& Tuunainen: Four Models of Sharing Economy Platforms Flashcards
(26 cards)
(Article: Four Models of Sharing Economy Platforms)
What is the paper about introducing the Four Sharing Economy Models?
- Sharing economy platforms have fostered competition and redefined industry boundaries in a range of businesses
- Competitive advantage because of how they are doing business -> new ways to combine old organisational & market mechanisms to coordinate platform participation
o Business boundaries (internal vs external) became increasingly fluid -> exploit fluidity as strategic asset to coordinate & collaborate without formal organsisation
Model can help other businesses to understand SE characteristics & respond strategically
(Article: Four Models of Sharing Economy Platforms)
What does Multi-sided platforms (MSPs) mean?
Multi-sided platforms (MSPs): centred on facilitating interactions between two or more parties, e.g. eBay sharing economy platforms are a form of MSPs, but facilitate rental & sharing instead of buying
(Article: Four Models of Sharing Economy Platforms)
What are the key Attributes: confluence of three broader socio-economic developments?
Access over ownership, Peer-to-peer economy, Allocation of idle resources
-> Enabled by diffusion of digital technologies; intermediaries mitigate risks, build trust & lower transaction costs
(Article: Four Models of Sharing Economy Platforms)
Key Attributes: confluence of three broader socio-economic developments: What is meant by Access over ownership?
- Access over ownership: on-demand economy - shift from primacy of buying goods towards buying access to goods
(Article: Four Models of Sharing Economy Platforms)
Key Attributes: confluence of three broader socio-economic developments: What is meant by Peer-to-peer economy?
- Peer-to-peer economy: platforms mediate transactions among peers coordinated by trust & reputation
(Article: Four Models of Sharing Economy Platforms)
Key Attributes: confluence of three broader socio-economic developments: What is meant by Allocation of idle resources?
- Allocation of idle resources: collaborative consumption – individuals share privately owned resources against a fee
(Article: Four Models of Sharing Economy Platforms)
Key Attributes: confluence of three broader socio-economic developments: What is meant by Allocation of idle resources?
- Allocation of idle resources: collaborative consumption – individuals share privately owned resources against a fee
(Article: Four Models of Sharing Economy Platforms)
What is the Challenge for Incumbent Firms?
- Sharing economy platforms don’t need traditional industry dynamics network effects are at the core of sharing economy business models and value propositions
- Incumbent firms react to competition from sharing economy platforms in three main ways: (1) through acquisitions of SE firms, (2) though collaboration or (3) through competition (create their own models)
- Main issue: sharing economy platforms face less regulations than incumbent firms, which is seen as unfair put incumbent firms at a competitive disadvantage through irregular/illegal means
(Article: Four Models of Sharing Economy Platforms)
What is Boundary fluidity: ?
Boundary fluidity: loosening of formerly strict distinctions in all organizational fields, contexts and domains -> SE business exploit it (competitive advantage) & make it easy for members to casually participate in value-creation
* Organisational coordination mechanisms used to be applied only within the boundaries of a formal firm, now they can be applied beyond to coordinate individuals participating in SE platforms
* Main issue: platform owners tend to treat their supply-side participants unethically exploited, left with most of the risk
(Article: Four Models of Sharing Economy Platforms)
What are the Organisational Coordination Mechanisms ?
-> Labour is divided into subtasks that have to be coordinated and put together, through:
- Mutual adjustment: informal communication between people conducting interdependent work
- Direct supervision: an individual oversees the work of others & instructs interdependent workers
- Standardisation of work processes: work content is specified in rules & routines
- Standardisation of output: clarified results of different work; actions are not prescribed
- Standardisation of skills & knowledge: standardised training & education
- Standardisation of norms: common values & beliefs
(Article: Four Models of Sharing Economy Platforms)
Market Coordination Mechanism: Price schemes??
Involves different pricing schemes that incentivize sharing or renting
Price system: either based on supply & demand, cost of service provision or as compensation to the service provider
(Article: Four Models of Sharing Economy Platforms)
Four sharing economy models:
Chaperones, FRachieser, Garderner, principals (siehe article)
(Article: Four Models of Sharing Economy Platforms)
Four sharing economy models: Tight vs loose control?
