurship. As such, sharing expands the lens of commerce and would mean for present business actors to extend their view on what is business, competition and forms of collaborations. For policy, the obvious link is between sharing and those regulatory regimes that guide operations yet also support them. As has been discussed in previous literature: how, why and when should sharing be taxed? But also: when would sharing operators be eligible for business support? This study has two main limitations. First, the study is empirically limited to publicly posted user-​generated posts published in the social media landscape and sharing economy platforms’ websites. Second, the collected data set from social media solely contains user-​generated posts published in Swedish. As such, other national settings may differ substantially from the Swedish discourse. We welcome further research on the topic and research elaborating on the sharing economy in various countries in this regard. Longitudinal studies may help to indicate the developing trends noted in the chapter.

58

Entrepreneurial Evolution of Electronic Commerce  85

Bibliography Acquier, A, Daudigeos, T & Pinkse, J 2017, ‘Promises and paradoxes of the sharing economy: An organizing framework’, Technological Forecasting and Social Change, vol. 125, pp. 1–​10. Belk, R 2014, ‘You are what you can access: Sharing and collaborative consumption online’, Journal of Business Research, vol. 67, no. 8, pp. 1595–​1600. Belk, R 2017, ‘Sharing, materialism, and design for sustainability’, in Chapman, J (ed.) Routledge Handbook of sustainable product design, Routledge, London, pp. 160–​172. Botsman, R 2015, ‘Defining the sharing economy: What is collaborative consumption and what isn’t?’ Fast Company, vol. 27, www.fastcompany.com/​ 3046119/​defining-​the-​sharing-​economy-​what-​is-​collaborative-​consumption-​ and-​what-​isnt (accessed 20 April 2019). Botsman, R & Rogers, R 2010, ‘Beyond zipcar: Collaborative consumption’, Harvard Business Review, vol. 88, no. 10, pp. 30–​32. Cohen, B & Kietzmann, J 2014, ‘Ride on! Mobility business models for the sharing economy’, Organization & Environment, vol. 27, no. 3, pp. 279–​296. Dahlin, P & Öberg, C 2017, ‘Sharing economy –​For whom?’ 22nd CBIM 2017 Academic Workshop, Stockholm. Economist 2015, ‘Workers on tap; the on-​demand economy’, available at: www. economist.com/​news/​leaders/​21637393-​rise-​demand-​economy-​poses-​difficult-​ questions-​workers-​companies (accessed 20 April 2019). Edelman, BG & Geradin, D 2015, ‘Efficiencies and regulatory shortcuts: How should we regulate companies like Airbnb and Uber’, Stanford Technology Law Review, vol. 19, no. 2, pp. 293–​328. Felländer, A, Ingram, C & Teigland, R 2015, Sharing economy: Embracing change with caution, Entreprenörskapsforum, Stockholm. Frenken, K & Schor, J 2017, ‘Putting the sharing economy into perspective’, Environmental Innovation and Societal Transitions, vol. 23, pp. 3–​10. Geissinger, A, Laurell, C, & Sandström, C 2020, ‘Digital disruption beyond Uber and Airbnb –​Tracking the long tail of the sharing economy’. Technological Forecasting and Social Change, vol. 155, 119323. Geissinger, A, Laurell, C, Sandström, C, Eriksson, K, & Nykvist, R 2019, ‘Digital entrepreneurship and field conditions for institutional change –​Investigating the enabling role of cities’, Technological Forecasting and Social Change, vol. 146, pp. 877–​886. Greenwood, B, Burtch, G & Carnahan, S 2017, ‘Unknowns of the gig-​economy: Seeking multidisciplinary research into the rapidly evolving gig-​ economy’, Communications of the ACM, vol. 60, no. 7, pp. 27–​29. Hajli, N 2015, ‘Social commerce constructs and consumer’s intention to buy’, International Journal of Information Management, vol. 35, no. 2, pp. 183–​191. Hajli, N & Featherman, M 2017, ‘Social commerce and new development in e-​ commerce technologies’, International Journal of Information Management, vol. 3, no. 37, 177–​178. Hajli, N, Sims, J, Zadeh, AH & Richard, MO 2017, ‘A social commerce investigation of the role of trust in a social networking site on purchase intentions’, Journal of Business Research, vol. 71, pp. 133–​141.

68

86  Andrea Geissinger et al. Hamari, J, Sjöklint, M & Ukkonen, A 2016, ‘The sharing economy: Why people participate in collaborative consumption’, Journal of the Association for Information Science and Technology, vol. 67, no. 9, pp. 2047–​2059. Huang, Z & Benyoucef, M 2013, ‘From e-​commerce to social commerce: A close look at design features’, Electronic Commerce Research and Applications, vol. 12, no. 4, pp. 246–​259. Javenpaa, S & Teigland, R 2017, ‘Trust in digital environments: From the sharing economy to decentralized autonomous organizations’, Proceedings of the 50th Hawaii International Conference on Systems Science, HICSS 2017, Hilton Waikoloa Village, Hawaii, USA, January 4–​7, 2017, pp. 5812–​5816. Jessop, B 2005, ‘Critical realism and strategic-​ relational approach’, Critical Realism Today, vol. 56, pp. 40–​53. Jung, K, Chilton, K & Valero, JN 2017, ‘Uncovering stakeholders in public–​ private relations on social media: a case study of the 2015 Volkswagen scandal’, Quality & Quantity, vol. 51, no. 3, pp. 1113–​1131. Laurell, C & Sandström, C 2017, ‘The sharing economy in social media: Analyzing tensions between market and non-​market logics’, Technological Forecasting and Social Change, vol. 125, pp. 58–​65. Liang, TP, Ho, YT, Li, YW & Turban, E 2011, ‘What drives social commerce: The role of social support and relationship quality’, International Journal of Electronic Commerce, vol. 16, no. 2, pp. 69–​90. Liang, TP & Turban, E 2011, ‘Introduction to the special issue social commerce: a research framework for social commerce’, International Journal of Electronic Commerce, vol. 16, no. 2, pp. 5–​14. Mair, J & Reischauer, G 2017, ‘Capturing the dynamics of the sharing economy: Institutional research on the plural forms and practices of sharing economy organizations’, Technological Forecasting and Social Change, vol. 125, pp. 11–​20. Möhlmann, M 2015, ‘Collaborative consumption: Determinants of satisfaction and the likelihood of using a sharing economy option again’, Journal of Consumer Behaviour, vol. 14, no. 3, pp. 193–​207. Möhlmann, M & Geissinger, A 2018, ‘Trust in the sharing economy: Platform-​ mediated peer trust’, in N Davidson, J Infranca & M Finck (eds.) Cambridge handbook on the law of the sharing economy, Cambridge University, Cambridge. Öberg, C 2018, ‘Social and economic ties in the freelance and sharing economies’, Journal of Small Business and Entrepreneurship, vol. 30, no. 1, pp. 77–​96. Shane, S & Venkataraman, S 2000, ‘The promise of entrepreneurship as a field of research’, Academy of Management Review, vol. 25, no. 1, pp. 217–​226. Silverman, D 2006, Interpreting qualitative data, Sage, London. Stephen, A & Toubia, O 2010, ‘Deriving value from social commerce networks’, Journal of Marketing Research, vol. 47, no. 2, pp. 215–​228. Stieglitz, S, Dang-​Xuan, L, Bruns, A & Neuberger C 2014, ‘Social media analytics’, Business & Information Systems Engineering, vol. 6, no. 2, pp. 89–​96. Troncoso, S 2014, ‘Is sharewashing the new greenwashing?’ P2P foundation, available at: https://​blog.p2pfoundation.net/​ is-​sharewashing-​the-​new-​ greenwashing/​2014/​05/​23 (accessed 20 April, 2018). Weber, TA 2016, ‘Product pricing in a peer-​ to-​ peer economy’, Journal of Management Information Systems, vol. 33, no. 2, pp. 573–​596.

78

Entrepreneurial Evolution of Electronic Commerce  87 Wigand, RT 1997, ‘Electronic commerce: Definition, theory, and context’, The Information Society, vol. 13, no. 1, pp. 1–​16. Yadav, MS, de Valck, K, Hennig-​Thurau, T, Hoffman, DL, & Spann, M 2013, ‘Social commerce: a contingency framework for assessing marketing potential’, Journal of Interactive Marketing, vol. 27, no. 4, pp. 311–​323. Zervas, G, Proserpio, D & Byers, JW 2017, ‘The rise of the sharing economy: Estimating the impact of Airbnb on the hotel industry’, Journal of Marketing Research, vol. 54, no. 5, pp. 687–​705. Zhang, P, Zhou, L & Zimmermann, HD 2013, ‘Advances in social commerce research: Guest editors’ introduction’, Electronic Commerce Research & Applications, vol. 12, no. 4, pp. 221–​223.

8

98

Part II

Digital Entrepreneurship and Sharing Economy Various Cases and Contexts

09

19

5  Asymmetries of Local Economic Impacts of Digital Entrepreneurship in Denmark The Case of Airbnb Jie Zhang and Nino Javakhishvili-​Larsen

Introduction This chapter investigates the potential economic impact of Airbnb on regional economies. Airbnb is a peer-​to-​peer (P2P) accommodation rental platform that allows individuals to rent out their dwellings to other individuals for a short period. This digital business form is often described as shared economy activity, which has grown rapidly over the last decade. The rise of Airbnb has been due to the increasing demand for short-​term rental accommodation and the popularity of online digital platforms. The online platform, Airbnb.com, is a digital marketplace that matches hosts and guests. The owners of houses or apartments (hereafter called ‘hosts’) can efficiently offer their unused rooms for short-​term rental through the online platform, while other individuals (hereafter called ‘guests’) can search for the available spare rooms for short-​term use. The hosts become entrepreneurs, earning extra income by renting out their spare rooms. At the same time, the guests, who are often tourists, can book accommodations at a lower price than other accommodation services offered at the destination. The aims of this chapter are (1) to contribute to the scarce literature on digital entrepreneurship, such as Airbnb, (2) to measure the value of Airbnb tourism in the local economy and (3) to shed light on how policies and regulations can be applied to diversify the economic gains from the digital entrepreneurship, so that it becomes favourable for tourist destinations not only in the urban areas but also in peripheral areas. The studies of Airbnb in Norwegian rural and peripheral destinations have shown that Airbnb has already spread into rural and peripheral regions, although it is primarily an urban phenomenon (Strommen-​ Bakhtiar &Vinogradov, 2019). Most businesses at the tourist destinations benefit from an increased number of visitors from Airbnb tourism such as restaurants, cafeterias and other tourism operators (e.g. museums, tourist attractions). They

29

92  Jie Zhang and Nino Javakhishvili-Larsen benefit from increased turnover when more tourists arrive at the destination (Fang et al., 2016; Tussyadiah & Pesonen, 2016; Leick et al., 2020). However, hotel sector organisations express concerns about Airbnb’s unfair competition for the prices of accommodation, and about hotels losing their market shares in the accommodation market (Zervas et al., 2017). The Airbnb company and Airbnb hosts are delighted to see the growth of the Airbnb market (Airbnb, 2019). The digital rental platform provides unique opportunities for individual entrepreneurs to get into markets as providers rather than consumers. We argue that the sharing economy, including Airbnb, is an innovation, which creates new means of supply and expands economic activity within other areas of service. If the increase of supply induces extra demand on the market, we assume that this will lead to growth in the local and regional economies. Furthermore, it is likely that Airbnb business will affect the traditional hotel business and push it towards innovative changes to keep its customer base. Sharing economy activity through digital platforms reflects the fact that citizens, especially urban citizens, have become digital entrepreneurs. They have become aware of the concept of resource-​ saving, where resources should be utilised more efficiently. It is cheaper for an individual (both guest and host) when traditional employees are removed from the distribution chain of an economic activity by digital platforms (Richter et al., 2017; Kraus et al., 2018). Digital platforms function as a ‘middleman’, connecting users and providers to trade their goods and services. The shared economy is the new and unreversed business model, changing from B2B (business to business) to B2C (business to consumer) and further to C2C (consumer to consumer). The latter type is a new business model derived from the popular online trading or through digital platforms and is growing especially in the sharing economy. The idea of a sharing economy is that consumers share the same resources without switching ownership (Kraus et al., 2018; Richter et al., 2017; Sussan & Acs, 2017; Zervas et al. 2017). The main purpose of this chapter is to make regional economic analysis of Airbnb activities through a database we collected. Airbnb data is collected from different sources, through which we also discuss the geographic distribution of Airbnb listings, listing prices and the potential for income generation in the local and regional economy. The data investigation provides a database for further analysis of the daily spending of Airbnb tourists, and to estimate total tourism revenue by given numbers of nights and the patterns of expenditure by Airbnb tourists. As a contribution to filling the gap in the literature, this chapter aims to shed light on the economic consequences of Airbnb tourism. The Danish interregional economic model, SAM-​ K/​ LINE®_​ RTSA is applied in the analysis to evaluate the economic effects of Airbnb through tourist spending in cities and coastal-​peripheral regions.

39

Digital Entrepreneurship in Denmark  93

Theoretical Framework of Digital Entrepreneurship and the Sharing Economy Various studies of the sharing economy analyse the effects of the goods and services that are consumed by multiple users. When so-​called ‘under-​ utilised’ products and services are returned to the supply chain, the value created by using idle resources generates additional economic wealth. Seen from the demand side, consumers benefit from the sharing economy by renting goods and services at a lower price and with lower transaction costs than buying or letting through a traditional provider (Zervas et al., 2017). Richter et al. (2017, p.301) define the sharing economy as “an economic model enabled and facilitated by the Internet and Web 2.0, in which users systematically share underutilized assets for monetary or nonmonetary benefits”. The main driver for tourists to use the Airbnb digital platform is financial. A low-​cost alternative to hotel accommodation is a primary motive for tourists to choose Airbnb. Tourists have always searched for ‘better value for the money’ (Balck & Crocau, 2015; Botsman & Rogers, 2011; Guttentag, 2015; Lamberton & Rose, 2012). Another motive is to keep social connections with the local communities (Tussyadiah & Pesonen, 2016). Most Airbnb listings are located outside the central hotel districts, and thus they provide tourists with intimacy and unique experiences in authentic settings (Guttentag, 2015; Oskam & Boswijk, 2016). Therefore, on the one hand, lower cost and unique local experiences from Airbnb are primary motives for tourists and, on the other hand, Airbnb tourists are willing to spend more in other goods and services at the destination (Tussyadiah & Pesonen 2016). As Tussyadiah and Pesonen (2016) point out, digital entrepreneurship through Airbnb transactions has shown a positive impact on local host communities, especially income generation. The business model has also induced more people to travel and change their travel patterns and behaviour. Tourists tend to travel more frequently due to the availability of low-​cost accommodation, and they are encouraged to participate more actively in local activities. Moreover, Airbnb tourists tend to stay longer and spend more than traditional tourists. There is a need for further investigation of the effects of Airbnb on local economies in order to motivate well-​informed policy making and local planning. As a low-​cost accommodation form, Airbnb is a competitor to the traditional accommodation providers. Zervas et al. (2017) analysed the effects of Airbnb supply on hotel revenue and found that Airbnb might cause reduced demand for small vacation hotels; however, the effect of Airbnb on the luxury hotels is limited. The authors claimed that Airbnb was taking over the role of low-​cost hotels like bed and breakfasts and hostels, as it most likely substitutes these, but not luxury hotels, which are more oriented towards business tourists, whose expenses will be

49

94  Jie Zhang and Nino Javakhishvili-Larsen reimbursed by their companies. Neeser (2015) applied the same method as Zervas et al. (2013) on the hotel revenue in Nordic European countries, and their results show that Airbnb did not significantly affect hotel revenue, but it did influence hotel room prices. Moreover, some studies also showed that short-​term rentals through Airbnb had no effect on the housing market or house prices. Parirolero (2016) established a method to test the relationship between houses sold and Airbnb development and provided evidence of insignificant correlation between Airbnb activity and house prices. Felländer et al. (2015) believe that a sharing economy can save transaction costs (e.g. saving the intermediate costs replaced by digital transactions). A sharing economy can also save bargaining and other costs by online transactions. Fang et al. (2016) provide an analysis of Airbnb’s effect on local employment. The results showed that Airbnb makes a positive contribution to tourism employment in the local economy, as tourists increase the consumption of local products and services. However, one of the drawbacks of the Airbnb business model seems to be that it might substitute and crowd-​out low-​end hotel accommodation in future. The increasing popularity of using digital marketplaces to conduct business is motivated by saving transaction and intermediate consumption costs. Traditional business models in service sectors are moving more towards digital business ventures and interactions online. Digital entrepreneurship is defined in many ways; however, all definitions emphasise the entrepreneurial aspect, i.e., sales, transactions, networking, conducted through the online platforms. Sussan and Acs (2017, p.66) define digital entrepreneurship as business activity “engaged in any sort of venture be it commercial, social, government, or corporate that uses digital technologies”. Sussan and Acs (2017) classify digital entrepreneurship as three types of digital business model: the user-​intensive unpaid (e.g. Facebook, Instagram, where the users share free information), the sharing economy (e.g. Airbnb, Uber, where the unused commodities are shared with payment through online transactions) and the user-​intensive, both paid and unpaid (e.g. Spotify, dating sites, where some services are unpaid with the possibility to upgrade to the paid services). In the rapidly growing digital era, the sharing economy business model grows through the reliability and trustworthiness of the business transactions, and this depends on the customer review system and the P2P model. The sharing economy through digital platforms diverts business activities from traditional business models to digital entrepreneurship and “challenges the traditional understanding of entrepreneurs” (Leick et al. 2020, p.4). Digital entrepreneurship relies on a good infrastructure of internet providers, and therefore it is mainly an urban phenomenon, as there is more high-​speed internet and communication in cities than in rural and peripheral areas. Geissinger et al. (2019) emphasised the changing lifestyle/​condition and urbanity as one of the main reasons for growing

59

Digital Entrepreneurship in Denmark  95 digital entrepreneurship in the sharing economy. They studied the digitalisation of business activities through the history of digital start-​ups and concluded that cities play an important role in imposing institutional change and in the growth of accessibility to information technologies and internet infrastructure. They argue that the recent trends in the development of digital entrepreneurship in the sharing economy point to future disruption, in both technological and institutional terms, in certain industries, thus pushing the governing institutions to adjust and change the regulatory approaches. One of the criticisms of digital entrepreneurship in the sharing economy is the absence of institutions that govern and regulate business activities, and this can lead to the failure of the model. As Kraus et al. (2018, p. 14) write: “Without fixing the tax requirements and the misuse of personal data, these models might not be sustainable, even in times of extreme digital entrepreneurship”. Denmark is one of the first countries in the world to enter into a collaborative agreement with Airbnb in 2018; the Danish government regulated that Airbnb hosts in Denmark can rent out their spare rooms for up to 70 days per year, and as an incentive there is an income tax allowance on the income generated through Airbnb rentals (Danmarks Erhvervsministeriet, 2017; Statistics Denmark, 2018; Rasmussen, 2019). In order to determine the best regulatory and institutional approaches, there is a need to understand how Airbnb as a form of digital entrepreneurship can contribute to local economies. Leick et al. (2020, p. 4) argue that the digital entrepreneurship in the sharing economy business model, like Airbnb, is ‘opportunity entrepreneurship’ (i.e. opportunity for using unutilised resources and expect expanding market demand), rather than ‘necessity entrepreneurship’ (i.e. new business start-​ups due to the lack of income opportunities). They follow Urbano and Aparicio’s (2016) argument that entrepreneurship growth leads to local economic growth and they test this empirically by studying Airbnb’s role on local economic development in Norway. Leick et al. (2020, p. 6) suggest a theoretical framework by linking digital entrepreneurship in the sharing economy to local economic growth. Their empirical model tests this link by using local unemployment as an indicator of economic growth. Their findings show that the increase in the unemployment rate does not affect Airbnb activity. They argue that Airbnb is opportunity entrepreneurship and therefore it does not show the traditional link of entrepreneurship to the traditional economic growth indicators such as unemployment (which is more common in necessity-​driven entrepreneurship activities). However, their study proves that Airbnb growth provides extra accommodation facilities and contributes to increasing the attractiveness of tourist destinations, thus increasing the demand in the tourism sector (Leick et al., 2020). This chapter studies the Airbnb case empirically by following the principles of digital entrepreneurship in the sharing economy (Kraus et al., 2018; Richter et al., 2017; Sussan & Acs 2017). It accepts the

69

96  Jie Zhang and Nino Javakhishvili-Larsen opportunity-​ driven entrepreneurship nature of Airbnb (Leich et al., 2020) that has primarily been an urban phenomenon emerging within disruptive institutional change (Geissinger et al., 2019). The chapter adds to previous empirical research by studying Airbnb’s direct and derived economic effects on the tourism sector, both in larger urban areas, as well as in rural and peripheral regions in Denmark and it measures the overall economic value of Airbnb.

Collection and Processing of Data Data is a critical issue in the analysis of Airbnb. Online short-​term rental is a new economic activity, so there is no data available in Denmark before 2015. Airbnb, Inc. has limited information regarding detailed datasets for research purposes. However, there are some Airbnb data sources available, and some variables can be collected there (Airbnb, 2015). The aim of data collection is to estimate the number of Airbnb bed nights that tourists spent at the destinations, tourists’ daily spending, room usage and the other categories. To estimate the number of Airbnb bed nights, we need information such as percentage of usage of Airbnb listings, renting frequency, length of stay and party size. Daily spending is collected by expenditure per person per night in different consumption categories. Total expenses of a tourist comprise daily spending and the rent paid to that hosts, excluding the Airbnb fees. Length of stay is an important indicator, as it concerns the business strategy of the tourism destination and for the travel industry. Length of stay represents the ‘quantity’ of vacation purchased by travellers, as it has a direct implication on tourist spending and, consequently, income generated at tourism destinations. Data shows that tourists stay at an Airbnb accommodation longer than they stay at a hotel (Airbnb, 2015). This indicates the rapid growth in the Airbnb business model in the tourism economy and its potential impacts on both tourist behaviour and additional demand at tourism destinations. The indicators for Airbnb growth include the number of bed nights, length of stay, party size and the activities participated in at destinations. Airbnb Data Source Airbnb data was collected via two main data sources: ‘Inside_​Airbnb’ and Tom Slee’s Airbnb data. Furthermore, some data was collected from Airbnb.com and Airdna.com. Some indicators were also obtained through Airbnb Inc.’s annual report by city (e.g. Copenhagen). In Denmark, the total number of estimated bed nights is broken down into municipalities using the number of listings by different geographical regions. The data shows that most of the Airbnb listings started in 2015. In June 2016, the number of listings in Copenhagen was 16,178, of

79

Digital Entrepreneurship in Denmark  97 which 82% were for entire apartments (houses/​summer houses) and the rest were room rentals. In 2017, the number of bed nights at an Airbnb was obtained from the Airbnb Inc. through VisitDenmark, which is a national tourism organisation that receives data directly from Airbnb Inc. every year. Variables in Airbnb Dataset Variables in the dataset contain the ‘room_​ID’, ‘host_​ID’, ‘type of room’ (entire home/​ apartment, private room and shared room), ‘location’, ‘neighbourhood’, ‘review’, ‘satisfaction’, ‘accommodation’, ‘number of bedrooms’, ‘number of bathrooms’, ‘price’, ‘min_​stay’ and ‘latitude and longitude’. Method of Data Transformation and Stylised Facts The number of reviews of hosts by geography is used as a dummy variable for the number of nights rented out at an Airbnb. The size of travel parties and length of stay can also be found in the dataset. An alternative method is to estimate the average spending for an overnight stay. Two formulas are applied in the estimation of total tourist spending at an Airbnb, i.e. the number of bed nights at an Airbnb and the average spending of tourists at an Airbnb: 1) N  umber of bed nights at an Airbnb = number of arrivals × average length of staty × size of travel party 2) T  otal tourist spending at Airbnb = number of bed nights × average spending per person per bed night The average spending of Airbnb tourists in other daily consumption categories (such as food, clothes and transport) is assumed to be similar to the spending of tourists who stay in small hotels. Such data is already available from visitor surveys in Denmark and is used in this analysis. During 2015 and 2016, there were on average 22 nights per active host in the whole country. The average number of nights per host for the capital city area (i.e. Copenhagen and Frederiksberg municipalities) was much higher, about 30 nights per active host, compared to the average number of nights in destinations outside of capital city area, which was around 20. Therefore, the national average (22 nights per host) was applied in the calculations, with the assumption that the hosts must have received at least one booking for one year. There was a significant difference between the number of gross listings and the number of listings that have received at least one booking for one year. A large proportion of the listings data comes from 2016 to 2017 Airbnb Inc. data source.

89

98  Jie Zhang and Nino Javakhishvili-Larsen Table 5.1 Number of listings, prices, length of stay, party size and estimated bed nights of Airbnb Area

Number of listings

Copenhagen 17,714 Aarhus 2,004 Aalborg 505 Odense 524 Sum of four 20,747 urban cities Rest of other 4,201 urban areas Sum of rest 9,389 coastal areas Sum of 34,337 Denmark

Average Number Length Party Estimated listing of nights of stay size nights price (apartment) 680 495 443 442

529,412 40,080 10,100 10,480 590,072

4 4 4 4

2.2 2.2 2.2 2.2

1,164,706 88,176 22,220 23,056 1,298,158

636

107,969

5.2

2.9

260,608

574

187,780

5.2

2.9

538,928

885,821

2,097,694

We assume that the average number of bed nights outside of capital city area is the same for the whole of Denmark. A higher number of nights were observed in more popular destinations than in less popular destinations. From the website www.airbnb.com, we find an average listing price per destination that should exclude 12% of the booking fee. Airbnb is a digital platform and is not necessarily located in the same municipality as where the bookings are made, and therefore the booking fee is not included in the price of Airbnb accommodation in the destination municipality. By taking this into consideration, the average spending of Airbnb tourists is re-​calculated accordingly. Table 5.1 shows the transformed dataset with the number of listings, prices, length of stay, party size and the number of bed nights in 2016. The total listings in Denmark were 34,337, from which bed nights are estimated to be around two million. The four largest cities in Denmark, Copenhagen, Aarhus, Odense and Aalborg, dominate the Airbnb market, accounting for 60.4% of listings and 62% of Airbnb bed nights. The listing price in the capital city area is the highest. As shown in Table 5.2, in 2017 the total number of bed nights at Airbnb was 3,171,000, of which 576,000 were domestic, and 2,595,000 were foreign tourists. The four largest cities had about two million overnights, accounting for 66.4% of the total, and the capital city area (Copenhagen and Frederiksberg) accounted for 56.5% of the total bed nights. Table 5.3 shows the total tourism revenue for Airbnb, which was DKK 5,969 million in 2017, with 68.3% of revenue concentrated in four main

9

Digital Entrepreneurship in Denmark  99 Table 5.2 Number of overnight stays at Airbnb in 2017 by cities and regions (’000) Area

Domestic Foreign

Total

% of the total

Copenhagen Aarhus Odense Aalborg Sum of the four cities Rest of the Capital Region of Denmark Region Zealand Rest of the Region of Southern Denmark Rest of the Central Denmark Region Rest of the North Denmark Region Total Denmark

142 69 20 19 251 147

1,649 136 36 35 1,856 333

1,791 205 56 55 2,106 480

56.5 6.5 1.8 1.7 66.4 15.1

39 67

89 153

128 220

4.0 6.9

41

92

133

4.2

32

72

104

3.3

576

2,595

3,171

100.0

Table 5.3 Tourism revenue at Airbnb in 2017 by cities and regions (DKK mill.) Area

Domestic

Foreign

Total

% of the total

Copenhagen Aarhus Odense Aalborg Sum from the four cities Rest in the Capital City Region Zealand Region Rest in The Southern Denmark Region Rest in The Central Denmark Region Rest in The Northern Denmark Region Total Denmark

233 113 25 26 397 240 48 85

3,285 267 61 69 3,682 653 173 264

3,518 379 86 95 4,079 893 220 349

58.9 6.4 1.4 1.6 68.3 15.0 3.7 5.9

66

180

246

4.1

43

138

181

3.0

879

5,089

5,969

100.0

cities. The capital city area alone accounted for 58.9%. The data clearly indicates that Airbnb is an urban phenomenon, and a large percentage of Airbnb tourists are foreigners.

Methodology for Evaluating Airbnb Impacts on Regional Economies According to the data records, 5% of total households have rented out their private homes to tourists in Denmark. This demonstrates how the simplicity and easy accessibility of digital entrepreneurship motivate

01

100  Jie Zhang and Nino Javakhishvili-Larsen any opportunity-​driven person/​household to be involved in the sharing economy business model. The share of households involved in Airbnb activities is higher in the cities (e.g. Copenhagen) than in the provinces. This new way of staying overnight does not involve traditional business elements such as a hotel or a food provider, but involves private individuals, or so-​called opportunity-​driven entrepreneurs, renting out their spare rooms or apartments to guests. Renting income is thus registered as private personal income, and not as business income, as is more common for traditional accommodation businesses. Therefore, Airbnb-​generated income is not treated in the model as business income, but it is treated as personal income. In order to analyse the economic impact of Airbnb, the assumption in analyses was defined as follows: firstly, as individual persons hosts do not pay corporate taxes, although they pay personal income taxes. Secondly, they receive tax deductions for additional income from Airbnb. This was initiated by the Danish government in order to motivate people to register their Airbnb activities in the tax system. Thirdly, in the modelling, income from Airbnb rentals is treated as a part of the household income, which is linked to the housing sector and redistributed in the economy through private consumption of products and services. The Danish interregional macro-​ economic model, SAM-​ K/​ LINE® (called ‘LINE model’ in this chapter) is applied in this analysis. It is a regionalised input–​output type of model with social accounting matrices (SAM) and the price-​due circuit as its modelling framework. The model is based on basic economic theories; for example, it has three main actors: producers, households and the government. The producers produce and deliver products and services to other producers (as intermediate inputs), to the government and households (as final demand). In contrast, households deliver labour force (as a production factor) to producers, and the government provides public services to households. At the same time, the government maintains welfare in the country through income taxes, corporation taxes and product taxes, including value-​added tax (VAT) (Madsen & Zhang, 2010; Zhang, 2014). As an interregional macroeconomic model, the LINE model distinguishes geographical regions as ‘place of production’, ‘place of residence’ and ‘place of demand’. The framework with SAM contains production sectors (J), factors (F), household types (H) and products and services (V). At the same time, the model system has a flexible degree of aggregation for sectors, factors (age, gender and education), household types and products and services. According to the characteristics of interregional macroeconomic models, the LINE model also has several linkages and sub-​models based on Keynesian economic theoretical principles. For example, the labour market sub-​model can analyse labour supply and labour market demand through commuting matrices based on very detailed register data for the labour force. The tourism sub-​model analyses consumers’ shopping and tourist activities from the place of residence to the place of demand

1 0

Digital Entrepreneurship in Denmark  101 (i.e. location of shops, restaurants, destinations). There is a trade sub-​ model that describes how products and services are traded within and between regions. A more detailed description of these linkages, including interregional commuting, shopping, trade and tourism flows, can be found in Madsen & Zhang (2010) and in Zhang (2014). These sub-​models and linkages make it possible to calculate regional economic effects by changing exogenous variables. The tourism sub-​model in the LINE model is constructed based on the detailed tourist bed night data from Statistics Denmark and tourism survey data from VisitDenmark (VisitDenmark, 2020). Tourism destination is assigned as the ‘place of demand’, and we treat domestic business tourist consumption as the demand from producers at the ‘place of production’ and tourism consumption by domestic leisure tourists as demand from households from the ‘place of residence’. Tourism consumption by foreign tourists (both business and leisure tourists) is treated as a Danish export of tourism services; however, as tourism consumption occurs in the place of demand, it is also a part of private consumption in the tourist destination region. In this analysis, we apply the demand approach (Keynesian), whereas the starting point is the changes in the demand side. Based on Airbnb bed nights and spending at the tourist destinations, the tourist demand by different consumption products at each tourist destination is established. The simulation exercise is based on the equilibrium in the model framework, where regional supply equals to regional demand for all products and services. In the model, investments and exports are treated as exogenous, while private and intermediate consumption are endogenously determined by the economy’s capacity. The model also assumes that domestic markets of goods and factors are perfectly competitive. Capital and labour are perfectly mobile between sectors and regions. For this chapter, the experiment is established such that Airbnb tourism is removed from tourist demand in the Danish economy and the consequences are re-​calculated and analysed. The model analysis is based on a short-​term solution, as in the long-​term, technology evolution or changes in productivity evens out the short-​term demand change and reach a new equilibrium. The model operates in several iterations, representing the economic reaction to the changes in final demand. When assuming there is no tourist demand for Airbnb overnight stays, the reduction is in the existing built-​in data system in the different tourist destinations. Some regions experience decreasing demand for certain products and services caused by removing Airbnb tourism from demand. Production, employment and income fall. The first round of production reduction causes the intermediate demand to fall as well. At the same time, the income reduction reduces demand from the household. Therefore, both intermediate demand and private consumption decrease, giving the second and third rounds of reduction. The amount of reduction in all rounds represents the total reduction in production, gross value added (GVA) and employment,

2 0 1

102  Jie Zhang and Nino Javakhishvili-Larsen and this was implemented in ten iteration rounds. All the variables in the model system are changed accordingly, both economic and governmental (income and other taxes) revenues. As the LINE model is an interregional economic model for Danish municipalities, this scenario experiment allows the model to estimate the Airbnb tourism economic value in intra-​ and inter-​municipality economic linkages, both directly and derived.

Economic Effects from Airbnb Tourists: City Versus Peripheral Regions This section presents the results from the model experiment analysis for Airbnb tourism. The most common variables for measuring economic value are employment, income indicator –​GVA and income taxes. Table 5.4 shows Airbnb employment effects broken down into cities and peripheral regions. The total employment effects are 5,662 full-​time equivalent jobs, of which 3,704 are direct employment effects and the rest are jobs derived from economic and geographic linkages. The employment effects show mostly in the four largest cities; they account for 61.5% of the direct employment effects and 53.5% of the total employment effects. In capital city area, Airbnb generates 2,449 jobs, accounting for 43.2% of the national total. Even though Airbnb is a digital entrepreneurial business form, its direct and derived job creation effects are still considerable in the local economies. Besides generating jobs, Airbnb also generates additional economic value. Table 5.5 presents Airbnb’s income (GVA) effects broken down into cities and regions. GVA is calculated as the total value of produced goods and services without added production taxes. Airbnb generates in

Table 5.4 Airbnb employment effects in cities and the regions (number of full-​ time equivalent jobs) Area

Direct effects

Total effects

% of the total

Copenhagen Aarhus Odense Aalborg Sum from the four cities Rest in the Capital City Region Zealand Region Rest in The Southern Denmark Region Rest in The Central Denmark Region Rest in The Northern Denmark Region Total Denmark

1,871 260 65 81 2,278 700 223 236

2,449 362 101 120 3,031 1,283 499 392

43.2 6.4 1.8 2.1 53.5 22.7 8.8 6.9

166

304

5.4

101

153

2.7

3,704

5,662

100.0

3 0 1

Digital Entrepreneurship in Denmark  103 Table 5.5 Airbnb income effects in cities and the regions (DKK mill.) Area

Direct effects Total effects % of the total

Copenhagen 980 Aarhus 125 Odense 35 Aalborg 38 Sum from the four cities 1,178 Rest in the Capital City Region 460 Zealand Region 182 Rest in The Southern Denmark 132 Region Rest in The Central Denmark 91 Region Rest in The Northern Denmark 57 Region Total Denmark 2,100

1,426 191 57 63 1,737 873 351 230

41.3 5.5 1.7 1.8 50.3 25.3 10.2 6.7

175

5.1

88

2.5

3,452

100.0

total DKK 3.4 billion GVA, of which DKK 2.1 billion is directly generated income. As shown in Table 5.5, more than one-​half of income creation is from the four largest cities. In the capital city area, the total income generated by Airbnb tourists is DKK 1.4 billion, accounting for approximately 41.3%. The state also benefits from the personal income generated from Airbnb. There are two sources of state revenues: personal income taxes and VAT. Table 5.6 shows the results from personal income tax and VAT effects. Airbnb contributes to revenues of DKK 556 million in income taxes, and DKK 812 million in VAT. As explained in the methodology section, Airbnb hosts do not pay VAT taxes, but Airbnb guests pay VAT on the products and services they buy at the destination localities. Unlike the above-​mentioned economic measures (employment and GVA), the four largest cities do not obtain high shares of income tax effects, but they do have a high share (61.7%) of VAT effects. The reason for the lower personal income taxes in the cities is the commuting patterns. As house prices are relatively higher in large cities than in the surrounding municipalities, service-​sector employees often live in the surrounding areas. Therefore, personal income tax effects are transferred to the residential municipalities that surround larger urban destinations. To summarise, by combining Tables 5.4 and 5.5, we can calculate the employment and income effects per million DKK of tourist revenue. According to the experiment results, DKK 1 million of tourist revenue from Airbnb tourists provides 0.7 jobs in Copenhagen and 0.96 jobs in Aarhus, which is the second largest city in Denmark. The job generation in the capital city area is lower than in other big cities and peripheral regions, which can be explained in higher productivity and economies of scale in the capital city area compared to the other regions. On average,

4 0 1

104  Jie Zhang and Nino Javakhishvili-Larsen Table 5.6 Airbnb effect on income taxes and value-​added taxes (VAT) in cities and the regions (DKK mill.) Area

Income taxes

VAT

Copenhagen Aarhus Odense Aalborg Sum from the four cities Rest in the Capital City Region Zealand Region Rest in The Southern Denmark Region Rest in The Central Denmark Region Rest in The Northern Denmark Region Total Denmark

29.7 23.5 14.4 9.6 77.2 312.1 92.1 40.9 40.7 16.2 556.2

428.7 47.8 11.3 13.7 501.4 149.6 50.0 48.9 37.6 24.8 812.4

Airbnb creates 0.95 jobs in Denmark per DKK 1 million of tourism revenue. As explained in Leich et al. (2020), the results from this experiment also show that Airbnb is not as large a job generator as hotels and other traditional accommodation businesses. However, Airbnb creates additional economic value through GVA and taxes. Likewise, we can calculate that DKK 1 million of Airbnb tourism revenue brings an additional gain of DKK 0.41 million of GVA in the capital city area and DKK 0.5 million in Aarhus. On average, Airbnb tourism generates DKK 0.58 million GVA per DKK 1 million revenue, in addition to state revenue in terms of personal income taxes and VAT. In absolute terms, the socioeconomic effects of Airbnb are mainly in the urban areas, as most listings are in these areas (about 60% of total listings in Denmark). However, in a relative comparison between the four big cities and the peripheral regions, we find that total (direct and derived) employment effects per listing are higher in the peripheral regions than in the cities (index 0.19 in the peripheral regions against 0.15 in the cities). Similar results were observed for GVA effects per listing, which were higher in the peripheral regions compared to the cities (index 0.126 in the peripheral regions against 0.084 in the cities). Airbnb benefits peripheral regions more through income taxes, which is explained by the commuting patterns of workers from the suburban and outskirt municipalities to the cities. There were 0.035 revenues created per listing in the peripheral regions compared to 0.004 in the cities. The VAT effects show a little higher effect in the cities than in the peripheral regions (index 0.024 in the cities against 0.023 in the peripheral regions) (see Figure 5.1). The relative comparison shows how much Airbnb tourism affects the development of local economies in the peripheral regions. It indicates that Airbnb generates more socioeconomic value in the peripheral regions than in the cities, which could be a good indication for the policy makers and planners to encourage the development of Airbnb businesses in the peripheral areas.

