Critical Success Factors for Peer-To-Peer Platforms in the Sharing Economy

Critical Success Factors for Peer-to-Peer platforms in the Sharing Economy

Thesis MSc. Business Administration Entrepreneurship & Innovation

Author Tim de Jong Student number 10599185 Date 04-11-2015 Version Final Supervisor dr. W. van der Aa

With the limited resources we have on the earth, the next step for conservation is instead of just buying stuff, sharing stuff

Zilok CEO

On the whole, you find wealth much more in use than in ownership

Aristotle

Statement of originality This document is written by Student Tim de Jong who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

Contents Acknowledgements ...... 6 Abstract ...... 7 1. Introduction ...... 8 1.1 Environmental degradation ...... 8 1.2 Sharing Economy - The Resource saving economy ...... 8 1.3 Theoretical relevance ...... 10 1.4 Managerial relevance ...... 11 1.5 Structure ...... 11 2. Theoretical background ...... 12 2.1 Collaborative economy ...... 12 2.2 Collaborative Consumption ...... 13 2.3 Sharing Economy ...... 14 2.3.1 Sharing ...... 15 2.3.2 The rise of the sharing economy ...... 15 2.4 The critical success factors ...... 16 2.4.2 Trust between strangers ...... 18 2.4.3 Idling capacity ...... 19 2.4.4 Critical mass ...... 20 3. Conceptual model ...... 22 3.1 Literature findings ...... 23 3.2 The conceptual model ...... 24 4. Methods ...... 27 4.1 Research approach ...... 27 4.2 Research design ...... 27 4.3 Research method ...... 28 4.4 Research strategy ...... 28 4.5 Data collection ...... 29 4.5.1 Research sample ...... 29 4.5.2 Interview ...... 30 4.5.3 Interview guide ...... 31 4.5.4 Location ...... 31 4.6 Data analysis...... 31 4.6.1 Transcribing ...... 31 4.6.2 Coding ...... 31 5. Interview results ...... 32

5.1 The Critical Success Factors ...... 33 5.1.1 Belief in Commons ...... 33 5.1.2 Trust between strangers ...... 34 5.1.3 Idling capacity ...... 35 5.1.4 Critical mass ...... 36 5.1.5 Additional CSF’s ...... 38 5.2 Relation between CSF’s ...... 40 5.3 Extra results ...... 40 6. Discussion ...... 42 6.1 The Critical Success Factors ...... 42 6.1.1 The four CSF’s ...... 43 6.1.2 Additional CSF’s ...... 47 6.2 The relation between the CSF’s and revision of the conceptual model ...... 49 7. Limitations and implications ...... 51 7.1 Limitations...... 51 7.2 Theoretical and managerial implications ...... 52 7.2.1 Theoretical implications ...... 52 7.2.2 Managerial implications ...... 52 8. Conclusion & future research ...... 54 8.1 Further research ...... 55 9. References ...... 58 10. Appendices ...... 64 Appendix A – E-mail to potential interviewees ...... 64 Appendix B – Interview guide ...... 65 Appendix C - Coding scheme ...... 67

Figures Figure one: Conceptual model ...... 26 Figure two: The printed cards ...... 30 Figure three: The revised model ...... 50 Tables Table one: The research sample ...... 29 Table two: Codenames of the participants ...... 32

Sharing the appreciation

Acknowledgements My thanks go to everybody who helped me in the process of writing this thesis. First of all I would like to thank my supervisor Wietze van der Aa for his guidance throughout the process. He supported me in giving direction to the research and providing valuable feedback where needed. Furthermore I would like to thank all the interviewees that were willing to participate in this study, without them my research would not have been possible. Lastly I would like to thank my family for their endless support and encouragement.

Sharing the study

Abstract The sharing economy is changing the way we do business. Instead of buying everything we need, we share and use assets from others. The sharing economy is the peer-to-peer sharing of goods, service, transportation, space and money at speed and scale that were unimaginable a decade ago. The last couple of years it experiences a rapid growth and will continue to grow even more the next decade, and thereby create enormous entrepreneurial opportunities. The goal of this study is to determine the critical success factors for peer to peer sharing platforms in the sharing economy to provide start-up organizations that want to start in the sharing economy with crucial information of the factors they should focus on. The critical success factors are first derived from the literature and thereafter tested during a qualitative research. Supplementary additional critical success factors are tried to be found during the research. The research consisted of ten semi-structured interviews with managers and owners of peer to peer sharing platforms. Results shows that the platforms are facing five critical success factors: critical mass; trust in the platform; potential idling capacity; price/value ratio; and convenience. The analysis of the qualitative data revealed that if the platform reaches its critical mass, it is successful in that specific region. However, it can only reach the critical mass if it has fulfilled all other critical success factors. This research can be used as a guideline for peer to peer startups in the sharing economy.

Keywords: Sharing economy, peer to peer platform, critical success factor, critical mass.

1. Introduction

1.1 Environmental degradation Our consumption has major impact on the environment and its resources. Since 1980 one third of the planets resources have been consumed and every year a tropical rain forest of the size of Greece, more than 250 million acres, gets destroyed. 35 % of all mangroves in the world have been destroyed and 20 % of the coral reef has been lost. Water withdrawals from lakes and rivers have been doubled the last 40 years (Radford 2005). Probably the best example of the harm we cause to the environment due to our consumption is the Great Pacific Garbage Patch. Between Japan and Hawaii the biggest landfill in the world has formed, except that it is not on land. Three and a half tons of garbage is formed in a floating stew which 90 % is plastic waste. (Casey 2010).

This is the result of the era of hyper-consumption were we have lived in (Botsman & Rogers 2012). The consumption of people is expanding in a hyperbolic rate. These days’ people consume everywhere: metro, airport or railway station. (Lipovetsky 2011). Annie Leonard (2007) explains that only one percent of products sold in North America are used more than six months indicating that 99 percent of items bought are thrown away within six months. If we continue this way of consumption, it could not be guaranteed that the future generations will have the resources they need (IPCC 2007). Therefore we have to change. Theodore Roosevelt former president of the U.S. once said in his speech "I recognize the right and duty of this generation to develop and use our natural resources, but I do not recognize the right to waste them, or to rob by wasteful use, the generations that come after us." (Roosevelt 1910).

1.2 Sharing Economy - The Resource saving economy A new movement has risen that supports the new emerging phenome calling the Collaborative Consumption with Rachel Botsman as global thought leader (Currency Fair 2015). This new phenome is one of the ten ideas that will change the world according to Time Magazine. The collaborative consumption is changing the way people consume. Instead of buying solo the things people need to use, the collaborative consumption is based on sharing, renting, swapping, and trading, enabling usage and access over ownership (Botsman 2013).

In this paper the focus will be on the Sharing Economy, a specific part of the Collaborative Economy. The Sharing Economy is an economic model that is based on the sharing of underutilized assets for monetary or non-monetary benefits (Botsman 2013). It

8 changes the focus from owning assets to just the usage of the assets (Botsman and Rogers 2012). For instance let’s look in the car industry. Census estimated that on average one household in the U.S. owned 1.8 vehicles (US Government). Why do people buy and own a car? Do they just want to own it or did they buy it because they need to use a car to get from point A to point B? The enhancers of the Sharing Economy enhance that it is the second. Research showed that on average a car is used one hour a day. This means that it is not used 23 hours a day, indicating that the idling capacity of the car can be shared with others for the remaining 23 hours (Hodges 2013).

New technologies enable to unlock and share the idling capacity of resources. Social, mobile, and location-based technologies enable us to efficiently and safely connect the people who have an idling capacity with those who want to use it (Botsman 2013, Owyang 2013). Therefore the Sharing Economy is growing rapidly. Today the sharing economy already generates a revenue around 15 billion $. However, PWC predicts that the five main sharing economy sectors of the sharing economy will generate 335 billion $ by 2025 (PWC 2014). Geron (2013) appoints that people generating revenue by participating in the Sharing Economy will surpass 3.5 billion $ in 2013, with growth exceeding 25%. Investors admits the new trend, proven that Sharing Economy start-ups have already received 15 billion $ in funding’s.

Despite the growing practical importance, not much academic literature has been written and empirical research has been done regarding the collaborative consumption and sharing economy. Especially concerning the Critical Success Factors (CSF) of the accessibility based business models. The CSF’s are the things that must go well to make the operation a success for the organization (Boyton & Zmut 1986). Therefore they are of major concern for all the start-ups and organizations in the Sharing Economy.

Concerning academic literature, one groundbreaking book is written by Rachel Botsman and Roo Rogers (2012). In their book they identify four principles that can be named the CSF’s for companies participating in the collaborative consumption: belief in commons; trust; idling capacity; and the critical mass. These principles are critical for all business operating in the sharing economy. The principles are all evenly weighted, but some can be more crucial than others depending on what is being shared and who is participating at the platform. These principles count for all the business models that are based on the collaborative consumption. Therefore the principles count for all three different markets

9 mentioned by Botsman & Rogers (2010): product-service systems; redistribution markets; and collaborative consumption. In addition the four principles should count for business-to- consumer (B2C) as well as for consumer-to-consumer, mostly known as peer-to-peer (P2P) businesses.

No empirical research has been done to investigate the impact of these CSF’s, and the difference within markets and between P2P and B2C on the platforms. It could be that one principle affects the other and vice versa. In addition there could be a difference in importance between the markets, as well difference between B2B and P2P businesses. Supplementary to the four named CSF’s by Botsman and Rogers there could be more CSF for specific parts of the collaborative consumption. This research focusses on a specific area of the collaborative consumption, the P2P platforms that perform in the Sharing Economy. At first, the importance and influences of the four CSF’s named by Botsman and Rogers (2012) on the Sharing Economy platforms are tested. Secondly, when the CSF’s are validated, the next step is to look for the existence of additional CSF’s. These two steps are firstly done by performing a critical literature review. Afterwards, the theory will be further investigated by conducting interviews with owners and managers of organizations with an accessibility based P2P business model. In addition to the research of the CSF’s supplementary information on how companies control and manage the CSF’s are tried to be found during the interviews and in the literature. However the main focus of this study will be on the determination of the CSF’s. Thereupon, this study tries to answer to following research question:

What are the Critical Success Factors for Peer-to-Peer platforms in the Sharing Economy?

1.3 Theoretical relevance Academic (Hamari, Sjöklint, & Ukkonen 2015; Lamberton and Rose 2012, Bardhi and Eckhard 2012, Botsman and Rogers 2010, 2012; Belk 2014) and non-academic literature (Burnett 2015, Owyang 2013, Sizemore 2013) acknowledges the importance of the sharing economy. At macro level, empirical and non-empirical research has been done investigating the rise of the sharing economy; the elements that caused the enormous growth of the sharing economy the last couple of years. At micro level more in depth psychological research has been done regarding the motivations and deterrents for consumers to participate in the sharing economy. Limited academic literature has been done looking at the management/company perspectives of the sharing economy. This study focuses on the management perspective via conducting interviews with the management of the platforms. Botsman and Rogers (2013)

10 argue the existence of four critical success factors that are needed for sharing economy platforms. However, they do not mention how they developed these CSF’s, how the CSF’s specifically influence the business, and what drives these CSF’s. No additional academic or non-academic research has been done to test the CSF’s, look for additional CSF’s and look how these CSF’s can be managed and controlled. This paper tries firstly to validate or reject the CSF’s that are argued by Botsman and Rogers (2012). Secondly, it tries to find the existence of additional CSF’s for P2P sharing platform. And at last, to provide the paper more practical insight it will look at how the CSF’s will be managed and controlled.

1.4 Managerial relevance By applying and exploratory research design, this study tries to determine the critical success factors for P2P sharing platforms. According to Botsman and Rogers (2012) four critical success factors are the basis for successful collaborative consumption businesses. This paper will define the influence of these CSF’s and tries to find additional CSF’s for P2P sharing platform. Defining the influence of these CSF’s and conceivable find additional principles will provide the management a clear indication where they should focus on. In this paper we try to give the management an extra step forward by looking at the how these CSF’s can be managed and controlled by the organization. This paper will give the management crucial information how they can successfully start and manage a P2P platform based in the sharing economy. It will set guidelines that enhance the success of P2P sharing platforms.

