Trust in the Sharing Economy. Can trust make or break a sharing enterprise?
©2017
Textbook
21 Pages
Summary
All over the world, people are renting rooms from strangers through Airbnb, outsourcing grocery trips to TaskRabbits, and getting across town with ride-sharing service BlaBlaCar. These people are participating in the sharing economy that has rapidly grown from a niche market to a mainstream social movement. Its continued growth and, thus, the future success of sharing economy companies is contingent upon one crucial factor: trust. Accordingly , this term paper approaches the question: Can trust make or break a sharing enterprise? The paper will address this topic by introducing the new economic force called sharing economy at first. The next two chapters will present the construct of trust on the basis of literature that deals with trust in a business context as well as trust in the sharing economy. Furthermore, a trust-building framework for online sharing services will be presented based on a recent study that was conducted, exclusively on the building process of Peer to Peer (P2P) trust. In the discussion section in Chapter 5 different approaches to the importance of trust for P2P marketplaces will be discussed. Subsequently, conclusions will be drawn based on the contents of the previous sections while there will be also made recommendations for the future.
Excerpt
Table Of Contents
platforms has changed patterns of consumer behaviour since they allow these two
parties to easily come together whenever and wherever they wish and conduct a trade
anytime and anywhere from a smart phone. Rachel Botsman, a pioneering author and
key advocate at the helm of the movement explained the genesis of the sharing
economy as follows: "For the first time in history, the age of networks and mobile
devices has created the efficiency and social glue to [enable] the sharing and exchange
of assets" (Conway, 2011).
Over the last decade the sharing economy has grown to include many
applications such as peer-to-peer lending, car sharing, accommodation pooling, and
labour redistribution. It encompasses a wide range of businesses and notably includes
Airbnb (which connects people who are looking for a place to stay with those who are
willing to make their homes or lodgings available for rent) and Uber (which connect
drivers and riders for car transportation services). In the international collaborative
economy there are now 17 billion-dollar companies with 60,000 employees (Koetsier,
2015). PricewaterhouseCoopers (pwc, 2015). reports that five key sharing sectors
travel, car sharing, finance, staffing, and music and video streaming have the
potential to increase global revenues to around $335 billion by 2025. Currently, 44% of
U.S. consumers are familiar with the sharing economy and 19% of consumers have
engaged in a sharing economy transaction, and these numbers will keep growing (pwc,
2015).
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3. Trust in a business context
The above section has shown that collaborative consumption is a movement
based on the notion of sharing and redistributing physical and intangible resources that
is revolutionizing the way people consume. Before investigating trust in the particular
context of collaborative consumption, first I would like to look at trust in business
contexts.
3.1. Business-to-consumer trust
According to Moorman (1992), trust is a key determinant for the quality of any
sort of relationship, next to power, communication, and goal compatibility. In a business
context, B2C relationships heavily rely on trust among consumers. In order to achieve
trust, commercial brands employ a number of relationship marketers just to take on this
challenge (Fournier, Dobscha, & Mick, 1998). To identify how such a trust relationship
from a consumer in a brand is established, it is important to understand the distinction
between cognitive and affective dimensions of trust.
Cognitive trust is defined as "a customer's confidence or willingness to rely on a
service provider's competence and reliability" (Moorman et al., 1992, p. 315). This is
based on the awareness consumers have of a particular company (for example,
reputation). Affective trust, on the other hand, is the confidence placed in a partner on
the basis of feelings linked to care and concern showed by the other (Johnson &
Grayson, 2005). The prediction process of a customer in a specific brand or company is
influenced by its feelings. Based on this, there is a certain level of faith established,
which has a direct impact on the degree of dependency the consumer is willing to take.
Both the cognitive as the affective dimensions of trust are important when it comes to
understanding how trust is built in commercial B2C relationships.
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4. Trust in the sharing economy
Establishing trust in the sharing economy seems to be a more complex process
compared to other more traditional trust-relationships (e.g. B2C). A customer who is
coming to a sharing platform to make purchases, does not only have to put trust in the
company/platform he is dealing with (B2C), he also has to trust the other customer he
is sharing a product or service with (consumer-to-consumer, or C2C). This means that
the consumer now has to have confidence in two different parties before doing a
transaction, both in the company and in other users.
4.1. Trust in the company
Literature in the previous section has shown that trust in business context
especially when it comes to B2C relationships can have both a cognitive as an
affective dimension. This is also applicable when it comes to sharing initiatives, since
new customers can have an assumption about a service based both on hard facts and
on feelings.
The cognitive trust components are also relevant for sharing companies. Cited
by Beldad et al. (2010) these are: (1) organisational reputation: for example, due to the
bad publicity around Airbnb following on the `orgy scandal', has this negatively
influenced its reputation? Also, (2) privacy assurance: how do collaborative
consumption services handle all the personal information of their customer base and
how extensive is their privacy policy? And as a third cognitive component, (3) third
party guarantees: to what extent do services have an official third party partnership?
Following on this, there are different affective trust components discussed,
mainly in the scope of customer service. Egger (2002) describes in his model (1)
provide mean of contact: do the services offer different possibilities to the customer to
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reach them (for example, next to email also a telephone hotline in case of emergency).
Also, (2) responsiveness: when a customer needs help, within what timeframe he/she
can expect a reply? Furthermore, (3) quality of help: is there plenty of collaborative
thinking with the customer and are there good solutions offered if it is necessary? And
lastly, also in the light of affective trust but not as a specific customer service attribute,
(4) transparency of risk: do the sharing services alert the customers to the fact things
can actually go wrong?