5 0 1

Digital Entrepreneurship in Denmark  105 0.250

Index

0.200

0.150

0.100

0.050

Employment effect

Income effect Urban

Income tax effect

VAT effect

Coastal/peripheral

Figure 5.1 Total socioeconomic effects of Airbnb per listing by type of region (2017). Note: Y axis is the index for the effects of per listing, which is calculated as the ratio of the total effect to the number of listings by type of region.

Conclusion As digital entrepreneurship, Airbnb has spread over many countries in the world. It is one of the main forms of business activity in digital entrepreneurship that allows the providers (hosts) and consumers (guests) to conduct business interaction at low cost and high flexibility through digital platforms. This form of business has already changed our everyday life: it has changed tourist behaviour with regard to travel, personal transport, cultural experience and choice of destination. Airbnb influences the current tourist markets. It stresses the value of co-​creation, co-​experience and dynamics in the tourist supply and demand chains. It helps tourist destinations to provide visitors with a wide range of products and services at more affordable prices. Airbnb facilitates authenticity and encounters between tourists and the residents, although it creates challenges to traditional accommodation providers, especially small hotel businesses, in retaining their market share. The aim of this chapter is to study the socioeconomic value of Airbnb tourism and its direct and derived effects on the local economy in different types of destination municipality such as urban and peripheral. The scenario experiment was established for this analysis in the interregional quantity model. The results of the experiment show that Airbnb business is still an urban phenomenon and the absolute volume of economic effects is also greater in urban regions rather than in peripheral areas. The experiment also demonstrated that, even though the Airbnb business is a form of digital entrepreneurship with the business interactions on the digital marketplace,

6 0 1

106  Jie Zhang and Nino Javakhishvili-Larsen it generates considerable additional economic gains both physically (i.e. Airbnb tourists spending on products and services) and geographically (i.e. creates additional demand at the different types of destinations such as urban, coastal/​peripheral). The experiment showed that the relative economic effects of Airbnb tourism are higher in peripheral regions than in cities, especially considering job creation and income taxes. This points to future potentials for developing Airbnb activities in the peripheral regions through supportive policies and provisional institutions. The digital entrepreneurship business model allows the flexibility and simplicity to conduct Airbnb business outside of urban areas, especially in the popular tourist destinations in peripheral municipalities. Creating policy instruments and increasing awareness in the population with high-​ speed internet coverage can motivate and diversify the economic potential of Airbnb tourism in peripheral destinations in Denmark. As other scholars have also emphasised, there is a need to create regulative and institutional systems around the digital forms of business activity in order to secure sustainable growth (Geissinger et al., 2019; Kraus et al., 2018). The theoretical argument for supporting sharing economic activities, including Airbnb, is that the business model is innovative and creative, and it has derived effects on economic activity within some areas of service. If additional supply induces an extra demand on the market, while simultaneously saving resources and increasing productivity, this will lead to an expansion of the local and regional economies. Airbnb business activities, characterised by the digital transactions, create possibilities for individuals to become entrepreneurs and service providers. Therefore, there are also other issues that should be further discussed in future studies, for example, how to control the quality of services and how to regulate the activity to guarantee that the market is not disturbed, and society continuously benefits from it. For example, it has been suggested that we could implement licensing and registration. Individuals who plan to do Airbnb business would have to register or obtain a licence from the tax authorities. Policy makers can use this registration to guide regional policy, such as in the peripheral regions, and possibly issue more licences than in the urban regions. The research on Airbnb and digital entrepreneurship is in the early phase. Topics for further investigation cover a wide array of questions through the interdisciplinary fields. Rapidly growing Airbnb tourism stresses the necessity of accelerating the process of generating scientific knowledge about this form of tourism and developing an institutional and regulatory framework around it, in order to ensure that it continues to benefit the economy and society.

References Airbnb 2015, Airbnb economic impact, Airbnb. https://​blog.atairbnb.com/​ economic-​impact-​airbnb.

7 0 1

Digital Entrepreneurship in Denmark  107 Airbnb 2019, Airbnb 2019 Business Update, Airbnb Newsroom. Balck, B & Crocau, D 2015, Empirical analysis of consumer motives in the share economy. University of Magdeburg, Working Paper, 2/​2015. Botsman, R & Rogers, R 2011, What is mine is yours: The rise of collaborative consumption, Harper Business, New York. Danmarks Erhvervsministeriet 2017, Deleøkonomien I Danmark –​Kortlægning af deleøkonomiens omfang I Danmark og økonomisk virkning af øget udbredelse af deleøkonomiske tjenester, Oktober 2017, www.ft.dk/​samling/​ 20171/​almdel/​sau/​spm/​69/​svar/​1443023/​1818010.pdf. Fang, B, Ye, Q, & Law, R 2016, ‘Effect of sharing economy on tourism industry employment’, Annals of Tourism Research, vol. 57, no. C, pp. 264–​267. Felländer, A, Ingram, C, & Teigland, R 2015, Sharing economy: embracing change with caution. Entreprenörskapsforum, Corpus ID 201822356. www. semanticscholar.org/ ​ p aper/ ​ T HE- ​ S HARING- ​ E CONOMY-​ E MBRACING-​ CHANGE-​WITH-​CAUTION-​Fell%C3%A4nder-​Ingram/​4740d0c80c6a4a6 23f5d73d8a1a30d5896bbc628. Geissinger, A, Laurell, C, Sandström, C, Eriksson, K & Nykvist, R 2019, ‘Digital entrepreneurship and field conditions for institutional change –​Investigating the enabling role of cities’, Technological Forecasting & Social Change, vol. 146, pp. 877–​886, DOI 10.1016/​j.techfore.2018.06.019. Guttentag, D 2015, ‘Airbnb: disruptive innovation and the rise of an informal tourism accommodation sector’, Current Issue in Tourism, vol. 18, no. 12, pp. 1192–​1217, DOI 10.1080/​13683500.2013.827159. Kraus, S, Palmer, C, Kailer, N, Kallinger, L & Spitzer, J 2018, ‘Digital entrepreneurship. A research agenda on new business models for the twenty-​first century’, International Journal of Entrepreneurial Behaviour & Research, pp. 1355–​2554, DOI 101108/​IJEBR-​06-​2018-​0425. Lamberton, CP & Rose, R L 2012, ‘What is ours better than mine: A framework for understanding and altering participation in commercial sharing systems’, Journal of Marketing, vol. 76, no. 4, pp. 109–​125. Leick, B. Eklund, MA & Kivedal, BK 2020, ‘Digital entrepreneurs in the sharing economy: A case study on Airbnb and regional economic development in Norway’, in A Strømmen-​Bahktiar & E Vinogradov (ed.). The Impact of the Sharing Economy on Businesses and Society: From Gig Economy to Financial Services. Routledge, London, pp. 69–​88. Chapter 5. Madsen, B & Zhang, J 2010, ‘Towards a new framework for accounting and modelling the regional and local impacts of tourism’, Economic System Research, vol. 22, no. 4, pp. 313–​340. Neeser, D 2015, Does Airbnb hurt hotel business? Evidence from the Nordic countries, Master thesis, University of Carlos III de Madrid. Oskam, J & Boswijk, A 2016, ‘Airbnb: the future pf networked hospitality businesses’, Journal of Tourism Future, vol. 2, no. 1, pp. 22–​42, DOI 10.1108/​ JTF-​11-​2015-​0048. Parirolero, NA 2016, ‘Assessing the effect of Airbnb on the Washington, D.C., housing market’, Economics, DOI 10.2139/​ssrn.2734109. Richter, C, Kraus, S, Brem, A, Durst, S & Giselbrecht, C 2017, ‘Digital entrepreneurship: innovative business models for the sharing economy’, Creativity and Innovation Management, vol. 26, no. 3, pp. 300–​310, DOI 10.1111/​ caim.12227.

8 0 1

108  Jie Zhang and Nino Javakhishvili-Larsen Rasmussen, JM 2019, ‘Airbnb indgår aftale med SKAT’, Videncentret Bolius, 17 June 2019, www.bolius.dk/​airbnb-​indgaar-​aftale-​med-​skat-​47177. Sussan, F & Acs, Z 2017, ‘The digital entrepreneurial ecosystem’, Small Business Economics, vol. 49, no. 1, pp. 55–​73, DOI 10.1007/​s11187-​017-​9867-​5. Statistics Denmark 2018, ‘Deleøkonomien –​Hvordan kan den defineres og måles?’, Danmark Statistik publikationer. www.dst.dk/​da/​Statistik/​ Publikationer/​VisPub?cid=30020. Strommen-​Bakhtiar, A. &Vinogradov, E. 2019, The adoption and development of Airbnb service in Norway: a regional perspective. International Journal of Innovation in the Digital Economy, vol. 10, no. 2, pp. 28–​39. Tussyadiah, IP & Personen, J 2016, ‘Impact of peer-​to-​peer accommodation use on travel patterns’, Journal of Travel Research, vol. 55, no. 8, pp. 1022–​1040. DOI 10.1177/​0047287515608505. Urbano, D & Aparicio, S 2016, ‘Entrepreneurship capital types and economic growth: International evidence’, Technological Forecasting and Social Change, vol. 102, January, pp. 34–​44. VisitDenmark 2020, ‘Turismens økonomiske betydning i Danmark 2018’, VisitDenmark, 25 May 2020, www.visitdenmark.dk/​corporate/​videncenter/​ turismens-​oekonomiske-​betydning. Zervas, G, Proserpio, D & Byers, JW 2013, ‘The rise of the sharing economy: estimating the impact of Airbnb on the hotel industry’, Research Paper No. 2013-​16, Boston University, School of Management. Zervas, G, Proserpio, D & Byers, JW 2017, ‘The rise of the sharing economy: estimating the impact of Airbnb on the hotel industry’, Journal of Marketing Research, vol. 54, no. 5, pp. 687–​705, DOI 10.1509/​jmr.15.0204. Zhang, J 2014, ‘Assessing the economic importance of meetings activities in Denmark’, Scandinavian Journal of Hospitality and Tourism, vol. 14, no. 3, pp. 192–​210.

9 0 1

6  How Can Digital Entrepreneurship Address Social Issues? The Case of EkoHarita in Fighting Ecological Disruption Zeynep Özsoy and Beyza Oba “The problem is the solution” Bill Mollison

Introduction During the last couple of decades, with the advent of internet, Web 2.0 and related digital technologies there has been an increase in the number of organisations that are described as being part of the sharing economy. The extant literature on entrepreneurship falls short of comprehending the role played by digitalisation and users in transforming entrepreneurship practices (Autio, 2017; Sussan & Acs, 2017). Users play a pivotal role within these platforms, enabled by digital technologies users from different geographies, with different value orientations participate and contribute to the development of new products/​services. Users, either as volunteers offering free labour or as entrepreneurs, are engaged in value co-​creation. Sometimes called user-​turned entrepreneurs, they are creating platforms, business models and products/​services (Sussan & Acs, 2017). This study by implementing a single case study as a research method (Eisenhardt, 1989) investigates a non-​profit, peer-​to-​peer (P2P), knowledge sharing platform (EkoHarita) that emerged as an entrepreneurial reaction to ecological disruption and inequalities in agriculture within Turkey. The aim of this research is to provide an explanation regarding how a non-​profit, sharing economy platform, producing knowledge and driven by digital entrepreneurs who share similar values and concerns, is organised and carries out its operations. Furthermore, by offering an explanation regarding the Turkish digital entrepreneurial ecosystem, the study elaborates on how constraining legal and political conditions activate creative entrepreneurs. Given inefficiencies in developing and implementing solutions to ecological problems and strict restrictions on digital media in Turkey, EkoHarita can be taken as an example of a platform and entrepreneurial effort that attains its commitment to the creation of a social value. The study makes three contributions to the extant literature on the sharing economy and digital entrepreneurship: first, although there are numerous examples of labour and capital platforms,

0 1

110  Zeynep Özsoy and Beyza Oba there are few cases of knowledge platforms and EkoHarita contributes to this strand of literature; second, by providing a comprehensive explanation of the Turkish digital entrepreneurship ecosystem the study aims to highlight the importance of the entrepreneurial ecosystem; lastly, there are very few studies of the non-​profit sector of the sharing economy and EkoHarita is an example of a non-​monetary platform where users employ an entrepreneurial role. The chapter is organised as follows: the following section reviews the literature on sharing economy and digital entrepreneurship; the next section explains the methodology utilised in this study. The findings are presented in two sub-​sections; the digital entrepreneurship ecosystem in Turkey, with a particular emphasis on the enabling and the constraining forces and the organisation of EkoHarita by focusing on the values of digital entrepreneurs and emerging organisational arrangements. The final section is comprised of discussion and conclusion.

Literature Review Sharing Economy Platforms Sharing economy organisations are digital platforms that create value by facilitating interaction between users, rather than producing tangible items (Acquier et al., 2017; Constantiou et al., 2017; Frenken & Schor, 2017; Strømmen-​Bakhtiar & Vinogradov, 2020). Digital platforms, by providing an open infrastructure, a means by which to carry out secure transactions, and a valid reputation system, facilitate the reduction of transaction costs and improve innovation (Strømmen-​ Bakhtiar & Vinogradov, 2020). Extant literature provides a classification of sharing economy platforms, according to platform orientation (profit or non-​ profit), type of provider (P2P or B2P), platform architecture (the structure and informational content), and motivation of the users (Parigi et al., 2013; Schor, 2016; Rivera et al., 2017; Bucher et al., 2016; Acquier et al., 2017; Gerwe & Silva, 2020). The value chain in P2P platforms focuses only on production, and net replaces the distributors (Bruns, 2008). Especially, in those platforms like EkoHarita that produce knowledge, production “takes place in a collaborative, participatory environment which breaks down the boundaries between producers and consumers and instead enables all participants to be users as well as producers” (Bruns, 2006, p. 2), a situation called produsage. In produsage the traditional roles attributed to users and producers change; consumers, as active users, lead projects and become key contributors. In the sharing economy ownership of a particular asset is temporary (Hamari et al., 2016; Frenken, 2017; Frenken & Schore, 2017; Gerwe & Silva, 2020), i.e. products, services and knowledge do not change hands; they are collaboratively produced and shared. Non-​profit platforms, like EkoHarita, which operate in order to provide a public

1

The case of EkoHarita  111 benefit, can function as ‘public goods’ and generally utilise a democratic, horizontal and participatory governance model (Schor, 2016; Rivera et al., 2017). Non-​profit sharing economy platforms focus on social and environmental issues and aim to develop connections within communities rather than pragmatic individualistic exchanges (Rivera et al., 2017, p. 12). User of these platforms are driven by relational goals (community building, gaining knowledge), altruistic, moral motives (Bucher et al., 2016), a desire to establish new social relations through the platform (Parigi et al., 2013) and a commitment to social transformation (Schor, 2016). Especially, in the case of non-​profit, P2P platforms, participants explicate their commitment to a specific set of ideas. Digital Entrepreneurship The sharing economy is a type of digital entrepreneurship that is based on digital technologies (Leick et al., 2020) and sharing economy platforms with reliance on digital technologies have also shaped the entrepreneurial landscape (Richter et al., 2017). Digital technologies impact innovation and entrepreneurial activity (Zaheer et al., 2019, p. 2) and enabled the emergence of a new group of entrepreneurs (Richter et al., 2015; Sundararajan, 2016) composed of geographically dispersed users that are driven by utilitarian, altruistic and hedonic drives. According to Sussan and Acs (2017), there are four types of entrepreneurial and digital ecosystems that reflect the positions taken by users, institutions, digital infrastructure and agents. In line with this classification we have taken EkoHarita as a case of digital citizenship (Mossberger et al., 2007) where users become entrepreneurs. In the case of digital citizenship users are regularly involved in online activities and create online content or participate in a movement (Sussan & Acs, 2017; de Moraes & de Andrade, 2015). In this type of digital entrepreneurship users who share similar concerns are taken as entrepreneurs who are driven towards a platform for advocacy on a controversial issue. In relation to the motives of the user entrepreneurs EkoHarita is also an example of digital social entrepreneurship where the mission of the platform is social value creation (Tauber, 2019) as opposed to wealth creation. Furthermore, as coined by Mair and Marti (2006), social entrepreneurship is a process that aims to cause a social change and are “catering to locally existing basic needs that are not addressed by traditional organisations” (Mair, 2010, p. 4). The extent of the social impact generated by the platform reflects its competency in value creation (Dees, 1998, revised 2001) which mainly resides in developing networks by establishing and cultivating social connections with different constituencies. As is the case of digital citizenship, extant social entrepreneurship studies emphasise the role of entrepreneurial ecosystem/​context in shaping the aims and the form of entrepreneurial initiatives. For example, Tauber’s (2019) study discusses the different roles assumed by social enterprises in authoritarian regimes

2 1

112  Zeynep Özsoy and Beyza Oba and developing countries. Similarly, de Bruin and Lewis (2015) explain how context influences and shapes the form of a social enterprise. Based on the arguments developed by extant studies on sharing economy, digital and social entrepreneurship this study proposes that the emergence of sharing economy initiatives such as EkoHarita is rooted in a specific context that is characterised by political, legal, economic and social conditions. Entrepreneur(s) with a specific value set can recognise voids, unmet needs in this context, and can reflect on developing solutions. The possibilities and limitations in the digital ecosystem guided by the values and motives of the entrepreneur(s) provide a basis for the development of solutions. The output of these entrepreneurial activities is expected to be a platform with a specific orientation (for profit or non-​ profit), operations and governance model.

Methodology The aim of this research is to provide an explanation regarding how a non-​ profit, sharing economy platform, producing knowledge and driven by digital entrepreneurs who share similar values and concerns, is organised and carries out its operations. The study uses a single case study as a research method (Eisenhardt, 1989). EkoHarita was chosen as a case because it is a rare and extreme example in Turkey. Such examples allow researchers to gain insight to study the concepts and their relation to each other (Yin, 2003; Eisenhardt & Graebner, 2007; Siggelkow, 2007). In order to provide a deeper understanding of the examined platform the study focuses on three fundamental issues: dominant values, aims and how operations are carried out to ensure the reliability of the output. Furthermore, by providing a nuanced explanation about the Turkish digital entrepreneurial ecosystem the study aims to explain how the ecosystem in which a venture is embedded shapes its objectives, orientation and governance. Data and Collection Procedures The data for this study was collected from three sources: unstructured interviews, participant observation and archival material. As indicated by Yin (2003) multiple sources of information are useful to ensure the validity of the data. In June 2018 we contacted one of the founders of EkoHarita and conducted the first interview. Following the first interview we arranged a series of interviews with other founders, volunteers and stakeholders. In choosing our informants we followed purposeful sampling. Initially, we approached informants who were expected to have the most information and experience in relation to our research question. Later, we also employed theoretical sampling as we proceeded with the analysis of the data and the identification of information considered to be important by the previous informants. This process of data collection

3 1

The case of EkoHarita  113 continued until no new information was acquired, a situation called ‘saturation’ by Glaser and Strauss (2017). In-​depth, ‘active’ interviews (Gubrium & Holstein, 1997) with EkoHarita members and other stakeholders lasted on an average 52 minutes and were transcribed verbatim. Although the sample was diverse in terms of gender, all informants were educated middle-​class professionals. We did 12 interviews. To provide a deeper understanding, as well as interviewees involved in EkoHarita we also interviewed members of other initiatives such as alternative food network (AFN) cooperatives, climate activists and Farmers’ Union, all of whom collaborate with EkoHarita. This was also helpful for validation purposes. In this group we did six interviews. Table 6.1 provides detailed information about the interviewees. In order to conduct participant observation, the first author attended offline events organised by EkoHarita, a workshop on AFNs organised by the Earth Association (Yeryüzü Derneği) and a university in İstanbul, as well as a festival on environmental issues organised by the Municipality. Finally, for triangulation purposes, we used archival data and documented posts, announcements and articles appearing on the Facebook and Instagram accounts of EkoHarita which were helpful in identifying the range of activities involved and dominant values communicated. Data analysis was carried out in two stages. In the first stage, archival material and interviews were used to understand how EkoHarita as a platform, and political, ecological and legislative voids related to agriculture,

Table 6.1 Interviews and interviewees Role in the platform

Affiliation

Age

Gender Profession/​ Education

Duration (in minutes)

Stakeholder AFN cooperative 30–​35 Female Industrial Designer 50 Stakeholder AFN cooperative 30–​35 Female PhD student 46 Stakeholder AFN cooperative 20–​25 Female Undergraduate 60 student Volunteer EkoHarita 35–​40 Male Bachelor’s in 55 & AFN Education cooperative Stakeholder AFN cooperative 35–​40 Male Food Engineer 50 Stakeholder AFN cooperative 45–​50 Male Professional 35 sportswomen Volunteer EkoHarita 30–​35 Female Industrial Engineer 58 Stakeholder Farmers’ Union 55–​60 Male Agricultural 120 Engineer Founder EkoHarita 30–​35 Male Bachelor’s in 183 Economics Founder EkoHarita 30–​35 Male Industrial Engineer 22 Founder EkoHarita 30–​35 Female Music Teacher 35 Volunteer EkoHarita 25–​30 Male Software developer 60 TOTAL 720

4 1

114  Zeynep Özsoy and Beyza Oba ecology and internet have evolved in Turkey. In this stage we identified five context specific issues –​ecological degradation, crises in agriculture, the media industry and conditions facilitating social media, legislation on internet usage and internet infrastructure enabling digital economies as constraining or enabling the founding and operations of EkoHarita. In the second stage of data analysis, participant observation, interviews and archival data were used to identify how context-​specific issues and values of the entrepreneurs shaped the platform orientation (for profit or non-​profit), scope of operations (knowledge production and dissemination), governance (heterarchy) and volunteer work. In other words, the analysis at this stage focused on the activities of a special group of digital entrepreneurs in the Turkish context.

The Research Setting: The Digital Entrepreneurial Ecosystem in Turkey The initiation, development and sustainability of sharing economy initiatives and digital entrepreneurship cases are influenced by the ecosystem in which they are embedded. Therefore, in this section, the Turkish government’s policies and regulations in relation to the environment, media and digital infrastructure will be studied. Over the last couple of decades ecological problems have been increasing worldwide and particularly in Turkey. Due to industrialisation, rapid population growth and urbanisation Turkey faces massive ecological disruption. According to the Environmental Performance Index (EPI) 2020, Turkey ranks 99th out of 180 countries with a score of 42.6 and over a period of ten years improvement in the overall score has been very low. According to the same report Turkey is rapidly losing its wetlands, due to increased nitrogen oxides (NOˣ) rates, facing more and more acid rains, and a rapid increase in greenhouse gas emissions. Given this background the government has taken significant steps, by drafting various legislations, formulating regulations and developing organisations that facilitate solutions to environmental problems (Adaman et al., 2016). However, despite all these initiatives environmental problems persist. The underlying causes of this paradox can be explained by the tendency of the government to prioritise economic growth and industrialisation over the cost of environmental degradation (Adaman & Arsel, 2013; Adaman et al., 2016). Environmental degradation also had consequences for agriculture; since 1985 Turkey suffered a 15% decrease in its croplands (OECD, 2019) and currently the country is facing an acute food crisis due mainly to the environmental problems discussed above but also because of massive urbanisation. Escalating environmental and agricultural problems triggered numerous protests (Önal, 2016; Tuğal, 2013) and Turkey has witnessed a rise in ecological activism and civic mobilisation. Another ecosystem issue related to EkoHarita’s digital entrepreneurship is the structure of the media industry and the dominant role assumed

5 1

The case of EkoHarita  115 by the state in Turkey. Governmental organisations like the Press Notices Agency (BİK) and Directorate of General Press and Information (BBYİK) control the printed media through various mechanisms such as the distribution of advertisements (Saka, 2020). This propensity to control and reshape the media industry has gradually led to an industry structure which is characterised by a concentration of ownership and biased relations among media owners and government. As the mainstream media became tightly controlled by the government, readers, especially the younger generation, in search of reliable sources, started to use social media (Tunç, 2015; Akdenizli, 2017) and digital platforms. Studies on internet usage in Turkey demonstrate a vibrant internet culture and heightened social media usage alongside rising web censorship and control (Tunç, 2015; Yeşil, 2016; Saka, 2020). The first internet-​specific legislation in Turkey was drafted in 2007 with an expressed aim to protect children from harmful and illegal content. With the increase in internet usage the internet law was amended in 2014 (Law 5651) to include content removal and data collection provisions.1 Over the following years the government passed various decree-​laws to tighten internet control (Yeşil & Sözeri, 2017). Violations of the legal requirements incur financial penalties and the license of the provider can be invalidated. Given these structural and legal reinforcements the government, since 2007, has taken serious steps to control and ‘clean’ the internet, ultimately giving way to the censorship of websites (for example, YouTube, Wikipedia, Facebook, Alibaba) (Akgül & Kırlıdoğ, 2015). As can be seen from this evidence, in the case of printed media and also especially the internet, the Turkish government has followed a very decisive policy in order to control and direct the content of media communications; this, in turn, drastically influences freedom of speech2 and the growth of digital economies (Saka, 2020). A further issue, which influences digital economies in Turkey, is linked to government policies for the development of an efficient internet infrastructure. According to the Inclusive Internet Index 2020 (The Economist, 2020) affordability is the major problem for Turkish internet users; a restrictive market concentration in broadband provisioning leads to high prices for internet usage. On the other hand, Turkey scores comparatively highly on readiness (availability of skills and culture inclination to internet usage) and relevance (existence of localised language and content). Simply put, Turkish citizens are ready to use digital platforms, but it is expensive to do so, and the available content is under strict control and surveillance by the government.

Findings Identifying the Problem and Developing Aims Given these conditions in the prevailing ecosystem, a group of young citizens concerned with ecological problems within agriculture and in

6 1

116  Zeynep Özsoy and Beyza Oba search of reliable and affordable knowledge related to ecology and AFNs are engaged in the development of a non-​profit, P2P, knowledge platform, EkoHarita. The seeds of the platform were sown in 2010 during a conference organised by the Turkish Permaculture Research Institute. In January 2015 the same group decided to develop EkoHarita as a project aiming to solve the problem of healthy, good quality, ecological food provisioning in the cities. The platform infrastructure was prepared by five young digital entrepreneurs. The platform became available to users in January 2016; since then many others have joined the group as volunteers. The core group of founders had experience in building websites for non-​profit projects. In order to learn the business and management side of such a project they joined the training program of a social entrepreneurship incubation centre run by a university. In line with their initial focus the founders decided to prepare a virtual map showing AFNs in Turkey. One of the founders stated that: at the beginning we were planning to prepare a map that only showed AFNs, later we enlarged the project by adding city gardens, ecological collectives, farms, training programs, tourism centres. The founders of EkoHarita aim to serve as a non-​profit platform which creates value by collaborative filtering. The major concern for this group of entrepreneurs is to provide timely and accurate knowledge that is free of charge and in Turkish, and build up virtual and physical communities, solidarity networks that are helpful in connecting people with similar values and raising awareness. Driving Values The core values of EkoHarita are shaped around the principles of permaculture and AFNs. As a digital entrepreneurial venture, the entrepreneurs of the platform aim to share and diffuse permaculture ethics (care for the earth, care for the people, return surplus, do not exploit) with a wider audience. The permaculture principles aim to create systems that are ecologically sound, economically viable and sustainable in the long run (Mollison et al., 1991). The prime directive of permaculture is based on cooperation, not competition. The most important principle of permaculture is the ‘law of return’ which is very similar to the defining characteristic of the sharing economy. Finally, permaculture considers information as a critical resource, which becomes valuable only when shared and acted upon. By adopting the ethics of permaculture and applying its principles in their daily life the EkoHarita founders and volunteers are actively involved in building communities that resist the environmental degradation that is mainly caused by savage industrial production. It is also expected that the implementation of permaculture principles by the producers and consumers of agricultural products will lead to reduced

7 1

The case of EkoHarita  117 costs and thus prices so that ecologically safe food can be affordable to all income groups. The second set of principles that shape the underlying values of EkoHarita are rooted in AFNs, i.e. mutuality, collective work, ecological and social relationships and solidarity. The major concern of AFNs is to overcome inequality in food provisioning (healthy, good quality food should be affordable to all income groups), ethical consumerism (social justice and environmental sustainability) and support for small local producers who have lost their position in the mass-​ produced food provisioning system. To overcome the crises in the provisioning of safe, healthy and affordable food stuff to all socio-​ economic groups in the society, EkoHarita as a platform gathers data regarding ecological small producers and makes it available to all those interested. Motivation; If Not Monetary, Then What? Like many other non-​profit sharing economy initiatives EkoHarita is a value-​based venture. Since the platform entrepreneurs want to be independent and avoid the intervention of the state or any other institution, they do not accept advertisements or sponsorship. The major revenue source of the platform is donations. Hosting and domain expenditures are funded by these donations. As stated by one of the founders, “our aim is to share, meet, and unite with a wider community. We want to build up a sustainable system which is based on sharing”. The most important motive for the founders of EkoHarita is to produce something that did not exist before in Turkey, being part of a new initiative. One of the founders stated that, “we do not have any financial expectations. Our motivation is the work we’ve done and the relationships that we build while working together”. Similar to many other non-​ profit platforms, they value developing strong social ties amongst the platform members. They are driven by the enjoyment of collective work and cooperation. Also, during the production process they can use their intellectual capabilities and enjoy doing self-​determined work. Establishing new social relations through the platform is especially important for them. What they value most is being together with friends, co-​creating content that enables them to express their values, that are shaped by the permaculture ethic and AFN principles. Coverage EkoHarita performs three major activities: content production, developing a medium of knowledge exchange and providing a space for the development of new projects. In relation to content production EkoHarita functions as a data silo and an intermediary between those who want to access reliable, valuable knowledge and those who provide it. Any entry

8 1

118  Zeynep Özsoy and Beyza Oba made is controlled by editors to prevent the sharing of inappropriate, impartial, illegal and inaccurate content. Content production covers three services: the newspaper, library and eco-​map. The content of the newspaper is comprised of previously made entries on EkoHarita and articles in other ecology-​related journals. The newspaper offers up-​to-​date, concise information on current ecology-​ related debates. Currently, the library offers links to various sites that provide information on alternative economies, ecological architecture, city gardening, healthy food, civic society organisations and environmental activism. The interactive ecological map of Turkey (the eco-​map) provides information about AFNs. The founders, as a new entrepreneurial venture, decided to develop a web-​ based eco-​ encyclopaedia (Ekopedi) that gathers, sorts and indexes ecological knowledge and is similar in architecture to Wikipedia. With this project they aim to provide an encyclopaedia that is free of charge and contains only ecology-​based content that is in Turkish. The second major activity of EkoHarita is to promote information and knowledge exchange amongst the registered members. Registered members lead discussions and express their ideas through forums. They can organise and announce new activities (for example, alternative holiday projects, eco-​ friendly camps, training programmes), and workshops (like paper recycling, zero garbage) designed in line with permaculture principles and aiming to change consumer habits. The third major activity of the EkoHarita platform is to provide tools, skills and labour for the development of new projects related to addressing ecological problems and the betterment of the food provisioning system in Turkey. These projects are collaboratively developed by volunteers. One of the current projects is related to AFNs. The project provides real-​time, trustworthy information about all the AFNs in Turkey. The database developed by EkoHarita helps users to locate ecological food producers and enables them to create their own communities to purchase directly from these producers. Updating the project with real-​time data will facilitate bulk purchases from small producers that adhere to the norms and principles of ecological farming, which, in turn, will be useful to help small producers to scale up. Another project, ‘Nature Will Be Your Way’, aims to form a virtual meeting place where people living in cities meet with ecological farmers. It is expected that these meetings will promote cultural and educational experiences based on trust and non-​monetary exchanges and will be useful in building a sustainable community. Work, Organisation and Governance At EkoHarita all work is done by users (known as volunteer members) who offer their labour voluntarily and a support team of 24 volunteers. The volunteer group is diverse in terms of gender and embraces people from a variety of professions such as engineers, economists, musicians,

9 1

The case of EkoHarita  119 academicians, software developers, graphic designer and artists. They are well educated, young (20–​35 years of age), white-​collar professionals. All of them share a common will to be part of the platform and its projects, value sensitivity to ecological issues and share the ethical principles of permaculture. Most of them have been involved in the ecological movement previously and already participated in other ecological initiatives. A volunteer explained that: when I was studying music at the university, I was member of an orchestra to protest hydroelectric power plants. We were playing music in places stricken by ecological disruption. After graduation, I decided to enrol in a certificate programme that provided training in permaculture, I heard about EkoHarita and decided to join them. Volunteers are recruited by open web calls and through informal networks. Anyone who is willing to offer their time and energy voluntarily and has the capacity can join the group. There are no orientation programmes for the new members. Volunteer members can choose the activity they want to be part of. Work relations among the volunteers are shaped by reciprocity. EkoHarita volunteers believe that sharing is deeply rooted in Turkish culture. One of the volunteers stated that “we have the ‘imece’3 tradition, which is based on sharing, helping one another. We want to reawaken this understanding”. Currently, EkoHarita operates as a heterarchy where any task holder can control and direct others and can be directed by them as well. It is a non-​hierarchical, ad hoc initiative where each volunteer has equal power and authority. As stated by a volunteer “it is a platform without a centre”. There is a consensus-​based decision-​making process; decisions are not voted on and are not based on majority votes. Decisions are made and implemented collectively by the volunteers and founders. Collective decision-​making is based on open, transparent communication and dialogue among the members. EkoHarita developed a project-​based organisation structure. Every project is carried out by a team composed of volunteers. In line with self-​determined work principles, new participants are asked to choose a project that they would like to be a part of. If they have the experience and expertise to carry out the project, they can immediately join it; otherwise they are trained on-​the-​job by the group members.

Discussion and Conclusion Currently, most of the transactions in sharing economy platforms are based on monetary rewards and are not free of charge. In that sense EkoHarita represents an early example of the sharing economy and is very similar to Wikipedia in mission and architecture. As is the case of Wikipedia (Bruns, 2006), EkoHarita produces knowledge for use rather

0 2 1

120  Zeynep Özsoy and Beyza Oba than for monetary exchange and the operations of the Platform are shaped by sharing, cooperation and collective ownership of the knowledge produced. As a non-​profit platform the major motivation for the founders and volunteers of EkoHarita is creating something new and being independent and autonomous; the platform is a reaction to the mainstream media industry and to the apathy of the government to ecological disruption. As is the case with other social entrepreneurship examples it aims for social change (Mair & Marti, 2006; Mair, 2010), a change in the food consumption habits, consumer-​producer relations and in working conditions. This is a type of activism which brings together people who share similar concerns on similar problems. The platform provides an opportunity to express ideas and offer alternative solutions. Also, in line with the extant studies on non-​profit sharing economy examples (for example, Bucher et al., 2016) EkoHarita user entrepreneurs are driven by more hedonic and altruistic motives. Furthermore, the platform enables users to build a network and a community by promoting connections to new friends. These new connections are instrumental in enlarging the community, finding new volunteers and disseminating their mission and values. According to Parigi et al. (2013) such connections are essential for the lives of the communities and the proper functioning of democracies. In the case of EkoHarita the major resource is information/​knowledge and value are created as this knowledge is shared by more and more users. Thus, connectivity and establishing wider networks are essential for increasing the value of the platform and its output. EkoHarita as a knowledge sharing, free of charge platform is driven by the users who are either followers or producers of the content. All the knowledge and information appearing on the platform is built up by volunteers. Although the founders of the Platform try to be inclusive and open to all who are interested in ecological issues, and post information about all producers positioned in AFNs regardless of their political and social standing, they have to ensure the reliability of the knowledge produced. In order to overcome information asymmetries and avoid misleading or impartial information, entrepreneurs involved in EkoHarita developed a set of norms and rules that are used as guidelines by the editors. Developing reliable, impartial content and extending network boundaries are important capabilities for non-​profit knowledge producing platforms since they enhance the social impact of the venture and draw in more users. The ecosystem in which sharing economy platforms are embedded can create opportunities or constraints for the development of these platforms. EkoHarita provides ample evidence regarding how the ecosystem creates a space of operation and about the demand for digital entrepreneurs. The incapability of the government to take necessary action to prevent environmental degradation and food crises created a

1 2

The case of EkoHarita  121 space for the operations of EkoHarita. Since the priority of the government has always been industrialisation, albeit via the institutional and legal arrangements developed, Turkey still faces serious problems in relation to the environment and agriculture. This void provides a space for EkoHarita entrepreneurs. Similarly, Richter et al. (2015) discuss the idea that for niche-​filling activities the sharing economy provides an opportunity for entrepreneurial initiatives. Activist groups composed of small rural farmers and urban middle-​class, educated, white-​collar professionals (Adaman et al., 2016) demand reliable, timely information and knowledge about ecological problems, their solutions and AFNs. Furthermore, governments’ inclination to control and reshape the structure and players within the printed media industry increases the demand for social media (Tunç, 2015; Akdenizli, 2017) and digital platforms. A constraint or limitation in one segment of the media industry led to the creation of opportunities in another segment and the development of a vibrant internet culture in Turkey. However, over time with the increased use of the internet as opposed to mainstream printed media, the Turkish government increased censorship, regulations and control of the internet as well (Yeşil, 2016; Tunç, 2015; Saka, 2020) which, in turn, negatively influenced the growth of digital economies. This online surveillance regime (Yeşil & Sözeri, 2017) and expensive internet services creates a threat in general for digital platforms. On the other hand, the Turkish digital entrepreneurship ecosystem is empowered by users who are equipped with the skills to use the internet and localised language for software development. Limitations on internet accessibility due to high prices can be a limitation for digital platforms. However, in the case of EkoHarita, like any other digital citizenship examples, volunteers and users are involved with the platform for advocacy of a controversial issue. Thus, such limitations do not practicably restrict their participation. Furthermore, EkoHarita entrepreneurs also organise offline events, as do many other examples of sharing economy platforms (Hamari et al., 2016), which is useful in enlarging their network and attracting more users. EkoHarita entrepreneurs currently face two major dilemmas: the first is related to their initial founding principles that aimed to be independent of mainstream, corporate-​led media and the second is related to sustainability. EkoHarita, which is based on decentralised, democratic methods of content development and knowledge sharing, is offering an unconventional alternative to existing platforms. Like many other examples of content creation (Waltz, 2005), the digital entrepreneurs at EkoHarita are challenging media power in terms of the way content is produced and disseminated. The main consideration for the EkoHarita founders and volunteers is to avoid being part of the corporate-​led internet which is based on profit maximisation. Though, as an alternative platform, they are trying to challenge mainstream corporate platforms, they also depend on corporate social media such as Facebook, Twitter and Pinterest.