1.5 Structure The next chapter consists of a literature review first giving an introduction to the sharing economy and providing clear definitions. Thereafter the critical success factors founded in the literature are explained and critically examined. Chapter three provides a summary of the findings in the literature and ends with this study’s research question, sub questions, and conceptual model. Chapter four contains a description of the used methodology, including the research sample, method of data collection and method of data analysis. The results of this research are given in chapter five followed by a discussion of the results in chapter six. Chapter seven examines the limitations of the research and the theoretical and managerial implications. At last, this paper finalizes with the conclusion that is drawn on based on findings of this study, and recommendations for further research

Sharing the literature

2. Theoretical background The goal in this paper is to provide a new insight in the critical success factors for peer to peer platform in the sharing economy. The terms sharing economy, collaborative economy, and collaborative economy have been used in literature for the mixed meanings and sometimes overlap (Botsman 2013). This happens because this movement is very new and not one clear definition has been developed. Additionally due to the fact that the topic of this paper: the sharing economy is relatively new, limited academic research concerning this topic has been written. For this reason non-academic literature is also been taken into consideration in this paper. Obviously this literature is critically analyzed. In this chapter, first the terms are given one clear meaning; secondly the drivers and barriers of the sharing economy are discussed, providing a clearer insight into the background of the new economy. After examining the literature concerning sharing economy, a vision on the CSF’s for the P2P sharing platform is given that connects previous literature with the CSF’s of Botsman and Rogers (2012). At last the relationship between the CSF’s is investigated.

2.1 Collaborative economy The collaborative economy is the economic model where access and ownership are shared between people, corporations and startups (Owyang 2013). Rachel Botsman provides a more detailed description of the term. The collaborative economy is “An economy built on distributed networks of connected individuals and communities versus centralized institutions, transforming how we can produce, consume, finance, and learn” (Botsman 2013). The collaborative economy can be divided into four parts (Botsman and Rogers 2012): collaborative consumption; production; education; and finance. Collaborative production is the production, design and distribution of goods via collaborative networks (example Quirky). Collaborative Education indicates the new way of education: open education and person-to- person learning models (example: Coursera). Collaborative Finance, the new style of banking, person-to-person banking where the big banks in the middle are absent (Example Zopa). Collaborative consumption ensures to maximize the usage of assets through redistribution and/or shared access (example Peerby). In this paper the collaborative economy is seen as an economic model focusing on connecting individuals or organizations to collaborative produce, consume, finance, and learn. During this study the focus will be on the

12 usage of assets section of the economy; the collaborative consumption. The next paragraph will provide a deeper understanding of the collaborative consumption.

2.2 Collaborative Consumption Felson and Spaeth were the first that used the term collaborative consumption in their paper in 1978. They used the term to describe the occurrence of sharing of consumers, for example drinking beer together, eating meals or driving together to a friend. (Felson and Spaeth 1978). According to Belk the definition that Felson and Spaeth use is too broad, they merely talk about coordinated consumption. Collaborative consumption is indeed related to joint activities involving consumption like coordinated consumption (Belk 2014). In addition the collaborative consumption it is more focused on the acquisition and distribution of the resource (Belk 2014). Lamberton and Rose (2012) define it as systems that provide costumer the opportunity to enjoy the asset benefits without owning the asset. Hamari, Sköklint, and Ukkonen (2015) define the collaborative consumption as the peer-to-peer based activity of giving, sharing and obtaining access to goods and services via community based online platforms. Hamari et al only mention the peer-to-peer and forget that businesses are also part of the collaborative consumption. Botsman and Rogers define collaborative consumption as the economic model based on sharing, swapping, trading, lending, renting resources that enables the access and usage of the resource despite the ownership. (Botsman and Rogers 2010). Belk provides a definition of collaborative consumption that is marginally different from Botsman and Rogers. Belk states: “Collaborative consumption is people coordinating the acquisition and distribution of a resource for a fee or other compensation” (Belk 2014, p1597). He excludes the sharing activities were no compensation is involved like at CouchSurfing and Peerby.

Despite the slightly different definitions of the collaborative consumption, the classifications are not commonly agreed. Bardhi and Eckhardt (2012) distinguish six classifications between the ranges of access-based consumption: temporality, anonymity, market mediation, consumer involvement, type of accessed object, and political consumerism. Contrasting Lamberton and Rose (2012) used a classification framework that distinguishes the sharing system based on their rivalry and exclusivity. Botsman and Rogers (2010) define three types of collaborative consumption namely product-service systems; redistribution markets; collaborative lifestyles. Product-service systems change the mindset to using instead of owning. You pay for the benefit for the product and not the ownership. It enables companies or persons to offer goods as a service instead of selling the product. A good

13 example is Spotify, instead of buying and owning CD’s, consumers are subscribed to Spotify a library of million songs which they can listen. Recent study showed that the environmental impact was decreased from 40 to 80% via sharing music online compared to buying CD’s (Weber, Koomey & Matthews 2010). Redistribution markets are used or pre-owned goods sold to someone else for monetary or non-monetary benefits. The goods move from somewhere they are not needed to somewhere they are. The most known platform is eBay and in the Netherlands Marktplaats. Collaborative lifestyle is the sharing, swapping or bartering of less tangible goods like spaces, time, skills, and money.

In this paper the collaborative consumption is seen as the activity of acquisition and distribution of goods used and or shared together or in succession. This paper focusses in specific on the sharing section of the collaborative consumption whereby more people or organizations use and share resources together, the sharing economy. The next section will provide an insight into the sharing economy.

2.3 Sharing Economy The term sharing economy and collaborative consumption are frequently confused with each other. However the sharing economy is part of the collaborative consumption. It is the part of the collaborative consumption where access is preferred above ownership (Botsman and Rogers 2012). As before mentioned, Lamberton and Rose (2012) define the collaborative consumptions as systems that provide costumer the opportunity to enjoy the asset benefits without owning the asset. This is indeed part of the collaborative consumption, the part that is called the sharing economy. Dervojeda (2013) argues that limited scientific publications have been published on the sharing economy. She defines the sharing economy as companies that execute accessibility based business models for peer-to-peer markets and its user community. In addition, Botsman (2013) state that in the sharing economy transactions happen between business-to-consumer (B2C) as well as peer-to-peer (P2P) and eventually business-to- business (B2B). The sharing economy is “an economic model based on sharing underutilized assets from spaces to skills to stuff for monetary or non-monetary profits” (Botsman 2013). A great example of the sharing economy is in the car industry. Instead of owning a car for the need of usage, consumers can now subscribe and make use of Car2Go cars, a flexible car renting service (B2C) or rent the car from other people like at RelayRides (P2P)

This study focusses on the Peer-to-peer sharing platforms like Relayride. The next section will give a better understanding of why the collaborative- and sharing economy is

14 emerging at the moment by giving a clear view of sharing, and the rise of the sharing economy. The rise of the sharing economy creates opportunities for the entrepreneurs (Zwilling 2015). Entrepreneurs have to consider some key factors before starting in this new economy. Literature describes four CSF’s that are needed to be successful in the collaborative consumption. These CSF’s will be examined in the last section.

2.3.1 Sharing Sharing is “the act and process of distributing what is ours to others for their use and/or the act and process of receiving or taking something from others for our use” (Belk 2007, p 126). Sharing has been in the humans system since they are born (Tomaselo 2009). It has been the most basic form of economic trade in the society for hundred thousand of years (Price 1975). There are both functional, like survival and altruistic reasons, like convenience and kindness, why people share (Fine 1980). Today most people are already sharing stuff like their home, food, resources with other household members (Belk 2007). Internet and in specific Web 2.0 has made sharing more easy and convenient than before, especially in a larger scale (Belk 2014). Start-ups have recognized the opportunity of sharing in combination with the web 2.0 and more companies are starting that are the mediator between the sharer and the renter like Share hood (Belk 2014).

2.3.2 The rise of the sharing economy As mentioned in the introduction the sharing economy is rapidly growing. Zervas, Proserpio & Byers (2014) conducted a study regarding the impact of Airbnb on the hotel sector in Texas. They concluded that a 1% increase in market of Airbnb comes along with a 0.05% decrease of the overall hotels revenue. This indicates that the sharing economy is substituting the traditional economy. But what are the drivers for this substitution and why is it starting this era? Owyang (2013) proposes three types of drivers for the collaborative economy, societal; economic and technology drivers. Societal drivers are the increasing population density, the drive for sustainability, desire for community and general altruism. Economic drivers are monetizing excess inventory, increase financial flexibility, access over ownership and influence of VC. Technological drivers are social networking, mobile devices and platforms and payment systems. Botsman and Rogers (2012) acknowledge that new technology enables us to unlock the idling capacity of resources. Social, mobile and location- based technologies enable to efficiently and increasingly safely connect the people who have this idling capacity (goods, services or skills) with those who want it. Besides technology Botsman and Rogers name three other drivers for the sharing economy: value shift, economic

15 realities and environmental pressures. Value shift, changes the mindset of the society of the preference of ownership above sharing. Economic realities, due to the crisis the consumers have less money and consider cost saving access above ownership. Environmental pressures, the world is facing degradation. Gansky (2010) also admits that the economic crisis has let consumers to rethink their values. The sharing economy is observed as the usage of assets with more value for less cost (Botsman & Rogers 2012; Gansky 2010, Lamberton & Rose, 2012). The increase in awareness of the environmental degradation drives people to find solutions to use resources more efficient to endeavor a more sustainable society (Gansky 2010). Leismann, Schmitt, Rohn and Baedeker (2013) emphasize the resource savings potentials from the collaborative consumption. The collaborative consumption reduces the negative impacts of consumption on the environment (Botsman & Rogers, 2012). The collaborative consumption also increases the social interaction in the society. Peer-to-peer sharing platforms provide the opportunity to meet other participants and develop new connections (Botsman & Rogers 2012).

2.4 The critical success factors Looking at examples of businesses in the collaborative consumption it can be concluded that at the core they all share four critical underlying principles (Botsman & Rogers 2012). According to Botsman and Rogers these principles are crucial for any business started in the collaborative consumption. A factor is a circumstance, fact, or influence that contributes to a result. A critical success factor is a factor that is needed to achieve a positive result. Without the compliance of the critical success factors the organization will not be successful. The CSF’s are the critical principles for organizations to achieve success. Therefore these principles can be seen as the critical success factors for companies participating in the collaborative consumption. Previous academic literature acknowledges the importance of CSF’s (Rockart 1978). The CSF’s are the things that must go well to make the operation a success for the organization (Boyton & Zmut 1986; Belassi & Tukel 1996). They are the factors that make the difference between winning and losing at new products (Cooper & Kleinschmidt 1995). Product innovation does not happen as well as it should when the critical success factors are noticeably absent (Cooper 1999). All these authors mention that the CSF’s are extremely important for the organization and especially in the innovation process. Despite the importance, limited research has been done regarding CSF’s for organizations in the collaborative consumption. Only Botsman and Rogers mention in their book what’s mine is

16 yours four critical success factors needed for collaborative consumption. This book is seen as the current norm as it is most referenced by others writings on the sharing economy.

There are four critical success factors that are needed for the collaborative consumption: belief in commons; trust; idling capacity; and the critical mass (Botsman & Rogers 2012). The factors are all evenly weighted, but some can be more crucial than others depending on what is being shared and who is participating at the platform. The CSF’s count for all three distinct systems: product service systems; redistribution markets; and collaborative lifestyles. In addition the four principles count for business-to-consumer (B2C) as well as for consumer-to-consumer, mostly named as peer-to-peer (P2P) businesses (Botsman & Rogers 2012).

In this part all four CSF’s are described and examined by linking existing academic and non-academic literature with the CSF’s. An in depth review of all four CSF’s is given and tools regarding the management and control of the CSF’s are taken into consideration.

