Design Choices of Sharing Systems and Their Underlying Institutional Logics
There is no uniform design approach for sharing systems that target consumers seeking temporary access to products. Indeed, there are many design elements through which consumers can interact with businesses or other consumers (Subramaniam and Piskorski 2020). Nevertheless, scholars distinguish between two main types of systems: peer-to-peer (P2P) and business-to-consumer (B2C) systems (Einav et al. 2016; Hartl et al. 2018; Möhlmann 2015; Münzel et al. 2018).
In B2C systems, companies own both the system and the products and grant consumers temporary access to the products (Bardhi and Eckhardt 2012). Thus, consumers temporarily use products provided by a company in a B2C sharing system, which involves a dyadic relationship and access-based consumption (Benoit et al. 2017; Gerwe and Silva 2020). In contrast, in P2P systems, third parties use a system provided by a system provider to grant other consumers temporary access to physical goods (Hamari et al. 2016). As a result, P2P sharing systems involve collaborative consumption through a more complex triadic relationship (Benoit et al. 2017). Therefore, while B2C sharing system providers are suppliers that need to stock assets and attract consumers (Bardhi and Eckhardt 2012), P2P sharing system providers match individuals according to demand, facilitating their transactions as suppliers and consumers (Einav et al. 2016). In P2P systems, individuals can be either suppliers or consumers and determine both supply and prices in the system. This contrasts with mixed forms of sharing systems in which the system provider independently alters prices and thus affects supply and demand.
While there are other strategies in the sharing economy, such as combined sharing systems or system participation for data access (Subramaniam and Piskorski 2020), B2B2C relationships—in which a system provider connects both third-party owners and consumers through its proprietary system—are increasingly common. Importantly, multiple archetypical sharing systems can be operated by the same company simultaneously. The US company Uber provides a useful example (albeit of service-based sharing rather than product sharing). Uber is a system provider that rents its own cars to consumers through Uber Rentals, connects commercial taxi companies with consumers through Uber Premium, and offers consumers the opportunity to act as carsharing providers to other consumers through Uber X (formerly Uber Pop).
Institutional logics can help us understand how such archetypical sharing systems develop and to what extent they affect stakeholder perceptions. Institutional logics understood as socially constructed patterns of assumptions, values, and beliefs by which individuals provide meaning to their reality. They determine the patterns by which individuals categorize other individuals and organizations (Lounsbury et al. 2021; Thornton and Ocasio 1999). The concept of institutional logics draws on institutional theory (DiMaggio and Powell 1983; Meyer and Rowan 1977), which posits that all organizations adhere to external expectations and thus gradually become similar (within comparable fields). Accordingly, institutional logics explain which activities companies’ internal and external audiences perceive as legitimate and desirable; moreover, they describe how such perceptions guide identity, behavior, and strategy (Ocasio and Radoynovska 2016; Thornton and Ocasio 1999; Thornton et al. 2012; Vaskelainen and Münzel 2018). Thornton et al. (2012) identify seven ideal types of institutional logic: family, community, religion, state, market, profession, and corporation. As Vaskelainen and Münzel (2018, p. 277) aptly put it, “a large family firm could be committed to family logic through its ownership ties, to corporation logic through the management system of the company, and to market logic through its business.”
While firms are shaped by several institutional logics, a dominant logic usually prevails within a firm (Reay and Hinings 2005, 2009; Vaskelainen and Münzel 2018). Once multiple institutional logics in the same field prevail, firms create strategies that address stakeholder expectations, as failing to meet such expectations could threaten their survival (Battilana and Dorado 2010; Pache and Santos 2012). This means that logics are not decided by a focal firm per se but co-created by its internal and external stakeholders, expressing the firm’s legitimacy. Among other stakeholders, consumers are heavily involved in the process of developing and adapting institutional logics (Ertimur and Coskuner-Balli 2015; Martin and Schouten 2014; Vargo and Lusch 2004). For example, a sharing system cannot decide by itself which logic it follows; instead, it must act according to the expectations of internal and external stakeholders to achieve gradual recognition.