21

122  Zeynep Özsoy and Beyza Oba Although the EkoHarita website provides tools to connect and develop forums, citizens in Turkey prefer Facebook, Twitter and Instagram as an exchange medium, making it difficult to relocate them to EkoHarita. Using social media alongside their own platform is a dilemma that they need to resolve. The other dilemma EkoHarita founders face is related to sustainability. As a civic, non-​profit platform, aspiring to be autonomous and free from the interventions of the government and big corporations, they are challenged by a shortage of financial resources. To adhere to their initial values and concerns the founders and volunteers of the platform are drafting future plans which include the incorporation of blockchain technology into their system and developing a digital open bazaar for ecologically safe food stuff which will enable buyers and sellers to transact directly. Such an entrepreneurial venture will be beneficial for different constituencies; small farmers, who lost their position in the conventional agriculture system will be able to re-​ connect and urban citizens will have access to healthy, ecologically safe food stuff at reasonable prices. Furthermore, the EkoHarita founders’ vision for a decentralised governance system that is fair and just in the distribution of rewards to all beneficiaries will be realised. One of the major arguments of this case study is that non-​profit, value-​driven digital, P2P platforms are viable in ecosystems dominated by large, mainstream media companies. The case of EkoHarita provides ample evidence as to how a group of entrepreneurs, driven by the values of permaculture, and AFNs can initiate, maintain and develop strategies for sustainability for a platform that is financially independent and autonomous in governance. The evidence provided by this case study can prelude research into similar platforms. The findings of this study are based on a single case in a specific ecosystem and confirmation of the discussions provided by other studies in other ecosystems will strengthen the arguments developed and will lead to more generalisable and robust claims. Another limitation of this study is related to the ecosystem; due to the volatility of the economic and political conditions in Turkey, it will be difficult to predict the future success or failure of such digital entrepreneurship cases.

Notes 1 Detailed explanation is provided by Akdeniz and Altıparmak in their book entitled Internet: Restricted Access, A Critical Assessment of Internet Content Regulation and Censorship in Turkey, İmaj Kitabevi. 2 The Freedom House Report (2020) reveals that the internet freedom status of Turkey is “not free” and internet usage remains highly restricted. 3 Imece is a traditional labour sharing system in rural Turkey. During harvests farmers help each other to accomplish a specific task, on time and promptly. It is based on reciprocity.

3 2 1

The case of EkoHarita  123

References Acquier, A, Daudigeos, T & Pinkse, J 2017, ‘Promises and paradoxes of the sharing economy: an organizing framework’, Technological Forecasting and Social Change, vol. 125, pp. 1–​10, viewed 28 June 2020, ScienceDirect, ISSN 0040-​1625, DOI 10.1016/​j.techfore.2017.07.006. Adaman, F, Akbulut, B & Arsel, M 2016, ‘Türkiye’de kalkınmacılığı yeniden okumak: HES’ler ve dönüşen devlet-​toplum-​doğa ilişkileri’, in C Aksu, Erensü, S & Evren, E (eds.), Sudan sebepler, Türkiye’de neoliberal su-​enerji politikaları ve direnişler, İletişim Yayınları, Istanbul, pp. 1–​20. Adaman, F & Arsel, M 2013, ‘Globalization, Development, and Environmental Policies in Turkey’, in T Cetin, & Yılmaz, F (eds.), Understanding the process of institutional change in Turkey: a political economy approach, Nova Science Publishers, New York, pp. 329–​345. Akdenizli, B 2017, ‘A glimmer of hope in a suffocated media landscape: citizen journalism practices in Turkey’, in M Friedrichsen & Kamalipour, Y (eds.), Digital transformation in journalism and news media; media management, media convergence and globalization, Springer, Berlin, pp. 169–​178. Akgül, M & Kırlıdoğ, M 2015, ‘Internet censorship in Turkey’ Internet Policy Review, vol. 4, no. 2, pp. 1–​22, Directory of Open Access Journals, DOI 10.14763/​2015.2.366, ISSN 2197-​6775, Alexander von Humboldt Institute for Internet and Society, Berlin, http://​dx.doi.org/​10.14763/​2015.2.366. Autio, E 2017, ‘Digitalisation, ecosystems, entrepreneurship and policy; perspectives into topical issues in society and ways to support political decision making’, Government’s Analysis, Research and Assessment Activities Policy Brief, vol. 20, pp. 1–​11, viewed 10 June 2020. de Bruin, A & Lewis, KV 2015, ‘Traversing the terrain of context in social entrepreneurship’, Journal of Social Entrepreneurship, vol. 6, no 2, pp. 127–​136, viewed 15 August 2020, Business Source Ultimate, DOI 10.1080/​ 19420676.2015.1038005. Bruns, A 2006, ‘Towards produsage: futures for user-​led content production’, Proceeding of the 5th International Conference, Cultural Attitudes towards Technology and Communication, Illinois, pp. 275–​ 284. Viewed at 15 June 2020. Bruns, A 2008, Blogs, Wikipedia, second life, and beyond: from production to produsage, Peter Lang, New York. Bucher, E, Fieseler, C & Lutz, C 2016, ‘What’s mine is yours (for a nominal fee) –​ exploring the spectrum of utilitarian to altruistic motives for internet-​mediated sharing’, Computers in Human Behavior, vol. 62, pp. 316–​326, viewed 28 August 2020, ScienceDirect, DOI 10.1016/​j.chb.2016.04.002. Constantiou, I, Marton, A & Tuunainen, VK 2017, ‘Four models of sharing economy platforms’, MIS Quarterly Executive, vol. 16, no. 4, pp. 231–​251. Dees, JG 1998, ‘The meaning of social entrepreneurship’, Stanford University: Draft Report for the Kauffman Center for Entrepreneurial Leadership, pp. 6. https://​sehub.stanford.edu/​sites/​default/​files/​TheMeaningofsocialEntrepreneur ship.pdf Dees, JG 1998 (revised 2001), ‘The meaning of social entrepreneurship’, www. caseatduke.org/​documents/​ dees_​sedef.pdf. The Economist, The Inclusive Internet Index, accessed 25 May 2020, https://​ theinclusiveInternet.eiu.com/​

4 2 1

124  Zeynep Özsoy and Beyza Oba Eisenhardt, KM 1989, ‘Building theories from case study research’ Academy of Management Review, vol. 14, no. 4, pp. 532–​550. Eisenhardt, KM & Graebner, M E 2007, ‘Theory building from cases: opportunities and challenges’, Academy of Management Journal, vol. 50, no. 1, pp. 25–​32, viewed 20 August 2020, Business Source Ultimate, DOI 10.5465/​ AMJ.2007.24160888. Frenken, K 2017, ‘Political economies and environmental futures of the sharing economy’, Philosophical Transactions of the Royal Society A: Mathematical, Physical and Engineering Sciences, A, 375:20160367, viewed June 15 2020, DOI 10.1098/​rsta.2016.0367. Accepted 21 February 2017. Frenken, K & Schor, J 2017, ‘Putting the sharing economy into perspective’, Environmental Innovation and Societal Transitions, vol. 23, pp. 3–​10, viewed June 15 2020, ScienceDirect, DOI 10.1016/​ j.eist.2017.01.003. Available at http://​linkinghub.elsevier.com/​retrieve/​pii/​S2210422417300114, accessed 18 March 2021. Glaser, S & Strauss, A 2017, The discovery of grounded theory: strategies for qualitative research. Routledge, London and New York. Gerwe, O & Silva, R 2020, ‘Clarifying the sharing economy: conceptualization, typology, antecedents, and effects’, Academy of Management Perspectives, vol. 34, no. 1, pp. 65–​96, viewed June 15 2020, Business Source Ultimate, DOI 10.5465/​amp.2017.0010. Gubrium, J & Holstein, JA 1997, Active interviewing. Qualitative research: theory, method and practice, second edition. Sage, London. Hamari, J, Sjöklint, M & Ukkonen, A 2016, ‘The sharing economy: why people participate in collaborative consumption’, Journal of the Association for Information Science and Technology, vol. 67, no. 9, pp. 2047–​2059, viewed 15 June 2020, Scopus®, DOI 10.1002/​asi.23552. Leick, B, Eklund, MA & Kivedal, BK 2020, ‘Digital entrepreneurs in the sharing economy: a case study on Airbnb and regional economic development in Norway’ in A Strømmen-​Bakhtiar & Vinogradov, E (eds.), The impact of the sharing economy on businesses and society, Routledge, London, pp. 69–​88. Mair, J 2010, ‘Social entrepreneurship: taking stock and looking ahead’, IESE Business School Working Paper, no. WP-​888, viewed 25 August 2020, DOI 10.2139/​ssrn.1729642. Mair, E & Martı, I 2006, ‘Social entrepreneurship research: a source of explanation, prediction, and delight’, Journal of World Business, vol. 41, no. 1, pp. 36–​ 44, viewed 25 August 2020, ScienceDirect, DOI 10.1016/​j.jwb.2005.09.002. de Moraes, JA & de Andrade, EB 2015, ‘Who are the citizens of the digital citizenship?’ The International Review of Information Ethics, vol. 23, no. 11, pp. 1–​19, viewed 25 June 2020, http://​informationethics.ca/​index.php/​irie/​article/​ view/​227. Mollison, BB, Slay, RM, Girard, JL & Girard, JL 1991, Introduction to permaculture, Tyalgum, Tagari Publications, Australia. Mossberger, K, Tolbert, CJ & McNeal, RS 2007 The internet, society, and participation, MIT Press, Boston. OECD (2019), OECD Environmental Performance Reviews: Turkey 2019, OECD Environmental Performance Reviews, Éditions OCDE, Paris, https://​ doi.org/​10.1787/​9789264309753-​en.

5 2 1

The case of EkoHarita  125 Önal, L 2016, ‘Gezi Park and EuroMaidan: social movements at the orders’, Innovation: The European Journal of Social Science Research, vol. 29, no. 1, pp. 16–​40, viewed 20 May 2019, DOI 10.1080/​13511610.2015.1089473. Parigi, P, State, B, Dakhlallah, D, Corten, R & Cook, K 2013, ‘A community of strangers: the dis-​embedding of social ties’, PLoS One, vol. 8, no. 7, e67388, viewed 28 June 2020, doi.org/​10.1371/​journal.pone.0067388. Richter C, Kraus, S & Syrjä, P 2015, ‘The shareconomy as a precursor for digital entrepreneurship business models’, International Journal of Entrepreneurship and Small Business, vol. 25, no. 1, pp. 18–​25, viewed 28 June 2020, DOI 10.1504/​IJESB.2015.068773. Richter, C, Kraus, S, Brem, A, Durst, S & Giselbrecht, C 2017, ‘Digital entrepreneurship: innovative business models for the sharing economy’, Creativity and Innovation Management, vol. 26, no. 3, pp. 300–​310, viewed 28 June 2020, DOI 10.1111/​caim.12227. de Rivera, J, Gordo, Á, Cassidy, P & Apesteguía, A 2017, ‘A netnographic study of P2P collaborative consumption platforms’ user interface and design’, Environmental Innovation and Societal Transitions, vol. 23, pp. 11–​ 27, viewed 20 august 2020, DOI 10.1016/​j.eist.2016.09.003. Saka, E 2020, Social media and politics in Turkey; a journey through citizen journalism, political trolling and fake news, Lexington Books, New York. Schor, J 2016, ‘Debating the sharing economy’, Journal of Self-​ Governance and Management Economics, vol. 4, no. 3, pp. 7–​22, viewed 28 June 2020, Business Source Ultimate, DOI 10.22381/​jsme4320161. Siggelkow, N 2007, ‘Persuasion with case studies’, Academy of Management Journal, vol. 50, no. 1, pp. 20–​24, viewed 20 August 2020, DOI 10.5465/​ amj.2007.24160882. Strømmen-​ Bakhtiar, A & Vinogradov, E 2020, The Impact of the Sharing Economy on Business and Society: Digital Transformation and the Rise of Platform Businesses, Routledge, London. Sundararajan, A 2016, The sharing economy: the end of employment and the rise of crowd-​based capitalism, MIT Press, Cambridge, MA. Sussan, F & Acs, ZJ 2017, ‘The digital entrepreneurial ecosystem’, Small Business Economics, vol. 49, no. 1, pp. 55–​73, viewed 25 June 2020, Springer Nature Journals, DOI 10.1007/​s11187-​017-​9867-​5. Tauber, L 2019, ‘Beyond homogeneity: redefining social entrepreneurship in authoritarian contexts’, Journal of Social Entrepreneurship, vol. 1, no. 19, viewed 28 June 2020, DOI10.1080/​19420676.2019.1668829. Tuğal, C 2013, ‘Resistance everywhere: the Gezi revolt in global perspective’, New Perspectives on Turkey, vol. 49, pp. 147–​162, viewed 20 May 2019, Supplemental Index, DOI: 10.1017/​S0896634600002077. Tunç, A 2015, ‘In quest for democracy: Internet freedom and politics in contemporary Turkey’ in B Akdenizli (ed.), Digital transformations in Turkey: current perspectives in communication studies, Lexington Books, New York, pp. 207–​220. Yesil, B 2016, ‘State policy towards online communications and the Internet regulatory regime in Turkey’, in GR Halegoua & Aslinger, B (eds.), Locating Emerging Media, Routledge, New York, pp. 36–​51. Yeşil, B & Sözeri, EK 2017, ‘Online surveillance in Turkey: legislation, technology and citizen involvement’, Surveillance & Society, vol. 15, no. ¾, pp. 543–​549, viewed 15 August 2020, Supplemental Index, DOI 10.24908/​ss.v15i3/​4.6637.

6 2 1

126  Zeynep Özsoy and Beyza Oba Waltz, M 2005, Alternative and activist media, Edinburgh University Press, UK. Yale Center for Environmental Law & Policy, Environmental Performance Index 2020, viewed 20 June 2020, https://​epi.yale.edu/​. Yin, RK 2003, Case study research: design and methods, fifth edition, Sage, London. Zaheer, H, Breyer Y & Dumay, J 2019, ‘Digital entrepreneurship: an interdisciplinary structured literature review and research agenda’, Technological Forecasting and Social Change, vol. 148, pp. 1–​20, viewed 20 June 2020, ScienceDirect, DOI 10.1016/​j.techfore.2019.119735.

7 2 1

7  Fostering Open Innovation in Digital Startups An Explorative Study of Norwegian Coworking Spaces Anh Nguyen Duc and Simode Sperinde

Introduction As a special instance of the sharing economy trend, providing access to shared physical and intangible assets, coworking spaces (CWS) have become a popular phenomenon among digital entrepreneurs (Cabral & Winden, 2016; Moriset, 2013) in that they create a community based on shared values of collaboration, openness, trust, accessibility, and sustainability (Capdevila, 2014; Waters-​Lynch et al., 2016), an ideal context for digital startups to thrive. Digital startups, or software startups, are companies with short operational history, working towards a scalable business model, and having software as a significant part of their value proposition (Nguyen-​duc et al., 2020) While it is true that CWS provide a cheap alternative to a traditional office arrangement, digital startups managers have many more reasons to choose them as their workplace. Perfectly in line with the sharing economy framework, CWS connect diverse organizations and individuals, giving them the chance to collaborate, share knowledge, and develop systemic solutions to the issues they are trying to address. The openness, the collaborative culture and the feeling of community suggest that individuals or startups have a good potential to seek external resources in the CWS they are sitting in. However, the role of CWS in facilitating inter-​organizational collaboration is controversial (Spinuzzi, 2012). In one scenario, coworkers can work on their own objectives, circulating their own networks of resources. In another one, coworkers can collaborate by providing and consuming value beyond the companies’ boundaries. As one of the known threats to early stage startups, digital entrepreneurs often find a lack of connections and useful contacts. CWS provide opportunities for interaction and collaboration, boosting entrepreneurial self-​ efficacy (Cabral & Winden, 2016). However, Parrino (2015) argued that mere co-​location alone does not foster collaboration that lead to innovation, and some sort of organizational mechanism is required for collaboration between coworking members. We are interested in understanding

8 2 1

128  Anh Nguyen Duc and Simode Sperinde which setting of a CWS can encourage collaboration and innovation generation among entrepreneurs and startups in the digital sector. Open innovation, a conceptual framework by Henry Chesbrough (Chesbrough, 2003), suggests a way to look at inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. Although open innovation is a large research area (West & Bogers, 2013), there has been no attempt to adopt the paradigm in the context of digital startups in CWS. From our research objective, we derive two research questions:

• RQ1: To what extent does open innovation occur for digital startups in the context of coworking spaces?

• RQ2: What is the role of coworking spaces in fostering open innovation for digital startups?

This work aims to contribute to both the literature about CWS and about open innovation in the context of startups in the digital sector, by proposing a novel point of view of both phenomena, which was not considered before.

Related Work Coworking Spaces CWS represent a multifaced phenomenon that has implications on various research principles, i.e. urban design, smart city, innovation management, and entrepreneurship (Gandini, 2015). It is also difficult to have a clear definition of CWS (Capdevila, 2014; Waters-​Lynch et al., 2016; Spinuzzi, 2012), with various emphasized characteristics of the phenomenon. According to the Oxford Dictionary, the term coworking refers to The use of an office or other working environment by people who are self-​employed or working for different employers, typically so as to share equipment, ideas, and knowledge. Capdevila et al. define a coworking space as a localized space where independent professionals work sharing resources and are open to sharing their knowledge with the rest of the community. Raffaele and Connel defined a coworking space as a practice where people occupy a desk on a casual or temporary basis in a workspace that is shared with others. (Raffaele & Connel, 2016) Waters-​Lynch and Potts (2017) argued that a CWS represents “a focal point that enables tacit coordination among independent knowledge workers.” In this article, we focused on the ability to foster collaboration with people in the same workspace.

9 2 1

Fostering Open Innovation  129 Collaboration among members is the competitive advantage of a CWS with respect to a serviced office (Parrino, 2015). CWS are found to provide a mechanism with internal social networks, regular events organized by the owners and designed common areas for facilitating collaboration (Waters-​Lynch & Potts, 2017). Capdevila proposed a model to capture how innovation develops in a CWS (Capdevila, 2015). The author identified four dimensions: places, spaces, events, and projects. Places represent physical locations where people interact. They are the basis for the generation of the so-​called “local buzz” (Bathelt et al., 2004) and the starting point for the dynamics of innovation at a local level (Rantisi & Leslie, 2010). While people in places are characterized by geographical proximity, cognitive proximity is the distinctive element of spaces. Spaces are figurative locations (Capdevila, 2015) where people interact and share knowledge. The combination of places and spaces is an ideal permanent platform that makes people gather together and serves as the basis for the origin of innovation processes. Projects and events represent temporary platforms with the same purpose. Events contribute to the circulation of tacit knowledge by allowing the participation of actors that would normally be distant from each other. Thus, a larger community gains access and brings inputs to locally generated knowledge (Capdevila, 2015). Projects help coordinate and integrate different knowledge backgrounds, by involving people that usually do not work together (Capdevila, 2015).

Open Innovation Jones-​Evans et al. proposed six key pillars of open innovation that can be used by other researchers for their own surveys to assess open innovation practices (Jones-​Evans et al., 2018). The six pillars are: (a) knowledge and technology sourcing activities, (b) innovation expenditure, (c) sources of knowledge, (d) human capital, (e) innovation networks, and (f) IP protection. For the purpose of this research, not all the pillars were considered. Pillar (b) was neglected, as the scope is not to evaluate companies’ innovation level from the point of view of financial expenditure (this data might not be very significant when evaluating an early stage startup’s innovation efforts), so it is more meaningful to assess the innovation performance of a company by Pillar (a) only. Moreover, for the sake of simplicity for the survey respondents, Pillar (e) –​innovation network –​was not considered: it is very similar to Pillar (c) –​sources of innovation –​and the related survey questions were written to get information about both the aspects. In synthesis, the following four out of six pillars were utilized: Pillar 1 –​Knowledge and technology sourcing activities: aside internal R&D activities, companies have the possibility to buy new technologies from external sources. The outsourcing of machinery,

0 3 1

130  Anh Nguyen Duc and Simode Sperinde software, hardware or any other form of technology is regarded as having an influence on the absorptive capacity of a company (Doloreux, 2015). The analysis of the sources of knowledge and technology is therefore important to evaluate a company’s open innovation approach. Pillar 2 –​Sources of knowledge: the origin of a company’s knowledge is analyzed to understand what the company does to enrich its intellectual capital. Along with several different actors, external sources include all of the company’s stakeholders. Pillar 3 –​Human capital: the fourth pillar is about what drives the firm’s internal innovation activity (Mariz-​ Pérez et al., 2012). Interestingly, internal skills and knowledge, which are the metrics of human capital, are thought to be fundamental in the process of assimilating and applying externally acquired knowledge, i.e. the absorptive capacity (Cohen & Levinthal, 1990). For this reason, the analysis of human capital is relevant in the assessment of an open model of innovation. Pillar 4 –​Intellectual property protection: finally, open innovation calls for cooperation and sharing of jointly generated knowledge. However, companies should be able to protect their innovative efforts in order to extract value from them and to participate in the open innovation process (Laursen & Salter, 2014). This ability is measured by looking at the number of IP protection mechanisms a company resorts to.

Open Innovation and Coworking Spaces The adoption of open innovation in the context of CWS remains unexplored in innovation management research. For open innovation to be in place, a network is of crucial relevance (Lee et al., 2010). Formal cooperation is often the result of informal talks and meetings, and knowledge gets shared through a set of actors that are somehow interconnected, namely a network. In this instance, CWS come into play. CWS are open, both literally and figuratively: there are no walls and the desks are often shared by coworkers, and the information flow is facilitated by the organization of events and by common spaces. The way they might act as an intermediary for open innovation is easily recognized. Not only CWS help to lower the amount of many expenses such as office rent and electricity (Capdevila, 2015). More importantly, the cost of accessing to resources and competencies held by others is much lower than it would otherwise be. Some CWS tend to specialize in one sector to host a set of coworkers with similar capabilities, so it is easier for a company to find just the right guy useful for its aims. Capdevila (2013) proposes the view of CWS as microclusters. In an attempt to explain the dynamics of innovation in coworking environments, the author compares shared offices to industrial clusters by

1 3

Fostering Open Innovation  131 recognizing many common characteristics: low entry barriers, specialization in a certain field, the ideology of “collaboration, openness, community, accessibility and sustainability” and physical and cognitive proximity. The so-​called “local buzz” allows the access of every member of the community to the knowledge sharing and to the potential learning opportunities that arise within clusters and CWS, or microclusters. What makes the difference are the insiders, firms for industrial clusters and entrepreneurs and freelancers for CWS. The concept of microcluster helps contextualizing open innovation in coworking spaces (OICS) by bringing up the importance of the network and the concept of local buzz. Thanks to serendipitous encounters (Bouncken et al., 2018), new learning opportunities, business channels, and collaborations easily arise in CWS, just like the open innovation framework envisages.

Theoretical Framework The interplay between places, spaces, events, and projects offers a fundamental way to examine CWS attributes. The interaction among these elements, which is essential to maintain the operations of CWS, is excluded from the scope of our research as it is already investigated previously. Besides, the indicators (or pillars) of open innovation also offer the way to understand the level of open innovation in a specific context. As the purpose of this work is to understand the connection between CWS and open innovation, the combination of these two frameworks gives us a theoretical foundation. Our RQs would explore the connection between places, spaces, projects, and events and each of the pillars in the open innovation framework (Jones-​Evans et al., 2018).

Research Methodology This chapter adopted a multiple case study approach and it targeted exclusively Norwegian digital startups operating at CWS, without considering firm-​specific variables such as size, age, or revenue. Exploratory case studies are used to investigate little known phenomena or one without an established theoretical basis (Yin, 2003). We use this approach to discover whether open innovation occurs and in which way it happens in the context of coworking. Eligible companies were identified through CWS websites and then contacted to request their participation in the study.

Data Collection The data collection was conducted in two phases, quantitatively and qualitatively, between May 2018 and August 2018. First, a survey aimed at measuring the extent of open innovation happening in CWS was sent to several Norwegian startups operating at CWS throughout the whole country. The survey was customized from an existing one, namely the

2 3 1

132  Anh Nguyen Duc and Simode Sperinde Table 7.1 Investigated coworking spaces Coworking Space

Location

Colab CoWorx Gowork Gründerhuset Hi5 Gründeriet Innovation Dock Ipark Mediekuben Nordic Impact Oslo House of Innovation Startup Lab Validé WorkWork

Larvik Kristiansand Asker/​Drammen Tønsberg Sandefjord Stavanger Stavanger Bergen Oslo Oslo Oslo Stavanger Trondheim

Community Innovation Survey.1 Innovasjon Norge,2 the Norwegian Government’s agency for the development of Norwegian enterprises and industry, was contacted for help in reaching out to companies. The agency kindly posted the survey on their private Facebook page, allowing to collect more responses. The survey was sent to 230 companies based at 16 different CWS in ten cities in Norway. A total of 37 answers was collected bringing to a satisfying response rate of 16%. Second, follow-​up interviews were conducted with some of the survey participants. We decided to conduct semi-​structured interviews, which enabled the interviewees to contribute with their own opinions deviating from our designed questions. Ten interviews were done, but one was discarded, as it was not believed to be significant for the research. Quotes were extracted from the interviews’ texts and the most significant ones are illustrated. In the scope of this chapter, we present the qualitative insight from interview data. The profiles of these CWS are shown in Table 7.1.

Data Analysis The information obtained from the interview was analyzed qualitatively. A thematic analysis approach was chosen, following the guidelines suggested by Braun and Clarke (2006). The texts of the interviews were coded so as to spot patterns and allow an easier reporting of the data. The difference with a pure thematic analysis is that here the questions targeted some previously specified themes (namely, the model dimensions and the link between open innovation and CWS) and no actual themes development was necessary. Rather, as the interviews were semi-​structured, sub-​ themes and quotes related to the predefined themes were sought in each of one interviewee’s answers: each question was asked for examining mainly

31

Fostering Open Innovation  133 one dimension, but as the interviews were often run as conversations, quotes related to other dimensions were found in several parts of the interviews. The interviews transcripts were analyzed with the aid of a software for text coding. Similar quotes were highlighted and grouped under one sub-​theme. Sub-​themes were then clustered under one of the previously established main themes. As an example, “easiness of networking” was used as a sub-​theme, and the main theme in this case was the value of the place dimension in the eyes of coworkers. Accordingly, the quotes under the sub-​theme “easiness of networking” were used for reporting within RQ1 when it came to describing coworkers’ opinions of places.

Results This section presents the findings for the two RQs. RQ1: To What Extent Does Open Innovation Occur for Digital Startups in the Context of Coworking Space? Open innovation is evaluated via four pillars, (1) knowledge and technology sourcing activities, (2) sources of knowledge, (3) human capital, and (4) intellectual property protection. In Table 7.2, we summarized the answers from almost 40 digital startups in Norway regarding these pillars. Pillar 1: Knowledge and Technology Sourcing Activities In general, coworking digital startups were found to be strongly committed towards innovation, showing by their focused activities on internal research and experimentation (67.57% of the total respondents), design and development of new products or services (54.05% of the total respondents). These findings might not be surprising because of the nature of these startups. Their core value propositions base on digital software, platforms, or services that require up-​front investment on R&D. We also observe many cases with significant acquisitions of knowledge or technologies as assistance or enablers for what is developed internally (48.65% of the total respondents). There are relatively less investments on marketing activities in comparison to R&D activities. Pillar 2: Sources of Innovation Table 7.2 shows the major source of innovation (56.76% of the total respondents) coming from inside the startups without any external influences. These groups of startups might be independent of their working place or the startup ecosystem. There is also a significant number of startups (40.51%) having their innovation relating to early customers. For example, a startup product appears as an evolution of a

4 3 1

134  Anh Nguyen Duc and Simode Sperinde Table 7.2 Survey responses to the four pillars of open innovation in digital startups Pillar –​Indicators

Items

Pillar 1 –​Main Internal research & development performed activities (R&D) by digital startups Design and development of new products or services Acquisitions of technologies, infrastructures, tools Market research conduct Acquisition of R&D Training focusing on innovation adoption Others Pillar 2 –​The major Within the digital startups source of From early customers innovations From technology suppliers/​partners From scientific journals or publications From conferences, fairs, exhibitions From professional and industry associations From universities or research organizations From external consultants From governments From competitors From industry standards or regulations Pillar 3 –​The available User experience, branding competence in the Software engineering, data engineering digital startups Product/​service design Content/​community development Applied science, i.e. AI, Big Data Theoretical science, i.e. mathematics Others Pillar 4 –​The most Design quality & performance important business-​ Market-​lead time related quality Product complexity factors Trademarks Copyrights Secrecy Patent

Answer (out of 100%) 67.57% 54.05% 48.65% 35.14% 24.32% 18.92% 8.11% 56.76% 40.51% 27.03% 16.27% 14.51% 13.51% 10.81% 5.41% 2.1% 1% 0% 51.35% 48.65% 48.65% 45.95% 29.73% 18.92% 29.73% 45.95% 24.31% 24.31% 16.22% 13.51% 10.81% 2.7%

bespoke product for a large organization. Or startups might be invested by other organizations to implement their ideas. We also observe that innovation comes from important elements of startup ecosystems, such as suppliers and partners, conferences and fairs, that confirm the importance of networking activities within the ecosystems.

5 3 1

Fostering Open Innovation  135 Pillar 3: Human Capital Table 7.2 also summarizes the competence or human capital that Norwegian startups possess. It shows that artistic design for user experience, i.e. branding, is the most popular competence (51.35% of the total respondents). Software and data engineering comes in the second place (48.65% of the total respondents). Technology competences are significant, as mentioned in either software development, database management, and web design competence. A considerable amount of coworking startups reported employing human resources with product and service design. One would expect to see competences such as Artificial Intelligence (AI) and Big Data occurring more and more in the coming years. Fundamental research and science, i.e. mathematics, are the least selected options, but still to a good extent. Pillar 4: Intellectual Property Protection As shown in Table 7.2, coworking companies do not seem to rely much on intellectual property rights protection. Many of them believe that market-​ lead time is very important in the competitive markets they operate. Quality of design and performance is reported as relevant aspects by almost half of the surveyed startups. They also seem to have faith in the complexity of their products, as 24.31% of the respondents stated it is either important or very important to their business. On the contrary, secrecy does not play any role according to most of the companies. Copyrights and trademarks are believed to be quite important, whereas patents are not considered much as part of the strategy by most of the managers who answered the survey; 2.7% of the respondents consider them very important. A remarkable fact was found by asking entrepreneurs whether they had ever found one of the aforementioned sources of innovation in their CWS: 92% of them answered yes, suggesting that CWS have the power of stimulating companies’ innovating processes. Most of the entrepreneurs report they had access to consultants and to customers through their working environment. As expected, since CWS host several different professionals, 25% of the surveyed companies said to have encountered competitors and suppliers at their workplace. Also, around the same percentage was found to have gained the possibility to attend fairs or exhibitions within the space. To a smaller, but still significant extent, professional associations, government, and university members were reported to provide support for innovation to coworking companies. Taking Away Overall, coworking companies display a high level of innovativeness: only 8% of the respondents reported not innovating at all. Coworking

6 3 1

136  Anh Nguyen Duc and Simode Sperinde startups seem to rely on many coworking peers to achieve innovation to some extent. The major portion of coworking startups has a good amount of human capital, implying at least some degree of absorptive capacity (Vinding, 2006). Looking at absorptive capacity as an enabler to an open innovation system, the open innovation evaluation framework is relevant to our investigated startups. Besides, startups found CWS as facilitators for generating their innovation; however, it seems that the amount of open innovation does not significantly occur as the result of activities in CWS. Coworking startups also do not rely strongly upon intellectual property protection mechanisms, which differs from the standard requirements of an open innovation system. RQ2: What Is the Role of Coworking Spaces in Fostering Open Innovation in Digital Startups? By interviewing nine entrepreneurs (aliased I1–​I9) as post-​survey follow-​ up action, we obtained a better understanding of the role of CWS in fostering open innovation. The entrepreneurs’ perception of the impacts of CWS on four pillars of open innovation indicators is summarized in Table 7.3. Pillar 1: Knowledge and Technology Sourcing Product research and development is observed as the activity where most entrepreneurs could put open innovation in practice. I3 reported that the CWS has an impact on his firm’s internal innovation: “[the coworking space] is really important in developing my product, since it gives me the opportunity to test it at events organized on purpose.” I8 explicitly reported his innovation activity being influenced by the CWS, as he gets the chance to discuss ideas with other startup founders. Moreover, I7 said: “We got the inspiration for trying new business models, we relied heavily on the comments people made to us.” In these cases, the place Table 7.3 The impact of coworking spaces on different indicators of open innovation Int.

Pillar 1

Pillar 2

Pillar 3

Pillar 4

I1 I2 I3 I4 I5 I6 I7 I8 I9

no no yes N/​A No N/​A yes yes no

yes yes yes N/​A yes N/​A yes yes yes

yes no no N/​A no N/​A yes no no

yes no no N/​A no N/​A no yes no

7 3 1

Fostering Open Innovation  137 dimension is important in sparking such communication. However, I7 and I8 worked in the same CWS, and they spoke about a community meeting happening once a month, where new members can ask for suggestions about their projects. Some of the insights they used to innovating their products emerged during this event. I4, a CWS manager, reported: “There are some guys here working on a podcast, using technical tools they’ve never used before: for them it’s innovation, and this wouldn’t have happened if they weren’t here together.” In this example, the presence of a permanent, ideal platform consisting of the dimensions of place and space is key in fostering the innovative behaviors mentioned. Alternatively, the mix between a common place where people interact with each other and a figurative community where they are located in cognitive proximity (where cognitive proximity is characterized by technical competences in the broadcasting sector that these people have in common) gives rise to a project dimension, which displays a certain degree of innovativeness. I3 enthusiastically mentioned how he got the chance to develop a digital version of his product: “I created a graphical illustration of [the product] to be used digitally and these guys developed it along with 8 students. We didn’t try it on the market, but it’s extremely interesting. I got more experienced with young people’s customer experience.” He also added: “A friend of mine is an expert about crowdfunding and he came to [an event held weekly]. We started a crowdfunding project for [a product] and I asked the people in [the coworking space] to help us design the campaign: nine people accepted and gathered together for an hour of brainstorming.” These are clear examples of innovation originating out of the scope of the company’s internal research and development activity, which consequently can be classified as open innovation behaviors. An event stimulated creativity and cooperation in the latter case, while it is not clear how the first project was ignited. Surely, being in the same place was a necessary condition. To sum up, all of the four dimensions of CWS, namely place, space, project, and event, are involved equally in fostering cooperation and open innovation practices among coworking startups, which, in turn, translate into a large set of innovative activities undertaken (i.e. the knowledge and technology sourcing process). The platform consisting of places and spaces gives people the chance to relate to each other in synergy. Events seem to act as connectors, and to play a relevant role in bringing people to interact. Projects are the final result of the process when open innovation can ultimately be observed. Pillar 2: Sources of Knowledge Consultants, students, peer entrepreneurs in CWS are found to be significant sources of knowledge. The collaboration between entrepreneurs and these stakeholders relies on the place and event dimensions of CWS.