2.4.1 Belief in commons By providing value to the community, you improve your own value. People have to believe that by participating in these platforms, sharing and or consuming, they add value to the community and support the system (Botsman & Rogers 2012). They want to participate for the common good and need to have the intrinsic motivation to help other participants by participating. Previous research showed that the perception of helping others is one of the top motivations to participate in the sharing economy (Sizelove 2013). Sizelove distributed a survey between 2103 adults in the U.S. Ipsos’ U.S. online panel on April 16-19 that showed a weighted sample of the American population. The top motivation for people to share was the ability to help others, argued by 36% of the panel. Tomaselo (2009) showed in his research that helping others is in every person’s nature. Study showed that when you drop something in front of a two year old baby, he or she is most likely to help and pick it up for you as reflex. Tomaselo argues that children are sociable and cooperative by nature and that by the age of three, children start to enhance and behave to social norms that are shaped by culture. Hence the platform has to underline the ability to help others by helping yourself.

Literature also indicated that one of the top drivers for people to participate in the collaborative economy is sustainability (Tussyadiah 2015; Hamari et al 2013; Burnett 2015). With sustainability is meant that the activity of the platform “optimizes the environmental, social, and economic consequences of consumption in order to meet the needs of both current

17 and future generations” (Luchs et al., 2011, p.2). Current needs are met as fully as possible while at the same time the life opportunities for the next generations are undiminished (Weiss 1992; Howarth & Norgaard 1992). By choosing for participation at the platform instead of renting and or buying at traditional shops participants help the future generations. Leo Burnett (2015) investigated the psychology behind the sharing economy. He sent three surveys with a total of 4.000 respondents with the age between 18 and 69 in the U.S. in July and September 2014. Burnett argues that people are not only motivated to participate in the sharing economy by self-interest like practical needs, convenience, the save or make money but also motivated primarily by altruism, community and the environment (35% of the respondents). Peer to peer platforms are used to foster sustainable marketplaces (Phipps et al., 2013).

2.4.2 Trust between strangers Mayer et al provide a clear definition of trust: the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party (Mayer et al., 1995, p. 712). Luhman (1979) simplifies stating that trust is the belief that other people will react in predictable ways. This CSF focusses on the trust between the two peers at the transaction, the user and the sharer. This transaction is done via the platform using an online app or website. Online trust is an important determinant for online marketplaces (Mc Knight & Chervany, 2001). Online trust is the attitude of confident expectation in an online situation of risk that vulnerability will not be exploited (Corritore et al, 2003). Peer-to- Peer sharing economy platforms are online platforms on the internet or with an application on the smartphone. Previous academic research has been done investigating the influence of trust for online shops. Chen & Barnes (2007) proved that at e-commerce, online trust has a significant influence on the purchasing intensions of the consumers. They let Taiwanese participants visit an unfamiliar Taiwanese e-bookshop web site for the first time, and search for a particular product. Thereafter, they had to gather some details about the book and become familiar with the website. After the searching activities the participants need to complete a questionnaire that indicated the responses on a seven point Likert scale. Results showed that online initial trust of the consumer regarding the e-shop has a significant influence on their purchase intensions.

Pavlou (2003) showed that a high degree of trust eliminates the perceived risks, uncertainty and interdependences and also stimulates the expectations of satisfaction of the transactions online. Additional to this Gefen and Straub (2003) found that a higher degree of

18 consumers trust comes along with a higher degree of purchasing behaviors. The P2P transactions on the sharing platform are also executed via the internet. Therefore just as normal online e-commerce, P2P sharing platforms also require a high level of trust (Wu, Wang, Huang 2011). Furthermore at P2P platforms the middle man, the firm, is removed. The participant of the platform has to trust somebody which most of the times he or she has never seen before. Therefore the platform has to enable decentralized and transparent community to form and build trust between strangers (Botsman and Rogers 2012). Tussyadiah (2015) collected questionnaires from 754 adult travelers in the US. Results showed that trust was the biggest deterrent for people to participate in the collaborative consumption, 32.4% of the respondents of his survey admitted that trust was their biggest deterrent. Olson (2013) and Burnett (2015) also admitted that trust is one of the biggest barriers to enter the sharing economy. Dervojeda states: the public’s trust in online activities and transactions play a crucial role for the uptake of innovations in the sharing economy” (Dervojeda, 2013, p10) indicating that trust has a crucial role in the sharing economy.

New technology enables to build interpersonal trust systems based on reputation (Keymolen 2013). Platforms can implement rating & review systems to create a reputation trail of the person. Every seller or lender will get rated; spammers will get flagged; and there will be comments on transactions (Botsman and Rogers 2012). The idea of a reputation system is to let people rate each other after the completion of the transaction. It will provide the other side with a reputation score which will influence if people are willing to do business with him or her in the future (Josang, Ismail and Boyd 2007). Botsman (2012) even takes it one step further. She states that trust will be the new currency. By participating and making transactions at online P2P platforms people create a reputation trail by receiving review and ratings of the other party. The reputation trail reflects their trustworthiness. Gathering a positive reputation trail provides the people reputation capital. Given the right tools, people are able to take ownership of their reputation capital and use it to gain access, power and influence (Botsman and Rogers 2012; Botsman 2012).

2.4.3 Idling capacity The idling capacity is the untapped social, economic, and environmental value of underutilized assets (Botsman 2013). The capacity left over after the deduction of the productive capacity. The asset has to have idling capacity to have the possibility to be rented out (Botsman and Rogers 2012). An example is the power drill. Half of the US households have a power drill. Research showed that a power drill is only used six to thirteen minutes in

19 its entire lifetime (Botsman and Rogers 2012). Thus the power drill has very high idling capacity.

People possess the asset but not need to use it all the time. Otherwise there is no idling capacity (Botsman and Rogers 2012). Therefore the ownership and usage specifications of the product on average have to be taken consideration before starting a platform. A critical note for the idling capacity is that when this is the case for an asset it does not immediately mean that it will be shared (Salinto 2014). “People will have to want to share: to give out their free capacity and/or receive it from others” (Salinto 2014). Highly personal or very hygienic items are usually less willing to shared or be shared.

2.4.4 Critical mass The last CSF named by Botsman and Rogers (2012) is the critical mass. The critical mass is describes the existence of sufficient momentum in the system to make it self-sustainable (Ball 2004). This indicates the need to offer enough products or services on the platform as well as the need for people demanding the product or service at the platform. (Botsman and Rogers 2012). The critical mass is reached when it offers enough content and active users to attract new users and provide them with the product and or service that they are looking for. Botsman and Rogers state “the system will be successful if users are satisfied with the choice and the convenience available to them. If not, the system will probably be poorly utilized and short lived” (Botsman and Rogers 2012, p 81). Furthermore the critical mass creates a core group of loyal and frequent users. These users create a social acceptance for using the platform which will attract new users, it makes it ‘social proof’ (Botsman & Rogers 2011).

However, before the firm has to ensure that their customers stay loyal it has to generate the customers to the platform. It has to ensure that potential participants are willing and will participate at the platform. The potential participants have to be motivated to participate. Several academic (Hamari et al 2013, Tussyadiah 2015 and non-academic literature (Burnett 2015; Sizelove 2013; Owyang 2013) investigated the motivations and deterrents for people to participate in the sharing economy

2.4.4.1 Motivations to participate Research has been done investigating the motivational factors for consumers to participate in the sharing economy. Three academic papers studied the motivational factors (Hamari et al 2013, Tussyadiah 2015, Bardhi and Eckhardt 2012). Hamari et al (2013) conceptualized and tested four motivational factors that could influence the attitude towards and behavioral

20 intention for collaborative consumption. They obtained a completed survey from 168 users of Sharetribe, a service were you can create a peer to peer marketplace in just a few minutes (Sharetribe). Results showed that motivational factors sustainability and enjoyment significantly affected the attitude towards collaborative consumption while enjoyment and economic benefits significantly affected the behavioral intentions. Tussyadiah (2015) investigated the motivational factors that drive and hinder the collaborative consumption in the travel and tourism marketplace. Her research showed that there are three drivers for consumers: sustainability, community and economic benefits. Bardhi and Eckhardt (2012) conducted 40 semi structured interviews with users of Zipcar in Boston. Their research showed that the users were largely motivated by self-interest and utilitarianism.

In addition, non-academic but notable studies were conducted. Burnett (2015) argues that people are not only motivated to participate in the sharing economy by self-interest like practical needs, convenience, to save or make money but primarily motivated by altruism, community and the environment. His research showed that the most frequent motivation for people to participate is to help the less fortunate. Ipsos, an independent market research company investigated the difference in motivations between people that had participated in the sharing economy and that did not participate yet. The top motivation for people participated is the ability to help others while the top motivation to participate for the non- participators would be the economic gains (Sizelove 2013).

I noticed that there are some conflicts and similarities in the literature. Hamari et al (2013) find that people have intrinsic; sustainability and enjoyment, and extrinsic, economic, motivations to participate in the sharing economy. This is enhanced by Tussyadiah (2015), her research indicated sustainability, community and economic benefits as top motivations. In contrast Bardhi and Eckhardt (2012) argue that people only participate out of self-interest and do not want to be part of a community. This contrast could occur because Bardhi and Eckhardt specifically focused on the car sharing platform Zipcar while the others did not have focus on a specific market. Other reasons can be that due to the time of the research the results were contrasting and that it became more socially accepted during the last few years. However this reason is refuted by Sizelove (2013) which research showed that people that already participate in the sharing economy mainly did it because they wanted to help others while people that did not participate at the moment main reason was to gain economic benefits. This shows that later in time more people will participate in the sharing economy with economic gains as main motivation.

2.4.4.2 Deterrents to participate Olson (2013) investigated the main deterrents why people did not want to participate in the sharing economy. He maintained 383 online interviews with participants in the U.S. His research showed that trust is the biggest barrier for people to participate, including the mistrust among strangers and their trust of privacy argued by 67% of his respondents. Burnett (2014) also investigates the reason why people were withholding participation in the sharing economy. The biggest deterrent that the people experienced was the perceived risk. People were afraid that it would not be safe or hygienic. The second deterrent was the joys of ownership. People still possessed emotional attachment to owning the assets indicating that the mindset of using instead of owning (Botsman & Rogers 2012) was not adapted by all respondents. Botsman and Rogers (2012) admit that the collaborative consumption implies trusting strangers to a varying degree. In addition, Keymolen (2013) states that the mediation of the ICT comes along with new challenges of trust, the trust trough technology. New technology enables to build interpersonal trust systems built on reputation. Olson (2013) argues that consumers are concerned that the products or services received in the sharing economy have a lower quality due to lack of supervision. In addition Tussyadiah (2015) argues that there are three deterrents to participate in the sharing economy: lack of trust, lack of efficiency and lack of economic benefits. Bardhi and Eckhardt (2012) showed that people do not like to be associated with the accessed asset and are deterrent to the community.

Trust seems to be the biggest deterrent shown in all researches. Burnett (2015) argues that perceived risk is the highest deterrent. Risk can be linked to trust. When people trust each other at the platform the perceived risk is lower. Economic disadvantage also seems to be a big deterrent for participation. This is in line with that one of the top motivations for participating is the economic benefit.

3. Conceptual model This chapter demonstrates the conceptual model that is developed after a critical literature review. First a clear delamination of the sharing economy is given. Second it summarizes the conflicts and similarities in the literature regarding the critical success factors of Botsman and Rogers (2012) and cognizance the relation between. The findings of the literature resulted in a conceptual model. Furthermore this chapter provides the research question with sub- questions. The conceptual model and sub-questions are used as sensitizing concepts during the execution of the research.