Markets in the sharing economy foster multiple institutional logics (Mair and Reischauer 2017). For example, Vaskelainen and Münzel (2018) demonstrate how multiple institutional logics are present in the German carsharing market. First, well-known corporate carsharing providers, such as BMW and Mercedes-Benz, operate sharing systems such as Share Now. In such systems, firms provide their own products to consumers for temporary use, aiming to increase the prospects of the firm (Vaskelainen and Münzel 2018). In our terms, these systems are B2C providers that seek to utilize their products in a proprietary system. These systems employ corporate logics, in which organizations conduct their activities to increase their own size, growth, and profit (Thornton et al. 2012).
Second, carsharing software firms like Fleetster seek to combine their system for public carsharing and private providers, thus increasing the system’s reach. These companies provide a sharing system to connect third-party product owners and consumers. In our terms, this corresponds to B2B2C providers that increase the scope of their system with both the total network size and service offering in mind. Such providers forego some value appropriation opportunities in favor of market value creation (Vaskelainen and Münzel 2018). This mirrors market logics, in which an organization conducts its activities to maximize its profitability by maximizing the quantity and quality of transactions, foregoing revenues in the process (Thornton et al. 2012). While this should be the main logic of most markets (as it maximizes the overall quality and quantity of market transactions), organizations often stray from this logic due to other institutional demands that favor their own organization over other actors (Ocasio and Radoynovska 2016).
Third, in the case of local carsharing providers, small or localized providers such as Turo typically focus on an ecological mission of decreasing private car usage rather than the goal of increasing profit or revenue (Vaskelainen and Münzel 2018). Such companies provide a sharing system to connect consumers that provide products to each other. In our terms, this corresponds to P2P providers whose goal is to create a channel for consumers to interact, with a focus on community-building and shared access to products. This mirrors community logics, in which an organization includes all participants in the group and focuses on the overall benefits for all group members (Thornton et al. 2012). For a summary of these characteristics, see Table 1.
Differences in Institutional Logics, Consumer Perceptions, and Intention to Use a System
Differences in institutional logics alter how external audiences in general (Thornton et al. 2012) and potential consumers in particular (Ertimur and Coskuner-Balli 2015) perceive companies. Grinevich et al. (2019) conducted a series of expert interviews on institutional logics in the sharing economy. They found that the most salient strategic considerations for system providers are the tangible benefits of economic factors and product availability/convenience and the intangible benefits of sustainability and social connections. This is in line with current findings suggesting that institutional logics that are connected to grand challenges, such as resource conservation and environmental sustainability, are integrating into topics of daily life, such as transportation, employment, and nutrition (Gümüsay et al. 2020). Therefore, environmental considerations are slowly becoming as important as economic and social factors, which have been found to impact attitudes toward sharing as opposed to owning (Grinevich et al. 2019; Hamari et al. 2016).
These tangible (i.e., economic benefits, product availability/convenience) and intangible benefits (i.e., sustainability, social benefits) are also regularly associated with institutional logics. For example, economic and sustainability benefits are commonly associated with community logics, which strive to provide benefits beyond the focal organization (Thornton et al. 2012; Vaskelainen and Münzel 2018). To extend this logic, we test whether consumer perception and corresponding intention to use a sharing system also vary due to differences in institutional logics.
We build on prior work that conceptualizes sharing systems as a single institutional logic (Ocasio and Radoynovska 2016; Vaskelainen and Münzel 2018). To study whether different institutional logics affect consumer perceptions of sharing systems, we test diametrically opposed archetypical sharing systems. Therefore, we compare corporate-based logic (B2C) and community-based logic (P2P) in the following chapter. While more comparisons are possible (especially with the market-based B2B2C logic), there is a methodological tradeoff between the number of design choices and the number of product categories under study. We choose to study a general effect between two diametrically opposed system designs across four product categories as opposed to studying more design choices for fewer product categories. We study multiple product categories because it is important to determine whether our proposed mechanisms might be confounded by product-specific considerations. Thus, with our design, we offer general mechanisms that apply to several product categories. To increase the confidence in our results, we choose products that differ with respect to their features, the economic impact of sharing, and their potential importance for consumer groups.