8 3 1

138  Anh Nguyen Duc and Simode Sperinde Consultants were found to be easily accessible to companies in many CWS. Many interviewees noted that Innovasjon Norge’s representatives visit CWS on a regular basis and that they are available to answer questions and to help people solve problems. Innovasjon Norge performs a free consultancy service directed to coworkers, which said benefitting from it in terms of innovation. The place dimension is clearly the enabling mechanism here: entrepreneurs get access to free consultancy just by being there. Students are believed to be a potential source of innovation, and while no evidence of current cooperation among coworkers and students was collected, it was observed how CWS members put an effort in developing connections with universities. I6, for instance, stated: “We have 3 or 4 student-​startups in Grunder Hub right now. As a student you might have a lot to talk about with a 60 years old guy. It’s difficult for this kind of interaction to take place in a context different from a coworking space, a place where everybody is equal.” A similar mentality was observed in I7’s thought: “I have thought of having my own events, to involve a university community into my company. This could benefit both my company with more visibility and get students to meet companies.” In the former case, a project is where innovation is thought to stem from, while in the latter, an event makes it possible to open a new link with the university. Coworking companies sometimes become each other’s customers and suppliers because of the easiness of connecting to each other and were found to cooperate in a number of cases. Also, several interviewees mentioned cooperation with other companies without specifying the relationship they have with them. The place dimension gives access to many sources of innovation, just by sitting in the CWS. Again, in many instances, events have the power to get people to know each other’s competences better and to foster their cooperation through the place later on. Pillar 3: Human Capital As shown in Table 7.3, only I1 and I7 report about the acquirement or improvement of human capital in their startups thanks to the CWS. It seems that early stage digital startups have developed their core competence before or outside the coworking environment. However, in a few cases, coworkers admitted they had the chance to learn something new thanks to their workplace. I1, for example, said: “It is very good to discuss personal challenges, to have someone to share it with who understands you.” Later on in the interview, she added: “In my office right now there are a lot of people who are professional story-​tellers, show makers, which are close to my business, a lot of companies facing the same challenges, and you can learn a lot just by talking to people.” Other digital entrepreneurs mentioned the fact that they see an improvement in their soft skills thanks to the CWS, through events and other social

9 3 1

Fostering Open Innovation  139 Table 7.4 The coworking space elements that matters Coworking space elements

Open innovation pillars

Place, Space, Event, Project Place, Event Project, Event

Knowledge and technology sourcing Source of knowledge Human capital

gathering occasions. As I1 mentioned, she could acquire new knowledge from her industry peers, so a space dimension is evident. Events help entrepreneurs develop their soft skills, although they do not contribute to the process of absorptive capacity building. It is interesting to notice that I1 expressed her appreciation in terms of learning opportunities for her CWS, which is specialized in her industry. The fact that she reports the possibility to improve her skills might well indicate that more focused CWS foster specific knowledge creation, aside from soft skills development and networking. I1 underlined this fact: “In my previous coworking space I couldn’t really get much, because they were all so different. I don’t see a lot of value in very diverse coworking spaces beyond the social aspect and networking.” Intellectual property protection is the least visible element in CWS context. One reason could be that the interviewed entrepreneurs are running small and young businesses that do not make the extensive use of IP protection tools yet. These findings are in accordance with the survey data, which displayed a low usage of such mechanisms by coworking companies. Nevertheless, some examples were found. I8 reported meeting a specialized lawyer at his CWS. The lawyer was presenting his company during an event, and was thereafter that, for talking to people. I8 applied for a patent with the help of this law firm. I1 said that legal services are available once a month, free of charge, at her CWS. In the former case, an event stimulated the use of IP protection mechanism, while in the latter instance, the place dimension is important, because, again, I1 got free legal services just by being there. The summary of important CWS elements is given in Table 7.4. Taking Away –​the Importance of Events According to the opinions of digital entrepreneurs and managers of CWS, a mere common place does not foster cooperation and consequently open innovation among people. To translate this within the four elements of CWS, the place dimension alone does not generate a project dimension by itself; a space needs to be generated for people to interact in cognitive proximity and a catalyst needs to push the origin of it. A catalyst is a person that knows coworkers and how to connect them and it is a necessary figure in a CWS. Most importantly for the sake of this research, the best tool that a catalyst can utilize is an event. Therefore, the event

0 4 1

140  Anh Nguyen Duc and Simode Sperinde dimension turns out to be crucial in promoting open innovation practices among coworkers. An event creates trust and synergy among people: it generates a space. The presence of the space improves the use of the place dimension from mere geographical proximity to cognitive proximity. The space dimension adds value to the place. Spaces and places together foster interaction among people and ultimately their projects. To sum up and to answer RQ2, the CWS plays an important role in fostering open innovation practices, as long as a catalyst puts an effort into building a community and connecting people with the help of events. An event sparks connection among people, allowing places, spaces, and projects to exercise their influence on the pillars of open innovation, as illustrated.

Discussions The Refined Model of Open Innovation in Coworking Spaces Understanding the role CWS play in supporting open innovation practices among digital startups leads to a refinement of our initial theoretical framework. Our proposed model on OICS is shown in Figure 7.1. The OICS model presents the different roles of CWS in connections to the four pillars of open innovations. In the first part of the model, places, spaces, events, and projects affect differently the four pillars of open innovation. More importantly, we believe that events have an influence more on the development of the other CWS dimensions, rather than directly on the four pillars, and this is shown in the model. The arrows between events and the other dimensions explain the influence in detail:

• Events give the chance to people to connect. Members get to know • •

each other better, and exchange mutual information about each other’s business. The space is generated. A common place with no mutual interaction and synergies is of low value. Places acquire value thanks to the generation of spaces. Events enable projects as they put people together. Also, the interaction between places and spaces allows more collaboration and consequently contributes to the rise of joint projects.

In the second part of OICS, we observe the central position of knowledge and technology sourcing as an open innovation indicator. While places and spaces are necessary conditions for startups developing their innovative products or services, common projects are the main context of open innovation with knowledge and information going beyond the boundary of the startups themselves. Common projects also facilitate the (partial) acquisitions of competences or skills in the shared places. Intellectual property protection, as described before, does not play a significant role in the model as a consequent factor.

1 4

Fostering Open Innovation  141 This research’s main focus was on the role of CWS in fostering open innovation in a digital startups context. While Lee et al. (2010) acknowledge the necessity of a network for open innovation practices to be in place, they do not explain the process that brings to the creation of the network. This work proposes a theoretical model that explains how different elements of CWS contribute to the rise of open innovations practices. This chapter fills the gap by illustrating the role of events. Capdevila (2013) compares CWS to industrial clusters, by recognizing a number of common aspects. However, only one out of four CWS where interviews were conducted displayed a degree of specialization throughout the whole shared office and could therefore be included in Capdevila’s definition. Nevertheless, specialized knowledge was observed to some extent in many CWS, and digital startups managers said they found it beneficial for their business. Moreover, the interviewee sitting in the specialized CWS reported preferring such a setting over diverse environments experienced before, since much more valuable cooperation can arise with people working in the same sector. Hence, it is believed that homogeneous shared offices can add value in terms of collaborative endeavors, but the analogy between CWS and microclusters seems to be applicable to a few cases. After all, this is an obvious consequence of the fact that a large majority of CWS are small and young startups themselves. Targeting only a small specific group of workers can be very risky in such a situation: for the sake of financial statements, managers are forced to accept anyone willing to join the CWS, and specialization is a rare occurrence. In contrast, diversity was reported as positive by many other interviewees, confirming the view of Johns and Gratton (2013). Therefore, it can be inferred that, although in different ways, both diverse and homogeneous

Source of knowledge

ad d

va lu

e

to

Places

Human capital enable

Events

Projects

e ak

m e us of

Spaces

Knowledge and technology sourcing

Figure 7.1 The OICS model on Open Innovation in Coworking Spaces.

2 4 1

142  Anh Nguyen Duc and Simode Sperinde CWS have the potential to foster collaboration and consequently open innovation practices.

Implications for Sharing Economy The financial crisis has possibly played a role in stimulating the coworking phenomenon: sitting in a CWS helps saving money, and workers might have chosen this solution over other workplaces in an attempt to save on key resources during the economic downturn. The spread of open innovation was recognized more recently but also became a global phenomenon across various industries. Companies often find it more convenient to undertake joint projects for innovation, knowing that all the actors active in the project will gain their share of value. Both phenomena are perfectly aligned with the sharing economy ideology, whereby coworking as well as open innovation represent an aid to entrepreneurs struggling to conduct business with resource constraints. This is especially true for digital startups that don’t need much room for assets, but most of the time only need a place to sit and work, just as a CWS can offer. Moreover, as long as safety precautions are taken, the authors invite entrepreneurs to consider such alternative office arrangements during these harsh times of crisis brought up by the coronavirus outbreak, which is forcing a number of companies to cut on resources.

Conclusions The hype around the coworking movement has mounted considerably throughout the last decade without signs of deceleration. The academic literature had thus far neglected the link between open innovation and CWS. This work aims at filling this gap, positions itself as one of the first research work exploring the empirical connection between open innovation and CWS. The results have shown that CWS have the potential to foster open innovation practices among their members. The role of events and similar initiatives is important in shaping a community. Two of the studied open innovation dimensions are majorly influenced by the role of CWS, namely knowledge and technology sourcing and sources of knowledge. On the other hand, human capital and intellectual property protection are not affected as much. CWS managers and companies can find much useful information in this chapter. More awareness is raised about the relationship between coworking and open innovation. This study helps companies decide on their corporate policies in terms of working arrangements and innovation practices and it advises managers on how to improve internal cooperation among coworkers. In particular, the study highlights the benefits CWS offer to startups active in the digital sector, promoting them as an ideal location to conduct day-​to-​day business. Digital entrepreneurs are

3 4 1

Fostering Open Innovation  143 invited to consider such an arrangement, in case they are looking for meaningful connections and successful cooperation. Many aspects were not considered within this study, leaving room for further development of the topic, while tracing a possible pattern for a literature flow. Future research on this theme should consider the suggestions proposed herein.

Notes https://​ec.europa.eu/​eurostat/​web/​microdata/​community-​innovation-​survey 1 2 https://​www.innovasjonnorge.no/​

References Bathelt, H., Malmberg, A., & Maskell, P., 2004, ‘Clusters and knowledge: local buzz, global pipelines and the process of knowledge creation’, Progress in Human Geography, vol. 28, no. 1, pp. 31–​56, https://​doi.org/​10.1191/​ 0309132504ph469oa Bouncken, R.B., Laudien, S.M., Fredrich, V., & Görmar, L., 2018, ‘Coopetition in coworking-​spaces: value creation and appropriation tensions in an entrepreneurial space’, Review Managerial Science, vol. 12, no. 2, pp. 385–​410, https://​doi.org/​10.1007/​s11846-​017-​0267-​7 Braun, V., & Clarke, V., 2006, ‘Using thematic analysis in psychology’, Qualitative Research in Psychology, vol. 3, no. 2, pp. 77–​101, https://​doi.org/​10.1191/​ 1478088706qp063oa Cabral, V., & Winden, W.V., 2016, ‘Coworking: An analysis of coworking strategies for interaction and innovation’, In: Regional studies association annual conference, Graz, Austria, doi:10. 13140/​RG.2.1.4404.5208 Capdevila, I., 2013, ‘Knowledge dynamics in localized communities: coworking spaces as microclusters’, SSRN Electronic Journal, http://​dx.doi.org/​10.2139/​ ssrn.2414121 Capdevila, I., 2014, ‘Different inter-​organizational collaboration approaches in coworking spaces in Barcelona’, SSRN Electronic Journal, pp. 1–​30, http://​ dx.doi.org/​10.2139/​ssrn.2502816 Capdevila, I., 2015, ‘Co-​working spaces and the localised dynamics of innovation in Barcelona’, International Journal of Innovation Management, vol. 19, no. 3, 1540004. 10.1142/​S1363919615400046. Chesbrough, H.W., 2003, ‘The era of open innovation’, Managing Innovation and Change, vol. 127, no. 3, pp. 34–​41. Cohen, W.M., & Levinthal, D.A., 1990, ‘Absorptive capacity: a new perspective on learning and innovation’, Administrative Science Quarterly, vol. 35, no. 1, pp. 128–​152, https://​doi.org/​10.2307/​2393553 Doloreux, D., 2015, ‘Use of internal and external sources of knowledge and innovation in the Canadian wine industry’, Canadian Journal of Administrative Sciences /​Revue Canadienne des Sciences de l’Administration vol. 32, no. 2, pp. 102–​112, https://​doi.org/​10.1002/​cjas.1312 Gandini, A., 2015, ‘The rise of coworking spaces: a literature review’, Ephemera: Theory and Politics in Organization, vol. 15, no. 1, pp. 193–​205.

41

144  Anh Nguyen Duc and Simode Sperinde Johns, T., & Gratton, L. (2013). ‘The third wave of virtual work’, Harvard Business Review, vol. 91, no. 1, pp. 66–​73. Jones-​Evans, D., Gkikas, A., Rhisiart, M., MacKenzie, N.G., 2018, ‘Measuring open innovation in SMEs. Researching Open Innovation in SMEs’, W Vanhaverbeke, F Frattini, N Roijakkers and M Usman (eds.), World Scientific Publishing, Singapore, pp. 399–​427, https://​doi.org/​10.1142/​9789813230972_​0013 Laursen, K., & Salter, A.J. (2014). The paradox of openness: Appropriability, external search and collaboration. Research Policy, vol. 43, no. 5, pp. 867–​878. Lee, S., Park, G., Yoon, B., & Park, J., 2010, ‘Open innovation in SMEs—​An intermediated network model’, Research Policy, vol. 39, no. 2, pp. 290–​300. Mariz-​ Pérez, R.M., Teijeiro-​ Alvarez, M.M., & García-​ Alvarez, M.T., 2012, ‘The relevance of human capital as a driver for innovation’, Cuadernos de economía, vol. 35, pp. 68–​76. Moriset, B., 2013, ‘Building new places of the creative economy. The rise of coworking spaces’, Territoire en Mouvement, https://​doi.org/​10.4000/​ tem.3868 Nguyen-​Duc, A., Münch, J., Prikladnicki, R., Wang, X., & Abrahamsson, P. (Eds.), 2020, Fundamentals of Software Startups: Essential Engineering and Business Aspects, Springer International Publishing, New York, https://​doi. org/​10.1007/​978-​3-​030-​35983-​6 Parrino, L., 2015. ‘Coworking: assessing the role of proximity in knowledge exchange’, Knowledge Management Research & Practice, vol. 13, no. 3, pp. 261–​271, https://​doi.org/​10.1057/​kmrp.2013.47 Raffaele, C., & Connell, J., 2016, ‘Telecommuting and Co-​Working Communities: What Are the Implications for Individual and Organizational Flexibility?’, In: Sushil, Connell J., Burgess J. (eds) Flexible Work Organizations. Flexible Systems Management. Springer, New Delhi, pp. 21–​ 35, https://​doi.org/​ 10.1007/​978-​81-​322-​2834-​9_​2 Rantisi, N.M., & Leslie, D., 2010, ‘Materiality and Creative Production: The Case of the Mile End Neighborhood in Montréal’, Environment and Planning A, vol. 42, no. 12, pp. 2824–​2841, https://​doi.org/​10.1068/​a4310 Spinuzzi, C., 2012, ‘Working Alone Together: Coworking as Emergent Collaborative Activity’, Journal of Business and Technical Communication, vol. 26, no. 3, pp. 399–​441, https://​doi.org/​10.1177/​1050651912444070 Vinding, L.A., 2006, ‘Absorptive capacity and innovative performance: A human capital approach’, Economics of Innovation and New Technology, vol. 15, no. 4–​5, pp. 507–​517, https://​doi.org/​10.1080/​10438590500513057 Waters-​Lynch, J., & Potts, J., 2017, ‘The social economy of coworking spaces: a focal point model of coordination’, Review of Social Economy, vol. 75, no. 4, pp. 417–​433, https://​doi.org/​10.1080/​00346764.2016.1269938 Waters-​ Lynch, J., Potts, J., Butcher, T., Dodson, J., & Hurley, J., 2016, ‘Coworking: A Transdisciplinary Overview’, Social Science Research Network (SSRN Scholarly Paper No. ID 2712217), Rochester, NY. West, J., Bogers, M., 2013, ‘Leveraging External Sources of Innovation: A Review of Research on Open Innovation’, Social Science Research Network, (SSRN Scholarly Paper No. ID 2195675), Rochester, NY. Yin, R. K., 2003, Case study research: Design and methods, Sage, Thousand Oaks, CA, 2003.

5 4 1

8  Gigging with an MBA When Elite Workers Join the “Gig Economy for Finance People” Alexandrea J. Ravenelle, Erica Janko, and Ken Cai Kowalski

Gigging with an MBA: When Elite Workers Join the “Gig Economy for Finance People” As professional work has become more precarious during the 21st century (Styhre, 2017), highly skilled workers have been working more and more in self-​ employment relationships (Barley & Kunda, 2011; Osnowitz, 2006). Yet, while gig platforms such as Uber and TaskRabbit have become household names, little is known about their higher status, but equally digital counterparts. Often described as “the gig economy meets McKinsey,” a slew of online platforms have recently arisen that promise elite workers the same opportunity for “flexibility” and to be their “own boss,” with the added benefit of a $1,000/​day minimum wage. Whereas many gig economy services have been criticized for outsourcing risk to workers (Ravenelle, 2017; Ravenelle, 2019; Rosenblat, 2018), high-​status services may reduce the risk experienced by potential entrepreneurs by allowing them to discreetly launch online consulting businesses within a password-​protected marketplace. As a result, workers can “test drive” entrepreneurship without quitting their day jobs. Yet, while the high daily wages are promising, and the work is highly professionalized, with the workers engaged in offices rather than working behind closed doors in private homes, workers still experience a high level of risk including slow periods, income uncertainty, and the constant need to market themselves. The question arises: Why are well-​educated workers with prestigious work experience turning to platform-​based gig work, however exclusive? We ask, do high-​status platforms serve as a stepping stone for elite workers to enter entrepreneurship, or do these services simply enable workers to engage in digital moonlighting? In this chapter, based on surveys and in-​depth interviews with 35 elite gig workers, we find that many workers identify themselves as being entrepreneurial or having an entrepreneurial spirit, and the majority have incorporated, but entrepreneurship tends to be a secondary interest when it comes to their platform-​based work. Instead, for most workers, the appeal of gig-​based work falls into one of four categories: New Money;

6 4 1

146  Alexandrea J. Ravenelle et al. Needed & Necessary; Networkers; and New Occupation. While some workers identified their platform-​based gig work as a way to “test” consulting and as a “warm-​up to entrepreneurship,” few saw their gig platform work as a direct on-​ramp to becoming an entrepreneur.

The Future of Work and Push/​Pull of Entrepreneurship The rapid expansion of the gig economy has largely been driven by the explosive growth of on-​demand app platforms such as Uber, Lyft, TaskRabbit, Airbnb, and Instacart. In 2010, on-​demand platforms collectively attracted $57 million in venture capital investment. By 2017, Uber alone pulled in $12 billion (Prassl, 2018, p. 18). With the continual improvement of digital technologies that enable remote labor, firms outside the tech sector are also finding that hiring freelance labor is more cost-​effective than retaining full-​time employees in conventional workspaces (Ryder, 2019). The embrace of contingent labor threatens to reproduce many of the working conditions that characterized early industrial capitalism, including piece-​work compensation and the devolution of financial risk from firms to workers (Ravenelle, 2019; Stanford, 2017). These concerns are further exacerbated by expected job losses and other major economic disruptions due to labor automation (Ford, 2015; Lent, 2018), culminating in a general shift away from stable employment that some observers have termed the “fourth industrial revolution” (Hirschi, 2018; Neufeind et al., 2018; Schwab, 2018). The decreasing role of stable employment further leads to a “risk society” in which “social institutions provide less ‘insurance’ against the vicissitudes of life, such as job loss or loss of one’s health, and individuals are expected to assume responsibility to navigate these risks” (Marshall & Bengtson, 2011, p. 24). Workers are told that they are responsible for their own careers, and urged to improve their value and marketability through such activities as job crafting (Wrzesniewski & Dutton, 2001) or personal branding (Gershon, 2017; Vallas & Cummins, 2015). This focus on identifying opportunity, marketing one’s self, and being able to survive the vicissitudes of work and insecurity is a small step away from the risks and challenges typically associated with entrepreneurship (Stevenson & Gumpert, 1985). Draws to entrepreneurship are often characterized as “pushes” into necessity entrepreneurship or “pulls” into opportunity entrepreneurship (Amit & Muller, 1995; Giacomin et al., 2011; Kirzner, 1979; van der Zwan et al., 2016). Young, wealthy men with proactive, optimistic attitudes are more likely to be opportunity entrepreneurs, while necessity entrepreneurs are often motivated by negative experiences in current or past employment and may have less privileged backgrounds (van der Zwan et al., 2016). Pull entrepreneurs are more likely to be financially successful and remain self-​employed for longer periods than push entrepreneurs (Amit & Muller, 1995; Block & Sander, 2009), though

7 4 1

Gigging with an MBA  147 recent work contradicts this trend (Rocha et al., 2015), suggesting the need for further research. Pull factors into opportunity entrepreneurship are often positive, with these entrepreneurs seeking intrinsic rewards (e.g. recognition, innovation, and independence), pursuing financial success, or following the path of a family member or role model (Amit & Muller, 1995; Carsrud & Brännback, 2011; van der Zwan et al., 2016). Push factors into necessity entrepreneurship are of a darker nature. In countries with high economic inequality people are more likely to enter into entrepreneurship (Auguste, 2020), but human and financial capital become weaker deterrents for entry into necessity entrepreneurship, while financial capital predicts entry into opportunity entrepreneurship (Xavier-​Oliveira et al., 2015). In the U.S., human capital, particularly the advanced education and managerial experience associated with elite occupations, is strongly associated with entry into entrepreneurship (Kim et al., 2006). The unemployed often pursue entrepreneurship, the “unemployment push” or “escape from unemployment” effect, because it may feel like less of a risk than having no job at all (Thurik et al., 2008; van der Zwan et al., 2016). Family pressure or job dissatisfaction may also push people into entrepreneurship, as well as traits that may make it difficult for people to find employment, like criminal background (Amit & Muller, 1995; Hwang & Phillips, 2020; van der Zwan et al., 2016). The boundary between opportunity and necessity entrepreneurship is, of course, not rigid, and recent work points to a group of entrepreneurs that fall between these categories (Giacomin et al., 2011). For example, hybrid entrepreneurs, particularly in knowledge-​intensive fields, may choose to engage in entrepreneurial moonlighting while keeping their primary jobs, before entering into self-​employment (Folta et al., 2009). The question then arises, are workers using elite gig platforms to begin preliminary forays into entrepreneurship, or is this simply seen as digital moonlighting?

Exclusive Platforms and Defining Elite Gig Workers Elite platforms such as Graphite (formerly known as SpareHire), Catalant (previously called HourlyNerd), and TopTal describe themselves as offering “top business talent” and “on-​demand experts.” Graphite markets itself as offering access to “6,000 vetted independent experts,” more than 800 of whom have big-​three consulting experience (Bain, McKinsey, and BCG), and 65% with advanced degrees, including more than 1,600 with an MBA from a top ten business school (Our experts, n.d.). Its competitor, Catalant, offers access to more than “70,000 independent experts” used by “more than 30% of the Fortune 100… to power strategic plan execution, enterprise portfolio management, centers of excellence, organizational redesigns… and post-​merger integrations” (What we do, n.d.). While these services are not household names, they are becoming increasingly entrenched in corporate America.

8 4 1

148  Alexandrea J. Ravenelle et al. Unlike lower status gig platforms, such as TaskRabbit, the personal assistant site, or Instacart, the grocery shopping platform, high-​status platforms market themselves as exclusive enclaves for talent. TopTal, a portmanteau of Top and Talent, puts potential gig workers through a three-​to five-​week application process before accepting only 3% of applicants. Workers are screened for “language and personality,” before undergoing a two-​step knowledge and skill screening, completing a test project and being required to exhibit “continued excellence” (Why 3%?, n.d.). Graphite notes that only 10% of applications are accepted and that workers “deliver great outcomes with an average rating of 4.8 out of 5 stars,” with those who fall short being “immediately removed from the network” (Frequently asked questions, n.d.). While the workers themselves fit the sociological definition of elites as “those with vastly disproportionate control over or access to a resource” (Khan, 2012) due to their incomes or education levels, we focus our categorization on the work itself. We define elite gig work as paying at least $100 an hour, and including the type of work that is usually considered high prestige and highly lucrative such as management consulting, strategic planning, and financial services. These are the types of jobs that top business school graduates traditionally compete for, and yet, they are now available via gig platform, albeit on an independent contractor status and without any workplace benefits, protections, or opportunities for advancement.

Research Methodology The 35 respondents for this study were recruited from the Graphite, Catalant, and TopTal platforms and participation was limited to workers who had at least one completed, and reviewed, project on their respective platform. Each participant completed a short demographic survey before being interviewed in a participant-​ directed semi-​ structured interview (Weiss, 1995). Interviews were conducted between June 2019 and March 2020, with most conducted in person. Interviews focused on open-​ ended questions: how workers became involved with the high-​ status gig economy; the challenges they encountered in engaging in consulting work; their views on the gig economy and entrepreneurship; if they identify as entrepreneurs; and their views on the future of work. All interviews were audio-​recorded, transcribed, and coded by question (Deterding & Waters, 2018) before being coded inductively and analyzed for patterns. Demographic information from the surveys was entered into a spreadsheet and analyzed via descriptive statistics. To preserve confidentiality, all respondents were assigned pseudonyms. To encourage participation in the study, workers were given a $50 gift card incentive and offered lunch during the course of the interview. Participants included 25 males and 10 females, ranging from 25 to 66 with an average age of 40. Twenty-​five participants identified as white,

9 4 1

Gigging with an MBA  149 six as Asian, one as Hispanic, one as racially mixed and one as American. Their household incomes were high: 28 had an income of more than $100,000, including 16 with household incomes north of $200,000 and only two had incomes below $99,999. Twenty-​four identified themselves as having a graduate degree, including two participants with doctorates and one with a law degree. The remainder had college degrees.

Findings New Money: “A Gig Economy for Finance People” First and foremost, the main reason that workers give for turning to the platforms is financial, an explanation we call “New Money.” For these workers, gig platform work was seen as relatively easy to access within a short time period, unlike obtaining a full-​time job. This is in line with Ravenelle (2017) where many workers identified their involvement in the sharing economy as being driven by the need to “sell” services or access to spaces (via Airbnb) as opposed to “share” resources. Many of the high-​ status gig workers described themselves as finding the elite platforms by searching online for opportunities to make money. For instance, Seth, 36, left his position in a top three management consulting firm, without a “firm plan” as to his next career move. After several months, he needed “work to pay my mortgage and so I just Googled freelance work and Sparehire was the first one that I found. And there were a couple of projects that I was right for. So I submitted and I got those projects and I started earning money from it on. So I thought, ‘that’s great.’ ” Likewise, Adalene, 30, noted that she turned to Catalant for work when she ran out of money while starting her own company. In addition to providing a new source of income, the platforms also enabled workers to group themselves as part of a new way of working, i.e. within the gig economy, as explained by Donald, 55. “I was working at a hedge fund and I left the fund, and was just trying to kind of figure out, you know, my next step. And actually I must’ve Googled it. I was like, I think I was just Googling. I just stumbled on it and I was like, I guess my initial thought was there’s a gig economy for everyone else. There has to be a gig economy for finance people.” Donald’s confidence that there must “be a gig economy for finance people” is illustrative of the sheer prevalence of gig platforms and the attention paid to the so-​called “future of work” as involving remote and independent contractor work and the expected rise of the freelancer class (Horowitz et al., 2005). Needed and Necessary: “Why am I putting up with this?” A closely linked category to New Money were those workers who viewed platform-​based gig work as Needed and Necessary. For these workers, gig work was seen as a necessity after a bad work experience or as an

0 5 1

150  Alexandrea J. Ravenelle et al. alternative to long-​term unemployment. While these workers were also using gig work as a source of income, they often framed the gig work as needed due to a reluctance to return to full-​time employment after a “career catastrophe” or negative experiences, partnered with the challenge of finding additional sources of work: I came out of grad school, went to [a major consulting firm], left and went to a startup and then… I got fired from the startup for an equal pay dispute. And I had left [the consulting firm] for whistle blowing on gender discrimination… But at that point I had sort of just had enough with trying to deal with the institutions. And I remember thinking all the time, like, why am I putting up with this bullshit? –​ Olivia, 33 I got involved to be honest, actually, after kind of a career catastrophe, I was fired from my prior job. And after two years of not being promoted, and it was all long, dramatic history to it –​I realized very late that was probably because I complained about sexual harassment a long time ago… And what I realized is that I had not –​ well, there was still some psychological issues, you know, based on how it ended but also, I realized that I just didn’t know how to sell. –​ Anastasia, 41 While Anastasia turned to the platforms for work, due a lack of knowledge about how to sell, she and her consulting partner regularly refer to themselves as “refugees” from the corporate world after they each experienced a series of career mismatches. Their gig-​based work, while it has not always been especially lucrative, is seen as “offering more control” over their work environment, while the short-​term nature of the projects allows for a “light at the end of the tunnel” if a consulting relationship sours. Also included in the Needed and Necessary classification are workers who turned to elite gig work after an extended period of unemployment. Moulton and Scott (2016) found that for older workers especially, job loss is strongly associated with entry into self-​employment. Drawing on Kalleberg (2011), Moulton and Scott note that older workers engaged in more knowledge-​based, entrepreneurial forms of self-​employment have greater levels of wealth, income, and education and are more likely to be white non-​Hispanic men. This more privileged group fills the “good jobs” of self-​ employment (Moulton & Scott, 2016), which includes elite gig work. For instance, Craig, 48, a former equity research analyst, turned to platform-​based gig work also after getting laid off several times and experiencing a long period of unemployment: I couldn’t find a research job, so I was doing everything I could. I was trying everything. I applied to Starbucks, applied to Blockbuster, couldn’t apply to sell mobile phones. I couldn’t get any, any type of

1 5

Gigging with an MBA  151 job…. Eventually I think SpareHire was created to take advantage of all these out of –​these unutilized workers like myself. And so I guess shortly after they started up, I noticed them because I was always searching for stuff. And I applied and I got in and I got my first job shortly thereafter. The work that Craig found through the platforms would fit many definitions of an enviable, professional job: well-​paid and offering weekly business class travel with stays in well-​appointed hotels. Yet, when he was interviewed in the summer of 2019, Craig hadn’t secured any additional consulting engagements in more than six months. “I apply to jobs every few days. And it’s really like winning a lottery ticket because it’s really hard to understand what a client’s looking for. And a lot of times in this gig economy, the clients themselves don’t even know what they’re looking for. They’ll get like 30 or 40 applications and unless –​in their mind –​you fit a certain bucket, they won’t talk to you.” Craig’s comment illustrates one of the challenges that gig workers face, even those engaged in elite work: while gig platforms are often described as offering services “on-​demand” for clients, it’s a lopsided equation for workers who may struggle to get work when they want –​or need –​it. Yet, while the elite platforms don’t always deliver when it comes to a dependable source of work, or income, many workers found that the sites offered strong opportunities for networking as the next section will show. Networking: “Expand at least the reach of what we’re doing…. Put our profiles out there” Granovetter (1973) foundationally laid out the importance of broad networks, with weak ties among many people, in securing new jobs. Weak ties enhance people’s opportunity for mobility by allowing them to connect to openings with new employers. In addition, when people accept a new job, they further broaden their networks by bridging the networks of weak ties among their new and old employers (Granovetter, 1973). Today, workers must consciously broaden their skills, knowledge, and networks to be able to secure work (Smith, 2010). Workers’ access to networks and network-​based referrals impacts their career trajectories and career turbulence, leading to more stable careers for those who are connected to less clustered, more widespread networks (Fountain & Stovel, 2014). In particular, freelancers may engage in career-​related network behavior to increase their career satisfaction and perceived future career opportunities (Jacobs et al., 2019). While workers sometimes differed in their assessment of the financial opportunities offered by gig platform work, many viewed the platforms as offering a strong opportunity for networking and the development of weak ties. For instance, Dennis, a 66-​year-​old banker, had traditionally relied on referrals from estate lawyers. In his 30s, it was beneficial to know

2 5 1

152  Alexandrea J. Ravenelle et al. older, more established attorneys. But as he aged, so did his referrals. “All those lawyers who’ve been referring to me,” he explained. “I mean a lot of them are dead and most of them are retired because you tend not to know the ones that are younger than you.” For Dennis, the platforms literally provided a way to access fresh contacts. Manish, 34, also described the platforms as a way to access new sources of work after exhausting his LinkedIn contacts and those of his consulting partner. Describing himself as “relatively gregarious for a data analyst,” he noted, “There is a limit to that even in my work. So we were like, ‘this is a good way for us to expand at least the reach of what we’re doing.’ …Put our profiles out there.” Unlike traditional networking events that are often seen as primarily attracting sales people and the unemployed, the platforms offered workers the opportunity to interact with individuals who were strategically placed in powerful –​or simply more powerful –​positions than their own, and provided the opportunity to increase their social capital (Lin et al., 2016; Sprengers et al., 1988). The platforms’ entrenchment within corporate America, and the coverture of their perceived exclusivity, provided opportunities that workers could not access individually. As Bret, 37, explained, the online platforms “provide new opportunities with potential clients that I don’t yet have access to.” Other workers echoed the perception that work was often relationship-​based and that the platforms provided the weak ties necessary (Granovetter, 1973). As a consultant, Olivia noted, “I wouldn’t have access to this work otherwise cause I don’t have those relationships.” The networking opportunities, and access to people in powerful positions, were seen as such an asset that John, a single family office banker, had the blessing of his company to work part-​time on his gig-​ based consulting work, ostensibly because it benefitted his job: “I’ve sourced deals for our portfolio out of it. I’ve avoided mistakes and just have a broader expert network to these people that I would never come in contact within my normal life,” he said. “Whether it’s people having specific things in different states that I have no reason to come across… So that’s where the intelligence and networking comes in.” The networking aspect of this gig work, in addition to the variety of work posted, also led to some workers viewing the platforms as an opportunity to reinvent themselves or pivot into a new career or field, as the next section will illustrate. New Career/​Pivot: “It wasn’t as easy as changing roles in my 20s” While most workers turn to gig work for financial or networking reasons, others saw the platforms as offering an option to try out a new line of work or even test drive their ability to venture out on their own. This is similar to work by Panos et al. (2014), which found that in the U.K., workers may hold multiple jobs to gain skills and transition careers or enter into self-​employment.

3 5 1

Gigging with an MBA  153 Neil, 34, saw gig work as a solution to a career that wasn’t as “deliberate” as he had hoped. While he started a position in a private equity firm immediately after college and then moved to an investment bank for several years, his work was primarily in the back office, which is typically viewed as secondary to the actual bankers (Ho, 2009). After taking a multi-​month vacation, Neil began looking for work again only to have countless recruiters try to place him in the same job he’d had before, just with a different firm. A colleague suggested that he try the online platforms to expand his resume while figuring out his next step: It’s going well. It’s sort of had the exact desired effect that I was hoping for. Again, it’s making a pivot, I guess. I have 12 years of professional experience since school. I quickly realized that it wasn’t as easy as changing roles in my 20s. People see that you’ve been doing something for 10 or 12 years and they say, “All right, well you’re going to keep doing that.” Unless you go back to business school, there’s really no way to reset that, or it’s very difficult at least…. While gig work can be used to reset one’s career or gain needed experience in a new industry or occupation, such a strategy is not without risks. Recent scholarship suggests that engaging in freelance work between jobs can negatively impact workers’ chances of securing future full-​time employment (Mai, 2020). While Neil chose gig work as an alternative to going to business school in order to ‘reset’ his career, for other workers, gig work was seen as an additional tool for career switching that could be used in conjunction with their education (Table 8.1). As Manish, 34, explains, “I was a career switcher, so I was looking to go into not only a field that I had no experience in, but also a job function I had no experience in, so I was looking to at least bolster one of those, so I started looking on HourlyNerd.” Potential Entrepreneurship: “One foot out the door” While numerous surveys have found strong support for entrepreneurship and self-​employment (Aldrich & Yang, 2012; Fairlie & Holleran, 2012; Kelley et al., 2011), the elite gig workers participating in this study did not identify entrepreneurship as their primary goal for joining the platforms. Indeed, only a distinct minority of participants viewed the platforms as an opportunity to test out entrepreneurship, or working independently. Mark, 49, described himself as joining the elite platforms because he “was toying around with consulting,” and had a varied background that could lend itself to working in various fields. In addition to the potential to earn money and network, the platforms were seen offering a way to ease into uncertainty. As Brandon, 25 noted, “To me, it’s kind of like one foot out the door, maybe even a challenge just to kind of get a feel for the water.” But even for those who viewed the work as potentially offering an opportunity for entrepreneurship often didn’t

4 5 1

154  Alexandrea J. Ravenelle et al. Table 8.1 Key categories of worker interest in elite gig work New Money: A relatively easy Needed “work to pay my mortgage and so to access within a short I just Googled freelance work and Sparehire time period income, unlike was the first one that I found. And there obtaining a full-​time job; also were a couple of projects that I was right a way to join a “new” way of for. So I submitted and I got those projects working and I started earning money from it on. So I thought, ‘that’s great.’ ” –​Seth, 36 Needed & Necessary: A “I got involved to be honest, actually, after necessity after a bad work kind of a career catastrophe, I was fired from experience or as an my prior job… Also, I realized that I just alternative to long-​term didn’t know how to sell.” –​Anastasia, 41 unemployment Networkers: A strong “All those lawyers who’ve been referring to opportunity for networking me… a lot of them are dead and most of and the development of weak them are retired because you tend not to ties know the ones that are younger than you.” –​ Dennis, 66 New Occupation: An option to “I quickly realized that it wasn’t as easy as try out a new line of work changing roles in my 20s… Unless you go or test drive their ability to back to business school, there’s really no way venture out on their own to reset that, or it’s very difficult at least….” –​Neil, 34

see it as the primary goal. When asked about making a career as an independent consultant, Van, 34, explained, “I think it’s an interesting optionality, I guess. It was in the back of my head like, ‘hey, if this thing works, let’s test it out, see what happens.’ But that wasn’t the primary objective or goal.” One possibility for this entrepreneurial reticence may be because the workers were often already engaged in elite occupations (management consulting, banking, etc.) and therefore they didn’t view entrepreneurship as offering a step “up” to an elevated social status (Aldrich & Yang, 2012; Mills, 1951). Another possibility is that the workers, many of whom had MBAs, didn’t view their work as entrepreneurship unless it fit a preconfigured heuristic of entrepreneurship (Aldrich & Yang, 2012). For instance, workers may not view their work as entrepreneurship unless they have established a wildly successful company that has hired thousands and earned millions.