3.1 Literature findings The terms collaborative economy, sharing economy and collaborative consumption are often confused with each other. In this paper the following definitions are given to the terms: The collaborative economy is the economic model focusing on connecting individuals or organizations to collaborative produce, consume, finance, and learn. The collaborative consumption is part of the collaborative economy specified on the consumption section. The collaborative consumption is the activity of acquisition and distribution of goods used and or shared together or in succession. Part of the collaborative consumption is the sharing economy. The sharing economy is the economic model that is based on the sharing of underutilized resources. It prefers usage above ownership. The sharing of resources can occur between organizations and persons. In this paper the focus is on the sharing between persons, the peer-to-peer sharing platforms. Sharing is the act and process of distributing belongings to other for their use and or receiving or taking others belonging for our use.

The sharing economy is growing rapidly, in 2013 the top five sector generate a revenue of 15 billion $ while in 2025 the PWC forecast that the sharing economy will generate 335 $ revenue (PWC 2013). Literature provides several drivers for the rise of the sharing economy. Three are commonly mentioned by most researchers (Owyang 2013; Botsman and Rogers 2012). (1) New technology enables to efficiently match the people who want to use with the persons that want to share or rent. (2) The economy went bad, which made people seek for extra income and cost savings. (3) The demand for sustainability, the world population is increasing, which increases the environmental degradation. Botsman and Rogers (2012) also mention an extra driver: value shift of the people, but this is the occurrence of the three before mentioned drivers.

The rise of the new innovative economy, the sharing economy, provides major entrepreneurial opportunities. Entrepreneurs that want to start a business in the sharing economy face critical principles that must be fulfilled to succeed in the sharing economy. These are the critical success factors for sharing economy companies. Botsman and Rogers (2012) name four critical success factors: belief in commons, trust between strangers, idling capacity, and critical mass.

To reach the critical mass people have to be willing to participate in the platform. Literature showed that the top motivation to participate in the sharing economy are economic benefits, helping others, sustainability and convenience (Hamari et al, 2015; Bardhi and

Eckhardt, 2012; Tussyadiah, 2015; Sizelove 2013). Empirical evidence also showed that trust was the biggest deterrent for organizations (Olson 2013).

This overlaps with two other critical success factors of Botsman and Rogers (2012) namely trust between strangers and belief in commons. Literature showed that two of the top motivations why people participate were sustainability and helping others (Tussyadiah 2015; Sizelove 2013). These two factors are connected to the CSF belief in commons. In addition, literature indicated that the biggest deterrent to participate was trust. People did not trust the system and in specific the other person, the stranger. Trust between strangers is the second CSF named by Botsman and Rogers (2012). Therefore, it could be seen that the two CSF’s: trust between strangers and belief in commons have influence on the other CSF: reaching the critical mass. Only the link of motivations and deterrents to reaching the critical mass has never been empirically tested and therefore the assuming relationships cannot be presumed based on academic literature.

The idling capacity stands on its own. A product has an average usage time and average ownership per household. Companies have to consider these two specifications before starting a peer to peer sharing platform.

3.2 The conceptual model Until this point I have general sense about the collaborative- and sharing economy, the drivers and deterrents that achieve the rise of this new economy, and the relationship of the four critical success factors that are crucial for all businesses in the sharing economy. Linking literature reveals that two CSF’s; trust between strangers and belief in commons, are driving factors for reaching the critical mass. However this link has never been empirically tested and therefore requires further investigation. Besides due to the limited academic literature available, additional non- academic literature is also used to link the CSF’s. Burnett (2015), Olson (2013) and Sizelove (2013) all did research into the motivations and deterrents for people to participate in the sharing economy. All three researches were commissioned by Market Research Companies which can lead to that the original purpose of their research could differ from this study. Furthermore, all three used web-based questionnaires that inevitably constrain those who participate (Saunders and Lewis 2012). Therefore their results cannot be directly adopted, but they are used as a basis to test for this study. For this reason the conceptual theory is used as a sensitizing concept, a starting point for this qualitative study. This study will not only focus on the conceptual model but uses it as a guideline to for

24 the research. The sensitizing concepts will set the direction of the study and lay the foundation for the analysis of obtained data (Bowen 2008). The sensitizing concepts can be tested, improved and refined (Brumer 1954).

Thereby the following main question is elaborated:

What are the Critical Success Factors for peer-to-peer platform in the sharing economy?

To answer the main question the following sub-questions are elaborated

(1) What are the CSF’s for peer-to-peer platforms in the sharing economy? a. Are their additional CSF’s besides the four mentioned by Botsman and Rogers b. Are all four CSF’s mentioned by Botsman and Rogers critical for peer-to- peer sharing platforms (2) What is the relation between the CSF’s? a. Do trust between strangers and belief in commons influence the critical mass

The results of these questions help me defining the CSF’s and examine the relationship between. During the research will be also investigated how the organizations try to control these CSF’s. The sensitizing relationships will be tested in the research. Despite their deductive character, exploratory characteristics will have the lead in the research. The combination of the literature review and the findings of the research will result in an empirical tested framework of the critical success factors.

The research objective is not only to present the data and findings but in addition translate the theoretical findings into practical recommendations for entrepreneurs that want to start a peer-to-peer sharing platform or for firms that participate in the sharing economy.

Looking at the gathered data found in the literature review the following conceptual model shown on the next page is elaborated:

Figure one: Conceptual model

Idling

capacity

Trust Success of the peer-to-peer between strangers sharing platform

Critical Mass Belief in Commons

Sharing the research

4. Methods The purpose of this chapter is to explain and reason the methodical choices of this research. It starts with a paragraph concerning the research approach, followed by a description of the research design and thereupon the research method. Fourth, the research strategy is explained. Fifth, a description of the data collection including the sampling frame, interview guide, and context and execution is provided. At last the process of data analysis is described.

4.1 Research approach There are two different research approaches: deductive and inductive (Saunders and Lewis 2012). The study presented in this paper uses an inductive approach. The main reason for this choice is because the existing academic literature on the sharing economy is scare, especially regarding the CSF’s that are examined in this paper. It would be counterproductive to base theory on relationships that are not empirical tested and might not be the case for the Dutch market. Using the inductive approach provides the study an open mind set which will results in interesting relationships. The literature review was used to provide a foundation for the conceptual building and analysis of the results of the research. It also gave the researcher a close understanding of the subject and research context.

4.2 Research design The research design focuses on changing the research objective and question into a research project (Saunders and Lewis 2012). The different research designs are used for different purposes and are categorized into: exploratory, descriptive, and explanatory. This study has an exploratory research design. “The exploratory research aims to seek new insights, ask new questions and to asses topics in a new light” (Saunders and Lewis p110). Exploratory research is the best option when there is limited academic literature and research is available regarding the subject (Saunders & Lewis 2012).

The aim of this study is to explore the relationship between the four CSF’s, find additional CSF’s, and discover their relationship. The purpose of this study is exploratory, designed to investigate and elaborate new insights on the four principles and generates a better understanding about the sharing economy.

4.3 Research method The research method indicates how the data is approached and gathered and the relation to the research question (Saunders and Lewis 2012). The research methods are categorized into quantitative and qualitative (Strauss and Corbin 1998). Straus and Corbin argue that qualitative methods can be used to discover and understand what lies behind the phenomenon about little is known. In addition it can provide with complex details that are difficult to convey with qualitative data. The newness of the phenome suggests that not much is already known about the subject. Furthermore the open research question emphasize the essence of complex information, in specific to answer the underlying drivers, in-depth data is needed.

Because of the following reasons a qualitative research method is chosen.

4.4 Research strategy The main types of research strategy are experiment, survey, case study, action research, grounded theory, ethnography, and archival. This research uses the case study strategy. According to Saunders and Lewis (2012) case studies are specifically good at “enabling the researcher to get a detailed understanding of the context of the research and the activity taking place within that context” (Saunders and Lewis 2012, p 117). The case study involves the investigation of a particular contemporary topic within its real-life context, using multiple sources of evidence. There are four ways of conducting descriptive studies: questionnaire surveys; sampling; interviews; and reanalysis of secondary data.

For this study, the primary data was gathered trough semi-structured interviews with owners and employees of firms that have peer-to-peer accessibility based business model. According to Denzin & Lincoln: “Qualitative research often studies phenomena in the environments in which they naturally occur and uses social actors' meanings to understand the phenomena” (Denzin & Lincoln, 1994 p, 2). The owners and employees of these companies should face and experience the critical success factors. By interviewing the people that faced these factors and experienced the impact provides this study clear in-depth information and insight data that could validate, adjust, and or expand the elaborated framework. According to Saunders and Lewis (2012) conducting an exploratory research can be done in three ways: (1) searching the academic literature, (2) interviewing experts in the subject, (3) and conducting interviews. This study combines all three methods by conducting interviews with owners (the experts) of peer to peer platforms testing supplementary relationships based on academic literature.

Secondary data consists of academic and non-academic literature review that was obtained before the interviews. This data allowed the researcher to have a better and more in- depth understanding of the subject. And thereby could better ask critical questions to acquire a good answer to the research question.

4.5 Data collection 4.5.1 Research sample The focal population of this study consisted of owners and employees of firms that provide peer to peer platforms in the sharing economy that have their home base in The Netherlands. Because of the sharing economy trend just emerged, only a selection of firms have started peer to peer sharing platforms.

The crucial number of observations is linked to the number of interviews that the research needs till it reaches data saturation, the stage when additional data only provides few new insights into answering the research question (Saunders and Lewis 2012). According to Saunders and Lewis for homogeneous populations it is likely that the stage is reached at about ten interviews. Therefore for this study ten managers and or owners of P2P sharing platforms were selected to be interviewed. The interviewees were recruited trough the following steps. First contact was made by telephone or e-mail explaining the research and asked their willingness to participate. The contact e-mail can be seen in appendix A. If the first contact was made by telephone, an e-mail was sent afterwards providing more information on the interview. Secondly, a selection of ten was made between all the people that were willing to participate. This was done by purposive sampling used to gather a wide variety of types of assets sharing. Table 1 shows the research sample of this study.

Table one – the research sample

Function Company Activity Chief Product Officer Peer to peer product sharing Boardmember Peer to peer jobs / tasks Co-founder & CFO Peer to peer bicycle rental Co-founder Peer to peer boat rental Product manager Peer to peer camper and caravan rental Co-founder & CEO Peer to peer summaries User Aquisition Specialist Peer to peer 3D Printing Assistant branch manager Peer to peer car rental Community support agent & insurance specialist Peer to peer car rental Co-founder Peer to peer housing rental

4.5.2 Interview There are three types of interviews: structured interview; unstructured interview; and semi- structured interview (Saunders and Lewis 2012). In the semi-structured interview the researcher has a list of topics and questions that have to be asked and covered but the interviewer can vary the order. The interviewer may also choose to skip some predetermined questions and ask additional questions if necessary (Saunders and Lewis 2012).

This study uses the semi-structured interviews. A semi-structured interview provides the interviewer the opportunity to tell everything they can and want to say but ensures that the interview will stay on the subject.

The interview always started with a short introduction to the research. Afterwards the researcher asks for the background of the interviewee and a description of the business of their company. Asking personal and back-ground questions will make the interviewee feel ease and will subsequently bee more easy to interview. Thereafter an introduction of the specific subject of the research, the sharing economy and a clear definition of the critical success factor were given. Consequently the first question was if they could explain which critical success factors they knew for peer to peer sharing platforms and which they had experienced.

The next step of the interview was to test the model based on the literature. All four critical success factors drawn from the literature were printed on cards and given to the interviewee. An extra card was printed that stated P2P sharing platform. The purpose of including printed cards to the interview was that it would give the interviewee a more visual look of the CSF’s. The cards could also be used to rank the CSF’s and visualize the relationships between the CSF’s. Figure 2 shows the printed cards.

Figure two: the printed cards

4.5.3 Interview guide Before the interviews the interview guide was conducted. The interview guide can be seen in appendix B. The interview guide includes the introduction to the research and to the specific subject. Furthermore it had clear definitions of the four critical success factors. Therefore all interviewees received exact the same definition of the four critical success factors which prevented bias.

4.5.4 Location I asked the interviewee where he/or she would like to have the interview. They could choose the location. Seven times the location of the interview was at their head office. Three times the interview took place in a bar which they had chosen. The sessions were scheduled to last half an hour.

