Defining the Sharing Economy

By Gobble, MaryAnne M. | Research-Technology Management, March-April 2017 | Go to article overview

Defining the Sharing Economy


Gobble, MaryAnne M., Research-Technology Management


This column is the latest in a series of discussions aimed at defining the vocabulary of innovation management. The object is to take on the profession's terms of art, exploring their origins and mapping their limitations, to provide new clarity and thus restore some of their power. In looking at the terminology at the heart of innovation management and exploring how it has emerged and evolved, perhaps we can get also a glimpse of where innovation is heading. In previous installments, we looked at disruptive innovation, open innovation, and user innovation. Up this month, a somewhat different topic: the sharing economy.

Or the peer-to-peer economy. Or perhaps you're partial to the on-demand economy or the access economy. Maybe the platform economy? We've had a half decade or so of breathless hype around the idea; the Economist announced "the rise of the sharing economy" in 2013. Much of it has been generated by or on behalf of companies like Uber and Airbnb. But despite the constant stream of press on the topic, there is not a general consensus around what constitutes the sharing economy. The headline for Steven Greenhouse's December 2016 New York Times essay aptly captures the questions around the terminology for this emergent economic sector: "The Whatchamacallit Economy." Even Arttn Sundararajan, author of a book called The Sharing Economy, isn't sure about the "sharing economy" as a term--according to Greenhouse, Sundararajan chose the title "because so many people use it," even though he prefers "crowd-based capitalism." Rachel Botsman, coauthor of an early work on the phenomenon, What's Mine is Yours, prefers "collaborative consumption."

A number of other terms have been suggested that escape the inaccuracies and ambiguities of the "sharing economy" terminology. Of course, each of these reflects the particular preoccupations of the person using it. Sundararajan's "crowd-based capitalism," perhaps the most inclusive of the alternatives, speaks to the way in which platforms like Uber and Airbnb draw on the resources of the crowd to serve the needs of the crowd, taking their cut along the way. Botsman's "collaborative consumption" highlights the focus on distributing the cost and use of capital assets, such as hotels, cars, and designer gowns (via Rent the Runway), as well as on the reuse of assets, via platforms such as Ebay and thredUP (a market for selling used designer clothes). "Access economy" describes a business model that offers customers access to a product or service as and when it's needed.

Other terms focus on the technical aspects of the business model driving firms in this sector. The US Department of Commerce introduced the term "digital matching firms" to describe "companies that use Internet and smartphone-enabled apps to match service providers with consumers, help ensure trust and quality assurance via peer-rating services, and rely on flexible service providers who, when necessary, use their own assets." Similarly, according to Adam Chandler, in a 2016 Atlantic article, "platform economy," distinguishing between "labor platforms" (Uber, TaskRabbit) and "capital platforms" (Airbnb). For Botsman--and I'd have to agree--each of these terms actually refers to something different, even if they are often used interchangeably.

But "sharing economy" has become the default term; it has even been added to the Oxford English Dictionary in 2015, a sign that, as Botsman points out in a Fast Company article that year, "the sharing economy as an idea is here to stay." But that's happened--as it so often does--as the concept itself has become fractured and confusing, applied to so many ideas that it no longer clearly denotes any.

So what is meant by the "sharing economy"? As Juliet Schor points out in a 2014 essay, that can be hard to pin down, nor is it clear which companies are included and which ones aren't. Occasional labor exchange TaskRabbit is generally considered part of the sharing economy; Amazon's Mechanical Turk is not. …

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