Conclusion Gig work is marketed as bringing “entrepreneurship to the masses” (Ravenelle, 2019), but gig workers also experience a high level of risk including slow periods, income uncertainty, and the constant need to market themselves. Given these challenges, we asked, why do elite workers join gig platforms? Is this a stepping stone to allow gig workers to begin entrepreneurial ventures, or simply a form of digital moonlighting?

51

Gigging with an MBA  155 Based on interviews and surveys with 35 elite gig workers, we find that while many workers identify themselves as being entrepreneurial or having an entrepreneurial spirit, and the majority have incorporated, entrepreneurship tends to be a secondary interest when it comes to their platform-​based work. Rather than seeking a gentle on-​ramp to entrepreneurship, the elite workers we interviewed turned to gig work after being pushed out of a job, to fill a gap in employment, to supplement a full-​time job with additional income, or to pivot careers. Workers report stumbling onto these platforms when seeking ways to make money or look for a job. Additionally, online consulting platforms replaced the expansive social networks used by entrepreneurs to secure work that either they could not risk mobilizing –​because their connections were limited or too closely tied to existing work –​or they did not have. Some of our respondents engaged in this work for a limited period, but for others gig platforms became their career path, even if unintended. In short, while some workers identified their platform-​based gig work as a way to “test” independent consulting and as a “get a feel for the water,” for most, the appeal of gig-​based work lies in the opportunity to earn new or needed money, make new connections, and potentially pivot into a new career. Although many of the participants described themselves as having entrepreneurial spirit, or entrepreneurial interests, their gig platform work is more often described as consulting or freelancing than entrepreneurship. The flexible nature of the work, whereby it can be picked up on the side, or turned to when one is between jobs, may enable gig work to be seen as less of an identity and less of a commitment. As a result, these platforms may actually reduce interest in entrepreneurship by making it possible for workers to engage in outside work –​to scratch the proverbial entrepreneurial itch –​ without fully committing to entrepreneurial business development. While entrepreneurial itch-​scratching may be beneficial for individuals in the short term, there are two major risks: (1) workers may get “stuck” in gig work; and (2) low-​risk outside work may reduce entrepreneurial desire and the establishment of new firms. Longitudinal research on low-​ status gig workers notes that workers who turn to gig work later in life may have a harder time transitioning back into stable non-​gig-​based employment (Ravenelle, 2020); additional research is needed to see if elite gig workers experience the same challenges. The risk of a reduction in the establishment of new firms has larger social implications, including impacting the creation of new jobs. Additional research on the career decisions leading up to entrepreneurship, and elite workers’ perceived deterrents in pursuing entrepreneurship, is needed.

Acknowledgments This work/research was funded by the Ewing Marion Kauffman Foundation. The contents of this publication are solely the responsibility of Grantee. The authors also wish to thank Howard Aldrich and Arne Kalleberg for their mentoring.

6 5 1

156  Alexandrea J. Ravenelle et al.

References Aldrich, HE & Yang, T 2012, ‘Lost in translation: cultural codes are not blueprints’, Strategic Entrepreneurship Journal, vol. 6, no. 1, pp. 1–​17, DOI 10.1002/​sej.1125. Amit, R & Muller, E 1995, ‘ “Push” and “pull” entrepreneurship’, Journal of Small Business & Entrepreneurship, vol. 12, no. 4, pp. 64–​80, DOI 10.1080/​ 08276331.1995.10600505. Auguste, D 2020, ‘Who becomes a business owner in high-​inequality regimes? The conditioning effect of economic inequality on the impact of individual educational and financial endowment on entrepreneurship’, Social Currents, vol. 7, no. 2, pp. 131–​154, DOI 10.1177/​2329496519889037. Barley, SR & Kunda, G 2011, ‘Making the deal’, in Gurus, hired guns, and warm bodies: itinerant experts in a knowledge economy, Princeton University Press, Princeton, NJ, pp. 136–​172. Block, J & Sandner, P 2009, ‘Necessity and opportunity entrepreneurs and their duration in self-​employment: evidence from German micro data’, Journal of Industry, Competition and Trade, vol. 9, no. 2, pp. 117–​137, DOI 10.1007/​ s10842-​007-​0029-​3. Carsrud, A & Brännback, M 2011, ‘Entrepreneurial motivations: what do we still need to know?’, Journal of Small Business Management, vol. 49, no. 1, pp. 9–​26, DOI 10.1111/​j.1540-​627X.2010.00312.x. Deterding, NM & Waters, MC 2018, ‘Flexible coding of in-​depth interviews: a twenty-​first-​century approach’, Sociological Methods & Research, DOI 10.1177/​0049124118799377. Fairlie, RW & Holleran, W 2012, ‘Entrepreneurship training, risk aversion and other personality traits: evidence from a random experiment’, Journal of Economic Psychology, vol. 33, no. 2, pp. 366–​ 378. DOI 10.1016/​ j.joep.2011.02.001 Folta, TB, Delmar, F & Wennberg, K 2009, ‘Hybrid entrepreneurship’, Management Science, vol. 56, no. 2, pp. 253–​269, DOI 10.1287/​mnsc.1090.1094. Ford, M 2015, Rise of the robots: technology and the threat of a jobless future, Basic Books, New York, NY. Fountain, C & Stovel, K 2014, ‘Turbulent careers: social networks, employer hiring preferences, and job instability’, in G Manzo (ed.), Analytical Sociology, John Wiley, Toronto, pp. 339–​370, DOI 10.1002/​9781118762707. Chapter 14. Frequently asked questions n.d., Graphite, viewed 23 July 2020, www.graphite. com/​info/​faq/​what-​kinds-​of-​experts-​join-​the-​graphite-​network-​how-​do-​you-​ vet-​them. Gershon, I 2017, Down and out in the new economy: how people find (or don’t find) work today, University of Chicago Press, Chicago, IL. Giacomin, O, Janssen, F, Guyot, J & Lohest, O 2011, ‘Opportunity and/​or necessity entrepreneurship? The impact of the socio-​economic characteristics of entrepreneurs’, Munich Personal RePEc Archive, MPRA Paper No. 29506, 15 March, viewed 11 July 2020, https://​mpra.ub.uni-​muenchen.de/​29506/​. Granovetter, MS 1973, ‘The strength of weak ties’, American Journal of Sociology, vol. 78, no. 6, pp. 1360–​1380. Hirschi, A 2018, ‘The fourth industrial revolution: issues and implications for career research and practice’, The Career Development Quarterly, vol. 66, no. 3, pp. 192–​204.

7 5 1

Gigging with an MBA  157 Ho, K, 2009, Liquidated: an ethnography of wall street, Duke University Press, Durham, NC. Horowitz, S, Buchanan, S, Alexandris, M, Anteby, M, Rothman, N, Seyman, S & Vural, L 2005, The rise of the freelance class: a new constituency of workers building a social safety net. The Freelancers Union, New York, NY. Hwang, KJ & Phillips, DJ 2020, Entrepreneurship as a response to labor market discrimination for formerly incarcerated people, Social Science Research Network Electronic Journal, http://​papers.ssrn.com/​abstract=3563421. Jacobs, S, De Vos, A, Stuer, D & Van der Heijden, BIJ 2019, ‘ “Knowing me, knowing you” the importance of networking for freelancers’ careers: examining the mediating role of need for relatedness fulfillment and employability-​ enhancing competencies’, Frontiers in Psychology, vol. 10, www.frontiersin. org/​articles/​10.3389/​fpsyg.2019.02055/​full. Kalleberg, AL 2011, Good jobs, bad jobs: the rise of polarized and precarious employment systems in the United States, 1970s to 2000s, Russell Sage Foundation, New York, NY. Kelley DJ, Singer S, Herrington M 2011, The global entrepreneurship monitor 2011 global report, GEM 2011. Khan, SE 2012, ‘The sociology of elites,’ Annual Review of Sociology, vol. 38, no. 1, pp. 361–​377. Kim, PH, Aldrich, HE & Keister, LA 2006, ‘Access (not) denied: the impact of financial, human, and cultural capital on entrepreneurial entry in the united states’, Small Business Economics, vol. 27, no. 1, pp. 5–​22, DOI 10.1007/​ s11187-​006-​0007-​x. Kirzner, IM 1979, Perception, opportunity, and profit: studies in the theory of entrepreneurship, University of Chicago Press, Chicago, IL. Lent, RW 2018, ‘Future of work in the digital world: preparing for instability and opportunity’, The Career Development Quarterly, vol. 66, no. 3, pp. 205–​219. Lin, N, Dayton, PW, & Greenwald, P 2016, ‘Analyzing the instrumental use of relations in the context of social structure’, Sociological Methods & Research, vol. 7, no. 2, pp. 149–​166, DOI 10.1177/​004912417800700203. Mai, QD 2020, ‘Unclear signals, uncertain prospects: the labor market consequences of freelancing in the new economy’, Social Forces, vol. 99, no. 3, pp. 1–​26, DOI 10.1093/​sf/​soaa043. Marshall, VW & Bengtson, VL 2011, ‘Theoretical perspectives on the sociology of aging’, in RA Settersten & JL Angel (eds.), Handbook of Sociology of Aging, Handbooks of Sociology and Social Research, Springer, New York, NY, pp. 17–​33, DOI 10.1007/​978-​1-​4419-​7374-​0_​2. Mills, CW 1951, White collar: the American middle classes, Oxford University Press, Oxford. Moulton, JG & Scott, JC 2016, ‘Opportunity or necessity? Disaggregating self-​ employment and entry at older ages’, Social Forces, vol. 94, no. 4, pp. 1539–​ 1566, www.jstor.org/​stable/​24754285. Neufeind, M, O’Reilly, J & Ranft, F (eds.) 2018, Work in the digital age: challenges of the fourth Industrial Revolution, Rowman & Littlefield International, London. Osnowitz, D 2006, ‘Occupational networking as normative control: collegial exchange among contract professionals’, Work and Occupations, vol. 33, no. 1, pp. 12–​41, DOI 10.1177/​0730888405280160.

8 5 1

158  Alexandrea J. Ravenelle et al. Our experts n.d., Graphite, viewed 23 July 2020, www.graphite.com/​info/​ ourexperts. Panos, GA, Pouliakas, K & Zangelidis, A 2014, ‘Multiple job holding, skill diversification, and mobility’, Industrial Relations: A Journal of Economy and Society, vol. 53, no. 2, pp. 223–​272, DOI 10.1111/​irel.12055. Prassl, J 2018, Humans as a service: the promise and perils of work in the gig economy, First edition, Oxford University Press, Oxford. Ravenelle, AJ 2017, ‘Sharing economy workers: selling, not sharing’, Cambridge Journal of Regions, Economy and Society, vol. 10, no. 2. pp. 281–​295. Ravenelle, AJ 2019, Hustle and gig: struggling and surviving in the sharing economy, University of California Press, Oakland, CA. Ravenelle, AJ 2020, ‘Just a gig? sharing economy work and the implications for career trajectory’, in DD Acevedo (ed.), The Law and Policy of the Gig Economy: Qualitative Analysis, Cambridge, Cambridge University Press, pp. 103–​122. Rocha, V, Carneiro, A, & Varum, CA 2015, ‘Entry and exit dynamics of nascent business owners’, Small Business Economics, vol. 45, no. 1, pp. 63–​84, DOI 10.1007/​s11187-​015-​9641-​5. Rosenblat, A 2018, Uberland: how algorithms are rewriting the rules of work, University of California Press, Oakland, CA. Ryder, G 2019, ‘Correctly valuing the work of the future’, Journal of International Affairs, vol. 72, no. 1, pp. 23–​35. Schwab, K & Davis, N 2018, Shaping the fourth industrial revolution, World Economic Forum, Geneva, Switzerland. Smith, V 2010, ‘Review article: Enhancing employability: Human, cultural, and social capital in an era of turbulent unpredictability’, Human Relations, vol. 63, no. 2, pp. 279–​303. Sprengers, M; Taselaar, F & Flap, HD 1988, ‘Social resources, situational constraints and reemployment’, Netherlands Journal of Sociology, vol. 24, no. 1, pp. 98–​116. Stanford, J 2017, ‘The resurgence of gig work: Historical and theoretical perspectives’, The Economic and Labour Relations Review, vol. 28, no. 3, pp. 382–​401. Stevenson, HH & Gumpert, DE 1985, ‘The Heart of Entrepreneurship’, Harvard Business Review, vol. March–​April, pp. 85–​94. Styhre, A 2017, Precarious professional work: entrepreneurialism, risk and economic compensation in the knowledge economy, Palgrave Macmillan, Cham, Switzerland. Thurik, AR, Carree, MA & van Stel Audretsch, DB 2008, ‘Does self-​employment reduce unemployment?’, Journal of Business Venturing, vol. 23, no. 6, pp. 673–​686, DOI 10.1016/​j.jbusvent.2008.01.007. Vallas, SP & Cummins, ER 2015, ‘Personal Branding and Identity Norms in the Popular Business Press: Enterprise Culture in an Age of Precarity’, Organization Studies, vol. 36, no. 3, pp. 293–​319, DOI 10.1177/​0170840614563741. van der Zwan, P, Thurik, R, Verheul, I & Hessels, J 2016, ‘Factors influencing the entrepreneurial engagement of opportunity and necessity entrepreneurs’, Eurasian Business Review, vol. 6, no. 3, pp. 273–​ 295, DOI 10.1007/​ s40821-​016-​0065-​1. Weiss, RS 1995, Learning from strangers: the art and method of qualitative interview studies, Simon and Schuster, New York, NY.

9 5 1

Gigging with an MBA  159 What we do n.d., Catalant, viewed 23 July 2020, https://​gocatalant.com/​ about-​2/​. Why 3%? n.d., Toptal, viewed 23 July 2020, www.toptal.com/​top-​3-​percent. Wrzesniewski, A & Dutton, JE 2001, ‘Crafting a Job: Revisioning Employees as Active Crafters of Their Work’, The Academy of Management Review, vol. 26, no. 2, p. 179, DOI 10.2307/​259118. Xavier-​Oliveira, E, Laplume, AO, & Pathak, S 2015, ‘What motivates entrepreneurial entry under economic inequality? The role of human and financial capital’, Human Relations, vol. 68, no. 7, pp. 1183–​1207, DOI 10.1177/​ 0018726715578200.

0 6 1

9  Coworking Spaces in the Sharing Economy Examples from an Emerging Country Ozge Kirezli and M.G. Serap Atakan

Introduction The sharing economy model is a collaborative system that solves the problem of the underutilisation of resources associated with the unequal distribution of wealth and resources (Botsman & Rogers, 2010). According to Kumar et al. (2018) the sharing economy is the monetisation of the underutilised assets of service providers through short-​term rental. The sharing of workplaces in coworking spaces aims to connect corporations that have unused office spaces with those who need it, tailoring office spaces and meeting rooms to the needs of the knowledge worker renters, namely freelancers, creatives, lawyers, entrepreneurs, and coders. There is a rising trend of more people working outside their traditional offices and engaging in coworking by sharing office spaces (Cheah & Ho, 2019). Coworking is a collective, community based, new way of working (Merkel, 2015). As an extension of the sharing economy (Botsman & Rogers, 2010; DeGuzman & Tang, 2011), coworking is constantly evolving to meet the office needs of autonomous workers (Brown, 2017). Coworking spaces provide the opportunity for collaboration, community, participation, and learning from each other. Rapid advances in technology, such as the internet of things (IoT), big data, mobile services, social media, and online communities changed the importance and perception of technology (European Commission, 2017) and facilitated the evolution of businesses from physical to virtual spaces and also to shared coworking spaces (Heinrichs, 2013; Ferrell et al., 2017; Ginoes & Brem, 2017; Ritter & Schanz, 2019). This study aims to explore and describe the new form of the sharing economy using the example of a sample of coworking spaces operating in Turkey. It contributes to the emerging research on coworking spaces, by attempting to present the benefits these coworking space providers offer to their users. After providing the literature review on coworking spaces, the authors introduce the findings of the qualitative study conducted with the founders/​cofounders of four selected coworking spaces. The conclusion and implications of the study are also presented.

1 6

Coworking Spaces in the Sharing Economy  161

Literature Review Coworking Spaces: A New Model in the Sharing Economy The sharing economy attracts the attention of both academicians and practitioners. Sharing is a substitute for private ownership (Belk, 2007). In their attempt to provide a strategic framework for the sharing economy, Kumar et al. (2018) proposed a business model consisting of a firm or a service enabler, acting as an intermediary between the service provider who supplies the goods or services and the customers who demand those underutilised goods and services. Coworking is a new and rapidly expanding sharing economy activity. The main idea of coworking spaces is to connect corporations that have unused office space with those who need it, tailoring office space, and meeting rooms to the needs of the users. It involves sharing physical workspaces and allows cooperation among independent knowledge workers. Codagnone and Martens (2016) classify sharing platforms into three categories: (a) the recirculation of goods (second hand and surplus goods), (b) increased asset utilisation (production factor markets), and (c) service and labour exchanges. As coworking spaces facilitate the recirculation of idle assets, vacant or underused spaces, and create new job opportunities through networking, they are therefore associated with the second and third categories. Coworking spaces emerged as a response to the global crisis and new employee needs. There are many successful global coworking space practices. LiquidSpace, which is known as “the Airbnb of workspaces”, brought collaborative consumption to the usage of office spaces and meeting rooms. This application helps freelancers and others seeking office space find workspaces tailored to their needs, time, and geographic preferences. Any company that has excess capacity and those that have capacity shortages can be matched through this application and thus can fill unused resources and capacities (Matzler et al., 2015). Spacecubed is another coworking space example from Western Australia. This venture facilitates the sharing of unused office space and brings digital entrepreneurs together (Standing et al., 2016). A coworking space operating in the U.S., WeWork, aims to create a coworking space where the individual who joins the coworking space as “me” becomes part of the greater “we” (Spreitzer et al., 2015). Coworking is more than access to space and facilities; it is the “working alone and together” behaviour that attracts the attention of participants (Spinuzzi, 2012; Capdevila, 2014). Coworking is characterised by the inclination of highly skilled knowledge workers to physically gather in some locations to take advantage of proximity and knowledge exchange. In this way, coworking involves sharing both physical assets (office, common spaces) and intangible assets (knowledge, skills) (Durante & Turvani, 2018).

2 6 1

162  Ozge Kirezli and M.G. Serap Atakan In the late 2000s, three main trends have given rise to the coworking system as a non-​standard work system: self-​employed creative knowledge work, the rise in independent work pursued at a flexible time and place of work, and the rapid developments in mobile communication technology. As mentioned by Moriset (2013), the globalised economy and intensive competition led the industry to push the limits of creativity and innovation, which, in turn, served as critical drivers of sustainable economic growth. The global economic crisis even triggered the global giants such as Deloitte, IBM, and Apple to reconsider their workplace and liberate employees from their physical locations (Brown, 2017). Moreover, digital technologies changed the geography and the way of doing knowledge-​based jobs. Nowadays creative people work on portable devices, notebook computers, and tablets, and benefit from access to information through wireless and mobile telecommunications anytime, anywhere. This means knowledge workers no longer need to work in an office. Also known as digital nomads, they can create their own office spaces outside of their home and office. Additionally, advances in cloud storage and on-​demand software also liberate employees from offices. They can work from anywhere as long as devices are mobile and versatile (Greenfield, 2006; Moriset, 2013). Thus, the presence of open spaces, meeting rooms, relaxing areas for informal socialising of freelancers, software experts, and designers led to an increase in the usage of coworking spaces. The coworking model creates interaction among people, spaces, and technology (Pratt, 2002). Seen this way there exist two sides to the coworking system: coworking users and coworking space providers. Coworking space users are self-​ employed creative nomads, start-​ up creators, entrepreneurs, travellers who use coworking spaces by sharing a desk, and engaging in social and professional interaction (Spinuzzi, 2012; Gandini, 2015). These people need well-​connected workplaces and this is what coworking spaces are providing them with. The offer of coworking spaces is mainly the rental of office spaces. Users first rent a desk and then may increase their involvement in the shared working environment and use other facilities such as meeting rooms and conference spaces. Beyond the office layout, coworking spaces also have an atmosphere, a spirit, and can even reflect a lifestyle. Coworking space providers have a specific business model consisting of a firm or a service enabler which acts as an intermediary between the service provider who supplies the goods or services and the customers who demand those underutilised goods and services (Kumar et al., 2018). In this manner, coworking space providers fill the gap in the sharing economy model to better manage the skyrocketing fixed costs of office space as well as providing a collaborative work environment. This new kind of workplace is designed to host creative people and entrepreneurs who endeavour to escape isolation and find an environment that advocates meetings and collaboration (Moriset, 2013). These places are meeting,

3 6 1

Coworking Spaces in the Sharing Economy  163 collaboration, discussion, and working places. As stated by Capdevila (2013) coworking spaces allow the co-​presence of professionals in the same place, by sharing resources and leading to community building. Benefits of Coworking Spaces The rise of this new working trend can be traced through the rise of either coworking space users or providers. According to the 2019 Global Coworking Survey undertaken by Deskmag, by the end of 2019 globally, almost 2.2 million employees were projected to be working in over 22,000 coworking spaces. (Foertsch, 2019). This rapid change is directly related to how the coworking system filled a gap by providing network intermediation and physical spaces aided by the technological infrastructure for the business world (Capdevila, 2013). As stated by Brachya and Collins (2016) during economic crises people prioritise saving money and find ways of reducing expenditure. Users’ tendencies to use underutilised resources at affordable prices provide economic value not only to customers but also to coworking space providers (Benoit et al., 2017; Hwang & Griffiths, 2017). Office users are willing to decrease costs, look for convenient and affordable offers (Hamari et al., 2016), They are also looking for the financial freedom afforded by sharing and renting office spaces rather than owning (Bardhi & Eckhardt, 2012). Hughes et al. (2011) assert that these spaces allow the users to lower their office rental costs, access better locations, and engage in social interactions. Coworking space providers offer technological support in three ways: infrastructure, office equipment, and facilitating software. Technological infrastructure includes the internet, wireless connection, call routing technology to direct calls to users, as well as mail, and fax handling (Bouncken & Reuschl, 2018). Printers, fax devices, phones, other hardware such as 3D printers or scanners are the types of office equipment that can be available to the users. Coworking spaces facilitate the meeting of new people, finding new friends, and increasing the interaction among users and the service providers (Botsman & Rogers, 2010; Grybaitė & Stankevičienė, 2016). Coworking systems help entrepreneurs create new networks within societies, building trust whereby people feel like coworkers and even neighbours (Grybaitė & Stankevičienė, 2016). This system enhances capacity utilisation, collaboration, and forming of a community (Capdevila, 2013; Moriset, 2013; Gandini, 2015). Social relations are the main factors in productivity across coworking spaces and in these collaborative environments, freelancers meet other independent workers, and are networking, socialising, and becoming part of a community (Gandini, 2015). The coworking system allows the exchange of views, encourages learning from each other, and forming teams. The coworking space users can develop social ties while learning from others on the digital platform

4 6 1

164  Ozge Kirezli and M.G. Serap Atakan in the form of “online communities” as well (Holzweber et al., 2015; Vaskelainen & Piscicelli, 2018). Coworking spaces are perceived as decreasing idle capacity, increasing full utilisation of assets, prioritising accessing the necessary products and services rather than owning them, and helping to extend the life cycle of goods (Botsman & Rogers, 2010; Haase et al., 2011; Demaily & Novel, 2014). Consequently, highly digitalised coworking space providers stimulate the users or service providers to reassess their impact on the environment. Botsman and Rogers (2010) also state that through engaging in sharing economy, users as well as service providers who share, rent, swap, lend, or barter may feel they are fulfilling their obligations towards the environment. Concerning the benefits offered, coworking spaces are combining the best parts of an office environment, namely community, collaboration, and convenient, flexible, and autonomous access to the right tools (Reed, 2007; Sundsted et al., 2009). The system allows people to share underutilised resources. Coworking spaces reflect the idea of a sharing economy and environmental sustainability in terms of providing access to shared physical assets such as an office, meeting rooms, conference spaces, infrastructure, cafeteria, and printing area, as well as the sharing of the intangible assets such as information and knowledge (Bouncken & Reuschl, 2018). Coworking Spaces in Turkey Coworking spaces, the membership-​ based workspaces where diverse groups of freelancers, remote workers, and other independent professionals work together in a shared, communal setting (Spreitzer et al., 2015), are also increasing in Turkey. The lower rental costs and the networking opportunities are increasing the demand for these shared working places. The changing needs of the young and tech-​savvy generations who value mobility, convenience, and price advantages mean they are willing to forgo ownership of office spaces. The knowledge workers, freelancers, and start-​up owners prefer working via a shared desk and engaging in social and professional interaction and meetings. All of these factors have increased interest in these shared working places in Turkey. Historically the old Turkish business environments, the famous Covered Bazaar, Spice Bazaar, and office blocks called “han”, were pioneering examples of shared workplaces that brought together various experts from different fields such as gold, silver, and copper traders as well as leather sellers. Experiencing the importance of community building these people cooperated and collaborated in these coworking places. The co-​locators of these spaces shared their expertise with others and created a living space based on sharing and collaboration (Cetiz, 2017). In these communities, there was always tea boiling in a pot or Turkish coffee available to be brought to the office and served to the owners or

5 6 1

Coworking Spaces in the Sharing Economy  165 their guests. There were also professional guilds that built cooperation, collaboration, and the neighbourhood concept. The coworking spaces of today are more structured and more productive working environments; the independent professionals may share a working environment while performing independent business activities. The coworking spaces create social interaction and collaboration in the same, traditional way. Coworking space providers offer fixed desks, totally furnished private office space, shared offices, meeting rooms, and virtual offices. The first attempts had emerged by the 2000s and were mainly focused on serving fixed offices as a turnkey solution to users requiring flexibility, speed, and one solution for all. Genuine coworking practices intensified in the 2010s when many national entrepreneurs started operating. Although there are various coworking spaces of differing scales in Turkey, Regus, eOfis, Kamara, Workinton, Workhaus, and Kolektif House are the pioneers in the sector due either to their date of foundation or their innovative offers. These coworking spaces are either founded or cofounded by Turkish entrepreneurs or are the franchisees of multinational coworking spaces such as Impact Hub or Servcorp. While purely physical, single location coworking spaces exist, there are also those that are members of larger coworking spaces hubs as well as digital ones (Dunya, 2018; Tuvay, 2019; Boru, 2020). Coworking space providers are expanding their service provision by integrating recreational events, like concerts, yoga classes, breakfasts, brunches, professional seminars, and workshops, into their offers.

Research Method Research Design and Sampling This study is an exploratory study on coworking spaces operating in Turkey, an emerging country. This qualitative study aims to improve knowledge regarding coworking spaces by describing the benefits of a sample of coworking spaces. The researchers sent invitation emails to or phoned the founders and cofounders of 12 coworking space providers. However, there was a lower than expected return rate in terms of getting appointments for the semi-​ structured in-​depth interviews. The sample consists of four coworking spaces, three service providers (coworking spaces CWS1, CWS2, and CWS3), and one service enabler (CWS4) linking users to service providers. These coworking spaces offer users office spaces, meeting rooms to share as well as creating an environment of social interaction and collaboration. Basic general corporate information such as the foundation year, number of locations, offers, the differential advantages of the sampled coworking spaces, information about the founders/​cofounders, and the interviewees are presented in Table 9.1. As can be seen from Table 9.1 two of the sampled coworking spaces have been in operation since 2010

61

166  Ozge Kirezli and M.G. Serap Atakan and the others were founded in 2015 and 2016. Two of them (CWS1 and CWS2) operate only in one city, while the other two (CWS3 and CWS4) have a wider geographic coverage. Data Collection Method, Data Collection Instrument, and Analysis The aim of the research is to identify specific benefits of coworking spaces in Turkey from coworking space providers’ perspective. The exploratory nature of the study necessitated the use of qualitative data collection method to understand the coworking sector in Turkey, emphasising mainly the benefits offered by these four coworking space providers. Due to the lack of research on this topic in Turkey and the research question, a qualitative research design is utilised. The authors collected both secondary and primary data regarding the coworking spaces. The secondary data is collected from the websites, mobile applications, as well as media reports about the coworking spaces published in the print, digital, and on social media. These resources provide objective and descriptive data about coworking spaces (Eisenhardt & Graebner, 2007; Vaskelainen & Piscicelli, 2018). The primary data of this qualitative study is collected through in-​ depth semi-​ structured interviews (Fontana & Frey, 1994; Denzin & Lincoln, 1995) conducted with the founders, cofounders, chief executive officer, and chief marketing officer of the coworking spaces during May–​ June 2020. As stated in the literature, as the research aims to provide an understanding of the motivations and thoughts of the participants, interviews are valuable, and a semi-​ structured in-​ depth interviewing method is utilised (Granot et al., 2012; Woodside & Wilson, 2003; Sanday, 1979, Geertz, 1973). An interview guide is prepared to focus on the research topic, but the interviews mostly proceeded in a spontaneous format. The data collection instrument is the interview guide that is presented in Appendix I. This guide is based on the literature and the secondary data regarding coworking spaces operating in Turkey. It includes questions about the coworking space, opportunities and threats, competition and the benefits of this business model for its users. The researchers interviewed six representatives of the four coworking spaces. One cofounder of CWS1, two cofounders of CWS2, a chief executive officer and a chief marketing officer of CWS3, and the founder of CWS4. Each of the interviews of this qualitative study lasted around 45–​ 60 minutes, were recorded, and then manually transcribed by the authors. Content analysis was used to identify themes and patterns mentioned by the interviewees (Fontana & Frey, 1994). First, the researchers separately identified the emerging themes in regard to the benefits of coworking spaces and then combined them. Direct quotations from the respondents are presented.

newgenrtpdf

7 6 1

Table 9.1 General corporate information about the coworking spaces CWS1

CWS2

Type of coworking space

Coworking space provider

Coworking space provider Coworking space provider

Coworking space enabler

2015 1 city 1 plaza building in a commercial district

2010 8 cities in Turkey Wider hub

2016 Digital service enabler in 21 cities International –​mostly in Bulgaria and Turkey

1,150 m2 27 A+ office spaces, 8 meeting rooms, coworking area Professional offer to members as well as walk-​in customers for networking.

37 A+ plaza offices offered to 5,500 member firms

Linking 130 coworking spaces with users

“Network of coworking spaces” allowing access to offices in a wide location hub. Starting a digitally linked offices concept in a wide geographic coverage of Turkey

Booking platform for coworking spaces. The city pass –​“the city is your coworking space” Cowork today. Virtual networking, facilitating customers in finding the best coworking spaces to work anytime, anywhere. (continued)

Year of foundation 2010 Number of locations/​coverage 1 city 7 locations Horizontal 3 to 4 floored small apartments mostly with garden space. Offers 125 offices, 8 meeting rooms offered to 1,400 “happy neighbours” Differential advantage Offering relaxed working spaces to “neighbours”, renting company-​ owned offices

CWS3

CWS4

Coworking Spaces in the Sharing Economy  167

Coworking space

newgenrtpdf

8 6 1

Coworking space

CWS1

CWS2

CWS3

CWS4

Founders/​entrepreneurs

Family business

Corporate/​banking sector background

Corporate background

Interviewees

1 Cofounder

2 Cofounders

Gender of the interviewees

Male

Age of the interviewees

In his 30s

Male Female In their 40s

1 Chief Executive Officer, 1 Chief Marketing Executive Male Male In their 30s

20 years of corporate experience in a multinational company 1 Founder

Education of the interviewees

University graduate –​ University University Bachelor of Arts (BA) graduates –​Bachelor of graduates –​BA degree in Business Science (B.Sc.) degree degree in Information in Environmental Management Management Engineering and MBA Information degree. Systems. BA degree in Business BS degree in Administration Computer Programming

Male In his late 40s University graduate –​ B.Sc. degree in Industrial Engineering.

168  Ozge Kirezli and M.G. Serap Atakan

Table 9.1 Cont.

9 6 1

Coworking Spaces in the Sharing Economy  169

Findings This section presents the findings regarding the benefits offered by the four coworking spaces. The benefits of the coworking spaces, presented in Table 9.2, are classified by the authors as functional, recreational, and networking and community building benefits. Benefits of the Coworking Spaces The functional benefits are providing flexibility and efficiency to the coworking space users. In terms of flexibility, members have the convenience of being able to move their office to any location that is owned by a service provider, without incurring additional rental costs or furniture and other supplies investment. Lower administrative obligations and easy access to highly desirable business districts are the major benefits offered by these coworking spaces.

Table 9.2 Benefits of the coworking spaces Benefits

Functional Recreational Networking benefits benefits and community building benefits

24/​7 access 24/​7 security Secretarial/​front desk services Mail and package handling Internet access Printing stations, photocopy and fax IT services Various locations/​coverage Leisure activities like meditation and yoga classes Social events like concerts, brunches Eating facilities like cafe, restaurant Lounge areas Developmental seminars and workshops Global online and offline community access Discounts and offers to members at solution partners

x x x x x x x x

x x x x

x x x

0 7 1

170  Ozge Kirezli and M.G. Serap Atakan Our members may rent our offices monthly rather than taking out a yearly contract and they can terminate their contracts monthly. CWS1 Our members work in an office in a plaza in the heart of the business district and enjoy a nice working environment without an economical investment. CWS2 Coworking spaces allow members to have access to and share the use of idle desks, office space, or meeting rooms rather than renting office space. The coworking spaces provide office space, kitchen, and access to amenities such as coffee, tea, photocopying, fax machine, and printers for their users. In this way, the resources are used efficiently and generate energy savings, thus are creating environmental benefits. Our members are sharing a pot of tea that is boiling in the kitchen the whole day. CWS1 There is a shared printer on each floor for the use of our members. CWS1 Our meeting rooms are shared by our members.

CWS2

The secretarial front desk services are also offered for handling calls as well as mail and package deliveries of the members. The sampled coworking spaces provide another functional benefit which is facilitating the digitalisation of their users through the provision of internet access via wireless hotspots, call routing services, mail and fax handling, mobile applications, and online payments. Our members can check availability and easily make reservation for our offices and meeting rooms and can access their call and delivery reports through our application on their smartphone. CWS3 As a part of work life communal places, gardens, restaurants, and cafes are integrated into coworking spaces’ facilities to allow employees to relax and socialise together. Some coworking spaces even welcome non-​members to their communal places to stimulate social interaction with their members. These examples reveal the recreational benefits offered by coworking spaces. Life is not just for work, we also designed areas for our members to relax and socialise. Members can drop by the restaurant for small

1 7

Coworking Spaces in the Sharing Economy  171 snacks or browse the current magazines with our wide selection of coffee offers at our terrace or socialise with other members. CWS2 Although we are also located in popular business districts, we have users who want to avoid hectic business districts and are willing to enjoy a cup of tea in the garden of our two-​story office space. CWS1 There is a considerable number of people entering our office building assuming it is a coffee shop or restaurant and are surprised to see our coworking space. We do not hesitate to welcome them even though they are not our members. Soon they become interested in our offers and become our new members. CWS2 While using the coffee shops, the meeting rooms, and attending the organised special events, workshops, breakfasts, lunches, yoga classes, or concerts, members can interact and socialise. Our members are “working alone and together”, they enjoy our coffee shop, meeting rooms, socialising areas. We offer breakfasts, after-​ work events, hosting talks allowing them to socialise and network. CWS2 The knowledge workers, the freelancers who are working in cafes or public places have minimum or mostly no interaction with others working in the same environment. The major shortcoming of working at these places is the feeling of social isolation. Coworking spaces, on the other hand, provide a working environment, where people meet, talk, interact, and cooperate with other users. This social interaction can lead to the exchange of ideas and knowledge as well as to socialisation, networking, and community building. These networking opportunities also increase the creativity and satisfaction of the members. The networking and community building benefits are encouraging members to be in contact with other coworking space users with different expertise, leading them to find solutions to each other’s problems. So in terms of the networking aspect, coworking spaces facilitate interaction and lead to cooperation. At a time of increasing speed of business life, Turkish society, as a high-​context and collectivist culture, values interpersonal relationship, and favours connection. The coworking spaces thus act as facilitators to enhance the working condition of their users. This collaborative and interactive social relationship is offered either face to face or through digital interaction.

2 7 1

172  Ozge Kirezli and M.G. Serap Atakan One of our members had a legal problem, we introduced him to our lawyer member and he helped him in solving his problem. CWS1 One of our members needed assistance from a web planner, she found it in our working space and they cooperated. CWS2 Users’ inclination to use coworking space is not solely limited to the use of the coworking space’s infrastructure such as desks, wi-​fi, conference rooms, kitchen, and office supplies. Users also enjoy building a community through social interaction and collaboration with other users, sometimes transcending national boundaries. Users can enjoy shared coffee and lunch breaks as well as after-​ work activities. Coworking spaces also offer networking events and training programs such as developmental seminars and workshops. The model reduces digital workers’ isolation and provides a social context in which individuals can interact. A large majority of coworkers also expand their network of clients and collaborators. Our members have a different bond among themselves, they are like neighbours. CWS1 Our members feel part of a community, they meet new people, share skills and ideas, interact with each other. They are looking for a productive working space but also a place to hang out and socialize. CWS2 Our latest offer is “Cowork today” which allows members to participate in professional and social events among all the members of the coworking spaces. It is not limited to just a single coworking space and its members. It also provides access to a global online community. CWS4 The issue of community building is interesting, especially at the digital platform. The first step in networking is taken when members meet and socialise with each other physically at the coworking spaces. In terms of digital interaction, it can be harder to stimulate this connectivity globally. However, members of coworking space enablers are able to make remote connections and become part of a global online community. In that manner, coworking space providers help to ease the interaction, in the form of the digital socialisation either with the users and coworking space providers or among users themselves.