4.6 Data analysis 4.6.1 Transcribing An important part of the analysis was transcribing the interviews. Transcribing the data is a secure process were the transcription as to give an exact written representation of the spoken interview without being influenced by researchers’ interpretation (Saunders and Lewis 2012). The interviews were transcribed as soon as possible after the interview. Thereby the researcher still had a good recall of the interview.

4.6.2 Coding The software program NVivo version 10 was used during the coding process. The starting codes were the factors found in the literature plus some additional elements. Extra nodes were added when they appeared during the interviews. The additional added nodes were more in depth nodes focusing on the CSF’s.

The complete coding scheme resulting after the coding process and therefor used during the process is added in appendix C.

Sharing the Results

5. Interview results In chapter two, the literature review, four critical success factors for peer to peer sharing platforms were found. Using additional literature a model was developed that showed the relationships between the CSF’s in chapter three. With the use of interviews first all CSF’s are tested and thereafter validated. Secondly the existences of additional CSF’s are inspected and at last the relationships between the CSF’s are considered. Interviewing the managers of peer to peer platforms gave me the opportunity to use their knowledge and experience to critically review the information composed at the literature review. In the process of coding and categorization I found that besides the four CSF’s of Botsman and Rogers, two others possible CSF were frequently mentioned. Therefore, an extra category, additional CSF’s was included in the process. The data collected at the interviews are anonymous processed. For this reason all participants have been given code names. Table 2 provides code names and characteristics about each participant.

Table two: Codenames of the participants

Code name Type of Business Part_1_PS Peer to peer product sharing Part_2_JT Peer to peer jobs / tasks Part_3_CR Peer to peer bicycle rental Part_4_BR Peer to peer boat rental Part_5_CCR Peer to peer camper and caravan rental Part_6_S Peer to peer summaries Part_7_P Peer to peer 3D Printing Part_8_CR Peer to peer car rental Part_9_CR Peer to peer car rental Part_10_HR Peer to peer housing rental The next section will provide a detailed description of the results of the interviews.

* The citations from the interviews were translated from Dutch to English because the interviews were held in Dutch.

5.1 The Critical Success Factors During the interviews specific questions regarding the four critical success factors found in literature review were asked. Supplementary questions regarding the existence of additional CSF’s factors were inquired and at last the relationships between the CSF’s were reviewed. The results are described in the next section.

5.1.1 Belief in Commons Overall, the managers were not convinced that the belief in commons is a critical success factor. Eight out of ten interviewees acknowledged the existence of the factor but called it a side effect. Participants of the sharing economy were not primarily motivated to participate in the sharing economy because they could help others but because of more individualistic reasons like economic gains. Part_9_CR admitted: “It is good but it is a good side effect. For me it is not a critical success factor”. Part_2_JT said: “If I’m being totally honest and look at the belief in commons I do not think that it has to be a principle but I do think it can be a result”. Part_5_CCR argued that money is the main reason for their participants: “I do not think it is applicable for campers, most of the times the renters rent their camper because of the money”. Part_6_S also agreed with that statement. He said: “our value focusses on the people who are trying to get money, maybe they do also have an intrinsic reason of helping others, but their main reason is individualistic”. Part_10_HR states: “belief in commons is the least important”.

Part_1_PS also acknowledges that the belief in commons is not the most important success factor but argues that the platform has proven, looking at the supply side, that people are keen to help others. Part_7_P admits that the main reason for their participators at the supply side is that that they just enjoy helping others. He also admits that the belief in commons provided them their critical mass. Part_7_P: “I think that belief in commons is the greatest factor for the critical mass, looking at the supply side”.

What I further noticed is that most interviewees only talked about the social human part of the belief in commons, the perception that they could and would help others by participating at the platform. Only Part_3_CR proclaimed that the sharing economy would prevent environmental degradation.

Noteworthy is that all managers were driven because of the belief in commons. They wanted next to making money like every other business add value to the society. Part_5_CCR stated: “we personally think it is very important and that drives us to succeed. We really want

33 to add something to the world. And there are people that join our platform with the same belief”.

5.1.2 Trust between strangers All managers indicated the importance of trust. At the beginning of the interview before the CSF’s drawn from the literature were explained all interviewees mentioned trust as a critical success factor. Part_6_S started with: “the first thing that I think of, maybe not very specific is trust. At peer to peer platforms, the consumer buys something from another consumer and thereby is trust a major core value”. However results showed that there are two types of trust concerning peer to peer platforms: Trusts between strangers, the trust between the peers; and trust in the platform, trust in the company that mediates the transaction.

Part_4_BR argued that both types of trust are important stating: “it is the most important thing, that the platform conveys trust, but that the consumers also have mutual trust within the platform”.

Part_3_CR admits that his participants mostly focus on trusting the platform and thereby the other participants. He states: “people trust each other but mainly they trust that our company has checked if the other person is trustable and that they won’t steal their asset. And even when it will get stolen that it is insured”.

All companies include technology to control the trust between strangers. They verify their participants by Facebook, credit cards, driver licenses, passports etcetera. Part_5_CCR acknowledge that his organization covers most of the trust. “We as Company X control the identities, driver licenses and implemented some safe cards”. Part_4_BR also argued that the trust between strangers depends on the technology implemented at the platform. Besides the screening of the participants at the entry of the platform most of the companies implemented a review and rating system. These rating and review system will give the participants a reputation based on their previous transactions at the platform.

Part_9_CR indicates the importance of the rating and review systems and states that it makes the platform self-regulating. He explained this with the example that “when you rent out a dirty car to someone, he or she will write a bad review causing that other people will not want to rent your car anymore. This works also vice versa when someone returns the car dirty for example”. All companies also use their rating and review system to influence the search results of the demand side. A lower reputation comes along with a lower rating in the

34 search results. For example Part_7_P said: “if a hub in London gets a bad review, the next time someone will search for a hub in London he will end lower in the search results”. However Part_2_JT explains that most rating & review systems are biased. She states that “it is very tempting to only give the maximum stars. It is difficult for people to give bad reviews”. Part_1_PS acknowledges that besides the self-regulation advantage the rating and review systems also create one other huge benefit. She mentions another huge benefit concerning rating and review systems. It has an effect on the behavior of the participants of the platform. She states: “it is more to control people’s behavior. If you know that your actions will be reviewed you will be extra careful. It does not prevent people from using Platform X but it prevents them to break things barrowed at Platform X”.

Another element that most platforms used to enhance the trust in the platform is that it provides insurance for the lent asset. Part_9_CR even states that without the insurance people will never share their car. He states: “the most important concept of Company X is the insurance”. Part_5_CCR also acknowledge the importance. He refers to that what their potential clients frequently argue is: “no I will not lean out my caravan. It is already hard for me to return from holiday without damage, not to mention how hard it will be for someone without experience”. Insurance covers the possible damage.

Only one platform has no rating & review systems or insurance and that is the original Peerby platform. However, trust between strangers and in the platform is no issue for them. Part_1_PS argues that this happens because of their platform is community based. You will rent and lean out stuff to and from your neighbors. She states that: “people have a natural trust with people in their neighborhood. Furthermore when you misbehave there is a good chance you will meet them the next day in for example the supermarket”.

5.1.3 Idling capacity Eight out of ten managers call the idling capacity a precondition for the sharing economy. Part_1_PS states: “well if you want to have a sharing economy you need idling capacity. Otherwise there is no sharing economy”. Supplementary Part_9_CR says: “to start with the idling capacity. For me it was needless to say because without unused cars, unoccupied houses, unused objects there is no platform”.

However Part_5_CCR argues that that the asset not only needs to have idling capacity but that the owner also needs to be able to perfectly predict when he or she needs to use the assets itself. Part_5_CCR: “things like a hand vacuum cleaner, maybe a weak example, you

35 use that so irregular that you do not know when you could lend it out for a longer period”.

Part_2_JT has a different opinion on the idling capacity. She argues that not all capacity that we call idling capacity is originally idling capacity. For example when people go on holiday and rent out their house on Airbnb, it is called idling capacity. Those people generate money by renting out their house on Airbnb whereby they can afford it to go on holiday. Without the existence of the sharing platform they could not afford to go on holiday. Therefore the idling capacity is created. Part_2_JT states:” for me the idling capacity is less relevant because the supply can be created”. Another great example is Uber, when people will drive an Uber cab in their spare time to collect some extra money while without the existence of Uber they did not do it.

Another interesting result is mentioned by Part_7_P. He said that there needs to be idling capacity locally. Their competitive advantage is that they have idling capacity closer to the demand side. Part_7_P: “you got access to assets within your neighborhood through which we could operate much faster. It is local”.

5.1.4 Critical mass Nine out of ten participants agreed that the critical mass is definitely a critical success factor. Part_6_S states: “the critical mass is absolutely true”. Part_2_JT explains it further: “there is one thing that definitely important and that is that you need a lot of supply and demand on the platform. The chance on a successful match is in that way the highest”.

The managers also noticed the level of their critical mass. Part_6_S admits that they know that per education program they need an x amount of suppliers and an x amount of users. When they have reached that amount their growth will continue by itself and it will become self-sustainable. Part_4_BR also acknowledges this fact. He admits that he needs an x amount of bikes per region in Amsterdam to become self-sustainable. After they reached that point their platform faced organic growth. Part_9_CR also admits that they have experienced and thereby set a critical mass per region.

According to Part_5_CCR the critical mass must be in balance. There must be a balance between supply and demand. “The more people that are willing to rent out their asset, the more valuable it will become for the renter. And the more people that want to rent the asset the more valuable it will become for the supply side”.

There are several ways that companies use to reach the first critical mass. Results showed that it is important that it reaches it critical mass in time so that the platform will continue by itself thereafter. Two companies needed to first artificial create the first users. Part_3_CR noticed that when they started firstly only a few people joined their platform. Part_3_CR: “when we first launched it we got a few early adapters that used it. But that remained the people that used it. Then we thought we buy ten bikes and give them to the early adapters and they could rent out the bikes for us. Then you got a girl that suddenly rent out two bikes a week and earns money with it. Others saw that and wanted to rent out as well which created an organic growth”. Others did not need to artificially create their first supply. Those companies were the first that started the peer-to-peer sharing business for their specific product which generated lots of PR and free publicity through which they generated and reached the critical mass right after the start. Part_4_BR stated: “in the beginning we had success purely because of the PR. That’s why the organic growth became. Because it was unique and new”.

Results also showed that the critical mass is very local. There have to be enough supply and demand in a specific area, for instance for Part_9_CR per city district and for Part_6_S per education program. Part_5_CCR stated: “location is very important as have we noticed”. Part_4_BR admits that you have to start in a small region and grow from thereupon. He argues that you have to build upon from a hub, like for them it was Amsterdam

Results showed that there are two ways to focus on a specific region. Four organizations used ambassadors to generate extra supply and demand. Part_7_P: “hubs that were highly active at the platform were selected to be ambassador. For instance in London and New York we have an ambassador. Those ambassadors were very important for the growth of the platform in the beginning”. Part_6_S argues that because of the ambassadors’ strategy their concept of starting the business locally becomes scalable. Part_9_CR indicates that they use much targeted marketing campaigns. Part_9_CR: “we keep that in mind trough geographically very specific marketing, so in certain areas, villages, we do locally focused marketing campaigns”.

People have to be willing to participate in the sharing economy. Results of the interviews showed that economic benefits were the main motivation for people to participate. Part_10_HR admits that the main reason for his supply side is to make money. Part_8_CR also acknowledge the fact that the main motive is for the participants is the economic benefits.

She states: “in the end people that rent out their car choose for it because then they can park for free”. Part_5_CCR acknowledge that: “I think that the renters and lenders participate because of the money”.

