Master’s Thesis M.Sc. Economics and Business Administration International Business What Drives Incumbent Firms to Acquire Sharing Economy Platforms? A Multiple Case Study Authors: Thibaut Evers Submission date: 15th of May 2018 Student Number: 107121 Total Characters: 244,211 Ida Mari Gundersen Supervisor: Ioanna Constantinou Student Number: 102528 Department of Digitalization Abstract Platforms from the sharing economy have turned traditional patterns of ownership upside down. The trend has fundamentally challenged market mechanisms and disrupted industries. Incumbent firms relying on traditional business models, seem to no longer ignore these threats. Apart from simple competition through differentiation, also partnerships and acquisitions are increasingly becoming relevant for the incumbent firms. This thesis aims to answer: “What drives incumbent firms to acquire sharing economy platforms?” In particular: “What are the incumbent firms’ strategic aims and integration strategies?” Lastly, this thesis provides insights of how these acquisitions affect the environment of the sharing economy. The Håkanson model (1995), as well as the business model by Johnson et al. (2008) lay the foundation of the analysis to answer the research questions. Herein, six cases that include an incumbent firm as acquirer and a sharing economy platform as acquisition target are studied in-depth. The aggregation and pattern matching analysis revealed three categories of incumbent firms. Based on their positioning in the value chain these categories include: The Manufacturer, The Distributor and The Maverick. These three categories of incumbents are distinguishable in their strategic aim and integration of distinctive product and service offerings from the sharing economy. The Manufacturer is motivated to move downstream in its value chain by capitalizing on customers that are access over ownership oriented. The Distributor’s motive is to complement its offerings with unique offers from the sharing economy. Lastly, the Maverick, represents a unique category, distinct in the way it integrates the sharing economy platform to provide additional services. Subsequently, the acquisition targets were revealed. Through the imposed changes on the sharing economy platform’s business model, the environment is affected by these acquisitions. Transaction costs are further decreasing, causing human interactions to decline. The sharing economy is considered by many as an advocate of social and environmental values; this master’s thesis suggests these values are rather positive side effects than embedded values. By answering the research questions, we lay the foundation of research for a newly emerged phenomenon. Furthermore, we give indications for future research from which practitioners, as well as academia will be able to benefit. 1 Glossary Abbreviation Meaning B2B Business-to-Business B2C Business-to-Consumer CEO Chief Executive Officer CFO Chief Financial Officer IoT Internet of Things M&A Mergers and Acquisitions OEM Original Equipment Manufacturer OTA Online Travel Agency P2P Peer-to-Peer 2 Table of Contents 1. Introduction ............................................................................................. 6 1.1 Discussion & Relevance ....................................................................................................................6 1.2 Research Gap .....................................................................................................................................9 1.3 Research Question .......................................................................................................................... 10 1.4 Thesis Delimitation ......................................................................................................................... 10 1.5 Thesis Disposition .......................................................................................................................... 10 2. Theoretical Background ......................................................................... 12 2.1 The Sharing Economy .................................................................................................................... 12 2.1.1 Critical Perspective on the Sharing Economy ........................................................................ 14 2.1.2 Current State of Research ....................................................................................................... 15 2.1.3 Business Models in the Sharing Economy ............................................................................... 17 2.1.4 Incumbent Firms within the Sharing Economy ....................................................................... 19 2.2 Mergers and Acquisitions ............................................................................................................... 22 2.2.1 History of M&A Waves............................................................................................................ 23 2.2.2 M&A in High Technological Environments ............................................................................ 24 2.2.3 Type of Acquisition .................................................................................................................. 25 2.2.4 Strategic Aims.......................................................................................................................... 25 2.2.5 Integration ............................................................................................................................... 26 2.2.6 M&A Success Criteria ............................................................................................................. 28 3. Conceptual Frameworks ........................................................................ 30 3.1 The Håkanson Framework .............................................................................................................. 30 3.1.1 Strategic Aim ........................................................................................................................... 30 3.1.2 Integration ............................................................................................................................... 33 3.1.3 Application .............................................................................................................................. 34 3.2 The Business Model Framework .................................................................................................... 36 3.2.1 Application .............................................................................................................................. 37 4. Methodology ........................................................................................... 40 4.1 Research Philosophy ....................................................................................................................... 40 4.2 Research Approach ......................................................................................................................... 41 4.3 Research Purpose ............................................................................................................................ 42 4.4 Research Strategy ........................................................................................................................... 43 4.5 Research Choice ............................................................................................................................. 44 4.5.1 Secondary Data ....................................................................................................................... 44 4.5.2 Time Horizon ........................................................................................................................... 45 4.6 Data Collection and Analysis ......................................................................................................... 46 4.6.1 Sampling of Cases ................................................................................................................... 46 4.6.2 Multiple Case Study................................................................................................................. 48 4.6.3 Cross Case Analysis ................................................................................................................ 49 4.7 Credibility ....................................................................................................................................... 49 4.7.1 Validity .................................................................................................................................... 49 4.7.2 Reliability ................................................................................................................................ 50 5. Findings .................................................................................................. 51 5.1 Case Caterpillar – YardClub ........................................................................................................... 51 5.2 Case Avis - Zipcar .......................................................................................................................... 56 5.3 Case Daimler – Chauffeur Privé ..................................................................................................... 63 5.4 Case AccorHotels – Onefinestay .................................................................................................... 70 3 5.5 Case Expedia - HomeAway ...........................................................................................................