3 7 1

Coworking Spaces in the Sharing Economy  173 We want to make the new way of work the only way to work through remote working. We want to create a coworking space community. The world is your coworking space. CWS4 People want to be connected globally and create digital connectivity. This is the future of coworking. CWS4

Conclusions Structural changes occurring in urban labour markets, such as a shift to knowledge-​intensive work, acceleration of the freelancer economy, and advances in internet and digital technologies, have altered the spatial distribution of work. These trends led to increasing individualism and the social isolation of workers (McRobbie, 2016). As stated by Bouncken and Reuschl (2018), the sharing economy introduced coworking spaces as a novel trend for the workplace and entrepreneurs. Defined as an emergent collaborative activity by Spinuzzi (2012), coworking spaces provide social interaction, knowledge sharing, and exchange of ideas and lead to beneficial collaborative activity. Although this global trend started to be seen in the country of analysis during the 2010s it was a system that already existed in Turkey’s business environment at the highly popular Covered Bazaars and “han” office blocks. It has been re-​introduced to business life by these modern coworking spaces. This book chapter is an exploratory study that describes the benefits of coworking spaces operating in the sharing economy of an emerging country. These benefits are grouped under functional, recreational, and networking and community building benefits. Surely, limited need for investment and functional benefits of coworking spaces make this form of organising business operations demanded. The interviewees’ responses supported the fact that coworking spaces offer more than physical assets, also offering intangible assets such as knowledge, skills, and competencies (Nica & Potcovaru, 2015; Durante & Turvani, 2018). The shared vision of companies is evolving towards a desire for meeting places both for work and leisure related activities, thus revealing the recreational benefits of coworking spaces. Coworking spaces foster communication and learning among users and hence act as a catalyst to form a community filled with ideas, knowledge, skills, and innovation (Bouncken & Reuschl, 2018). Several studies also emphasised a major motive of coworking space users as being able to become part of the community, together with networking, information exchange, and collaboration opportunities (Gandini, 2015; Foertsch, 2015; Gerdenitsch et al., 2016; Brown, 2017). This study also revealed networking and community

4 7 1

174  Ozge Kirezli and M.G. Serap Atakan building benefits that are encouraging users to interact and cooperate. These benefits of coworking spaces are believed to be the most crucial ones, especially for the high context culture of Turkey. This exploratory study’s limitation is the number of interviews conducted with entrepreneurs from the selected coworking space providers. For future studies, it is recommended that the sample size be extended and that more coworking space founders/​cofounders are included. The users of the coworking spaces could also be interviewed to understand their evaluation of the offers and benefits of these coworking spaces. This will allow both the users and coworking space providers to see the win-​win state of the sharing economy. Regarding the managerial implications of this study, the researchers aimed to highlight the benefits of the coworking spaces for their users. As technological advances increase, ways of working are changing. The Covid-​19 global pandemic of 2020 has a significant effect and may lead to more people working remotely on a permanent basis. Rather than being isolated at home, these workers could join coworking spaces and benefit from their functional, recreational, and networking and community building benefits. In this vein, the “me” worker can become a part of the greater “we” of the coworking space community.

References Bardhi, F & Eckhardt, GM 2012, ‘Access-​based consumption: The case of car sharing’, Journal of Consumer Research, vol. 39, no. 4, pp. 881–​898. Belk, R 2007, ‘Why not share rather than own?’, The ANNALS of the American Academy of Political and Social Science, vol. 611, no. 1, pp. 126–​140. Belk, R 2014, ‘You are what you can access: Sharing and collaborative consumption online’, Journal of Business Research, vol. 67, no. 8, pp. 1595–​1600. Benoit, S, Baker, TL, Bolton, RN, Gruber, T & Kandampully, J 2017, ‘A triadic framework for collaborative consumption (CC): Motives, activities, and resources and capabilities of actors’, Journal of Business Research, vol. 79, no. 1, pp. 219–​227. Boru, A 2020, ‘Neden yeni bir ofise yatirim yapsinlar ki?: (Why would they invest in a new office?), Bloomberg Businesweek, 19 January, viewed 20 June 2020, https://​ drive.google.com/​file/​d/​1eMxbd_​29FqzLpE4wjECZDdmNOmSnJXrh/​view. Botsman, R & Rogers, R 2010, What’s mine is yours: The rise of collaborative consumption, Harper Business, New York, NY. Bouncken, RB & Reuschl, AJ 2018, ‘Coworking-​spaces: how a phenomenon of the sharing economy builds a novel trend for the workplace and for entrepreneurship’, Review of Managerial Science, vol. 12, no. 1, pp. 317–​334. Brachya, V & Collins, L 2016, The Sharing Economy and Sustainability, Urban Sustainability Project, viewed 18 September 2020, www.ukayamut.com/​ wp-​content/​uploads/​2016/​02/​the-​sharing-​economy-​and-​sustainability-​feb-​7-​ 2016.pdf. Brown, J 2017, ‘Curating the “Third Place”? Coworking and the mediation of creativity’, Geoforum, vol. 82, no. 1, pp. 112–​126.

5 7 1

Coworking Spaces in the Sharing Economy  175 Capdevila, I 2013, ‘Knowledge dynamics in localized communities: Coworking spaces as microclusters’, SSRN, December 9, viewed 10 October 2020, http://​ dx.doi.org/​10.2139/​ssrn.2414121. Capdevila, I 2014, ‘Different inter-​organizational collaboration approaches in coworking spaces in Barcelona’, SSRN, January, viewed 10 October 2020, http://​dx.doi.org/​10.2139/​ssrn.2502816 Cetiz, F 2017, Yaratici Ekonomiler Baglaminda Ortak Calisma Alanlarinin Gelisimi, 21.Yy’da Is ve Calisma Hayatina Etkisi: Istanbul Ornegi, MS thesis, Kadir Has University, viewed 22 October 2020, Kadir Has academic repository database. http://​academicrepository.khas.edu.tr/​xmlui/​bitstream/​handle/​ 20.500.12469/​2011/​0097679FatihCetiz.pdf?sequence=1andisAllowed=y Cheah, S & Ho, YP 2019, ‘Coworking and sustainable business model innovation in young firms’, Sustainability, vol. 11, no. 2959, pp.1–​18, https://​doi. org/​10.3390/​su11102959. Codagnone, C & Martens, B 2016, Scoping the sharing economy: Origins, definitions, impact and regulatory issues, Institute for Prospective Technological Studies Digital Economy Working Paper, 1, viewed 20 September 2020, http://​ hdl.handle.net/​10419/​202218. DeGuzman, GV & Tang, AI 2011, Working in the unoffice: A guide to coworking for indie workers, small businesses, and nonprofits. Night Owls Press LLC, Houston, TX. Denzin, N K & Lincoln, Y S 1995, ‘Transforming qualitative research methods: Is it a revolution?’, Journal of Contemporary Ethnography, vol. 24, no. 3, pp. 349–​358. Demailly, D & Novel, AS 2014, ‘The sharing economy: make it sustainable’, Studies, vol. 3, no. 14, pp. 14–​30. ‘Isini kaybeden paylasimli ofise geldi (Those who lost their job came to coworking spaces)”, Dunya, 1 February 2018, Accessed 9 June 2020, www.dunya.com/​ ekonomi/​isini-​kaybeden-​paylasimli-​ofise-​geldi-​haberi-​401208. Durante, G & Turvani, M 2018, ‘Coworking, the sharing economy, and the city: which role for the ‘coworking entrepreneur’?’, Urban Science, vol. 2, no. 83, pp. 1–​21, https://​doi.org/​10.3390/​urbansci2030083. Eisenhardt, KM & Graebner, ME 2007, ‘Theory building from cases: Opportunities and challenges’, Academy of Management Journal, vol. 50, no. 1, pp. 25–​32, https://​doi.org/​10.5465/​amj.2007.24160888. European Commission 2017, Digital Transformation Scoreboard 2017, viewed 10 August 2020, https://​ec.europa.eu/​growth/​tools-​databases/​dem/​monitor/​ scoreboard. Ferrell, O C Ferrell, L & Huggins, K 2017, ‘Seismic shifts in the sharing economy: shaking up marketing channels and supply chains’, Journal of Marketing Channels, vol. 24, no. 1–​ 2, pp. 3–​ 12, https://​doi.org/​10.1080/​ 1046669X.2017.1346973. Foertsch, C 2015, ‘First Results of the New Global Coworking Survey’, viewed 18 October 2020, www.deskmag.com/​en/​ first-​results-​of-​the-​new-​global-​coworking-​survey-​2015-​16. Foertsch, C 2019, ‘2019 State of Coworking: Over 2 Million Coworking Space Members Expected –​Deskmag’, viewed 20 October 2020, www.deskmag. com/​en/​2019-​state-​of-​coworking-​spaces-​2-​million-​members-​growth-​crisis-​ market-​report-​survey-​study.

6 7 1

176  Ozge Kirezli and M.G. Serap Atakan Fontana, A & Frey, J 1994, ‘Interviewing –​The Art of Science’, in N K Denzin & Y S Lincoln (ed.), Handbook of Qualitative Research, Sage, New York, pp. 361–​37. Gandini, A 2015, ‘The rise of coworking spaces: A literature review’, Ephemera, vol. 15, no. 1, pp. 193–​215. Geertz, C 1973, ‘Thick description: toward an interpretive theory of culture’, in Y S Lincoln & N K Denzin (ed.), Turning Points in Qualitative Research, Basic Books, New York, NY, pp. 3–​30. Gerdenitsch, C, Scheel, TE, Andorfer, J & Korunka, C 2016, ‘Coworking spaces: a source of social support for independent professionals’, Frontiers in Psychology, vol. 7, no. 581, pp. 1–​12, https://​doi.org/​10.3389/​fpsyg.2016.00581. Giones, F & Brem, A 2017, ‘Digital technology entrepreneurship: A definition and research agenda’, Technology Innovation Management Review, vol. 7, no. 5, pp. 44–​51, https://​doi.org/​10.3389/​fpsyg.2016.00581. Granot, E, Brashear, TG & Motta, PC 2012. ‘A structural guide to in-​depth interviewing in business and industrial marketing research’, Journal of Business & Industrial Marketing, vol. 27, no. 7, pp. 547–​553, https://​doi.org/​ 10.1108/​08858621211257310. Greenfield, A 2006, Everyware: The dawning age of ubiquitous computing, New Riders, Berkeley, CA. Grybaitė, V & Stankevičienė, J 2016, ‘Motives for participation in the sharing economy–​evidence from Lithuania’, Engineering Management in Production and Services, vol. 8, no. 4, pp. 7–​17, https://​doi.org/​10.1515/​emj-​2016-​0028. Haase, M, Kleinaltenkamp, M, Layton, R, Nill, A & Pels, J 2011, ‘Sustainable Development of Markets and Marketing Systems in a Globalized World’, Journal of Macromarketing, vol. 31, no. 4, pp. 430–​ 430, https://​doi.org/​ 10.1177/​0276146711430451. Hamari, J, Sjöklint, M & Ukkonen, A 2016, ‘The sharing economy: Why people participate in collaborative consumption’, Journal of the Association for Information Science and Technology, vol. 67, no. 9, pp. 2047–​2059, https://​ doi.org/​10.1002/​asi.23552. Heinrichs, H 2013, ‘Sharing economy: a potential new pathway to sustainability’, Gaia, vol. 22, no. 4, pp. 228–​231, https://​doi.org/​10.14512/​gaia.22.4.5. Holzweber, M, Mattsson, J & Standing, C 2015, ‘Entrepreneurial business development through building tribes’, Journal of Strategic Marketing, vol. 23, no. 7, pp. 563–​578, https://​doi.org/​10.1080/​0965254X.2014.1001864. Hughes, M, Morgan, RE, Ireland, RD & Hughes, P 2011, ‘Network behaviours, social capital, and organisational learning in high-​ growth entrepreneurial firms’, International Journal of Entrepreneurship and Small Business, vol. 12, no. 3, pp. 257–​272, https://​doi.org/​10.1504/​IJESB.2011.039006. Hwang, J & Griffiths, MA 2017, ‘Share more, drive less: Millennials value perception and behavioral intent in using collaborative consumption services’, Journal of Consumer Marketing, vol. 34, no. 2, pp. 132–​146. https://​doi.org/​ 10.1108/​JCM-​10-​2015-​1560 Kumar, V, Lahiri, A & Dogan, OB 2018, ‘A strategic framework for a profitable business model in the sharing economy’, Industrial Marketing Management, vol. 69, no. 1, pp. 147–​160, https://​doi.org/​10.1016/​j.indmarman.2017.08.021. Matzler, K, Veider, V & Kathan, W 2015, ‘Adapting to the sharing economy’, MIT Sloan Management Review, vol. 56, no. 2, pp. 71–​77.

71

Coworking Spaces in the Sharing Economy  177 McRobbie, A 2016, Be creative: Making a living in the new culture industries, Polity, Cambridge. Merkel, J 2015, ‘Coworking in the city’, Ephemera, vol. 15, no. 1, pp. 121–​139, https://​openaccess.city.ac.uk/​id/​eprint/​14478. Moriset, B 2013, ‘Building new places of the creative economy. The rise of coworking spaces’, Proceedings of the 2nd Geography of Innovation, International Conference 2014, Utrecht University, Utrecht, viewed 9 July 2020. Nica, E & Potcovaru, AM 2015, ‘The social sustainability of the sharing economy’, Economics, Management, and Financial Markets, vol. 10, no. 4, pp. 69–​75. Pratt, AC 2002, ‘Hot jobs in cool places. The material cultures of new media product spaces: the case of south of the market, San Francisco’, Information, Communication & Society, vol. 5, no. 1, pp. 27–​50, https://​doi.org/​10.1080/​ 13691180110117640. Reed, B 2007, ‘Co-​working: The ultimate in teleworking flexibility’, Network World, 23 October, viewed 18 August 2020, www.networkworld.com/​article/​ 2287504/​co-​working—​the-​ultimate-​in-​teleworking-​flexibility.html. Ritter, M & Schanz, H 2019, ‘The sharing economy: A comprehensive business model framework’, Journal of Cleaner Production, vol. 213, no. 1, pp. 320–​ 331, https://​doi.org/​10.1016/​j.jclepro.2018.12.154. Sanday, PR 1979, ‘The ethnographic paradigm(s)’, Administrative Science Quarterly, vol. 24, no. 4, pp. 527–​538, https://​doi.org/​10.2307/​2392359. Spinuzzi, C 2012, ‘Working alone together: Coworking as emergent collaborative activity’, Journal of Business and Technical Communication, vol. 26, no. 4, pp. 399–​441, https://​doi.org/​10.1177/​1050651912444070. Spreitzer, G, Garrett, L & Bacevice, P 2015, ‘Should your company embrace coworking?’, MIT Sloan Management Review, vol. 57, no. 1, pp. 27–​29. Standing, C, Holzweber, M & Mattsson, J 2016, ‘Exploring emotional expressions in e-​ word-​ of-​ mouth from online communities’, Information Processing & Management, vol. 52, no. 5, pp. 721–​ 732, https://​doi.org/​ 10.1016/​j.ipm.2016.01.001. Sundsted, T, Jones, D & Bacigalupo, T 2009, I’m Outta Here: How Co-​Working Is Making the Office Obsolete, Not an MBA Press, Austin, TX. Tuvay, B 2019, ‘Paylasimli ofisler start up’ları bekliyor! (Coworking spaces are waiting for the entrepreneurs)’, Ekonomist, 23 July, viewed 28 June 2020, www.ekonomist.com.tr/​girisim-​kobi/​paylasimli-​ofisler-​start-​uplari-​bekliyor. html. Vaskelainen, T. & Piscicelli, L 2018, Online and offline communities in the sharing economy, Sustainability, vol. 10, no. 2927, pp. 1–​18, https://​doi.org/​ 10.3390/​su10082927. Woodside, A G & Wilson, E J 2003, ‘Case study research methods for theory building’, Journal of Business & Industrial Marketing, vol. 18, no. 6–​7, pp. 493–​508, https://​doi.org/​10.1108/​08858620310492374.

8 7 1

178  Ozge Kirezli and M.G. Serap Atakan

Appendix I –​Interview guide Open-​ended questions

Theme

Could you please give information about the sharing economy and coworking business model. What are the opportunities and threats that you encounter? What is the demand for coworking spaces in Turkey? What is the competition in Turkey as for coworking spaces?

The general state of coworking and coworking spaces

Name, year of foundation, number of locations/​coverage, General information information about target market/​members about the Information about the entrepreneurs and interviewees coworking spaces What are your offers as a coworking space provider? How do you differentiate your offer from the competitors/​ differential advantage? What are the benefits that you offer to your coworking Benefits of the space users? coworking spaces What is the most valuable benefit you promise as a service provider? Thinking about the overall benefits of coworking spaces, what can be the specific benefits offered for the Turkish market?

9 7 1

Part III

Governance and Legal Structure

0 8 1

1 8

10  The EU Legal-​Regulatory Framework for Digital Entrepreneurs in the Sharing Economy Emily M. Weitzenboeck

Introduction Among the new business models that have flourished due to the ubiquity of the internet, the advent of Web 2.0 and the growing culture of sharing between online users is the sharing economy. Private individuals and businesses –​from micro to large businesses –​are able to share unused resources and services with other online users through the intermediation of a third party, typically a platform or an app. This chapter examines how digital entrepreneurship in the sharing economy is regulated in the European Union (EU). Using the traditional legal method to investigate the regulatory framework of digital entrepreneurship, it seeks to identify what rules are applicable, the extent to which such rules are mandatory, and what may be left to contractual negotiation between the parties. Starting with an examination of basic terms, this chapter then analyses how digital entrepreneurs are governed, especially after the recent Uber and Airbnb judgements by the Court of Justice of the EU (CJEU) and in light of key EU e-​commerce legislation. It first examines governance of the sharing economy platform ‘per se’ and then looks at the position of service providers sharing goods and services via the platform. The Sharing Economy Before delving into how the sharing economy is regulated in the EU, the term ‘sharing economy’ ought to first be clarified. Although the term ‘sharing economy’ is not defined in EU legislation, it has been the subject of various studies commissioned by, respectively, the European Commission and the European Parliament (Codagnone et al., 2016; Dervojeda et al., 2013). Though many scientific articles have been written on this new business model, there does not appear to be one commonly agreed to definition in business and economics literature (Stanoevska-​ Slabeva et al., 2017; Wirtz et al., 2019). Some scholars have focused on the peer-​to-​peer sharing of underutilised physical assets between private

2 8 1

182  Emily M. Weitzenboeck persons, usually for a fee (Franken & Schor, 2017). Others envisage that, besides the sharing of physical assets, it may also encompass services (Cheng et al., 2020) as well as ‘other resources that are provided by peers or platform owners’ (Wirtz et al., 2019, p. 458)1. Some authors envisage that peers can also include firms (Cheng et al., 2020), self-​employed and owners of micro-​businesses (Wirtz et al., 2019), besides private individuals. Another element often highlighted by the literature is the key role of online platforms to facilitate sharing between peers (Stanoevska-​Slabeva et al., 2017; Wirtz et al., 2019). The lack of agreement on a definition of the sharing economy in the literature is compounded by the proliferation of similar-​sounding terms to describe other established or emerging business phenomena such as ‘collaborative consumption’ (Belk, 2014), ‘gig economy’ (De Stefano, 2016), ‘access-​ based consumption’ (Bardhi & Eckhardt, 2012), ‘the mesh’ (Gansky, 2010), and ‘peer platform markets’ (OECD, 2016).2 Ambivalence on terminology is also reflected within the EU where the terms ‘sharing economy’ and ‘collaborative economy’ are used synonymously. In a key policy document issued by the European Commission (2016a, p. 3) that was wholly dedicated to the sharing economy, the term was defined as follows: business models where activities are facilitated by collaborative platforms that create an open marketplace for the temporary usage of goods or services often provided by private individuals. The collaborative economy involves three categories of actors: (i) service providers who share assets, resources, time and/​or skills –​ these can be private individuals offering services on an occasional basis (‘peers’) or service providers acting in their professional capacity (‘professional services providers’); (ii) users of these; and (iii) intermediaries that connect via an online platform providers with users and that facilitate transactions between them (‘collaborative platforms’). Collaborative economy transactions generally do not involve a change of ownership and can be carried out for profit or not-​for-​profit. Acknowledging the fluid and evolving nature of this phenomenon, the European Commission (2016a, p. 3) stated that this definition ‘may evolve accordingly’. Extrapolating the key elements of the sharing economy as highlighted by the literature and by the European Commission’s definition, one finds the following: (i) sharing between peers or professional service providers and users that is based on (ii) the provision of temporary access to underutilised goods or services (iii) that may be carried out either for profit or not-​for-​profit and which is (iv) facilitated by an online intermediary such as an online platform or an app. The sharing economy involves a triangular relationship between the sharing economy platform, the provider of the goods or services and the recipient of such

3 8 1

The EU Legal-Regulatory Framework  183 service. It is this understanding of the sharing economy that forms the basis of the legal analysis in this chapter. Digital Entrepreneurship and the Law: Terminology and Methodology Business management and economics literature describe digital entrepreneurship as comprising new products and services based on the internet where services are typically run in the cloud and use big data or artificial intelligence (Giones & Brem, 2017). The sharing economy is seen as a distinct type of digital entrepreneurship that is based on the internet and uses digital technologies, such as cloud-​based technology and peer-​to-​ peer platforms, to offer either physical or intangible goods and services (Giones & Brem, 2017; Leick et al., 2020). In the literature, besides the sharing economy platform itself, the providers of sharing economy goods or services are themselves seen as digital entrepreneurs (Sussan & Acs, 2017; Leick et al., 2020). Although these actors may not perform activities that are in themselves digital, such as the supply of Airbnb-​brokered accommodation or driving services by Uber drivers, their activities need digital engagement. Each of these actors ‘leverages digital technology and seeks and acts on these opportunities within the marketplace’ (Sussan & Acs, 2017, p. 66). This chapter deals with the legal and regulatory framework of digital entrepreneurship in the sharing economy, specifically, the EU legal and regulatory e-​commerce framework. Besides differences in the research method, there are also terminological differences between the social sciences and legal disciplines. This chapter follows the traditional legal method. The starting point is relevant legislation (primarily at an EU level and secondly at a national level) and its interpretation by the courts. Legal literature and preparatory documents from the various EU institutions (e.g. the European Commission and European Parliament) that are involved in the EU law-​ making process are relevant interpretative instruments. The contract between the platform, service provider and customer is another key source of how the interaction between these key actors is regulated.3 Very often, there is only one contract that governs the interaction between the three actors. This is usually drafted by the platform and adhered to by the service providers and, unless otherwise specified, the same clauses usually apply as between the service providers and their customers, both being users of the intermediation services provided by the platform (Smorto, 2018). Even where the parties have chosen to regulate their interaction through the regulatory instrument of contract, sometimes mandatory rules of law become applicable, depending on how the peers share resources and provide services to other peers, as well as how the latter –​the users –​ are classified. Of key relevance to this chapter are underlying mandatory rules that form part of the considerable body of EU e-​commerce law and the consumer acquis, i.e. the body of EU legislation as implemented by the

4 8 1

184  Emily M. Weitzenboeck various EU and European Economic Area (EEA) countries and its interpretation by the CJEU. How the sharing economy digital entrepreneurs such as the platform and the service providers are classified in the aforementioned mandatory rules, in particular, whether they are information society service providers, business users or consumers –​terminology that is central to such legislation –​is fundamental to determine whether such mandatory rules are applicable or not.

Governance of the Sharing Economy The European Commission’s approach regarding regulation of sharing economy platforms, like its approach to other types of online platforms, has been a cautious one so as not to stifle the digital environment from which new business models emerge (Howells et al., 2018, p. 336). Instead of solely focusing on the sharing economy, the European Commission (2016b, p. 5) has preferred to look at the broader notion of online platforms –​of which sharing economy platforms are but one e­ xample –​ and to only address clearly identified problems that relate to a specific type or activity of online platforms where the existing legal framework cannot be applied to resolve those problems. It is this approach which led to the adoption of the Platform-​to-​Business (P2B) Regulation 2019/​1150, discussed further below, which addresses fairness and transparency issues in some types of online platforms. As stated earlier, business and innovation do not happen in a legal vacuum and pre-​existing mandatory rules of law may still be applicable and provide constraints or limitations on how a sharing economy platform is regulated. Some of these fundamental rules in the current e-​ commerce legal framework are found in the E-​Commerce Directive 2000/​ 31/​EC (hereinafter ECD). Governance of the Platform ‘per se’ Within the EU and the EEA, the question of how sharing economy platforms are regulated must be resolved on a case-​by-​case basis and depends on how the particular platform is set up. One must examine what the underlying service being intermediated by the platform is, the degree of influence the platform exercises on the actors sharing goods and services and whether those actors are consumers or business actors. A key question is whether the sharing economy platform can be classified as a provider of online intermediation services, known in the ECD as ‘information society services’ (ISS), or whether it is in fact a provider of the underlying service (e.g. transport, accommodation) being intermediated via the platform. An information society service is a ‘service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services’ (ECD, article 2(a)).4 At face value, sharing economy platforms appear to fall within

5 8 1

The EU Legal-Regulatory Framework  185 the definition of a provider of ISS. However, as the Uber Spain and Uber France judgements discussed below have shown, this is not always the case. Why do platforms like Uber and Airbnb prefer to be classified as an ISS provider and not a provider of the underlying service? If classified as an ISS provider, a sharing economy platform enjoys several benefits. According to the ECD, an ISS can offer its services in all the other EU and EEA member states by solely complying with the rules for the provision of ISS services in the country where the platform is established, i.e. the country of origin (ECD, article 3).5 This is known as the internal market rule. Furthermore, an ISS does not have to comply with any prior authorisation or similar requirements in the country where the ISS is offered, i.e. the country of destination (ECD, article 4(1)). If we take Airbnb as example, according to its Terms of Service, within the EU, Airbnb is established in Ireland.6 Airbnb must therefore comply with Irish law requirements applicable to ISS and cannot be subjected to any other prior authorisation or equivalent requirements from any other EU or country where it provides its intermediation services. It is only possible for a country of destination to derogate from this rule on a case-​by-​ case basis and as long as strict material (namely, proportionate measures to protect public policy, public health, public security or consumer protection) and procedural conditions (namely, prior notification to the Commission and other member states) are observed. Once an exceptional measure is notified to the Commission, the latter will examine whether the measure is incompatible with Community law and, in the affirmative, the country of destination proposing such a measure is asked to refrain from either taking or continuing with such measure. If the main service offered by the sharing economy platform is not the provision of intermediation but rather the underlying service being intermediated via the platform, the platform is not categorised as providing ISS pursuant to the ECD. Instead, the online intermediation service is considered accessory to and absorbed in the underlying service being intermediated. The applicable rules here are those pertaining to the underlying service. Whether such rules are to be found at a supranational level (EU), national or subnational (e.g. regional or local) level depends on (1) whether the EU has competence to regulate the service in question and (2) whether it has actually legislated on the subject. Several areas that are relevant for the sharing economy, such as transport, consumer protection as well as internal market issues, fall within the shared competence of the European Commission and the EU member states.7 However, issues involving, for example, urban planning and housing policy fall outside the competence of the EU and any legal requirements (e.g. for authorisation, operating licences) would have to be at a national, regional or local level (Finck, 2018).8 Determining the regulatory framework of a specific sharing economy platform is thus a rather complex matter and revolves on whether the platform is classified as an ISS or not. If the platform exercises a decisive

6 8 1

186  Emily M. Weitzenboeck influence over the existence and the conditions of the underlying service mediated by the platform, the underlying service is deemed to be ancillary to the provision of intermediation services and the platform will not be deemed to be an ISS provider. If the platform does not exercise a decisive influence over the provision of the underlying service and the online intermediation is separated from the underlying service, the platform is considered to be an ISS provider. To assess whether a decisive influence is exercised, several criteria were set out by the CJEU in, respectively, the Uber Spain, Uber France and Airbnb Ireland cases, namely:9 i Is the intermediation provided by the platform e.g. (app, website) indispensable for the provision of the underlying services (e.g. transport, accommodation)? ii Who sets the price –​the platform or the peer service provider (e.g. driver, host)? iii Who sets the other key contractual terms, e.g. control over the quality of the asset (e.g. car, accommodation) shared, requirements as regards the conduct of the service providers which can result in their exclusion? That the above is not merely a theoretical discussion but has practical consequences for sharing economy businesses was highlighted in the Uber and Airbnb cases. In Uber Spain and Uber France, the CJEU had to determine whether Uber was an ISS pursuant to the ECD or whether it provided a transport service, more specifically, non-​public urban transport services (e.g. taxi services). If it provided transport services, Uber would have to comply with national laws in each of the EU countries where it operates since there are no common EU rules or measures on non-​public urban transport.10 In Airbnb Ireland, the court had to decide whether the French Airbnb subsidiary was an ISS or a real estate agent. If it were a real estate agent, the French Hoguet Law which set strict requirements on the licencing of real estate agents would have been applicable. Though the CJEU came to diametrically opposed conclusions and held that Airbnb offered ISS and was not a real estate agent whereas Uber provided transport services and not ISS, the grounds for the judgements were the same. The court held that the service provided by Airbnb was not indispensable to the provision of accommodation service from both the point of view of the guests and the hosts who use the platform, since both guests and hosts had a number of other channels at their disposal such as estate agents, classified advertisements in paper or electronic format, or property letting websites. On the other hand, the app provided by Uber to its non-​professional drivers and those wishing to make a journey was deemed to be indispensable for both drivers and prospective customers. Without such an app, those drivers would not be able to provide transport services and persons wishing to make a journey would not be able to

7 8 1

The EU Legal-Regulatory Framework  187 use the services provided by those drivers. Furthermore, whereas the Uber app determined the maximum fare payable by customers, Airbnb Ireland did not set the price or cap the amount of rents charged by the hosts using that platform. The fact that Airbnb provided other optional services such as photography services, civil liability insurance and a guarantee against damages did not alter the conclusion of the court since such services were ancillary in nature and did not affect Airbnb’s role as an ISS provider. The level of control that the sharing economy platform exercises on the underlying service that is provided via the intermediation of the platform is thus a determining factor for establishing which rules apply to govern the platform. That this has practical consequences is evidenced by the Uber and Airbnb judgements discussed above. As a provider of non-​public urban transport services, Uber is subject to national law requirements for providers of transport services in each EU and EEA country it operates in, since there are no common EU rules on this matter. On the other hand, as an ISS, Airbnb benefits from the internal market rule in the ECD and only needs to comply with legal requirements in Ireland, its country of establishment. If any EU or EEA state, as a country of destination, wants to apply other measures on ISS providers like Airbnb –​as France did in the Airbnb Ireland case –​those measures must satisfy the material and procedural derogation requirements in the ECD mentioned above and cannot be in breach of EU law, in particular the free movement rules. Regulation and the Service Provider Having examined how mandatory rules effect the governance of sharing economy platforms, the focus now turns onto the legal and regulatory framework surrounding the service provider who shares goods or services via the platform with the user. This section investigates the main rules that govern the relationship between the service provider and the platform, as well as that between the service provider and the user. Gig Economy Issues Sharing economy platforms are often linked to the rise of the gig economy where contractors are hired by the job rather than employed. Whether the service providers are independent contractors or fall within the scope of labour law as ‘workers’ has been the subject of scholarly debate and litigation. Most of the discussion has been on what factors should be used to determine whether a service provider is an employee or not (Lobel, 2019; Smorto, 2018). Though labour law issues are beyond the scope of this chapter, two aspects are relevant to our analysis. First of all, if the user providing the service is deemed to be an employee, it is the platform that is responsible for the performance of the underlying transaction to the user, not the service provider. In cases where the user is a consumer, i.e. acting outside her trade, business, profession or vocation, consumer

81

188  Emily M. Weitzenboeck protection legislation applies between the platform and the user, in addition to any other sector-​specific legislation, e.g. transport rules (Smorto, 2018). Secondly, even if the contract between the platform and the service provider states that they are not in an employment relationship, or that the service provider is an independent business user of the platform’s intermediation services, this does not preclude either regulatory authorities or courts of law from regarding the platform as an employer under labour regulation if that is ‘the actual nature of the economic activity performed by the online platform’ (European Parliament, 2018, p. 84). Platforms should not try to hide ‘bogus self-​employment’ behind a fictitious contractual relationship, a matter which the P2B Regulation discourages (article 18(2)(f)).11 Contract and the P2B Regulation Where the service providers are truly autonomous entrepreneurs vis-​ à-​ vis  the platform, their legal relationship is governed by contract. However, the risk of imbalance in the terms and conditions of their contract with the platform cannot be ruled out, even where both parties are independent business actors. Sharing economy platforms, especially those that are large and global, often enjoy a superior bargaining power vis-​à-​ vis service providers. Service providers may thus find themselves in a situation of increased dependency and exploited by the imposition of unfair terms and practices by the platform (de Streel 2018). It is these concerns about unfairness and lack of transparency by online platforms that lie at the basis of the P2B.12 The P2B Regulation is the first EU legislation that is specifically directed at online platforms such as sharing economy platforms. In its very first recital, the regulation acknowledges that such platforms ‘are key enablers of entrepreneurship and new business models, trade and innovation’, and are of benefit to both industry and consumers alike. It imposes several transparency obligations on the platforms in favour of business service providers (termed ‘business users’ in the regulation) that offer goods or services to consumers. Thus, the platform must make its contractual terms and conditions easily available to business users, ensure that such terms are drafted in plain and intelligible language, and that the grounds for any eventual decision to suspend, terminate or restrict their intermediation service are set out in the contract (P2B Regulation, article 3(1)). If a platform decides to restrict or suspend its intermediation service, it must give a statement of reasons for its decision. If its decision was to terminate the provision of intermediation service, it must provide at least 30 days prior notice to the service provider, together with a statement of reasons for its decision (P2B Regulation, article 4(1)(2)). Similarly, if the platform gives differential treatment in respect of goods or services that either other business users or the platform itself provides or controls, the platform must provide information on ‘the main economic, commercial

9 8 1

The EU Legal-Regulatory Framework  189 or legal consideration for such differentiated treatment’ (P2B Regulation, article 7(1)). Online platforms have been criticised by legal scholars of opacity in their ranking criteria and algorithms (Smorto, 2018). The P2B Regulation, therefore, obliges platforms to provide information on the main parameters determining ranking, such as ‘general criteria, processes, specific signals incorporated into algorithms, or other adjustment or demotion mechanisms used in connection with the ranking’ (P2B Regulation, recital 24). However, although the underlying aim is to improve predictability for business users and to enable them to compare the ranking practices of various providers by better understanding how the ranking mechanism works, the platform is not required to disclose the detailed functioning of such ranking mechanisms, including algorithms. A ‘general description of the main ranking parameters’ suffices (P2B Regulation, recital 27). Another issue of concern to service providers is whether they can demand access to data provided or generated by them or by their users through the provision of intermediation service by the platform. According to article 9 of the regulation, the platform is only bound to state in its terms and conditions whether business users have access (and if so, to describe the technical and contractual access) or not to any such data. What one immediately notes from the above analysis is that, though the aim of the P2B Regulation was to promote fairness and transparency for business users of online intermediation platforms, most of the rules in the P2B Regulation are actually transparency rules, not fairness rules.13 This approach is, to a large extent, understandable, in the context of transactions between two business parties. Except for situations where platforms act as private gatekeepers to markets where they have significant scale and market power, and which ought to be addressed by competition policy –​a matter which the European Commission (2020, p. 10) has promised to do in the context of the promised Digital Markets Act –​broad-​based ‘ex ante’ regulation of business-​to-​business relations may stifle further innovation and entrepreneurship. What there is certainly room for is to extend the sphere of application of the P2B Regulation to cover all types of sharing economy platforms. In its current form, the regulation only applies to platforms which are an ISS within the meaning of the ECD. This means that service providers in Uber-​like platforms do not automatically benefit from the transparency provisions of the P2B Regulation, a result which contradicts the Commission’s intention to capture ‘the entire online platform economy’ (European Commission, 2019). A further limitation of the regulation is that it only applies to business users that offer goods and services to consumers, i.e. not to other business customers. This invites arguments as to whether the regulation ceases to apply as soon as a business user has supplied goods or services to a non-​ consumer or whether the regulation still applies as long as it offers goods

0 9 1

190  Emily M. Weitzenboeck or services to consumers, even if it also includes businesses amongst its customers (Twigg-​Flesner, 2018). Though, in practice, the more serious platforms and service providers are likely to comply with the P2B regulation in respect of all their respective customers, this calls for clarity by the legislator. Furthermore, the regulation does not apply to ‘peer-​to-​peer online intermediation services without the presence of business users’ (recital 11). Thus, a service provider who shares resources on a one-​off basis in a non-​professional capacity is not likely to be deemed to be a ‘business user’ who is defined in the regulation (article 2(1)) as follows: any private individual acting in a commercial or professional capacity who, or any legal person which, through online intermediation services offers goods or services to consumers for purposes relating to its trade, business, craft or profession. The term ‘business user’ clearly includes micro-​, small-​and medium-​ sized enterprises (P2B Regulation, recital 2). Private individuals only fall within this definition if they are acting either in a professional capacity or ‘in a commercial […] capacity’. The phrase ‘acting in a commercial capacity’ is to be read in light of what comes later on in the definition, that is, that it offers goods or services ‘for purposes relating to its trade, business, craft or profession’. Is an Airbnb host, who only occasionally rents out a room or an apartment, a business user? Is a non-​professional service provider, whose main income derives from another profession, a business user? When can one say that a private individual has become a ‘business user’ for the purposes of the P2B Regulation? In today’s digital world, on/​off legal categories such as ‘business/​consumer’, typical of EU consumer protection legislation, are no longer so viable (Lobel, 2019). Digital platforms create hybrid types of online users, variously called ‘amateur entrepreneurs’ (Howells & Weatherill, 2005, p. 167), ‘hybrid sellers’ (Morgan-​Taylor & Willet, 2005, p. 157) and ‘hybrid consumers’ (Riefa, 2006, p. 17) by legal scholars. It is perhaps here that the rich business management and economics literature on digital entrepreneurship mentioned above can help to cross-​fertilise legal literature and shed light on what factors should be taken into account to determine when a private individual ought to be considered to be a business user. Consumer Acquis and Other Applicable Rules Where the service provider is not deemed to be a ‘business user’ but a consumer, the provision of intermediation services by the platform to the service provider is regulated by the consumer acquis. Key issues covered by EU consumer protection law include: (i) mandatory precontractual information that must be provided to the consumer and a right of withdrawal from certain contracts (Consumer Rights Directive 2011/​83/​EU),

1 9

The EU Legal-Regulatory Framework  191 (ii) the prohibition of unfair practices, in particular, the prohibition of misleading information, misleading omissions or aggressive commercial practices (Unfair Commercial Practices Directive 2005/​29/​EC) and (iii) the prohibition of unfair terms (Unfair Contract Terms Directive 93/​13/​ EEC), i.e. terms which have not been individually negotiated with the consumer and cause a significant imbalance to the detriment of the consumer. How the relationship between the service provider and its users is regulated depends on whether the relationship is a business-​to-​consumer relationship, in which case EU consumer protection legislation as discussed in the preceding paragraph applies in favour of the user. If the relationship is classified as either consumer-​to-​consumer or business-​to-​ business, it falls outside the realm of consumer protection legislation and is governed by the terms and conditions of the contract between the parties.