Part_4_BR admits that people participate for economic gains. However he also argues that they do it as well because they can help others. Otherwise the asset would not be used at all during that time. Part_3_CR states that initially people start sharing to gain money. But they keep doing it because of they enjoy sharing. Part_7_P states that from the supply side people start sharing their idling capacity because they enjoy sharing and like helping the community. He talks about the hubs: “for them it is really a hobby and at a certain point you have already made everything that you could, than they want to help the others in their neighborhood. So I think that for us the belief in commons is the biggest factor for the critical mass for the supply side”. Supplementary Part_1_PS says that people like to help others. When you help someone your karma will rise. However Part_5_CCR argues that when you introduce financial triggers all social and sustainable motivations will disappear.

5.1.5 Additional CSF’s At the beginning of each interview the question was asked if they could name CSF’s for peer to peer platforms. At the end of the interview after discussing the four CSF’s from the previous paragraphs a probe question was asked if they missed CSF’s besides those four. Results showed that two possible critical success factors were named frequently and independent of each other: economic benefits and convenience. Besides those two the interviewees named some other possible CSF but they were all only mentioned once.

Economic benefits can count for the demand, the renter, as well for the supply, the user. The frequently mentioned CSF that emerged from the results concentrated on the demand side. All managers stated that the offering has to be cheaper than the traditional offerings. Part_9_CR states: “it must be cheaper than the existing services. The services of for example Company X must be cheaper then renting a car at Hertz”. The reason he gives is that you will not get the service that you get at a traditional company. If you stay at a hotel you are assured that the room is clean, sheets has been washed etc. When you rent a room via Airbnb it be could that the room that has been rent is dirty. There is no check like there is at traditional hotels. Part_8_CR admits this. Her company even has a price guaranty that it is always 25% cheaper than all other car rentals around the airport Schiphol.

However Part_1_PS firstly admits that indeed it must be cheaper. However, thereafter she changes her mind and states that it is merely concerned about the value of the deal. She states: “A lot of things on Airbnb are more expensive than a hotel. But then it could be that you are sleeping in somebody’s treehouse. That is a really good, just a really good deal”. Part_5_CCR supports her view. He states that to break with a habit you need to add value. People need to see the value of it. This can be the social, convenience, or price.

The second factor that was frequently named was convenience. Eight managers admitted that the app and or website of the platform should be easy to use. Supply and demand should be easily and quickly matched. Part_2_JT gave a good example: “if I need to perform many proceedings for lending my drilling machine than it is not so important for me to rent it out”. Part_7_P goes even one step further and claims that the convenience of the platform keeps the participants on the platform. Part_8_CR admitted that one of the reasons that people rent out and park their car at our company is for the convenience. They get a private shuttle bus to the airport and the car is totally clean when they return from their holiday. Furthermore Part_2_JT suggest that the speed of the match between supply and demand is very important.

Other possible CSF’s were only mentioned once. Part_4_BR admitted that people have to know what your company does and why. Part_5_CCR argues that the platform should focus on one specific kind of asset. Part_10_HR names that the attitude of the government has to be positive towards the sharing economy. The government controls the sharing economy with rules and regulations. Additionally he also mentions the mindset of the society towards the sharing economy. Part_3_CR argues that the product that is shared on the platform must be totally accepted in the society, like bikes in Amsterdam.

Besides specific CSF’s for peer to peer sharing platforms, CSF’s applicable for all types of companies were mentioned. Part_4_BR suggested that the company should focus on growth hacking. Part_9_CR mentions what he calls the common factors, good managers, good HR policy, and a good quality of service. Supplementary Part_1_PS names CSF’s for e- business companies. Part_1_PS: “a lot of things that are important for peer to peer platforms are also important at regular platforms like amazon and bol.com. Retention, that you activate people to place their order, and that the potential customer leaves their details”.

5.2 Relation between CSF’s During the interview was asked if the managers recognized relationships between the CSF’s, the influence of one critical success factor on the other.

The most frequently mentioned link was between trust between strangers and the critical mass. Part_6_S proclaims: “you will only reach the critical mass if there is trust”. Part_2_JT says: “These to fit together: trust and critical mass”.

Part_8_CR admits that trust is an issue for the supply side of their platform. She noticed that within a year people have more trust in the platform and thereby they are more willing to share their asset on the platform.

On the other side, the critical mass also affects the trust between strangers according to Part_5_CCR. When people live closer together they have more trust in each other. Anna admits that because people want to help others in their neighborhood they form a community that has a positive contribution to trust.

Part_10_HR suggest the influence of belief in commons on trust between strangers. When people like to help others and feel comfortable participating in the sharing economy they will automatically have more trust. Part_10_HR: “if there is a positive image, that it is not weird to share your house then there will be more trust”.

Part_3_CR proclaims that to reach the critical mass there has to be an idling capacity. Otherwise people will not share their assets.

Part_9_CR acknowledges that there is cohesion between the CSF’s. But he cannot designate which one has influence on each other.

5.3 Extra results For this research a variety of the participant’s product and or service offerings in the sharing economy was chosen. However the organizations also contained similarities. The platforms of participants 3, 4, 5, 8, and 9 all focused on vehicles. Participant 2 and 7 both offered services, and participant 1 and 2 both exclude rewards for sharing in the transaction. Investigating the results shows no significant cohesion within these groups. Vice versa no participants showed significant cohesion with other participants and therefore no new groups or links were found. This result shows that the participants all comprehend individual answers in respect to this research.

Next to the results concerning the critical success factors the interviews revealed some very interesting insights that could add value to the research. Three participants proclaimed that money changes the perception of the transaction.

Part_1_PS argues that people like to pay for the things they borrow. She states that: “renters feel uncomfortable for using stuff from their neighbors without giving them something in return. They are a bit ashamed. When they pay for the usage they will get the feeling that the transaction is finished”.

Another interesting thing that came up during the interview is that if you don’t include money into the transaction but just exchange assets for other assets the perception of value changes. Part_2_JT gave a great example. She performed a home exchange with a family from Madrid that had a huge house including swimming pool, private tennis court etc. Her house was a normal size house in Amsterdam. Normally on Airbnb you would pay a lot more for that the villa in Spain then her house in Amsterdam. But because the Spanish family wanted to see Amsterdam and Part_2_JT wanted to visit Madrid it was a good deal for both of them. But if you would include money the deal was better for one side then the other.

Part_5_CCR states that when you add financial triggers to a transaction, all social and sustainable motivations are forget.

Sharing the discussion

6. Discussion The goal of this study is to define the critical success factors for peer to peer businesses in the sharing economy. The sharing economy is facing an enormous growth with an even bigger market potential. Therefore many startups begin in the sharing economy. When you start a business it is of crucial importance that you know where you should focus on, what are the factors that are critical to successfully start your business? Peer to peer sharing platforms are different than the traditional organizations and thereby experience different and additional CSF’s. This research focusses on these CSF’s, the ones that are especially important for peer- to-peer sharing platforms. Based on this the following research question is introduced:

What are the Critical Success Factors for peer-to-peer platform in the sharing economy?

To answer this research question the following sub questions were elaborated:

To answer the research question qualitative data from the interviews and secondary data from the literature study is analyzed and contrasted. This chapter will discuss the gathered data. First the critical success factors for peer to peer sharing platforms are defined (sub question 1). Secondly the relationships between the CSF’s and the sensitized concept conducted from the literature will be analyzed and if necessary revised (sub question 2).

6.1 The Critical Success Factors It is for organizations in the sharing economy for major importance to know which factors are crucial for them. During the literature review four CSF’s were found. These will firstly be

42 analyzed using the data from the literature and contrasting it with the qualitative data gathered from the interviews. In the second section the existence of additional CSF’s is analyzed.

6.1.1 The four CSF’s Analyzing the data from the literature showed four critical success factors, namely: belief in commons; trust between strangers; critical mass; and idling capacity. These four were all critically examined and discussed during the interviews. In this section the results of the interviews will be compared with the results of the literature review resulting in an answer to the sub question 1b.

The first CSF tested is the belief in commons. The belief in commons addresses the goodwill of the humankind. The perception of by providing value to the community, you improve your own value. Drawn from the literature, the belief in commons can be separated into two elements: being sustainable and helping others. With being sustainable was meant that the current needs are met as fully as possible while at the same time the life opportunities for the next generations are undiminished (Weiss 1992). Research showed that only one manager out of the ten interviewees named sustainability as an important element of his business. It seems like the sustainable benefits, less environmental degradation comparing to traditional business, was not one of the top reasons why people choose to participate at their sharing platform in contrast to results from the literature review (Burnett 2015; Hamari et al 2013; Tussyadiah 2015). The other side of the belief in commons is the ability to help others. Literature (Sizelove 2013) showed that the perception of helping others was one of the top reasons for participation. Results from the interviews showed that at the demand side this was not the case. People rented from others because they needed the usage of the asset. They had an intrinsic motivation which makes sense. Looking at the demand side, managers acknowledged the fact that people also shared their assets because they enjoyed it, they enjoyed helping others. However most managers still indicated that the top motivation to share is the intrinsic reason of gaining money. Supplementary most managers proclaimed that the belief in commons was not a real critical success factor but a great outcome of the sharing economy.

Looking at the results of the interviews and comparing them with the literature I admit that the belief in commons is not a critical success factor for all business in the sharing economy. However for some business it is. For example at the house sharing platforms, for Airbnb people mostly share their house for monetary reason. But that is also because people

43 who possess the motivation to share their house just to help others can do this on Couchsurfing, a peer to peer house sharing platform which excludes rewards in return. Concluding, for some platforms the belief in commons is a CSF, but in general it is not a CSF for all peer-to-peer platforms in the sharing economy.

The second CSF tested is the trust between strangers. Trust indicates the belief that other people will react in predictable way (Luhman 1979). Trust between strangers indicates the perception of trust between the renter and the user. Previous literature showed that trust has a significant influence in the purchasing intentions of consumers for all online shops (Chen & Barnes 2007). This is important because all peer to peer platforms are platforms via a website and or application. Supplementary literature also indicated that for peer to peer platforms trust is even more important than for traditional online websites because the middle man is removed (Botsman and Rogers 2011). Previous research also showed that lack of trust was the biggest deterrent for people to participate in the sharing economy (Tussyadiah 2015). Results from the interviews showed that indeed trust is important for peer to peer sharing platforms. All managers agreed that trust is a major concern for them. However, they accepted the term trust, but not all accepted trust between strangers. Most of them proclaimed that the participants needed to trust the platform and company and thereby indirectly already partially trusted the other party of their transaction. Results from the interviews showed that the participants assume that the platform executes a good and critical background check at all the participants. Furthermore the platform also creates “safe cards” that lowered the needed level of trust. Including an insurance makes the risks for the for example car owner lower. If the user of the car crashes, the renter is assured that the platform will repair his car. Supplementary the platform arranges the payment. The payment to the platform is done before the transaction but most of the times the lender will be paid after the transactions. Thereby both sides know that their money is safe and there are no scammers. The managers indicate that due to technology, trust can be built and controlled at the platform. All platforms implemented a rating and review system. This was also mentioned in the literature to generate trustworthiness (Josang, Ismail & Boyd 2005). The outcome of the rating and review system is a reputation trail for the participant that affects their further business inquiries. However results from the interviews also showed one other positive point regarding the review and rating systems. People will pay more attention on their own behavior because they know they will get reviewed. Bad behavior will result in a bad review. Another result from the interviews

44 is that a community automatically has trust. Looking at for example Peerby, their participant trust each other because of they live in the same neighborhood.

Concluding, trust is very important for peer to peer sharing platforms. However this is mostly controlled by the platforms itself. People have to trust the platform and thereby automatically partial trust the other participants. For the platform it is beneficial that the participants do not fully trust each other without the platform. One of added values of the platform is that it creates more trust and implements trust, insurance and safety systems at the transaction. The needed level of trust is lower and the trust between the participants increases due to the platform. When people fully trust each other, the second time they can choose to exclude the platform for their transaction to exclude the transaction fee. If participants already fully trust each other the platform cannot add that extra value. People are willing to pay the transaction fee because they need that extra value. A great example is Peerby. At Peerby people lend from their neighbors. Results showed that people already trust others in their neighborhood. Therefore Peerby did not need to set up technology that increases the trust and safety and thereby Peerby does not charge a transaction fee and thereby generates no cash. The platform has to make sure it can provide that extra bit of trust at the transaction. Therefore trust in the platform is a critical success factor.