Tight control: platform owner specifies, standardises and monitors all those aspects of platform participation that can be used to keep the costs of transacting low
Loose control: platform owner defines only minimum standards or guiding principles; support activities
(Article: Four Models of Sharing Economy Platforms)
Four sharing economy models: High vs Low rivalry?
High rivalry: platform owner prices the service dynamically based on supply & demand algorithm stimulates participants to contribute more effort to increase service quality & differentiation to maximise their profits
Low rivalry: low when prices, if there are any, are based on compensating or sharing the costs of the supply side
(Article: Four Models of Sharing Economy Platforms)
Four sharing economy models: High vs Low rivalry
High rivalry: platform owner prices the service dynamically based on supply & demand algorithm stimulates participants to contribute more effort to increase service quality & differentiation to maximise their profits
Low rivalry: low when prices, if there are any, are based on compensating or sharing the costs of the supply side
(Article: Four Models of Sharing Economy Platforms)
Franchiser Model:
Tight Control, High Rivalry
Franchisers: exert tight control over platform participants through standardised procedures & contracts; foster high rivalry among participants by prescribing service prices based on secret supply & demand algorithms
Value proposition: low cost & efficiency gains
Example: Uber – dictates the fare for the ride & collects a commission fee; competes with taxi companies
(Article: Four Models of Sharing Economy Platforms)
Chaperones Model:
Loose Control, High Rivalry
Chaperones: exert loose control over participants (free to offer what they want), owners just set norms, community values & rewards; high rivalry between participants through price recommendations based on supply & demand, but participants are allowed to set their own prices
Value proposition: encourages service differentiation of supply-side participants
Example: Airbnb – treats hosts like community members (norms & values), but makes them compete like self-employed service providers
(Article: Four Models of Sharing Economy Platforms)
Principals Model:
Tight Control, Low Rivalry
Principals: exert tight control by dictating the terms of short-term performance-based contracts, standardised rules & monitoring; low rivalry through charging predefined, stable prices for services (e.g. price is determined by therapist’s qualifications)
Value proposition: compete on lower costs & risk mitigation of opportunistic behaviour
Example: Handy – standardisation & control ensure quality; pricing scheme rewards quality work with higher compensation
(Article: Four Models of Sharing Economy Platforms)
Gardener Model:
Loose Control, Low Rivalry
Gardeners: exert low control & low rivalry through prices based on predefined, stable categories; participants often don’t earn profits but share costs
Value proposition: self-organisation & community building
Example: Couchsurfing
(Article: Four Models of Sharing Economy Platforms)
lessons learned for incumbent firms: : What meant by Understanding the Strategic Intent of Sharing Economy Platforms?
- Incumbent firms need to understand how sharing/renting is facilitated, how control is exerted & how rivalry is promoted -> model helps the analysis, so strategic intent becomes clear
- Platforms may offer different services based on different models & may switch from one model to another
(Article: Four Models of Sharing Economy Platforms)
lessons learned for incumbent firms: : What meant by Understanding the Strategic Intent of Sharing Economy Platforms?
- Incumbent firms need to understand how sharing/renting is facilitated, how control is exerted & how rivalry is promoted -> model helps the analysis, so strategic intent becomes clear
- Platforms may offer different services based on different models & may switch from one model to another
(Article: Four Models of Sharing Economy Platforms)
lessons learned for incumbent firms: : What meant by Complement Your Product Portfolio with Services?
Complement Your Product Portfolio with Services
* Complementing existing product portfolios with related services is an effective countermeasure against SE competitors servitisation of private idle resources is what SE firms do
(Article: Four Models of Sharing Economy Platforms)
lessons learned for incumbent firms: : What meant by Access New Modes of Innovating?
Access New Modes of Innovating
* Incumbent firms can exploit boundary fluidity to gain access to new sources of innovation can set up platforms for engaging outsiders in open innovation and crowdsourcing
o Idle resources being harnessed are the creativity, ingenuity and time of private individuals
(Article: Four Models of Sharing Economy Platforms)
lessons learned for incumbent firms: : What meant by Engage Consumers in Value Creation?
Engage Consumers in Value Creation
* Consider how to involve consumers or clients more closely by increasing the value of network effects
* Requires a shift in strategic intent, away from competing based on the ownership of unique assets, to generating value based on user participation and community engagement