Conclusion The above analysis illustrates the complex meshwork of rules that govern digital entrepreneurship in the sharing economy. Even though there is no ‘ad hoc’ legislation that regulates all aspects of the sharing economy, there are both constraints and opportunities under the existing legal framework that affect how a sharing economy platform’s business model is regulated. The CJEU’s judgements in the Uber and Airbnb cases examined above, in practice, imply that e-​commerce legislation such as the ECD and the P2B Regulation will only apply to the extent that a platform can be classified an ISS, and may lead to two different regulatory approaches for sharing economy platforms. In its Digital Agenda policy, the European Commission (2020) announced an ‘initiative to improve labour conditions of platform workers’ (p. 8) as well as an investigation into whether additional rules are needed to ensure fairness, innovation and the possibility of market entry to the platform economy, which involve public interests that go beyond competition or economic considerations (p. 10). It is thus hoped that any resultant policy document and/​ or any proposed rules take a coherent approach towards the regulation of sharing economy platforms and avoid a fragmented regulatory approach.

Notes 1 Consider, for example, Zipcar drivers providing Uber trips. 2 These other terms highlight different aspects of these business phenomena. With the term ‘collaborative consumption’, Belk (2014, p. 1597) focuses on ‘people coordinating the acquisition and distribution of a resource for a fee or other compensation’ and thereby includes bartering and swapping in the definition. De Stefano (2016, p. 1) looks at labour aspects and explains the term ‘gig economy’ as mainly referring to ‘crowdwork’ (where an online platform connects organisations and individuals) and ‘work-​on-​demand via apps’. The

2 9 1

192  Emily M. Weitzenboeck term ‘access-​based consumption’ focuses on the provision of access to pooled resources without transfer of ownership offered by companies to consumers for shared consumption (Bardhi & Eckhardt, 2012, p. 881). Gansky’s (2010) ‘mesh economy’ is broader than ‘sharing economy’ in that ‘the mesh’ involves not only sharing of private peer goods but also access-​based consumption of goods owned by companies. The OECD (2016, p. 7) uses the term ‘peer platform markets’ and focuses on the commercial exchange of goods and services which may involve the transfer of ownership between peers through internet platforms, thereby including marketplaces such as eBay in its study of such peer platform markets. 3 Whereas legislation applies to everyone, contract is often said to act as law between the contracting parties. See, for example, article 1372 of the Italian and article 1134 of the French civil codes, respectively, which state that a contract has the force of law between the parties (Weitzenboeck, 2012, p. 157). 4 Article 2(a) of the E-​Commerce Directive in turn cross-​refers to the definition of ISS in article 1(b) of Directive 2015/​1535. 5 These are requirements related to the so-​ called ‘coordinated field’, i.e. requirements with which the ISS provider needs to comply for the taking up of the activity of an ISS, such as requirements concerning qualifications, authorisation or notification, the pursuit of the activity of an ISS, requirements concerning the behaviour of the service provider, requirements regarding the quality or content of the service including those applicable to advertising and contracts or requirements concerning the liability of the ISS provider. 6 See Airbnb’s Terms of Service, opening paragraphs, definition of ‘Airbnb’. 7 According to the principle of subsidiarity, in areas of shared competence the EU shall only act if and insofar as the objectives of the proposed action cannot be sufficiently achieved by the member states, either at central or at regional and local level but can rather, by reason of the scale or effects of the proposed action, be better achieved at the EU level (Treaty of the European Union, article 5(3)). 8 The rules adopted by many European cities on short-​term rentals for private accommodation include, for example, the imposition of different total length of stay limits (Paris, Madrid, Amsterdam, Berlin), and technical requirements for buildings to have separate entrances (Madrid) (Colliers International & Hotelschool The Hague, 2018). 9 See Uber Spain CJEU judgement in case C-​434/​15, paragraph 39, Uber France CJEU judgement in case C-​320/​16 paragraph 21 and Airbnb Ireland CJEU judgement in case C-​390/​18 paragraphs 55, 56 and 58. 10 At issue in Uber Spain was the law on taxi services which required those wanting to provide taxi services to have appropriate licences and authorisations. 11 As part of its Digital Agenda, the European Commission (2020, p. 6) has announced that it will ‘propose an enhanced framework for platform workers’ in 2021 to address the position of people ‘who do not have a worker status yet who share some of the vulnerabilities of workers’. 12 The regulation came into application in EU member states on 12 July 2020. Before it becomes law in the three EEA states, it must first be incorporated into the EEA Agreement. 13 One important exception that promotes fairness is the prohibition of retroactive changes to contractual terms and conditions by the platform, unless this is required by statute or the change is beneficial to the business user (P2B Regulation, article 8(1)).

3 9 1

The EU Legal-Regulatory Framework  193

References Bardhi, F & Eckhardt, G M 2012, ‘Access-​based consumption: The case of car sharing’, Journal of Consumer Research, vol. 39, no. 4, pp. 881–​898, DOI 10.1086/​666376. Belk, R 2014, ‘You are what you can access: Sharing and collaborative consumption online’, Journal of Business Research, vol. 67, no. 8, pp. 1595–​1600. Cheng, HWJ, Jung, KH, Parra-​Lancourt, M & Powell, AR 2020, ‘Does the sharing economy share or concentrate?’, UN Frontier Technology Quarterly, 18 February 2020, pp. 1–​6. Codagnone, C, Biagi, F & Abadie, F 2016, The passions and the interests: Unpacking the ‘sharing economy’ –​JRC Science for Policy Report, European Commission, DOI 10.2791/​474555. Colliers International & Hotelschool The Hague 2018, Airbnb in Europe. Dervojeda, K, Verzijl, D, Nagtegaal, F, Lengton, M, Rouwmaat, E, Monfardini, E & Frideres, L 2013, The sharing economy: Accessibility based business models for peer-​to-​peer markets, A study for the European Commission Business Innovation Observatory, viewed 17 November 2020, https://​ec.europa.eu/​ docsroom/​documents/​13413/​attachments/​2/​translations/​en/​renditions/​native. De Stefano, V 2016, The rise of the “just-​in-​time workforce”: on-​demand work, crowdwork and labour protection in the “gig-​economy”’, Conditions of work and employment series no. 71, International Labour Office, Geneva, viewed 17 November 2020, https://​ilo.org/​travail/​whatwedo/​publications/​WCMS_​ 443267/​lang—​en/​index.htm. de Streel, A 2018, Online Intermediation Platforms and Fairness: As assessment of the recent Commission Proposal, DOI: 10.2139/​ssrn.3248723. European Commission 2016a, A European agenda for the collaborative economy, (Communication) COM (2016) 356 final. European Commission 2016b, Online platforms and the Digital Single Market –​Opportunities and challenges for Europe, (Communication) COM (2016) 288 final. European Commission 2019, Digital Single Market: EU negotiators agree to set up new European rules to improve fairness of online platforms’ trading practices, press release 14 February 2019, viewed 17 November 2020, https://​ ec.europa.eu/​commission/​presscorner/​detail/​en/​IP_​19_​1168. European Commission 2020, Shaping Europe’s digital future, (Communication) COM (2020) 67 final. European Parliament 2018, Report on the proposal for a regulation of the European Parliament and of the Council on promoting fairness and transparency for business users of online intermediation services (COM (2018) 0238 –​ C8-​0165/​2018 –​ 2018/​0112(COD)). Finck, M 2018 ‘The sharing economy and the EU’, In N. Davidson, M. Finck, & J. Infranca (Eds.), The Cambridge Handbook of the Law of the Sharing Economy, pp. 261–​ 273, Cambridge, Cambridge University Press, DOI 10.1017/​9781108255882. Franken, K & Schor, J 2017, ‘Putting the sharing economy into perspective’, Environmental Innovation and Societal Transitions, vol. 23, pp. 3–​10, DOI 10.1016/​j.eist.2017.01.003. Gansky, L 2010, The mesh: Why the future of business is sharing, London, Penguin.

4 9 1

194  Emily M. Weitzenboeck Giones, F & Brem, A 2017, ‘Digital technology entrepreneurship: A definition and research agenda’, Technology Innovation Management Review, vol. 7, no. 5, pp. 44–​51. Howells, GG & Weatherhill, S 2005, Consumer protection law, 2nd ed. Ashgate, Aldershot. Howells, G, Twigg-​Flesner, C & Wilhelmsson, T 2018, Rethinking EU Consumer Law, London, Routledge. Leick, B, Eklund, MA & Kivedal, BK 2020, ‘Digital entrepreneurs in the sharing economy: A case study on Airbnb and regional economic development in Norway’, The impact of the sharing economy on business and society: Digital transformation and the rise of platform businesses, New York, Routledge, pp. 69–​88. Lobel, O 2019, Regulating the sharing economy: Self-​governance, efficiency and values, University of San Diego Legal Studies, Paper no. 10–​419. Morgan-​ Taylor, MP & Willet, CC 2005, ‘The quality obligation and online market places’, Journal of Contract Law, vol. 18, no. 2, pp. 155–​171. OECD 2016, Protecting Consumers in Peer Platform Markets –​Exploring the issues, 2016 Ministerial Meeting on the Digital Economy, OECD Digital Economy Paper no. 253. Riefa, C 2006, ‘The reform of electronic consumer contracts in Europe: Towards an effective legal framework?’ Lex Electronica, vol. 14, no. 2, pp. 1–​ 44, viewed 17 November 2020, www.lex-​electronica.org/​articles/​vol14/​num2/​ the-​reform-​of-​electronic-​consumer-​contracts-​in-​europe-​towards-​an-​effective-​ legal-​framework/​. Smorto, G 2018, ‘The protection of the weaker parties in the platform economy’, In N. Davidson, M. Finck, & J. Infranca (Eds.), The Cambridge Handbook of the Law of the Sharing Economy, pp. 431–​445, Cambridge, Cambridge University Press, DOI 10.1017/​9781108255882. Stanoevska-​Slabeva K, Lenz-​Kesekamp, L & Suter, V 2017, Platforms and the sharing economy: An analysis, Report from the EU H2020 Research Project Ps2Share: Participation, Privacy and Power in the Sharing Economy, viewed 17 November 2020, www.researchgate.net/​publication/​322845971_​Platforms_​ and_​the_​Sharing_​Economy_​An_​Analysis_​EU_​H2020_​Research_​Project_​ Ps2Share_​Participation_​Privacy_​and_​Power_​in_​the_​Sharing_​Economy_​2017. Sussan, F & Acs, ZJ 2017, ‘The digital entrepreneurial ecosystem’, Small Business Economics, vol. 49, no. 1, pp. 55–​ 73, Springer, DOI 10.1007/​ s11187-​017-​9867-​5. Twigg-​Flesner, C 2018, ‘The EU’s proposals for regulating B2B relationships on online platforms –​Transparency, fairness and beyond’, Journal of European Consumer and Markets Law, vol. 6, pp. 222–​233. Weitzenboeck, EM 2012, A legal framework for emerging business models: Dynamic networks as collaborative contracts, Cheltenham, Edward Elgar Publishing. Wirtz, J, So, KKF, Mody, MA, Liu, SQ & Chun, HH 2019, ‘Platforms in the peer-​ to-​peer sharing economy’, Journal of Service Management, vol. 30, no. 4, pp. 452–​483, DOI: 10.1108/​JOSM-​11-​2018-​0369.

5 9 1

11  U.S. Securities Crowdfunding A Way to Economic Inclusion for Low-​Income Entrepreneurs? Joan MacLeod Heminway

Introduction Crowdfunding represents the financing side of digital entrepreneurship. Its online platforms, typically the province of digital entrepreneurs, are designed to effortlessly bring together businesses (archetypally, startups and small businesses) and those who desire to provide funding to them. Funders can be donors, consumers, investors, or a combination of two or all three. In its most elemental and broad form, crowdfunding is a representative component of the sharing economy. It democratizes capital formation from the standpoint of both the funded and the funders. It allows those without prototypical capital raising networks at their disposal to finance the startup or continued operation of their business—​or a part of it—​by identifying and deploying unutilized or underutilized investment capital. It invites new types of funders from new communities. The technological developments and enhancements of digital entrepreneurs are at the heart of it all, catalyzing a variety of crowdfunding models and compelling related regulatory change (Pollman & Barry, 2017). Where crowdfunding involves the offer and sale of equity, debt, or other financial investment instruments classified as securities under applicable law, it is commonly known, and referred to in this chapter, as “securities crowdfunding” (but is also sometimes referred to in whole or in part as “equity crowdfunding” or “investment crowdfunding”). This chapter examines the legal aspects of U.S. securities crowdfunding under the Capital Raising Online While Deterring Fraud and Unethical Non-​Disclosure Act (2012), commonly known as the “CROWDFUND Act” (Title III of the Jumpstart Our Business Startups Act) and related federal securities regulations. The CROWDFUND Act represents specific, targeted federal legislation that was designed to facilitate digital business finance in the U.S. sharing economy. The possible two-​way benefits (i.e., the democratization of capital raising for the funded and funders through digital means) and profit-​ sharing incentive associated with securities crowdfunding together imply a relatively cost-​effective way to enhance

6 9 1

196  Joan MacLeod Heminway funding capacity that may be attractive to entrepreneurs and investors, including especially those of modest means. Given that crowdfunding can be a means to level the capital-​ raising playing field, it seems important to ask whether U.S. securities crowdfunding—​a distinctive type of internet finance—​is, in fact, a promising avenue for funding entrepreneurial ventures. More specifically, as economic challenges continue to put pressure on financial and labor markets, this chapter explores whether U.S. securities crowdfunding is a viable and efficient means for low-​income entrepreneurs to raise capital for their startups and small businesses and offers related observations. Overall, although securities crowdfunding may be a tempting choice for U.S. entrepreneurs, U.S. law and regulation create obvious and non-​obvious costs and yield somewhat uncertain benefits. Yet, market pressures and innovations introduced by digital entrepreneurs may play a role in increasing the efficacy of U.S. securities crowdfunding as a financing option for low-​income entrepreneurs. With the foregoing in mind, this chapter begins by describing the research method employed in support of the included analysis and resulting observations and proposals. The chapter next isolates a number of socio-​ legal issues at the intersection of financial hardship and business finance that highlight the uncertain, yet potentially important, economic role of limited means entrepreneurs. After presenting those issues, the chapter continues by offering perspectives on the potential use of U.S. securities crowdfunding to fund entrepreneurship for those in financial need. Finally, the chapter suggests possible ways forward in addressing identified shortcomings inherent in the securities crowdfunding solution to financing business startups and innovations in the U.S. in times of economic distress. Overall, the chapter aims to shine light on the role that crowdfunded securities offerings may play in promoting entrepreneurship in the U.S.

Research Method The analysis and observations in this chapter are founded principally on traditionally applied legal research methods and related analytical frameworks. These methods are typically characterized as a form of desk research. The primary objective is problem-​solving. The applied legal research employed in this chapter involves canvassing a specific area of law for relevant legal rules and assessing their efficacy in a specific context. The method involves a review of both primary sources of law or regulation and secondary sources of legal commentary. Primary sources most typically include statutory and decisional law, but also may include regulatory principles and constitutional law. For example, because U.S. securities crowdfunding is regulated at the federal level through legislatively enacted provisions in the U.S. Code, rules of the U.S. Securities and Exchange Commission, and decisional law generated by U.S. federal

7 9 1

U.S. Securities Crowdfunding  197 courts, each of these primary sources was canvassed to formulate the analysis shared in this chapter. Secondary sources include empirical, theoretical, policy-​oriented, and practical literature generated in academic and nonacademic settings. The assessment provided in this chapter, for instance, is informed by reading an assortment of secondary sources, including principally law review and journal articles, as well as industry studies and academic publications from economics, finance, management, and other business research traditions. The analysis that follows from the review of primary and secondary sources identifies legal rules germane to the research question, describes their significance in context (by relating them to factual circumstances relevant to the research question), and offers a legal conclusion or critique and, optimally, proposed solutions to identified problems. Thus, the support for the analysis includes the applicable legal rules themselves, as well as related studies, commentaries, and predecessor analyses. The legal conclusion, critique, and solutions also incorporate a knowledge of applicable norms and the exercise of professional judgment founded in practical or academic experience.

Theoretical Framework and Analysis The Contextual Economic Role of the Financially Disadvantaged Entrepreneur Small business entrepreneurship has historically been a positive driver of the economy in the U.S. (Kobe & Schwinn, 2018). As a result, the financing, financial health, and overall well-​being of startups and small businesses compel attention. Law or regulation may be a valuable tool in encouraging or discouraging entrepreneurship. Entrepreneurship also is responsive to the economy. Economic downturns, including significant economic dislocations like those resulting from the 2008 global financial crisis and the 2020 COVID-​19 pandemic, may affect business finance both directly and indirectly. Investors may be less likely to make certain types of investments, including investments in new or small firms. Among other economic effects, labor markets typically are hard hit by economic downturns. The resulting changes in unemployment rates may complicate the entrepreneurship picture. Among other things, the number of necessity entrepreneurs is likely to increase with increased unemployment. Necessity entrepreneurship is compelled by economic factors. Nikolaev et al. (2018, p. 246) defined necessity entrepreneurs as ‘[i]‌ndividuals who engage in necessity-​based entrepreneurship . . . do so because they have to, owing to the lack of other options. . . . [T]hey are all pushed into entrepreneurship because they have no other employment prospects.’ Necessity entrepreneurship often is contrasted with opportunity entrepreneurship, which is more a product of creative ideation and innovation. Although both types of

8 9 1

198  Joan MacLeod Heminway entrepreneurs may be low-​income entrepreneurs, necessity entrepreneurs are by their very nature at substantial financial risk. Increased entrepreneurship should result in a classic “win-​ win” outcome. The successful encouragement of entrepreneurship should boost the economy generally and may also have positive effects on the unemployment rate specifically. A flourishing market for entrepreneurship should provide a special benefit to necessity entrepreneurs suffering financial challenges, offering a way to alleviate poverty more generally. However, the overall rationale for encouraging entrepreneurship may be complicated by, among other things, studies that indicate differences in the economic contribution of necessity and opportunity entrepreneurship (Acs, 2006; Acs, Desai & Hessels, 2008). Nevertheless, aspects of socio-​ political economic theory predict that encouraging low-​ income entrepreneurship—​ and more specifically encouraging its funding through capital markets—​may have positive economic effects. Capabilities theory and binary economics, read together, may predict that the broad and consistent engagement of low-​income entrepreneurs in business finance will have positive wealth and economic effects. Specifically, under a capabilities approach, ‘poverty alleviation depends on the expansion of the freedoms that people have to use their capacities in ways that satisfy their personal objectives’ and urges attention in this context to ‘quality of life and the freedoms associated with social justice’ (Dyal-​Chand & Rowan, 2014, p. 884). Importantly, this freedom may not exist for necessity entrepreneurs (Gries & Naudé, 2011. Under binary economic theory, ‘[c]‌apital has a strong, positive, distributive relationship to growth, such that the more broadly capital is acquired, the more it can be profitably employed to increase output’ (Ashford, 2012, p. 3). ‘It envisions broadening access to the existing system of corporate finance to people who have historically encountered barriers to such systems . . . by securing more equal access to competitive, individual property rights’ (Fleissner, 2018, p. 203). Accordingly, over time, increased and sustained participation in entrepreneurship by financially disadvantaged entrepreneurs, including notably those who derive personal satisfaction from their businesses, should both enhance capabilities and increase outputs, alleviating poverty and stimulating economic growth. Yet, entrepreneurship opportunities have a somewhat unclear relationship to poverty relief in the U.S. (Dyal-​Chand & Rowan, 2014). Entrepreneurial ventures are not typically seen as a panacea for poverty’s ills—​at least not in the sense of widespread financial wealth enhancement for the individuals involved. Similarly, entrepreneurial endeavors are not normally seen as a “sure bet” for general economic recovery in low-​income communities that may redound to the benefit of individual low-​income entrepreneurs. Although theoretically or practically there may be much to gain from encouraging entrepreneurship as a means of enhancing personal financial wealth for low-​income entrepreneurs, obtaining financing presents a true

91

U.S. Securities Crowdfunding  199 challenge. Entrepreneurs and promoters who are themselves of limited financial means are unlikely to be able to use or significantly rely on traditional personal credit and friends-​and-​family funding sources to finance their business ventures. External startup financing and small business capital are difficult to get for all in the U.S. U.S. entrepreneurs with limited personal financial resources and a lack of financial connections find it very challenging to fund their businesses (Hwang et al., 2019). Among other things, low-​income entrepreneurs are unlikely to regularly cross paths with angel funds or venture capitalists, investment banking firms, or the like. Although special programs have existed from time to time to bring business finance prospects and related resources to resource-​ challenged entrepreneurship, access to business capital continues to be a challenge. Accordingly, ‘many entrepreneurs with good ideas, particularly those who are not in the upper and middle classes, have very little access to funds’ (Bradford, 2012, p. 101). Startups, including entrepreneurial ventures in poor communities, have historically had trouble finding early stage investors for a variety of reasons (Alexander, 2013; Rezin, 2014). Digital entrepreneurship in the form of crowdfunding is designed to address that difficulty. By effectively combining the power of ecommerce platforms and social media outreach and engagement, crowdfunding has been successful in helping some new and young business ventures identify previously unknown funders. Bradford (2012, pp. 103–​104) notes: Crowdfunding makes new sources of capital available to small businesses. It opens business investment to smaller investors who have not traditionally participated in private securities offerings. Those investors have less money to invest, so they would be willing to fund smaller business opportunities that the venture capitalists and angel investors would not touch. Crowdfunding also gives poorer entrepreneurs whose friends and family lack the wealth to provide seed capital somewhere else to turn. In essence, crowdfunding, by its nature, has the capacity to provide a more inclusive source of funding for business formation and development. More specifically, securities crowdfunding may make a difference in this environment by introducing low-​income entrepreneurs to a wider scope of potential funders who, because they are seeking a financial return on their investment, may be in a position to provide some or all of the necessary capital.

The Promise of Crowdfunding for Financially Disadvantaged Entrepreneurs Crowdfunding has been variously defined for use and analysis in different contexts. For purposes of this chapter, crowdfunding is an online method

02

200  Joan MacLeod Heminway of financing business ventures and projects through a general public solicitation of funding from a broadly inclusive set of funders. This definition is in accord with Belleflamme et al. (2014, p. 588), who describe crowdfunding as ‘an open call, mostly through the Internet, for the provision of financial resources either in the form of donation or in exchange for the future product or some form of reward to support initiatives for specific purposes.’ Securities crowdfunding, the core focus of this chapter, is accomplished through a crowdsourced offering of investment interests classified as securities—​ typically, equity, debt, or investment contracts. Securities crowdfunding has been facilitated in the U.S. by the CROWDFUND Act. The CROWDFUND Act exempts compliant offerings of securities from expensive and time-​consuming federal and state offering registration requirements that otherwise would be applicable (Heminway & Hoffman 2011). Although the CROWDFUND Act was signed into law in 2012, it did not become operative until four years later, upon the effectiveness of Regulation Crowdfunding (2016), as approved by the U.S. Securities and Exchange Commission (referred to in this chapter as the “SEC”). The registration exemption has now been operative for over four years. Yet, few widely published studies have been done on offerings commenced or completed under the CROWDFUND Act. Some overall data is, however, publicly available. According to a recent summary industry report published by Crowdfund Capital Advisors, LLC (2020), over 1,500 firms from a variety of industries (including application software, beverages, entertainment, consumer, and more) have raised an aggregate of over $367,000,000 in gross proceeds through securities offerings made under the CROWDFUND Act during its first four years in operation, and an average of 60% of those CROWDFUND Act offerings were successful in reaching their goals. The same report noted a significant increase in the number of investors and aggregate amount invested in the most recent (fourth) year of offerings under the CROWDFUND Act as compared to those in the first year of offerings made under the CROWDFUND Act. ‘In the very first year . . . there were only 61,000 investors that deployed $56 million. This past year those figures jumped to 265,000 and $138 million respectively’ (ibid., p. 3). The report (ibid., p. 7) recorded increased year-​over-​year funding commitments for January and February 2020 and projected a year-​over-​year increase for May 2020. The SEC’s initial report on CROWDFUND Act offerings (2019, pp. 4), which covers campaigns undertaken between May 2016 and December 2018, describes the number of offerings (1,351) and total amount of capital sought as ‘relatively modest’ (while also noting year-​to-​year increases during the period studied). Only 519 of the 1,351 offerings included in the SEC’s study were actually completed (ibid., p. 15). The SEC report also noted in a summary fashion that, ‘[w]‌hile there was variation among

1 0 2

U.S. Securities Crowdfunding  201 issuers undertaking Regulation Crowdfunding offerings during the considered period, the typical issuer was small and at an early stage of its lifecycle’ (ibid., p. 17). The overall success of the CROWDFUND Act remains to be seen and may be measured in many different ways. Although the use and utility of the CROWDFUND Act for offerings by low-​income entrepreneurs have not been studied empirically in any rigorous way, Crowdfund Capital Advisors (2020, p. 6) notes that the average capital raise for an offering under the CROWDFUND Act would effectively replace the amount typically raised by an entrepreneur through ‘personal access to capital.’ The report also notes that these firms are largely startups and early stage ventures that may find it difficult to raise capital from other sources (ibid, pp. 12–​ 13). Moreover, Crowdfund Capital Advisors (ibid., p. 6) reports that firms using the CROWDFUND Act to raise capital ‘have supported over 100,000 jobs since inception’ and, in light of the unemployment rate increase resulting from the pandemic, urges the U.S. government to promote and invest in securities crowdfunding under the CROWDFUND Act for this reason. (The SEC (2020b) in fact adopted temporary rules (applicable to offerings commenced by August 31, 2020) that allow for expedited offerings under the CROWDFUND Act if eligibility criteria are met). The SEC’s data on issuers of crowdfunded securities (2019, pp. 17–​ 18), as alluded to above, offers a similar startup and small business profile that could include (but is not focused on) low-​income entrepreneurs. The median offering was by an issuer that was incorporated approximately two years prior to the offering and employed about three people. The median issuer had total assets of approximately $30,000, cash holdings of approximately $4,000, and no revenues (just over half of the offerings were by issuers with no revenues). Approximately 59% of issuers had some debt prior to the offering (approximately 51% had some short-​term debt and approximately 36% had some long-​term debt). The SEC report also observed that ‘the majority of issuers have had no, or very limited, prior experience with securities offerings and Commission filings’ (ibid., p. 28). The findings and observations recounted in the Crowdfund Capital Advisors and SEC reports indicate that U.S. entrepreneurs of limited means may be able to use (and may even already be using) securities crowdfunding to their advantage in obtaining financing for their ventures. Yet, the incomplete publicly reported data are not targeted to the funding of these specific ventures. Accordingly, based on these studies, securities crowdfunding under the CROWDFUND Act cannot be categorically embraced or discarded as a way of promoting or supporting entrepreneurial efforts in low-​income communities. Having said that, securities crowdfunding deserves serious consideration as a financing option for low-​income entrepreneurs in the U.S. In sum, securities crowdfunding under the CROWDFUND Act may be an important financing option for entrepreneurs whose businesses are

2 0

202  Joan MacLeod Heminway marginalized in the quest for traditional sources of investment capital or do not qualify for other types of funding (Alexander, 2013; Bradford, 2012). While securities crowdfunding is still relatively young and rare in the U.S., some foresee that it, as a form of digital finance, will be successful in funding significant and increasing numbers of new and early stage businesses and projects. Digital entrepreneurship has enabled low-​ income entrepreneurs to tap into securities crowdfunding to enjoy some of that envisioned success. Importantly, the analysis and observations provided in this chapter are intended to facilitate—​but not necessarily recommend—​the use of securities crowdfunding by necessity entrepreneurs and other entrepreneurs who face financial challenges because of their low-​income status. More specifically, the legal and practical reflections in the chapter are not necessarily meant to encourage widespread use of securities crowdfunding by financially disadvantaged entrepreneurs or promote the use of securities crowdfunding by any individual low-​income entrepreneur. The use of any business finance alternative must be carefully evaluated for its efficacy in any individual case.

Discussion Although crowdfunding has enjoyed a positive existence in the sharing economy for a number of years, U.S. securities crowdfunding has not achieved its potential. An informed examination reveals that the capacity of internet finance, and U.S. securities crowdfunding more specifically, to democratize the market for capital has been limited by a number of factors. These impediments, together with ideas for overcoming them, are reviewed, in turn, below. Barriers to the Success of U.S. Securities Crowdfunding for Low-​Income Entrepreneurs Given the promise of the CROWDFUND Act in meeting the needs of necessity and other low-​income entrepreneurs, what may be preventing these founders and promoters from using securities crowdfunding to finance their businesses? The answer to that question is reasonably simple: the potential for securities crowdfunding as a source of financing for limited means entrepreneurs may not be realized because securities crowdfunding is too expensive, too speculative, and too complex. Although the CROWDFUND Act and Regulation Crowdfunding are deregulatory in nature, they include reporting and recordkeeping requirements that require the expenditure of human and financial capital. Moreover, as the Crowdfund Capital Advisors and SEC data indicate, the probability of a successful campaign is relatively low. Consequently, the costs of securities crowdfunding may not be rewarded with offsetting benefits. Overall, the reporting and recordkeeping requirements under the

3 0 2

U.S. Securities Crowdfunding  203 CROWDFUND Act, taken together with the related liability provisions and instructional mandates, represent a formidable set of legal rules to digest and apply, even for attorneys. Regulatory complexity adds to compliance and other costs. Expense of Regulatory Compliance The cost of starting up and sustaining a business can be substantial in relation to an entrepreneur’s income. That expenditure is more significant for some business venturers than for others. Laney et al. (2013, p. 17) observe that ‘[s]‌tarting a business takes an estimated 4.4 times the median net worth of the average [A]frican-​[A]merican household ($5,677) and four times the median net worth of the average Latino household ($6,325), compared to just 22 percent of the median net worth of the average White household ($113,149).’ The cost of financing is only one component (albeit an important one) of a business firm’s startup and maintenance costs. Among other things, U.S. securities crowdfunding involves compliance with significant documentation and disclosure requirements (for which retention of legal counsel and an accounting firm typically are advisable, if not necessary) and the engagement of a mandatory intermediary—​a broker or funding portal that hosts the digital platform through which the offering is conducted. These obligations (especially when viewed together with the completion and litigation risks associated with U.S. securities crowdfunding) likely outweigh the potential benefits of securities crowdfunding for many, if not most, low-​income entrepreneurs (Alexander, 2013; Heminway, 2013–​2014; Lee, 2016; Oranburg, 2015). The SEC (2019, p. 25) estimates that an average offering of securities under the CROWDFUND Act may cost upwards of $20,000. This average amount includes the cost of disclosure as well as marketing, legal, accounting, video, and campaign copy expenses, but it does not include digital platform fees (i.e., the cost of the mandatory intermediary—​a federally registered broker dealer or funding portal). These costs alone may marginalize the utility of securities crowdfunding for necessity and other low-​income entrepreneurs. Offering Risk Even if limited means entrepreneurs are willing to look into securities crowdfunding as an option, they may be dissuaded from pursuing a CROWDFUND Act offering because the prospect of a successful offering, given the expense of conducting the offering, is too limited. Although the 60% success rate reported by Crowdfund Capital Advisors (2020) may be impressive as compared to venture capital success rates (depending on how those success rates may be measured), crowdfunded securities may not find a market. An issuer of crowdfunded securities or the securities

4 0 2

204  Joan MacLeod Heminway themselves may carry more risk than investors desire to bear. They may have surer bets for their capital investments, based on their calculation of a risk-​adjusted return. In terms of risk, business failure or fraud is a distinct possibility. ‘[W]‌ e must recognize that most small businesses fail—​ a fact that is particularly noteworthy considering the startups that will likely utilize crowdfunding are generally riskier than other startups …’ (Hamermesh & Tsoflias 2013, p. 470). In addition, ‘first-​time investors, borrowers, and entrepreneurs often will not have perfect information in these markets, and thus cannot be assured that the institutional or organizational forms of the for-​profit cyberfinancing intermediaries will deter opportunism and fraud’ (Alexander 2013, p. 367). As a general matter, crowdfunded securities offerings are speculative and typically illiquid, and the issuers of crowdfunded securities may not have the management or professional advisory support needed to succeed and limit fraudulent practices or conduct (U.S. Securities and Exchange Commission 2013). The type of security offered in a CROWDFUND Act offering also may add speculative risk to the offering that limits its potential success. Simple Agreements for Future Equity (SAFEs) and other investment contracts may be especially risky to both issuers and investors, for example, because ‘inexperienced retail investors may mistakenly believe that they are receiving something simple and safe, . . . and make an investment without fully understanding the risks that they are assuming’ (Green & Coyle 2016, p. 174). The SEC (2019) reports that 21% of the CROWDFUND Act offerings involved the offer and sale of SAFEs. Regulatory Complexity Finally, the overall complexity of the regulatory structure may be a barrier to some low-​income entrepreneurs. The expertise, time, patience, and other resources needed to understand the salient aspects of the CROWDFUND Act may be unavailable or in short supply. Even with the relatively light level of required disclosure and diligence provided for under the CROWDFUND Act, the possibility of noncompliance and related adverse effects on the business in this environment adds to the perceived—​and potentially the actual—​cost and overall risk of the offering. The SEC’s report (2019) recognized and described—​but declined to evaluate—​this risk of noncompliance. A More Positive Way Forward for Crowdfunded Securities Offerings by Low-​Income Entrepreneurs in the United States. Is it possible to clear away, or at least mitigate, the downsides of securities crowdfunding for the benefit of ventures started or promoted by low-​income entrepreneurs? There do appear to be several paths forward—​ some representing long-​term (legislative and regulatory) solutions and

5 0 2

U.S. Securities Crowdfunding  205 some representing short-​ term (market-​ based) solutions. However, the most promising solutions depend on action by the U.S. government—​ action which may not occur in the near term or long term. Potential Federal Legislative and Regulatory Solutions First, and perhaps most obviously, the CROWDFUND Act should be modified to better serve entrepreneurs of limited means. Muhammad Yunus’s words from over a decade ago ring true today in this context: ‘There is no better time for a serious discussion of how the law and lawyers can enable the poor to help themselves—​. . . especially in the United States’ (Yunus, 2008). In particular, a reduction in the burdens and costs on securities issuers under the CROWDFUND Act could be engineered that would increase the affordability of securities crowdfunding to low-​ income entrepreneurs while, at the same time, generating an appropriate level of risk for investors. Alexander (2013), for example, made a specific proposal along these lines, suggesting lighter regulatory burdens for issuers selling an aggregate of no more than $100,000 of securities to investors and no more than $250 of securities to any individual investor, in each case over a 12-​month period. Heminway (2013–​2014) also has proposed that less regulation be imposed on smaller dollar-​value offerings and investments. Unfortunately, proposals brought before the U.S. Congress to date are unlikely to be helpful to low-​income entrepreneurs in financing their startups and young businesses. Instead, proposals have focused on raising the maximum aggregate dollar amount of crowdfunded securities offerings (which recently was accomplished by the SEC, as noted below) and clarifying or instituting more limited regulation of funding portals—​together with brokers, the intermediaries that may be involved in crowdfunding (Crowdfunding Enhancement Act, 2017) or on permitting pooled investment funds to use the registration exemption under the CROWDFUND Act (Crowdfunding Amendments Act, 2018). With a targeted lobbying effort, however, it may be possible to focus Congress on modifications to the current law that would make securities crowdfunding more useful and attractive to these entrepreneurs. Digital entrepreneurs could contribute positively to effective lobbying efforts. Absent action by Congress, the SEC may be able to use its expansive regulatory authority to decrease the regulatory cost of crowdfunding. These changes may require effective rewriting of certain terms and provisions of the CROWDFUND Act through agency regulation. As a result, if Congress is either not consulted or is hostile to any proposed changes, the SEC’s authority may be challenged, or the reform effort may be abandoned to keep or restore regulatory peace. In fact, cost reductions for smaller offerings under the CROWDFUND Act have already been under active discussion among legal professionals and industry representatives. The SEC is required by § 503(a) of the