The idling capacity is the third CSF tested. It is the unutilized capacity of the asset. According to the literature the asset has to have idling capacity to be rented out (Botsman and Rogers 2012). Previous literature also indicated that people needed to be willing to share their idling capacity (Salento 2014). Results from the interviews indeed showed that the existence of the idling capacity is the precondition for starting a business in the sharing economy. However this idling capacity does not need to exist beforehand, it can also be created. For example at Airbnb, people receive money for renting out their house when they are on holiday. Due to the fact that they receive that money they can afford to go on holiday. Without the existence of Airbnb they would not have idling capacity. Besides the potential the people need to be able to predict when he or she needs to use the asset themselves. Without knowing that specific part people do not know when they could miss their asset and thereby cannot predict the time of the idling capacity. However for most important stuff people are able to predict when they definitely need it. The third result of the interview showed that the idling capacity needs to be local. If someone has idling capacity, someone else in his surroundings needs to have the demand to use it. Otherwise the idling capacity stays unused.

Nonetheless when the platform reaches its critical mass, it has enough participants in a specific region to be self-sustainable and thereby the idling capacity will be used.

Concluding, the existence of idling capacity is the precondition for peer to peer sharing platforms. However this is the potential idling capacity. It does not need to be there before the start. But without potential idling capacity there is nothing that can be shared. Therefore this research admits that the potential idling capacity is a critical success factor for all peer to peer sharing platforms.

The last critical success factor drawn from the literature is the critical mass. This indicates the existence of enough participators, supply and demand, at the platform to make it self-sustainable. Results from the interviews showed that the critical mass is a critical success factor. Nine out of ten interviewees admitted that they experience the crucial effect of the critical mass. They knew how much participants they needed before the platform will become self-sustainable. Self-sustainable means that they did not need to intervene anymore. Interviewees recognized when they reached that particular point, they noticed an organic growth afterwards. Results also showed that for one platform there is not only one critical mass. The critical mass is very local. There must be enough participants that share their asset and enough people that want to rent the asset in one specific region. If there is enough supply and demand in that specific region the chance of a successful match is the highest. I investigated how the organizations reach their critical mass, and why people want to participate at the platform. Results from the literature shows that the main reasons that people participated at the platform is that it has economic benefits. For the renter this means that it is cheaper than renting a comparable asset at a traditional firm and for the supply side it means that it generates money with the idling capacity. Other reasons are that the participants like to help others, the community and the environment. As mentioned at the beginning of this chapter results from the interviews show that people are not driven because of sustainability. Some people that shared their asset are driven because of they wanted and liked to help others, but moreover they are motived by economic gains. This shows that the secondary data from the literature and qualitative data from the interviews correspond except that the literature suggests that people have more altruistic reasons. The difference could be explained because this research was conducted with the managers of the peer to peer platforms while most literature targeted the participants. When someone asks you if you perform your action for the common good or just out of self-interest, you would prefer to tell them for the common good because in that way you improve your own status. The managers

46 independently observe the behavior of their participants and do not improve their own status by choosing one of the two answers. Other interesting results gained from interviews showed how the companies reached its critical mass. How did the platforms motivate the participants? Results from the interview show that two platforms artificially created their first users concerning the supply side. Simplistic, they started as business-to-consumer platforms. And when they reached the critical mass, they stopped intervening at that region and let the platform become self-sustainable peer-to-peer platform. Most companies also used PR. As a start up in the booming sharing economy you get a lot of media attention. In that way they were able to reach their target groups. Another great way to reach to their potential participants is with targeted marketing. Because the critical mass is very local, the platforms need to advertise locally. The last option the platforms used to reach its mass was to appoint ambassadors who would help setting up the business at that specific region.

Determinative if a peer to peer platform wants to be successful it has to reach its critical mass. Without reaching its critical mass it always has to intervene and in some cases even stay a business-to-consumer company. Therefore it can be concluded that the critical mass is a critical success factor for peer to peer platforms.

6.1.2 Additional CSF’s During the analysis from the qualitative data gathered by the interviews I noticed that two additional CSF’s were frequently mentioned by the interviewees: economic benefits and convenience.

Data from the literature review shows that economic benefits are one of the top motivations for people to participate in the sharing economy. The research of Sizelove (2013) showed that the top reason for people that did not participate yet was economic gains (41 %) and for people that did participate already it was the second best motivations with (31%). Supplementary research from Hamari et al (2013) shows that economic benefits significantly affect the behavioral intentions. Tussyadiah (2015) research indicates three drivers to collaborate in the sharing economy including economic benefits. As mentioned in the previous paragraph, data from the interviews show that the economic benefits were frequently mentioned. Part_9_CR indicated that it must be cheaper than traditional services because you face more risk than at traditional companies. Part_8_CR offers are always is 25% cheaper than its competitors. Part_5_CCR mentions that it has to be cheaper or the quality has to be better. A sharing platform has to add more value for the same price than a traditional company

47 because people are used to buy a traditional shop. And to overcome and change a habit you have to add something extra: price or quality. Comparing the literature with data from the interviews it seems like the interviewees are thinking one step further. Indeed it has to be cheaper, but it has to be cheaper for the same value. It does not have to be cheaper when the value of the offering at the sharing platform is higher than the value of the traditional firm. The motivations for people to rent a car from for example from Getaround (a peer-to-peer car sharing platform) than from Hertz can be because of the lower price or a better car for the same price.

Therefore concerning the demand side of the sharing platform, the price/value ratio is a critical success factor for the peer to peer sharing platforms. The shared assets have to have a lower price or better value compared to the traditional firms. To break the traditional habit the platforms have to offer a better option. In the future when the sharing economy will be fully accepted and the habit is changed this does not need to be a critical factor but at this moment it is a critical success factor.

Eight out of ten participants mentioned convenience as a possible critical success factor. With convenience is meant that it should be easy to use and the transactions have to run smoothly without any hazards. The participants should be able by performing just a few short steps to hire or rent out their asset. Concerning the literature Burnett (2015) showed that convenience was the second best motivation for people to participate in the sharing economy with 28%. Corning the data form the interviews all managers admitted that the platform must be easy to use. They stated that without convenience people will be less willing to share their assets. Results also showed that because of the convenience people keep using the platform and would not exclude the platform in the next transaction. For example if someone rents something for 5 euro, he would say you get the five euro later, five euro is not very important. But after a while both parties forgot it and the sharer did not receive his five euro. Using the platform provides the convenience that the five euro will be paid directly after the transaction. Another thing concerning the supply side is that the sharers are also motived because they feel the need to help others. They like to help others and believe in the common good. But when it takes them a lot of time and effort to share something it will withhold them from sharing.

Concluding the convenience of the platform and thereby the transaction is a critical success factor for peer to peer platforms. Especially concerning the supply side because most of the people do not have the intrinsic need to share their asset but they just like and enjoy it.

While the renter, the users of the asset has the intrinsic need of using the asset. Therefore the sharers are less willing to do much effort for the transactions and need convenience of the platform.

6.2 The relation between the CSF’s and revision of the conceptual model Before conducting the qualitative research, the conceptual model was elaborated based on the literature review showing the relations between the four CSF’s. The conceptual model can be seen in chapter three. After critically examining the results of the interviews this model has to be rejected.

Results of the research derived two additional CSF’s for peer to peer sharing platforms: price/value ratio and convenience of the platform. Furthermore the trust between strangers and idling capacity changed in trust in the platform and potential idling capacity. Results also showed that the belief in commons was not a critical success factor for all peer- to-peer platforms in the sharing economy.

It can be concluded that it is for essential importance for peer-to-peer sharing platforms that it reaches it critical mass. Without reaching its critical mass the platforms will not become self-sustainable and the organization behind it will face too much costs. The platform will only reach its critical mass when it complies with the following critical success factors: trust in the platform; idling capacity; price/value ratio; and convenience of the platform.

Without the existence of potential idling capacity there is nothing and will not be anything that can be shared. When there is nothing that can be shared there will be no offerings at the platform and thereby will never reach its critical mass. The existence of the potential idling capacity is the precondition to reach the critical mass.

Without trust in the platform people will not share their assets on the platform. Vice versa if people do not trust the rented asset people will not want to use the assets from others. The platform will not have any participant and thereby will not reach its critical mass if there is a lack of trust in and at the platform by and between its potential participants. Therefore trust in the platform has significant influence in the critical mass. On the other hand when the ‘mass’, the participants on the platform grow, it will create a community. Results from the interviews and literature show that people in a community automatically have more trust in each other. Supplementary, if many people participate, the usage of the platform becomes

‘social proof’. Indicating that people will think it is normal to participate in the sharing economy and thereby are less deterrent and have more confidence in the platform. Therefore the critical mass also influences the trust in the platform.

Consumers are used to buy and rent or borrow from traditional companies. Renting from another person is not their standard way of business. They are not used to it. Hence people are more likely to rent from traditional companies than rent from other people at the platform. Therefore the offer must be more competitive, the value has to be higher or the price has to be lower. Otherwise most consumers will prefer to choose for the traditional way because they are used to it. And without people that want to rent from other people, the platform will have no participants that want to use the offerings and thereby will not reach its critical mass. The price/value has to be better than at traditional firms.

The platform has to be convenient to use. People that want to rent an asset have to be easily matched with someone who rents out that asset. If it will become too much effort to get this match people will not participate at the platform, especially for the supply side. Therefore the platform has to be convenient to reach its critical mass.

All these links developed in the following model:

Figure three: the revised model

Potential idling capacity

Trust in the platform Success of the peer to peer Critical mass sharing Price/value ratio platform

Convenience of the platform

7. Limitations and implications This chapter will fist explain all the limitations that were faced and experienced during the research. Secondly it will provide a detailed overview of the theoretical and managerial implications resulted from this research.

7.1 Limitations This research and its findings should be considered in the context of its limitations.

Reliability

The data was collected through semi-structured interviews which could let to participant bias. The possibilities that participants of the interviews might were inclined, intentionally or unaware, to confirm the answer that was favorable for them or the right thing to say in a given situation. By using the interview guideline including the introduction and the definitions of the critical success factors drawn from the literature I tried to prevent observer error. Hence it occurred that probe questions differed per interview which can still lead to observer error. The data of the interviews were recorded, transcribed and thereafter analyzed. Observers can interpret the transcribed data in different ways what causes observer bias. Furthermore only semi-structured interviews were used in this research. It is possible that other research methods could lead to different outcomes. Using quantitative research methods could perhaps lead to additional insights. Nonetheless, it is expected that the main findings of this research will not be altered.

Validity

Within the sharing economy there are several kinds of service and product offerings. Due to time constraints ten interviews were held with different kind of companies within the sharing economy. What I noticed during the interviews was that different kind of companies, that offered different services or products, experienced different problems. Thereby this research could only focus on the critical success factors that were applicable for all different kind of companies in the sharing economy. Each specific business, like the peer to peer car rental, or the peer to peer housing rental have other critical success factors that were not further measured in this research. Therefore the sample size had too much variety. For this research is chosen to interview different kind of companies focusing in different markets with different products. But to discover and study all the CSF’s for one specific market, the research has to focus on one market. This is a recommendation for further research.

Additionally this research focused on Dutch organizations that possess peer-to-peer sharing platforms. All interviewees were Dutch and their organizations mainly focused on the Dutch market. The study could benefit from interviews at other countries in other parts of the world to see if there are conflicting results. Furthermore this study focused on start-ups in the sharing economy, which indicates that the companies are maximum a few years in business. Simultaneously this is because the sharing economy is relatively new. Hence these managers have less experience than people who have work for ten years or more in one company or market. Therefore it could be that they do not have experienced everything that could have added value to this research. Supplementary, due to the fact that the sharing economy is relatively new, limited academic literature is written and available concerning this subject.

7.2 Theoretical and managerial implications This paragraph focusses on the implementation and contribution of this research to firstly the academic literature. Secondly the managerial implications are described.