A key difference between corporate and community logics is the distribution of economic benefits. While organizations with a corporate logic focus on their own growth and profitability, those with a community logic focus on distributing economic benefits among community members (Thornton et al. 2012). Moreover, while both B2C and P2P systems generate cost savings for consumers compared to traditional ownership (Bardhi and Eckhardt 2012; Hamari et al. 2016), they distribute these savings differently. In B2C systems, economic benefits are divided between one supplier and the consumers. In contrast, P2P systems distribute the economic benefits between the system provider, consumers who supply goods, and consumers who use the goods for a lower price than they would pay for traditional ownership (Benoit et al. 2017).
As a result, corporate-focused B2C systems seek to maximize their own profits in each transaction, whereas P2P systems distribute economic gains more evenly among the participants. B2C systems must maximize corporate profits to compensate for the capital tied up in the products offered for rent. In contrast, P2P systems do not require the amortization of such bound capital because they utilize the idle capacity of products owned by consumers (Sundararajan 2017). While individual consumers may decide to buy products solely to act as providers in the P2P system, the community is generally unaware of individual decisions, and such decisions do not affect the distribution of profit within the community. The difference between the economic priorities of the B2C and P2P systems becomes further evident given prior work suggesting that individuals share their assets not only for profit but also for altruistic reasons, such as helping others and doing something meaningful (Bucher et al. 2016). As a result, we hypothesize that consumers perceive that they will benefit economically more from a P2P than a B2C system because they expect economic benefits to be more evenly distributed in P2P sharing systems.
Consumers perceive that they will obtain greater economic benefits in P2P sharing systems than in B2C sharing systems.
Gaining economic benefits is a strong consumer motive for using sharing systems (Belk 2014; Botsman and Rogers 2010; Hamari et al. 2016). Thus, when consumers perceive that economic benefits are distributed more favorably toward them in P2P systems than in B2C systems, their intention to use P2P systems will be greater than their intention to use B2C systems.
There is a positive indirect effect of P2P systems (vs. B2C systems) on consumers’ intention to use a system, mediated by consumers’ perception that they will obtain greater economic benefits.
A central feature of the corporate logic is the use of internal assets to sustain growth. In contrast, the community logic focuses on distributing benefits and costs among its members (Thornton et al. 2012). This can be seen in the perceived availability of sharing systems’ products. While B2C sharing systems need large investments to build up stock, P2P systems can grow without tying up capital in assets. As a result, P2P sharing systems grow naturally with the number of providers and consumers (Sundararajan 2017). This growth is less predictable than the centrally managed corporate approach, as P2P sharing systems must attract two sides of a market, each of which is incentivized to join when there are many actors on the opposite side (Rochet and Tirole 2006). Indeed, before they reach a critical threshold, P2P sharing systems are unattractive to both consumers and providers (Botsman and Rogers 2010). In B2C sharing systems, the company is responsible for allocating assets (Cohen and Kietzmann 2014) and can react to market demand by increasing the number of products or redistributing them to high-demand areas (Regue and Recker 2014).
In contrast, P2P sharing systems can improve their coverage only by advertising to and incentivizing providers (Weber 2016). As a result, their limited ability to react to market demand might increase consumers’ doubts about satisfactory coverage. We expect that consumers will perceive product scarcity to be higher in P2P than in B2C sharing systems, as consumers value the central role of a company and expect companies to efficiently distribute their product offerings. Compared to B2C systems, decentralized P2P communities can be expected to reallocate resources less efficiently.
Consumers perceive that P2P sharing systems have higher product scarcity than B2C sharing systems.
Product availability is a motivator for consumers to use sharing systems. When consumers perceive that products will not be available, they are less likely to choose a sharing system because their main need—access to the product—is not met (Baumeister et al. 2015; Lamberton and Rose 2012).