Moreover, Beldad et al. (2010) discuss some website's usability aspects and
user-interface design components that, according to scientific literature, evoke trust. As
first, (1) perceived ease of use: do services offer a website or mobile application (app)
that is easy to use? And, (2) graphical characteristics: is the platform well-designed in
terms of graphical characteristics?
In addition, Beldad et al. (2010) discuss some website content components that
can generate trust. (1) Information quality: is there extensive information available on
the site and is everything covered? And, (2) social presence: Do the services make use
of real people (pictures, videos) so that a feeling of social presence is suggested (also
an affective dimension of trust). And lastly, (3) customised/personalised content: is the
content customised to user's own preferences or based on their location?
4.2. Trust in other consumers
One of the largest European collaborative consumption communities named
BlaBlaCar, a ride-sharing platform developed a trust-framework in order to secure and
simplify P2P transactions in sharing services. This model is called the D.R.E.A.M.S.
trust-framework (see figure 1) and was presented in June 2013 during an international
online business conference in Paris (Gauthey, 2013). Based on their own experiences
and other sharing initiatives that are operating in the collaborative economy, this model
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describes in six different ways how trust is built among users of a sharing service. It
explains that, in order to interact with one another with a solid level of trust, members in
a P2P network must have access to specific information, such as basic information
about other user's identity, their level of activity on the platform and how they are
rated/recommended by others (Gauthey, 2013).
Figure 1. D.R.E.A.M.S. trust-framework (Gauthey, 2013)
In order to build trust, BlaBlaCar proposes all information to be Declared. This means
that all users give their full names, add a picture of themselves and if applicable
they add a short biography and indicate their preferences (smoker vs. non-smoker;
talkative vs. quiet; pets allowed vs. no pets allowed, etc.).
Secondly, the R for Rated refers to the possibility for community members to rate each
other. These ratings can be given after sharing a ride with a community member. It is
said that these ratings "significantly increase the level of trust within the community and
the credibility of the service" (Gauthey, 2013). As a member of the service it is now
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possible to see whether another person already has used the service and/or whether
he or she is recommended by and trustworthy in the eyes of others.
The letter E is for Engaged, which means that two peers reassure the transaction by
doing a pre-payment on forehand through the platform. In doing so, both peers are now
assured that the actual arrangement will take place.
In regards to the fourth variable, the A for Activity, it refers to the activity of the
members participating on the sharing platform. For example, if they are regular visitors
of the website, or if they respond to their messages, if they actively add new content on
the platform, and so on. Following on this, the collaborative consumption service shows
the last login time of its members and their response rate.
The fifth pillar is the M for Moderated, which refers to the idea that all information that is
transferred by users of a sharing service must be verified by the service itself (i.e. bank
details, phone numbers and correct postal address).
Lastly, the S for Social means a total integration with other social networks (i.e.
Facebook, Twitter, LinkedIn or Google+), in order to check a user's existence in real-
life.
An in-house assessment of the D.R.E.A.M.S. framework was conducted by
BlaBlaCar, which has resulted in a positive outcome for the proposed model. This
research reveals that by using the rules and regulations of the framework, there is a
`trust-score' of 4.2/5 among peers in general achieved. In other words, members of a
sharing platform that follow the rules of this framework are perceived as trustworthy
users by 84% of the respondents. This compared to a 2.2/5 score (44%) for strangers,
3.6/5 (72%) for neighbours and a 4.7/5 (94%) for friends and family members
(Gauthey, 2013).
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5. Discussion
In June 2011, a woman returned from vacation to find that her house, which she
had rented out on Airbnb, had been ransacked and robbed by her tenants (Arrington,
2011). This incident severely damaged the company's reputation and pushed Airbnb to
establish stronger security measures and offer a $50,000 host guarantee in the case of
vandalism. Several months later HiGear, a P2P car sharing service that specializes in
high end luxury vehicles was forced to shut down, because four of its member's cars
valued at $300,000 were stolen by a criminal ring (Perez, 2012). This occurred despite
an array of security precautions the company had put in place, including member
screening, credit checks, collision insurance and security deposits. For this reason, the
founders decided that the inherent risk of the business was too high for its members for
them to stay in operation.
After an initial period of wild enthusiasm and some naivety towards collaborative
consumption, these events brought on a sorely needed wave of scepticism towards
sharing economy platforms. With growing concerns as to the safety of P2P
marketplaces, many start-ups realized that "they had lost sight of an element that was
critical to their survival" (Gorenflo, 2012), trust.
The ability to create trust between strangers is a crucial factor that may
determine the success or failure of sharing enterprises (Maag, 2012). According to
Ingram (2012), a sharing economy company can only function if it is built on a solid
web of trust, which could become the "new currency" (Canigueral, Ortiz and Léonard,
2012 p. 15) for P2P interactions. Creating trust between users constitutes a challenge
for sharing economy platforms, since trust underlies every peer-to-peer exchange. Why
would one trust a complete stranger to drive her from point A to point B? Or feel
comfortable staying in a stranger's house overnight?
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Details
- Pages
- Type of Edition
- Erstausgabe
- Publication Year
- 2017
- ISBN (PDF)
- 9783960676713
- File size
- 339 KB
- Language
- English
- Institution / College
- Institut for Interpreter and Languages Munich – Hochschule für Angewandte Sprachen
- Publication date
- 2017 (July)
- Grade
- 1.0
- Keywords
- sharing economy sharing enterprise sharing company Airbnb BlaBlaCar trust-building online sharing service P2P Peer-to-peer P2P marketplace TaskRabbits