7.2.1 Theoretical implications Limited academic research has been done regarding the critical success factors for peer-to- peer platforms in the sharing economy. Only one ground breaking book has been written by Botsman and Rogers (2012) were they describe four critical principles, in this study named and seen as CSF’s. However they describe four CSF’s that are applicable on all organizations in the collaborative consumption. This study focusses on a specific part of the collaborative consumption, the sharing economy. This research specializes even more by focusing only on the peer-to-peer sharing platforms. This is the first research that investigates the CSF’s for peer-to-peer sharing platforms in specific. The study builds upon the study of Botsman and Rogers by firstly test the CSF’s resulted from their study. Thereafter this study included additional CSF’s and describes the relationship between the CSF’s for peer-to-peer sharing platforms.

7.2.2 Managerial implications Critical success factors are for major concern for organizations. Peer-to-peer sharing platforms possess other specific CSF’s than traditional firms because they have another business model. Knowing their specific CSF’s provides the organizations a head start. This research shows that an operation for peer-to-peer sharing platforms is successful when it reaches its critical mass in that specific region. Therefore the biggest measurement for success for the platforms is to look if they have reached the critical mass. This research also shows

52 how the critical mass can be reached. At first, when a company wants to start a peer-to-peer platform in the sharing economy it has to investigate the existence of the potential idling capacity of the products/ service they want people to offer at their platform. If the firm concludes that there is or will be idling capacity the firm has to take care of the following factors.

The firm has to create trust in the platform from its users. This can be done by implementing extra services: insurance; screening of the participants; safe cards; review and rating systems; buyer’s protection; money back guarantee; and credit card deposit. The peers on both sides of the platform will partially trust each other because the platform assures the other side is trustworthy. Undoubtable there always will be a few participants that are frauds but because of the extra service of the platform the participants are protected for frauds.

The offerings on the platform must have a better price/value ratio than traditional firms because it has to change the habits of the consumers. The managers controlling the peer- to-peer sharing platform have to take care that the participant’s offerings at the platform provide extra value compared to traditional firms or offer the same value for a lower price.

During the development of the platform managers have to assure that the platform is easy to use. The platform has to be convenient, especially for the sharers. At most platforms you will not get rich by sharing, people also have to enjoy sharing their assets. If it will take them too much effort to share, they will be less willing to share their assets. Therefore supply and demand have to be easily and quickly matched.

When the firm complies with the CSF’s above mentioned, the firms can use other ways that will accelerate the growth of the participants at the platform and thereby reach the critical mass. The organization can choose to first artificially create the first users via providing the first offerings them self. The company will start as an “invisible” business-to- consumer platform. Thereafter the critical mass is reached and a local organic growth from users will follow. Furthermore the organization can use ambassadors that will be responsible to generate the first participants and thereby reach the critical mass. At last the organization should use targeted marketing and PR.

This study can be used as a guideline for organizations that want to start a peer to peer business in the sharing economy.

Sharing the conclusion

8. Conclusion & future research This study contributes to the growing knowledge base about the sharing economy. The study investigates the critical success factors for peer-to-peer platforms in the sharing economy and examines the relationships between these factors. Literature analysis and empirical research was done to define the CSF’s and the impact of and between the factors. The main research question of the study is:

What are the Critical Success Factors for peer-to-peer platforms in the sharing economy?

To answer the research question at first a literature review was executed. Drawn from the literature four CSF’s were identified: belief in commons; trust between strangers; idling capacity; and critical mass. Results from the literature showed that belief in commons and trust between strangers affect the critical mass while the critical mass and the idling capacity influence the success of the peer-to-peer sharing platform. This resulted in the conceptual model shown in chapter three.

The next step was to test and validate the model using a qualitative research design. The data was gathered using interviews with managers and or owners of peer to peer platforms in the sharing economy. Ten semi-structured interviews were held and recorded. Afterwards the recordings were transcribed and analyzed. The four CSF’s gathered from the literature were examined and the existences of additional CSF’s were investigated.

Results from this study showed that the conceptual model needs to be rejected. By analyzing the qualitative data I concluded that the belief in commons is not a CSF for all peer- to-peer firms in the sharing economy. Furthermore one CSF was accepted, the critical mass. This study revealed the importance of the critical mass. For peer to peer sharing platforms it is crucial to reach its critical mass. When the platform reaches its critical mass, it will become self-sufficient and an organic growth of participants will follow. Reaching the critical mass is a measure of success for the platforms. However firms experience local critical mass. It has to reach the mass at each specific region. Two other CSF’s were partially accepted. First of all without the idling capacity there is nothing to be shared. Results showed that the idling capacity is the precondition to have people sharing on the platform. However the idling capacity can also be created. Therefore the CSF idling capacity is altered into the potential

54 idling capacity. The last CSF drawn from the literature is trust between strangers. Trust is the belief that the other party will react in a predictable way. Undoubtedly trust is very important for peer-to-peer sharing platforms. However results showed that participants first have to trust the platform and thereafter the platform can create the trust between the strangers and can lower the required level of trust of the strangers. It could be said that the lack of trust between peers creates the business for peer-to-peer sharing platforms. The organization adds value by creating trust between the participants and by implementing more safety in the transaction. Therefore the CSF is altered from trust between peers into trust in the platform. Supplementary two additional CSF’s were found: price/value ratio and convenience of the platform. Consumers have to overcome their habits; therefore the offerings at the platform have to possess more value or a lower price than traditional firms. Consumers are used to rent assets from traditional organizations. For instance if they want to rent a car they are used to rent it from a car rental service and not from their neighbors. To overcome this habitude the offerings at the peer-to-peer platforms have to possess extra value or have a lower price. When the sharing economy is fully accepted and the habitude will change and the CSF will disappear. But for now a better price/value ratio is a critical success factor for peer-to-peer sharing platforms. Furthermore, without convenience people will not use the platform. The platform has to work efficient and should be easy to use. Supply and demand have to be easily and quickly matched. Especially corning the supply side, the sharer of the assets should not have to do much effort because otherwise he could be discouraged; he does not needed to share his asset. To that end convenience of the platform is considered a critical success factor.

Concluding, when the firm reaches its local critical mass, the firm can succeed in that specific region. It can only reach that critical mass when it complies with the CSF’s: potential idling capacity, trust in the platform; price/value ratio; and convenience of the platform.

8.1 Further research Avenues to explore future research are offered by this study. This study builds upon the study of Botsman and Rogers (2012). In contrast to the study of Botsman and Rogers, this paper focusses not just on the collaborative consumption, but on a specific part of the collaborative consumption: the peer-to-peer platforms in the sharing economy. Still, during the research was found that the focus was not specific enough to generalize and review all the CSF’s that the peer-to-peer platforms in the sharing economy faced. Results showed that specific kind of

55 offerings possessed besides the in common CSF’s additional CSF’s for them in specific. For instance a car sharing platform has also other CSF’s in conjunction with a 3D printing platform. For this reason further research is recommend in specific kind of offerings in the sharing economy. Besides the kind of offerings this study focused on Dutch peer to peer platforms that were essentially active in The Netherlands. Further research regarding other countries and the difference between the countries would be very interesting.

Next to this, the proposed model was designed with the use of limited qualitative data concerning time constraints. Further research should validate the model using a bigger and wider amount of data that includes all kind of offerings in the sharing economy.

At last, the sharing economy is rapidly growing and in consequence the acceptance and mindset regarding the sharing economy is positively changing. Therefore in the future the results of the same investigation could differ. In that event further research is required in the future to investigate the CSF’s at that moment and observe the alteration from now.

An increasing awareness of environmental pressure drives people to find ways to use resources more efficiently in order to have a more sustainable society (Gansky, 2010)

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10. Appendices

Appendix A – E-mail to potential interviewees

Beste Name X,

Naar aanleiding van ons telefoongesprek zojuist stuur ik u hierbij een e-mail. Zoals

aangegeven aan de telefoon ben ik momenteel bezig met het schrijven van mijn master scriptie aan de Universiteit van Amsterdam gericht op de sharing economy. Hiervoor hou ik interviews met eigenaren en of medewerkers van bedrijven in dit gebied. Company X zou een uitstekend bedrijf zijn voor mijn onderzoek. Het doel mijn onderzoek is om factoren te definiëren waar het slagen van het deelplatform van af hangt, de kritische succes factoren. Ook zal uit onderzoek blijken hoe deze factoren te beïnvloeden zijn. De resultaten van het onderzoek zullen naderhand ook met uw bedrijf gedeeld worden.

Graag zou ik met u een afspraak willen maken om uw visie en ervaring over de sharing economy te bespreken. Het interview zal tussen de 20 en 30 minuten duren. Ik zag dat uw kantoor gevestigd is in City X. Naar uw wens kan ik langs het kantoor komen of eventueel ergens anders af te spreken voor het interview.

Hopelijk past dit in uw planning en hoor ik graag wanneer wij een afspraak kunnen maken.

Indien u vragen heeft kunt u mij ook telefonisch bereiken op het volgende nummer: 06- 31635355

Met vriendelijke groet,

Tim de Jong

Appendix B – Interview guide

Start:

Als eerste wil ik je graag bedanken voor je tijd en moeite om mee te doen aan het onderzoek

Het doel van het onderzoek is om de kritische succes factoren voor peer-to-peer sharing platformen te definiëren.

Ik zal dit interview opnemen zodat het later kan worden overgeschreven en daardoor gebruikt kan worden tijdens het onderzoek.

Het interview zal tussen de 20 en 30 minuten duren.

Achtergrond geïnterviewde

Leeftijd, bedrijf, functie, studie, ervaring

Introductie

De sharing economy is een economisch model dat is gebaseerd op het delen van bezittingen voor monetair en niet monetair profijt.

De laatste jaren is de sharing economy groter geworden door de nieuwe technologie, vraag naar duurzaamheid, en het verslechteren van de economie. Veel start ups werden het afgelopen jaar en zullen de komende jaren worden opgericht in de sharing economy.

Mijn onderzoek focust zich op de Kritische Succes Factoren voor deze start ups. De KSF zijn de Factoren waarvan het slagen of mislukken van een activiteit of onderneming vanaf hangt. Het zijn de elementen die kritiek zijn voor het bestaan van de onderneming.

Uit literatuur onderzoek komen vier factoren naar boven. Maar voor ik deze aan jou voorleg zou ik graag willen weten of jij al iets in gedachte hebt ?

Geïnterviewde kan nu zijn verhaal doen

Vier factoren

Botsman en Rogers noemen vier factoren in hun boek die van toepassing zijn op de collaborative consumption (het overkoepelende geheel van de sharing economy). “They share four critical underlying principles (Botsman and Rogers 2012)”

Belief in Commons

Door waarde toe te voegen aan de gemeenschap, verbeteren ze hun eigenwaarde. Door te participeren in het platform, helpen ze ook anderen. De goodwill van de mens.

Trust between strangers

De participanten op het platform moeten elkaar vertrouwen. Dus dat de peers aan beide kanten elkaar vertrouwen

Idling capacity

De idling capacity is de onbenutte capaciteit van een bezitting. De capaciteit over na gebruik van de eigenaar.

Critical mass

De kritieke massa van participanten die bereikt moet worden om het platform self-sustainable te maken. Dit geldt zowel voor de vraag als aanbod kant.

Einde

Wilt en of heeft u nog iets te vertellen over het onderwerp wat van toegevoegde waarde kan zijn voor mijn onderzoek?

Bedankt voor de moeite en tijd

Appendix C - Coding scheme

Coding scheme

 CSF’s o Belief in commons . Sustainability . Helping others o Trust between strangers . Trust in the platform . Trust between the peers . Trust systems  Review and rating systems  Insurance  Screening participants o Idling capacity . Creation of idling capacity o Critical mass . Generate critical mass . Motivations to participate  Enjoyment  Economic benefits  Convenience  Helping others  Sustainability o Additional CSF’s . Convenience . Economic benefits  Background participant  Sharing economy general  The rise of SE  Final question