There is a negative indirect effect of P2P systems (vs. B2C systems) on consumers’ intention to use a system, mediated by consumers’ perception of higher product scarcity.
Vaskelainen and Münzel (2018) show that carsharing providers that focus on corporate logic use business models that are less sustainable than comparable providers with community business logics, which aim to reduce the overall distance traveled by vehicle. In general, traditional B2C providers employing a corporate institutional logic can be expected to co-opt the sharing economy by focusing more on profitability than sustainability (Martin 2016). For example, sustainability is seen as a side effect rather than a purpose of B2C business models in carsharing (Vaskelainen and Münzel 2018). In fact, corporations might even force more sustainability-oriented actors out of the market due to their greater market power and resource pools (Martin 2016). This may affect consumer perceptions of system designs, as the environmental sustainability of sharing systems is of growing importance for consumers (Bardhi and Eckhardt 2012; Ozanne and Ballantine 2010). Stakeholders see the reduction of idle product capacity through sharing as sustainable, as it lowers the consumption of resources in the production of new products (Belk 2007; Botsman and Rogers 2010). However, consumers perceive the use of existing products as more sustainable than the use of products specifically built and used for sharing (Sundararajan 2017). Thus, when comparing P2P and B2C systems, consumers can be expected to perceive products that are privately owned as more sustainable than products that firms specifically dedicate to sharing systems.
Consumers perceive P2P sharing systems to be more sustainable than B2C systems.
Scholars tend to agree that the goal of increasing sustainable consumption is a major reason why consumers use sharing systems (Cohen and Kietzmann 2014). However, the empirical evidence on this point is inconsistent. Although some studies on car and home rentals found no evidence that the goal of sustainable consumption influenced consumers’ intentions to use sharing systems compared to ownership (e.g., Möhlmann 2015), other studies on cars and studies that did not specify a product found that increased sustainability perceptions influenced consumers’ attitudes toward the system and, consequently, their intention to participate (Hamari et al. 2016; Hartl et al. 2018). We follow the latter, more recent evidence and hypothesize that the increased consumer perception of sustainable consumption in P2P systems positively affects consumers’ intentions to use P2P sharing systems, compared to B2C systems.
There is a positive indirect effect of P2P systems (vs. B2C systems) on consumers’ intention to use a system, mediated by consumers’ perception of higher sustainability.
Organizations with corporate logics are focused on transactions with consumers, whereas those with community logics interact with their stakeholders, assess their needs, and engage in dialogue with their community (Thornton et al. 2012; Vaskelainen and Münzel 2018). In general, sharing goes beyond access to the physical product. Providers offer supplementary knowledge and skills, information about past experiences, and advice on how to use the product through personal interaction (Albinsson and Yasanthi Perera 2012). Perceptions of reciprocity make consumers more likely to have favorable opinions of sharing. Individuals expect a greater positive social return through the creation of reciprocal social bonds (Belk 2007). Reciprocity, and thus social returns, are perceived differently in corporate and community institutional logics. In the context of this study, in P2P systems, consumers interact with the system provider and other consumers, whereas consumers solely interact with the providing company in B2C sharing systems (Bardhi and Eckhardt 2012). We argue that reciprocity and social belonging are more prevalent in P2P than in B2C sharing systems, as they are more likely to emerge between individuals sharing an experience (Ozanne and Ballantine 2010). Studies of carsharing show that community logics and longer interactions lead to less anonymity and more personalized exchanges (Bardhi and Eckhardt 2012; Vaskelainen and Münzel 2018).
Consumers perceive that they will obtain greater social benefits in P2P sharing systems than in B2C systems.
Greater social returns increase the likelihood that consumers will use a sharing system (Belk 2007). Social belonging drives consumers’ intentions to use a sharing system in multiple product markets of the sharing economy, such as the toy market (Ozanne and Ballantine 2010) and meal sharing (Böcker and Meelen 2017).
There is a positive indirect effect of P2P systems (vs. B2C systems) on consumers’ intention to use a system, mediated by consumers’ perception of higher social benefits.