6 0 2

206  Joan MacLeod Heminway Small Business Investment Incentive Act of 1980 to ‘conduct an annual Government-​business forum to review the current status of problems and programs relating to small business capital formation’ (Annual Government-​Business Forum on Capital Formation, 1980). This legal requirement has resulted in an annual SEC Government-​Business Forum on Small Business Capital Formation. At the forum held in November 2017, the need for cost-​reduction regulation for low-​dollar-​value offerings under the CROWDFUND Act was raised and discussed at length. A related regulatory request was made to the SEC through the final report for the annual forum required under § 503(d) of the Small Business Investment Incentive Act of 1980 (Annual Government-​Business Forum on Capital Formation, 1980). That request suggested rationalizing the Regulation Crowdfunding requirements for debt offerings (by, e.g., limiting periodic reporting obligations to actual holders of the debt securities, rather than to the general public) and small offerings under $250,000 (by, e.g., right-​sizing regulatory burdens to reduce currently inelastic offering costs—​including the cost of required professional services) (2017 SEC Government-​Business Forum on Small Business Capital Formation, 2017). Although the SEC is not compelled to act on matters included in the report, members of the SEC present at the forum indicated a desire to seriously consider taking action based on matters arising from the proceedings (Clayton, 2017; Piwowar, 2017). Yet, as with the congressional reform proposals, the SEC’s most recent rulemaking relating to Regulation Crowdfunding (2020a, 2020c) is focused on policy objectives seemingly unlikely to support low-​income entrepreneurs. The most recent initiative, proposed early in 2020 and adopted later that same year, provided for an increase in the 12-​month maximum aggregate offering amount applicable to CROWDFUND Act offerings (from the current $1,070,000 to $5,000,000), a removal of the investment limits currently applicable to accredited investors, and a change in the way in which the investment limit applicable to other investors is calculated (allowing investors to rely on the greater of their income or net worth in making that calculation). These changes cater more to the capital raising aspect of offerings under the CROWDFUND Act. For example, the SEC reported (2019) that ‘accredited investors comprised approximately 9% of investors in this sample but accounted for approximately 40% of amounts invested in funded offerings due to investing higher amounts on average.’ Increasing maximum aggregate offering amounts and eliminating accredited investor limits may allow for accredited investors to increase their funding of any one or more business. It is not clear how these changes may benefit or detriment issuers founded or promoted by necessity or limited means entrepreneurs, but they do not directly or unambiguously address barriers to the use of U.S. securities crowdfunding by those entrepreneurs. To be most effective in clearing away impediments to the use of U.S. securities crowdfunding by those entrepreneurs, changes to law or

7 0 2

U.S. Securities Crowdfunding  207 agency rules governing securities crowdfunding should be undertaken with low-​ income entrepreneurs—​ especially necessity entrepreneurs—​ expressly in mind. In this regard, Yunus (2008, p. 24) advises that ‘[l]‌aws should be kept as simple as possible for low-​income people in particular, to motivate them to take the next steps to help themselves.’ In general, it seems prudent to suggest that legislative or regulatory changes should focus on simplifying the regulatory system and processes for use in financially and economically challenged settings. Productive, targeted, legislative, or regulatory action may not be forthcoming, however, at any time in the near future, if at all. A number of reasons exist for ostensible legislative and regulatory inaction on these issues. First, getting a majority of legislators to support change is always a complicated and expensive political issue (Buchanan & Tullock, 1965). Second, any innovation causes change and may be a source of systemic risk that could cause a risk-​averse legislator to hesitate in introducing or supporting new legislation (Ashta, 2017a). Third, the innovation may concern only a minority of legislators and their constituents, resulting in unlikely support from the majority in facilitating a legislative initiative unless it can produce some demonstrable direct or indirect value to its members (Ashta, 2017b). Regulatory paralysis also is likely, given the historical aversion of the SEC to facilitating securities crowdfunding (although that aversion has abated somewhat in recent years, and the emergence of digital entrepreneurship has had a role in that change). Potential State Regulatory Solutions In the absence of federal legislative or regulatory action, advocates of crowdfunding as a means of poverty reduction may consider turning to state securities regulators for help in making U.S. securities crowdfunding a viable option for entrepreneurs of limited means, including necessity entrepreneurs. A number of U.S. states have adopted legislation or regulatory schemes colloquially known as “intrastate crowdfunding.” Although offerings under these state-​based rules are geographically restricted and have other limitations that low-​income entrepreneurs may find undesirable, these intrastate securities offerings may represent a simpler, more cost-​ effective means of conducting a small, crowdfunded securities offering in or for the benefit of a particular community. Potential Market-​Based Solutions Until a legislative or regulatory solution is proposed and implemented (and on an ongoing basis), it may be strategically productive to organize, through industry trade associations, as well as the Small Business Administration, the Service Corps of Retired Executives (SCORE), the local Chamber of Commerce, local law school legal clinics, the bar, or

8 0 2

208  Joan MacLeod Heminway others, a focused educational and advisory campaign that helps low-​ income entrepreneurs assess whether a specific business or project is a good candidate for U.S. securities crowdfunding—​or, perhaps more saliently, to determine that securities crowdfunding is not an appropriate means of financing a particular venture. The campaign also could focus on identifying and describing funding alternatives for businesses and projects that are not well suited for securities crowdfunding. Education and advice on negotiating fees with funding portals, brokers, and other intermediaries also may provide encouragement and support. In many cases, an educational and advisory campaign could be accomplished as an enhancement or adjunct to an existing small business development program. Digital entrepreneurs, including funding portals, brokers, and other internet-​based intermediaries, could also play a role in encouraging and supporting crowdfunded offerings by necessity and other low-​income entrepreneurs. For example, by adopting sliding fee scales or other means of providing discounted services, digital entrepreneurs supplying offering platforms and other services to entrepreneurs of limited means can help encourage the use of crowdfunded offerings by these entrepreneurs. Lawyers, accountants, and others also can consider more closely tailoring the cost of their services to the financial resources of the entrepreneurs seeking them. Lawyers may even offer their services pro bono—​free of charge—​as a public service. Alternatively, a specialized market for digital platforms and other online service providers organized as social enterprises may develop to serve low-​income entrepreneurs, among other populations. Additionally, assuming that U.S. securities crowdfunding can be done cost-​effectively by low-​income entrepreneurs, combining it with pre-​sale or rewards-​based crowdfunding may hold promise for the generation of entrepreneurship opportunities and successes for those of modest means. For example, a low-​income entrepreneur promoting a low-​cost, valued service could offer or pre-​sell that service to investors while also offering them a small financial interest in the firm. The most likely candidate for this type of combined financing would be a fan-​funded venture (a business seeking capital from an enthusiastic public—​likely, its existing or prospective customers or clients), a business with strong local ties seeking funding through a community capital offering (what Cortese (2011) calls ‘locavesting’), or a social enterprise or other mission-​driven firm designed to generate altruistic or positive emotional, as well as financial, gain. The combined investor-​clients may see the offering as more appealing (and even less risky), enhancing the probability that they will invest, that the offering will be fully subscribed, and that the benefit of the offering will offset its cost. Woodard (2015) posits this combined crowdfunding scenario as a benefit to low-​income investors—​to help them rise from poverty.

9 0 2

U.S. Securities Crowdfunding  209

Conclusion The sharing economy’s internet-​based business finance offers the possibility of opening up new sources of funding for startups and small businesses. Crowdfunding’s digital platforms, as two-​way markets, have the capacity to enable businesses seeking funding to access larger and more diverse funding sources while offering funders a wider array of investment options. The offering of securities through crowdfunding further increases this array of investment options. The use of crowdfunding—​ and especially securities crowdfunding—​may be especially advantageous to low-​ income entrepreneurs (including, without limitation, necessity entrepreneurs) who typically have less access to capital funding sources than other business founders and promoters. Yet, digital entrepreneurs should understand that securities crowdfunding, as currently structured under U.S. law, is unlikely to be a comprehensive—​ or even entirely viable—​ solution to the challenges associated with funding business ventures founded or promoted by necessity entrepreneurs and other entrepreneurs of modest means. In fact, no single response to entrepreneurship originating out of poverty is likely to be sufficient. ‘Successful poverty alleviation requires a multi-​ pronged strategy’ (Coleman 2005, p. 187). Thoughtful modifications or accompaniments to current U.S. securities crowdfunding regulation (statutes or agency rules) may enable crowdfunded securities offerings to better serve the capital needs of necessity and other low-​ income entrepreneurs. Specifically, securities crowdfunding may play a more central role in low-​income entrepreneurship in the U.S. if (1) Congress makes properly targeted changes to the CROWDFUND Act or the SEC rethinks related agency rules to decrease regulatory costs, completion risks, or complexity or (2) interested industry participants and advisors, including digital entrepreneurs and legal counsel, explore and adopt innovative practices including or relating to securities crowdfunding that focus on entrepreneurs of limited means. Regardless, combining targeted legislative or regulatory solutions with, e.g., entrepreneur education—​potentially resulting in different kinds of disclosure and outreach customized for use in optimizing the funding of ventures started or promoted by necessity or other low-​income entrepreneurs—​represents an intriguing and realizable approach. Focused education and advice may help ensure that crowdfunding occupies an appropriate, even if not prominent, place in the financing of new and early stage low-​income entrepreneurial ventures across the U.S. In evaluating proposals, consideration should be given to the positive effects that may result from both financial wealth generation and the capacity for increasing other resources (including, prominently, employment). Ideally, solutions should enhance both financial and human capital. They

0 1 2

210  Joan MacLeod Heminway also should be highly customized. Poverty is a context-​based problem. The navigation of financially disadvantaged entrepreneurship may need to be structured differently in different situations or communities; not every low-​ income entrepreneur is the same. For example, necessity entrepreneurs may benefit from different approaches than opportunity entrepreneurs, and the government structures and political environments in some communities may be more supportive or hostile than those in others. Tailored solutions may provide incremental, but efficacious, ways forward. Regardless of the approach taken, there will be significant challenges. For example, proposals must focus on how to reduce cost and risk at the same time. Layered or combined solutions, while more complex, may have a greater chance of achieving both goals. Yet, they also may increase cost or risk. For instance, a combined securities/​rewards-​based crowdfunding solution generates additional complexity and may increase cost or risk. In addition, it will be important to remember that entrepreneurs with limited investment and capital-​raising capacity are not monolithic. Some may be necessity entrepreneurs; some may be passionate creators or innovators; some may be a bit of each. Some may be starting their ventures while unemployed; others may be engaging in entrepreneurship as a side business. Some may be experienced entrepreneurs; others may be engaging in their first entrepreneurial venture. Administrative burdens on low-​income individuals and families are generally high; however, the exact nature of these burdens may differ as among various low-​income entrepreneurs. Securities crowdfunding will only be a viable alternative for any individual type of low-​income entrepreneur if the burdens are proportional to the expected benefits. Resources other than money also will likely be at a premium. Low-​ income workers have limited time and energy to focus on matters other than their employment and personal lives. For example, necessity entrepreneurs may work more than one job or have challenging childcare or eldercare responsibilities. The 2020 global pandemic has focused attention on these and other issues affecting working families, including those of modest means. Under these circumstances, it may be difficult to engage low-​income entrepreneurs in education or training. Creative responses—​allowing for internet-​based instruction or obtaining grants that would allow participants to be paid for the time they spend in education or training modules—​may address these issues in part or for some. There may also be prejudice against necessity and other low-​income entrepreneurs in capital raising markets. On the other hand, there may be promotional benefits to leverage through focused attention to poverty alleviation through crowdfunded securities offerings involving entrepreneurs of limited means. Feasibility studies may help in determining how to best approach the creation of a successful, sustainable U.S. securities crowdfunding market for use by low-​ income entrepreneurs. Much is

12

U.S. Securities Crowdfunding  211 unknown about investor capacity and desires in the near term to fund entrepreneurship of any kind through securities crowdfunding. The creation of an unsuccessful or unsustainable securities crowdfunding market for low-​income entrepreneurs in the U.S. could be counterproductive to the encouragement of low-​income entrepreneurship. Finally, the comparative novelty and relatively short track record of CROWDFUND Act offerings in the U.S. present a particularly difficult challenge in funding the businesses of necessity and other financially disadvantaged entrepreneurs through securities crowdfunding. Although experience with this form of digital business finance is increasing, relatively few examples exist of successful offerings that a particular firm can use as a model, and the applicable law and regulation remains largely untested. Moreover, both the national economy and the regulatory system may continue to be in a state of flux for a significant period of time after the COVID-​19 crisis abates. Yet, these challenges ultimately present opportunities for, rather than true barriers to, the use of securities crowdfunding by low-​income entrepreneurs in the U.S. Crowdfunding’s promise to serve necessity entrepreneurs and other entrepreneurs of limited means provides motivation for action, especially in light of the increase in unemployment and other economic effects of the COVID-​19 pandemic. This chapter is designed to open doors to further inquiry and study into the effectual use of CROWDFUND Act offerings to promote and support low-​income entrepreneurship, enabling securities crowdfunding to realize its full potential in this important online business finance setting.

References 2017 SEC Government-​Business Forum on Small Business Capital Formation 2017, Ausin, TX, ‘Final report’, viewed 20 September 2020, www.sec.gov/​ files/​gbfor36.pdf. Acs, Z 2006, ‘How is entrepreneurship good for economic growth?’, Innovations 1(1), 97–​107. Acs, Z, Desai, S & Hessels, J 2008, ‘Entrepreneurship, economic development and Institutions’, Small Business Economics 31(3), 219–​234. Alexander, LT 2013, ‘Cyberfinancing for economic justice’, William & Mary Business Law Review 4(2), 309–​383. Ashford, R 2012, ‘Binary economics: an overview’, viewed 20 September 2020, https://​ssrn.com/​abstract=928752. Ashta, A 2017a, ‘Evolution of mobile banking regulations: a case study on legislator’s behavior’, Strategic Change: Briefings in Entrepreneurial Finance 26(1), 3–​20. Ashta A 2017b, ‘Why minority interests may be encouraged by majority regulation: a case study illustrated by slow money movement’, Strategic Change: Briefings in Entrepreneurial Finance 26(6), 617–​626. Belleflamme, P, Lambert, T & Schwienbacher, A 2014, ‘Crowdfunding: tapping the right crowd’, Journal of. Business Venturing 29(5), 585–​609.

2 1

212  Joan MacLeod Heminway Bradford, CS 2012, ‘Crowdfunding and the federal securities laws’, Columbia Business Law Review 2012(1), 1–​150. Buchanan, JM & Tullock, G 1965, The calculus of consent: logical foundations of constitutional democracy, Ann Arbor: University of Michigan Press (Orig. pub. 1962). Clayton, J 2017, ‘Remarks to the annual government-​ business forum on small business capital formation’, viewed 20 September 2020, www.sec.gov/ ​ n ews/ ​ p ublic- ​ s tatement/ ​ a nnual-​ g overnment-​ b usiness-​ forum-​small-​business-​capital-​formation. Coleman, I 2005, ‘Defending microfinance’, The Fletcher Forum of World Affairs 29 (1), 181–​188. Cortese, A 2011, Locavesting: the revolution in local investing and how to profit from it, John Wiley, Hoboken. Crowdfund Capital Advisors, LLC 2020, Regulation Crowdfunding Finishes Its Fourth Fiscal Year with Some Impressive Results, www.prweb.com/​releases/​ regulation_​crowdfunding_​finishes_​its_​fourth_​year_​with_​impressive_​results_​ crowdfund_​capital_​advisors_​says_​industry_​poised_​for_​significant_​growth/​ prweb17178111.htm. Dyal-​Chand, R & Rowan, JV 2014, ‘Developing capabilities, not entrepreneurs: a new theory for community economic development’, Hofstra Law Review 42(3), 839–​903. Fleissner, C 2018, ‘Inclusive capitalism based on binary economics and positive international human rights in the age of artificial intelligence’, Washington University Global Studies Law Review 17(1), 201–​244. Green, JM & Coyle, JF 2016, ‘Crowdfunding and the not-​so-​safe SAFE’, Virginia Law Review Online 102(8), 168–​182. Gries, T & Naudé, W 2011, ‘Entrepreneurship and human development: a capability approach’, Journal of Public Economics 95(3–​4), 216–​224. Hamermesh, LA & Tsoflias, PI 2013, ‘An introduction to the federalist society’s panelist discussion titled ‘deregulating the markets: the jobs act’, Delaware Journal of Corporate Law 38(2), 453–​516. Heminway, JM & Hoffman, SR 2011, ‘Proceed at your peril: crowdfunding and the securities act of 1933’, Tennessee Law Review 78(4), 879–​972. Heminway, JM 2013–​2014, ‘How congress killed investment crowdfunding: a tale of political pressure, hasty decisions, and inexpert judgments that begs for a happy ending’, Kentucky Law Journal 102(4), 865–​889. Hwang, V, Desai, S & Baird, R 2019, Access to capital for entrepreneurs: removing barriers, Kansas City, Ewing Marion Kauffman Foundation, viewed 20 September 2020, www.kauffman.org/​wp-​content/​uploads/​2019/​12/​ CapitalReport_​042519.pdf. Kobe, K & Schwinn, R 2018, ‘Small Business GDP 1998–​2014’, viewed 20 September 2020, https://​cdn.advocacy.sba.gov/​wp-​content/​uploads/​2018/​12/​ 21060437/​Small-​Business-​GDP-​1998-​2014.pdf. Laney, K, Bowles, J & Hilliard, T 2013, ‘Launching low-​income entrepreneurs’, viewed 20 September 2020, https://​nycfuture.org/​pdf/​Launching-​Low-​Income-​ Entrepreneurs.pdf. Lee, PH 2016, ‘Access to capital or just more blues? Issuer decision-​making post SEC crowdfunding regulation’, Transactions: Tennessee Journal of Business Law 18(1), 19–​79.

3 1 2

U.S. Securities Crowdfunding  213 Nikolaev, BN, Boudreaux, CJ & Palich, L 2018, ‘Cross-​country determinants of early-​stage necessity and opportunity-​motivated entrepreneurship: accounting for model uncertainty’, Journal of Small Business Management 56(S1), 243–​280. Oranburg, SC 2015, ‘Bridgefunding: crowdfunding and the market for entrepreneurial finance’, Cornell Journal of Law & Public Policy 25(2), 397–​452. Piwowar, MS 2017, ‘Remarks to the sec government-​business forum on small business capital formation’, viewed 20 September 2020, www.sec.gov/​news/​ public-​statement/​piwowar-​2017-​11-​30. Pollman, E & Barry, JM 2017, ‘Regulatory entrepreneurship’, Southern California Law Review 90(3), 383–​448. Rezin, A 2014, ‘Study: businesses in low-​ income, majority minority areas struggle to access credit’, viewed 20 September 2020, http://​ p r o g r e s s i l l i n o i s . c o m / ​ q u i c k - ​ h i t s / ​ c o n t e n t / ​ 2 0 1 4 / ​ 0 8 / ​ 2 2 / ​ s t u d y -​ businesses-​low-​income-​majority-​minority-​areas-​struggle-​access-​cr. U.S. Securities and Exchange Commission 2017, Crowdfunding, viewed 17 March. 2020, www.sec.gov/​rules/​proposed/​2013/​33-​9470.pdf. U.S. Securities and Exchange Commission 2019, Report to the Commission: Regulation Crowdfunding, viewed 20 September 2020, www.sec.gov/​files/​ regulation-​crowdfunding-​2019_​0.pdf. U.S. Securities and Exchange Commission 2020a, Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in Private Markets, viewed 20 September 2020, www.sec.gov/​rules/​proposed/​ 2020/​33-​10763.pdf. U.S. Securities and Exchange Commission 2020b, SEC Provides Temporary, Conditional Relief to Allow Small Businesses to Pursue Expedited Crowdfunding Offerings [Press release 2020-​ 101], viewed 20 September 2020, www.sec.gov/​news/​press-​release/​2020-​101. U.S. Securities and Exchange Commission 2020c, SEC Harmonizes and Improves “Patchwork” Exempt Offering Framework [Press release 2020-​273], viewed 18 November 2020, www.sec.gov/​news/​press-​release/​2020-​273. Woodard, J 2015, ‘Could equity crowdfunding be a pathway from poverty?’, ICTworks, viewed 20 September 2020, www.ictworks.org/​2015/​12/​18/​ could-​equity-​crowdfunding-​be-​a-​pathway-​from-​poverty. Yunus, M 2008, ‘How legal steps can help to pave the way to ending poverty’, Human Rights 35(1), 22–​24.

Bills, Statutes, Regulations Annual Government-​Business Forum on Capital Formation 1980, Pub. L. No. 96–​477, 94 Stat. 2292 § 503 (codified at 15 U.S.C. 80c-​1) Capital Raising Online While Deterring Fraud and Unethical Non-​Disclosure Act 2012, Pub. L. No. 112–​116, 126 Stat. 306 §§ 301–​305 (codified as amended in scattered sections of 12 U.S.C. and 15 U.S.C.). Crowdfunding Amendments Act 2018, S. 3213, 115th Congress. Crowdfunding Enhancement Act 2017, S. 1031, 115th Congress. Regulation Crowdfunding 2016, 17 C.F.R. §§ 227.100–​227.503.

4 1 2

Index

Note: Page numbers in bold refers to material in tables, in italics to figures agriculture, environmental degradation and 114 Airbnb 2, 5; consumption costs 94; Court of Justice of EU judgement 181; Danish regulation 95; information society services 186–​7; regional economies in Denmark see regional economies (Airbnb); regional tourism 19; socioeconomic value of 105–​6; tourist destination effects 91–​2; traditional accommodation vs. 93–​4; transaction costs 94; triadic business models 62; see also tourism amateur entrepreneurs 190 Annual Government-​Business Forum on Capital Formation (1980) 206 Aparico 95 Apple 5 asset utilization, coworking space 164 autonomy: entrepreneurship 42; lack of 43; regulation 188 B2B (business-​to-​business) 53, 65, 67, 92; dyadic structure 62 B2C (business-​to-​consumer) 53, 63–​5, 67, 92; value creation 63–​4; value sharing 66 barrier mitigation, P2P 37 barrier to entrepreneurship mitigation, P2P 41–​2 bibliographic coupling analysis 61, 61 bibliometrics 57; sharing economy business models 59–​61, 60, 61 big platforms, entrepreneurship and 5–​6 BlaBlaCar 2 broad markets 46–​7

businesses, digital see digital businesses business failure 204 business models 53; coworking space 162–​3; digital platform 24–​5; disruptive activities of 4–​5; platform-​based sharing economy 17–​18; regional sharing economy entrepreneurs 21, 24–​5; scalability of 30–​1 business start-​up, regional context 19 buy-​and-​sell platforms 45 C2C (consumer to consumer) business model 92 Capital Raising Online While Deterring Fraud and Unethical Non-​Disclosure Act (2012) see CROWDFUND carsharing business models: B2C 64; regional sharing-​economy entrepreneurship 21 Catalant 146, 147 CJEU (Court of Justice of the EU) 181, 186 click and mortar entrepreneurship 3 co-​citation analysis 60–​1, 61 cognitive perspective, P2P 37 collaborative consumption economy 74 collaborative lifestyles 73 commercial skills, P2P 40 commoners business models 64 communal places, coworking spaces 170–​1 communities 56; building in coworking spaces 171, 172 competitive platforms 30

5 1 2

Index  215 consensus-​based decision-​making process, EkoHarita 119 consumer acquisition 190–​1 consumer-​to-​consumer (C2C) business model 92 consumption costs, Airbnb 94 content production, EkoHarita 117–​18 contextural role, financial disadvantaged entrepreneurs 197–​9 co-​occurrence analysis 59, 60 cost reduction, P2P 37 Couchsharing 2 Court of Justice of the EU (CJEU) 181, 186 coverage, EkoHarita 117–​18 Covid-​19 crisis 34 coworking spaces (CWS) 128–​9, 130–​1, 132, 160–​78; benefits 163–​4, 169, 169–​73; data analysis 166; data collection 166; definition 160, 161; human capital 134, 135, 138–​9, 139; innovation fostering 136, 136–​40; innovation sources 133–​4, 134; intellectual property 134, 135; knowledge sources 133, 136–​8; literature review 161–​5; research design 165–​6, 167–​8; shared economies 142, 161–​3; technology sourcing 133, 136–​7; Turkey 164–​5; see also open innovation CROWDFUND 195–​6, 200–​1, 202–​3, 204, 211; changes to 205–​6 Crowdfund Capital Advisors 200 crowdfunding: definition 199; financial disadvantaged entrepreneurs 199–​202; regional sharing-​economy entrepreneurship 21; securities 209; see also U. S. securities crowdfunding Crowdfunding Amendments Act (2018) 205 Crowdfunding Enhancement Act (2017) 205 CWS see coworking spaces (CWS) data access, service providers 189 demand approach 101 Denmark see regional economies (Airbnb) deprived people employment 40 descriptive analysis 59–​61 digital businesses: new creation 4; theoretical underpinning 54–​5

digital entrepreneurship 183–​4; business model 106; definition 34; EkoHarita 111–​12; non-​digital entrepreneurship vs. 18; sharing economy and 3, 93–​6; social issues see EkoHarita; transition to 3–​4; Turkey 114–​15; see also digital subsistence entrepreneurs digital platforms: business model 24–​5; sharing economy and 92 digital social entrepreneurship see EkoHarita digital subsistence entrepreneurs 34–​61; P2P 37, 38–​41; resurgence of 35–​7; transition status 40–​1 digital technology 3–​4 disruptive activities 4–​5 distinguishing characteristics, business models 67 dyadic business models 62, 66 e-​commerce 74–​5; characteristics of 76; definition 72, 74, 76; identified platforms 79, 81; sharing economy vs. 81–​2; social commerce vs. 72 economic value: P2P 37; regional economies (Airbnb) 104, 105 economies: collaborative consumption economy 74; gig economy see gig economy; informal economies, disappearance 35–​6; local communities/​economies 93, 95, 99; on-​demand economies 47, 74; peer economy 74; platform-​based sharing economy see platform-​ based sharing economy; regional economies see regional economies (Airbnb); sharing economy see sharing economy; urban economies see urban economies economy platform sharing, EkoHarita 110–​11 EkoHarita 109–​26; aim development 115–​16; coverage 117–​18; data collection 112–​14, 113; development 116; digital entrepreneurship 111–​12; driving values 116–​17; economy platform sharing 110–​11; environmental degradation and 114; founding principles 121–​2; information & knowledge exchange 118; literature reviews 110–​12; media and 114–​15; motivation 117; problem

6 1 2

216 Index identification 115–​16; sustainability 122; work, organisation and governance 118–​19 empirical research 19–​20 employment: deprived people 40; regional economies (Airbnb) 103–​4; regional sharing-​economy entrepreneurship 21; see also unemployment push entrepreneurship: big platforms and 5–​6; definition of 72; digital see digital entrepreneurship; digital subsistence entrepreneurs; economy responsiveness 197; exclusion by poverty 46; motivation of 19, 22–​3, 28; platform-​based sharing economy 18–​19; push/​pull of 146–​7; sharing economy and 82–​3; sharing economy vs. 84; social exchange and 84 environmental degradation 114 eOfis 165 European Commission 181 European Economic Area (EEA) 184 European Parliament 181 European Union (EU): e-​commerce law 183–​4; legal-​regulatory framework 181–​94 exclusive platforms, gig economy 147–​8 expansion 25 expenditure reduction, coworking 163 exploitation: P2P 41; sharing economy 4 external startup financing 199 Facebook 5; buy-​and-​sell groups 36 fan-​funded ventures 208 financial issues: disadvantaged entrepreneurs 197–​9; gig economies 151–​2; regional sharing economy entrepreneurs 24 financial resources: lack of 45–​6; P2P 41 for-​profit monetary exchange 82 founding principles, EkoHarita 121–​2 fraud 204 functional benefits, coworking spaces 169 Getaround 2 gig economy 74, 145–​59; definitions 147–​8; exclusive platforms 147–​8; methodology 148–​9; need and necessity 149–​51;

networking 151–​2; new careers 152–​3; new money 149; potential entrepreneurship 153–​4; regulation of 187–​8; worker interest 154 Global Coworking Survey (2019) 163 global economic crisis 161, 162 global players 15 Google 5 governance, EkoHarita 118–​19 Graphite 146, 147 grounded theory thinking 21 hierarchical organizations 40 high-​status platforms 147 HomeAway 2 human capital, coworking spaces 134, 135, 138–​9, 139 hybrid consumers 190 hybrid entrepreneurs 146 hybrid sellers 190 hygiene standards introduction 35 Impact Hub 165 inclusive entrepreneurial ecosystems 46 income, regional economies (Airbnb) 103–​4, 104 independent business promotion 44 informal economies, disappearance 35–​6 information exchange, EkoHarita 118 information society services (ISS) 184, 189; classification 185–​6; innovation 43; coworking spaces 136, 136–​40; open see open innovation Instacart 147 institutional barriers, P2P 37 intellectual property protection 134, 135 interactions, coworking space 162 internal market rule 185 internet-​of-​things (IoT) 29–​30, 160 internet providers 94–​5 internet-​specific legislation 115 interregional macroeconomic model 100–​2 IoT (internet-​of-​things) 29–​30, 160 ISS see information society services (ISS) Kamara 165 Kickstarter 2 Kiva 2 Klarna 15

7 1 2

Index  217 knowledge: coworking spaces 133, 136–​8; exchange in EkoHarita 118; open innovation and 140 Kolektif House 165 legislation, P2P 37 length of stay, Airbnb 96, 97, 99 licensing models 25 life satisfaction, P2P 39–​40, 41 LiquidSpace 161 local communities/​economies, Airbnb 93, 95, 99 Love Home Swap 2 low-​income entrepreneurs 198; securities crowdfunding 209; startup capital 196 Lyft 2, 47 Makerspace 2 mandatory precontractual information 190–​1 market opportunities 23 market orientations 56 market redistribution 73 market structure 56 matchmakers 63 media, EkoHarita and 114–​15 microfranchising 47 minimum wages, gig economy 145 mission-​driven platforms 63 motivation: EkoHarita 117; entrepreneurship 22–​3 multinationals 2 multisided platforms 62 narrow skillsets 42 necessity entrepreneurship 28, 146–​7, 197–​8 need and necessity, gig economy 149–​51, 154 networking 151; coworking space 163–​4; coworking spaces 171, 172; exploitation 17; gig economy 151–​2, 154 new careers 152–​3 new employees 161 new money 149, 154 new occupations 154 new technology 55–​6 non-​digital entrepreneurship, digital entrepreneurship vs. 18 non-​profit business models 20 on-​demand economies 47, 74 on-​demand platforms 44, 146, 151

open innovation 129–​31; data analysis 132–​3; data collection 131–​2; extent of 133–​6; refined model 140–​2; research methodology 131; sources of 133–​4, 134; theoretical framework 131; see also coworking spaces (CWS) opportunity-​driven mindset 23 opportunity entrepreneurship 95, 146–​7; Airbnb as 95; motivation 28 organisation, EkoHarita 118–​19 P2B (platform-​to-​business) regulation 188–​90 P2P (peer-​to-​peer) 1, 62–​3, 67; barrier to entrepreneurship mitigation 41–​2; classification 110; digital subsistence entrepreneurs 37, 38–​41; economiic benefits 37; empowerment 34; life satisfaction 39–​40; limitations 41–​3; opportunity range 36; real entrepreneurs 42–​3; relational benefits 38; symbolic benefits 39; technology & software 28; triadic structure 61–​2; value capturing 63; value chain 110; value sharing 66 peer economy 74 permaculture principles, EkoHarita 116 personal income, state benefit 103 PiggyBee 2 platform-​based sharing economy: business models 17–​18; entrepreneurship 18–​19 platform models 15 platform ownership 30 Platform-​to-​Business (P2B) Regulations 2019/​1150 184 polyadic business models 66 potential clients, gig economies 152 potential entrepreneurship, gig economy 153–​4 poverty: P2P 34; relief and entrepreneurship 198 private personal income 100 product renting/​sharing 73 produsage 110 professional relationships 23 profitable markets 46–​7 prohibition of unfair practices 191 pro-​social labelling 82 public procurement 47 pure play entrepreneurs 3–​4 push/​pull of entrepreneurship 146–​7

8 1 2

218 Index recreational benefits, coworking spaces 170–​1 regional context, business start-​up 19 regional economies (Airbnb) 91–​108, 98, 99; data collection 96–​9; data processin; 96–​9; data source 96–​7; data transformation 97–​9; impact evaluation 99–​102; urban economies vs. 102, 102–​5, 103 regional-​national-​global scales 25, 28 regional sharing economy entrepreneurs 15–​32, 26–​9; business model 24–​5; business venture 22–​4; data analysis 21–​2; definition 16; empirical analysis 22–​8; empirical research 19–​20; literature review 17–​20; managerial implications 29–​31; methodology 21–​2, 22; research design 20–​1; sampling process 20–​1 regional tourism, Airbnb 19 Regus 165 relational benefits, P2P 38 relational perspective, P2P 37 renting income 100 replicative businesses 43 resource sharing, B2B 65 ride-​hailing platforms 36 risk levels, gig economy 145 risk society 146 Rotating Savings Credit Associations (ROSCAs) 45–​6 SAFEs (Simple Agreements for Future Equity) 204 safety standards introduction 35 SAM-​K/​LINE® (LINE) model 100–​2 SCORE (Service Corps of Retired Executives) 207 search procedures, sharing economy business models 57–​8 SEC Government-​Business Forum on Small Business Capital Formation (2017) 206 secretarial front desk spaces 170 securities crowdfunding 209 self-​employment 145; necessity of 36; platform use 19 Servcorp 165 Service Corps of Retired Executives (SCORE) 207 service providers: data access 189; regulation and 187 shared infrastructure providers 64 share washing 82

sharing commerce 74–​5; definition 75; identified platforms 81 sharing economy 72–​87, 106; characteristics of 75, 76; components of 195; coworking spaces and 142, 161–​3; data analysis 78; data collection 76–​7, 77; definition lack 182; definitions 2, 55, 75, 76; digital entrepreneurship and 3, 93–​6; digital platforms and 92; e-​ commerce vs. 81–​2; EkoHarita see EkoHarita; entrepreneurship and 82–​3; entrepreneurship vs. 84; evolution of 73–​4; exploitation of 4; governance of 184–​91; identified platforms 79; platform-​ based see platform-​based sharing economy; regulation 181–​3; social commerce and 82; synonyms for 74; theoretical underpinning 55–​6; value of 52 sharing economy business models 52–​71; bibliometric analysis 59–​61, 60, 61; content analysis 61–​2; descriptive analysis 59–​61; samples 57–​8; search procedures 57–​8; theoretical underpinning 54–​6; three-​phase analysis 58–​9 sharing economy entrepreneurs 25, 28; regional see regional sharing economy entrepreneurs sharing platforms 44–​5; control of underlying services 187 Simple Agreements for Future Equity (SAFEs) 204 skill broadening 151 sliding fee scales 208 Small Business Administration 207 small business capital 199 Small Business Investment Incentive Act (1980) 206 social capital, P2P 37 social commerce 74–​5; characteristics of 76; definition 72, 76; e-​commerce vs. 72; identified platforms 79, 81; sharing economy and 82 social interactions: coworking space 163–​4; coworking spaces 171; entrepreneurship and 84; erosion of 36 social issues, digital entrepreneurship see EkoHarita social service providers 21

9 1 2

Index  219 socio-​economic theory 198 software, P2P 28 Spacecubed 161 stable working environments 41 startup capital 196 station-​based business models 64–​5 structural perspective, P2P 37 structure questionnaires 20–​1 students, innovation source 138 Superprof 2 sustainability, EkoHarita 122 symbolic benefits, P2P 39 TaskRabbit 2, 147 technological advances 1 technology: coworking space 133, 136–​7, 163; open innovation and 140; P2P 28; regional sharing economy entrepreneurs 24–​5; sourcing 133, 136–​7; support 163 terminology: ambivalence of 182–​3; digital entrepreneurship 183–​4 three-​phase analysis, sharing economy 58–​9 TopTal 146, 147 tourism 91–​2; drivers for 93; spending 97; see also Airbnb traditional accommodation, Airbnb vs. 93–​4 training programs, coworking spaces 172 transaction costs: Airbnb 94; reduction of 5 transportation lack 42 triadic business models 61–​2, 66 Turkey: coworking spaces 164–​5; digital entrepreneurship 114–​15; internet-​specific legislation 115; see also EkoHarita Turo 2 two-​sided markets 17 Uber 2, 5; autonomy 42; Court of Justice of EU judgement 181;

EU regulations 186; on-​demand platforms 47; triadic business models 62 underutilized assets 62–​3 unemployment push 146; extended periods of 150–​1 unfair practice prohibition 191 United Kingdom (UK) Government, independent business promotion 44 urban economies: peripheral economies vs. 102–​5; regional economies vs. 102, 103 Urbano 95 user-​friendly solutions, sharing economy 55–​6 user-​generated posts 80, 80 U.S. Securities and Exchange Commission 196–​7 U.S. securities crowdfunding 195–​216; barriers to 202–​3; expense of 203; federal legislation 205–​7; market-​based solutions 207–​8; offering risk 203–​4; potential state regulatory solutions 207; regulatory complexity 204–​5; regulatory solutions 205–​7; research methods 196–​7 value capture 67; B2B 65; P2P 63 value chain; digital technology 3–​4; P2P 110 value-​creation 17, 67; B2B 65; B2C 63–​4 value-​distribution 17 value propositions 63, 67 value sharing, B2C 66 volunteers, EkoHarita 118–​19 Web 2.0-​based social media 1, 6 welfare providers 21 work, EkoHarita 118–​19 Workhaus 165 working alone and together 161 Workinton 165

0 2