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18 Oct 2016

Sharing Economy: Striking a Balance

 What are the fundamental principles that guide the sharing economy? How is this new economy revolutionizing our society? Is the sharing economy really all about sharing? To learn more about this new economic model, we speak with Thibault Daudigeos, a professor at Grenoble Ecole de Management, and Vincent Pasquier, a doctoral student in management sciences at Grenoble Ecole de Management. Their research explores the principles and paradoxes of the sharing economy.

Questions to Thibault Daudigeos and Vincent Pasquier

The sharing economy can be defined using a variety of philosophical viewpoints, which cover everything from libertarianism to shared goods or hacker counterculture. Does a particular viewpoint standout to explain the sharing economy?

All of these perspectives are part of the sharing economy. However, the libertarian perspective receives extra media attention due to leaders such as the CEO of Uber, who openly voices and embraces Ayn Rand’s ultra-liberal vision. Nonetheless, each of these perspectives contributes to the movement. The idea of a shared good for example is very much a part of the sharing economy. There are many players such as La Louve or Cité Lib in France that were founded on this principle. They simply receive less attention from the media. 

There are also startups in the sharing economy that stand out for their phenomenal capital raising. For example, Airbnb once again raised more than 500 million dollars last September. Yet many initiatives in the sharing culture are built on perspectives that are in opposition to libertarianism. They simply take longer to grow and blossom. But they exist and are sustainable!

One key aspect of your research was to examine the end goals of a company in the sharing economy. There is a stark contrast between for-profit models (Airbnb, Uber, etc.) and associative models (Cité Lib). Are these two approaches at odds?

Both of these models are united around a single goal: To find the best way to share goods and resources in order to promote economic development. The primary difference is in terms of revenue. The for-profit model is primarily focused on creating added value for investors and customers whereas the associative model also tries to meet the needs of employees, local authorities and society by sharing revenue in a different manner. 

This dichotomy has existed since the beginning of capitalism. No matter the goal though, both types of companies create value for society. If they didn’t, they wouldn’t exist! The primary difference between the two is their vision of the common good. The employee model used by Uber and Amazon for example really highlights a different view of social responsibility.

What fields of activity are impacted by the sharing economy?

The greatest impact is currently on the economy of services. Traditional hotel and transportation industries have been strongly affected by the arrival of companies like Airbnb, Uber or Blablacar. In addition, our consumer habits are changing to deal with issues such as carbon emissions or under-used goods. We’re at the end of an era in which people were happy to use their lawnmower, their barbecue or even their car once a year.

In terms of production, Fab Labs are springing up in neighborhoods with 3D printing signaling a transformation in our production systems. But this change will take a bit longer to be fully developed. Regulation can also be an important factor to consider. When states decide to regulate a sector, it can have an important impact on the sharing economy.

For example, Berlin took the radical decision to forbid renting entire apartments via Airbnb. Or, Montreal decided to allow Uber drivers only a couple thousand driving hours in order to balance the activity with traditional taxis. However, leaders of the sharing economy are responding to these changes. Uber has for example announced a self-driving service in Pittsburg, which might be a solution to overcome criticism about the company’s treatment of drivers.

The sharing economy brings to mind both great economic success (profitable companies) and failure (lack of shared value). Can you highlight some of the paradoxes created by the sharing economy?

Paradoxes concerning the sharing economy are created by the gap that exists between the myths attributed to this economy and its real-life impact. For example, we have been sold the idea of uberizing the workplace by freeing workers to work according to their own schedule without administration and organizational constraints. However, in reality this uberization translates to independent workers who have to combine multiple part-time jobs and are paid on a task basis. So uberization is in fact Taylorism 2.0!

The environment creates another paradox within the sharing economy. Car sharing is a great collaborative system. But the hidden effect of this collaboration is that the overall number of miles driven actually increases because more people have access to a car. In a manner of speaking, the sharing economy doesn’t encourage us to consume differently, but simply to consume more.

There is also a paradox in terms of value creation. We all use services offered by well-known startups in the sharing economy. They meet our needs as consumers. But to fulfill their promise as players in the sharing economy, they have to remember other stakeholders such as employees. The promise of the sharing economy is to share! That means sharing resources and revenue in a socially responsible manner. 

For example, Airbnb slowly destroyed the renting market in Berlin. This made rents skyrocket and forced the middle class to move outside the city. The fundamental question we face today is how these companies can find a balance in order to share the value they create. Uber is very useful for consumers. However, it’s missing a social model. For the moment, we can safely say that the fruits of the sharing economy are far from being shared by everyone.