Digital Entrepreneurship and the Sharing Economy

Evgueni Vinogradov, Birgit Leick, Djamchid Assadi

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000409239
• Edition: 1
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

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 interested to researchers, academics, and students in the field of business and entrepreneurship, with a special focus on digital entrepreneurship.

Part I

Conceptualisation of Digital Entrepreneurship and Sharing Economy

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, 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.

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 creati...

Table of contents

• Cover
• Half Title
• Series Information
• Title Page
• Copyright Page
• Dedication page
• Table of Contents
• List of Figures
• List of Tables
• Notes on Contributors
• Foreword
• Introduction
• Part I Conceptualisation of Digital Entrepreneurship and Sharing Economy
• Part II Digital Entrepreneurship and Sharing Economy: Various Cases and Contexts
• Part III Governance and Legal Structure
• Index