KEY CHALLENGES TO SHARING ECONOMY IN SOUTH ASIA A Pakistani motorbike case MASTER THESIS Zarish Zafar Student no. 105351 Supervisor: Qiqi Jiang Cand. Merc. International Marketing and Management (IMM) Date of submission: 12th May 2020 | No. characters: 180.079 (80 pages) Page | 0 ABSTRACT Culture plays an important role in innovation performance and economic creativity of a society. Considering that sharing economy is a product of innovation, culture becomes an inherited force capable of advancing or deterring behavior towards innovation. Therefore, the aim of this study is to explore the effect of cultural dimensions and their impact on the establishment and growth of sharing economy industry in South Asian countries: firstly, by identifying the barriers to a shared economy startup in this geographical region; and secondly, using the Pakistani metropolitan context to evaluate the feasibility of starting a shared economy motor bike business. In order to answer these two research questions, this paper takes an exploratory approach to research using both primary and secondary data, and makes use of the findings of Hofstede’s cultural dimensions theory in order to find out the deterrents of sharing economy as a result of cultural variation between the developed and developing countries, and of the PEST model analysis in the optics of Pakistan in order to evaluate the feasibility of a motorbike-based sharing economy venture, inspired by the business model of Chinese mobike. The findings of the paper show that the lack of resources from both market and supplier side in collectivist South Asian society and the lack of trust due to high uncertainty avoidance, high terrorism, high corruption etc. were ascribed to be the primary two restraining factors behind the struggling sharing economy industry in these developing countries. Thus, the relationship between the dimension of collectivism- individualism and uncertainty avoidance were found to be most directly associated with entrepreneurship, economic development and innovation. The findings of this paper also demonstrate that besides the strong correlation between economic creativity and the cultural dimensions identified by Hofstede, there are other factors, such as a country’s research and development budget, which may override the impact of culture and promote innovation. In the later section, the feasibility of the motorbike-based sharing economy shows that the metropolitan cities of Pakistan have reached the point enabling this business concept to thrive and grow, starting out with piloting this service in Karachi instead of Lahore as initially anticipated. Moreover, for the business to succeed in Pakistan, the Chinese inspired mobike business model is not practical. Instead, the model should develop closer to that of Uber due to risk of theft and vandalism. The paper also discusses the user profile for the service, identifying that as early adopters, the male groups will dominate, but female users would be onboard as later adopters as soon as cultural (social) challenges are overcome in a foreseeable time span of months to years boosted thanks to the efforts of Careem WOW (Women on wheels). Page | 1 ACKNOWLEDGEMENTS I would like to express my deepest gratitude to my supervisor, Qiqi Jiang, for his continuous support, understanding and guidance during the last one year. His advices have been of profound value to me, and without his help, this thesis would not have been possible. Besides that, I would like to convey a special thanks to Sir.Hasaan Khawar (whom I consider a pool of knowledge), for sharing his immensely valuable expertise that he has gained by several years of experience on numerous large and small scale projects in Pakistan and South Asia. Thank you for being so generous in giving your time despite your overwhelming schedule. I would like to thank Mr.Ahmed Ayub, who is the Cofounder of Airlift, one of the very few Pakistan based ride hailing sharing economy companies operating successfully and growing at a very fast pace, for sharing his practical experience and ground realities in bringing a sharing economy company into execution. Lastly, I would like to thank my friends and family. A big shout out to my dear husband for his moral support and encouragement throughout which kept me motivated for this thesis. Many thanks to my dearest sister Laiba, and my friend in need, Sara, who have extended their support to me physically and mentally during the course of this project. A special thanks to my beloved daughter, Irene, for bringing joy and positivity to me by coming to this world ten months ago while I was doing this research! I am obliged to all of you for your support which made me finish this project with pride and joy. Zarish Zafar Copenhagen, May 2020 Page | 2 TABLE OF CONTENTS ABSTRACT ...................................................................................................................................................................... 1 ACKNOWLEDGEMENTS ................................................................................................................................................ 2 TABLE OF FIGURES......................................................................................................................................................... 5 1. INTRODUCTION ......................................................................................................................................................... 6 1.1. Emergence of peer-to-peer economy ................................................................................................ 6 1.2. Size of the sharing economy .............................................................................................................. 7 1.3. Motivation of the paper ..................................................................................................................... 8 1.4. Research Questions ........................................................................................................................... 9 2. STRATEGIC FRAMEWORKS ..................................................................................................................................... 11 2.1. Hofstede’s cultural dimensions theory ............................................................................................ 11 2.1.1. Individualism-collectivism ......................................................................................................... 14 2.1.2. Uncertainty avoidance .............................................................................................................. 15 2.1.3 Masculinity-Femininity ............................................................................................................... 15 2.2. PEST Framework .............................................................................................................................. 16 2.3. Limitations of the Strategic Frameworks ......................................................................................... 17 2.3.1. Limitations of Hofstede’s cultural dimensions theory .............................................................. 17 2.3.2. Limitations of PEST .................................................................................................................... 18 3. BACKGROUND ......................................................................................................................................................... 20 3.1. Defining sharing economy ............................................................................................................... 20 3.2. Why is there a need for sharing economy - Creating shared value ................................................. 21 3.3. Reasoning for doing a feasibility on motorbike related sharing economy business ....................... 23 4. RESEARCH APPROACH ............................................................................................................................................ 25 4.1. Philosophy of Science ...................................................................................................................... 25 4.2. Methodology .................................................................................................................................... 27 4.2.1. Research Design ........................................................................................................................ 27 4.2.2. Research Approach ................................................................................................................... 28 4.3. Research Method ............................................................................................................................. 29 4.3.1. Secondary data collection ......................................................................................................... 29 4.3.2. Primary data collection ............................................................................................................. 30 4.4. Limitations of Methodology ............................................................................................................. 34 Page | 3 5. DATA ANALYSIS ....................................................................................................................................................... 36 5.1. Hofstede’s cultural dimensional analysis ......................................................................................... 36